<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 27, 1997
REGISTRATION NO. 333-_____
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CLEARVIEW CINEMA GROUP, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7832 22-3338356
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
7 WAVERLY PLACE
MADISON, NJ 07940
(201) 377-4646
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE
OFFICES AND PRINCIPAL PLACE OF BUSINESS)
------------------------
A. DALE MAYO
CLEARVIEW CINEMA GROUP, INC.
7 WAVERLY PLACE
MADISON, NJ 07940
(201) 377-4646
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
LEONARD S. FERLEGER MARK R. BAKER
KIRKPATRICK & LOCKHART LLP DEWEY BALLANTINE
1500 OLIVER BUILDING 1301 AVENUE OF THE AMERICAS
PITTSBURGH, PA 15222-2312 NEW YORK, NY 10019-6092
(412) 355-6500 (212) 259-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
TITLE OF EACH CLASS MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock, $.01 par value............ $11,500,000 $3,484.85
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933, as amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY PART I
OF FORM SB-2
<TABLE>
<CAPTION>
ITEM NO. CAPTION LOCATION IN PROSPECTUS
- -------- --------------------------------------------------- ---------------------------------------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Front
Cover of Prospectus.............................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front and Outside Back Cover Pages
3. Summary Information and Risk Factors............... Prospectus Summary; Risk Factors
4. Use of Proceeds.................................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price.................... Underwriting
6. Dilution........................................... Dilution
7. Selling Security Holders........................... Not Applicable
8. Plan of Distribution............................... Outside Front Cover Page; Underwriting
9. Legal Proceedings.................................. Legal Proceedings
10. Directors, Executive Officers, Promoters and
Control Persons.................................. Management and Directors
11. Security Ownership of Certain Beneficial Owners and
Management....................................... Principal Stockholders
12. Description of Securities.......................... Description of Capital Stock
13. Interest of Named Experts and Counsels............. Not Applicable
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... Not Applicable
15. Organization within Last Five Years................ Certain Transactions
16. Description of Business............................ Prospectus Summary; Business
17. Management's Discussion and Analysis or Plan of
Operation........................................ Management's Discussion and Analysis of Financial
Condition and Results of Operation
18. Description of Property............................ Management's Discussion and Analysis of Financial
Condition and Results of Operation
19. Certain Relationships and Related Transactions..... Certain Transactions
20. Market for Common Equity and Related Stockholder
Matters.......................................... Outside Front Cover; Risk factors; Dividend Policy;
Principal Stockholders; Shares Eligible for
Future Sale; Underwriting
21. Executive Compensation............................. Management and Directors
22. Financial Statements............................... Pro Forma Consolidated Financial Data; Selected
Consolidated Financial Data
23. Changes In and Disagreement With Accountants on
Accounting and Financial Disclosure.............. Not Applicable
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Prospectus shall
not constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of such State.
SUBJECT TO COMPLETION, DATED MAY 27, 1997
PROSPECTUS
SHARES
[LOGO]
CLEARVIEW CINEMA GROUP, INC.
COMMON STOCK
------------------------
All of the shares of Common Stock, $.01 par value (the 'Common Stock'), of
Clearview Cinema Group, Inc. ('Clearview' or the 'Company') offered hereby (the
'Offering') are being sold by the Company. Prior to the Offering, there has been
no public market for the Common Stock. It is anticipated that the initial public
offering price will be between $ and $ per share. For information
relating to the factors considered in determining the initial offering price to
the public, see 'Underwriting.'
Application will be made to list the Common Stock on the
under the symbol '
- ------.'
------------------------
SEE 'RISK FACTORS' COMMENCING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[CAPTION]
<TABLE>
PRICE TO UNDERWRITING PROCEEDS TO
THE PUBLIC DISCOUNT(1) THE COMPANY(2)
<S> <C> <C> <C>
Per Share....................... $ $ $
Total(3)........................ $ $ $
</TABLE>
(1) Does not include a 2 1/2% non-accountable expense allowance payable to Prime
Charter Ltd. (the 'Representative') on behalf of the Underwriters and
warrants to purchase shares of Common Stock issuable to the
Representative (the 'Underwriter Warrants'). The Company has also agreed to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
'Underwriting.'
(2) Before deducting expenses payable by the Company, estimated at $ ,
which excludes the non-accountable expense allowance.
(3) The Company has granted the Underwriters an option, exercisable within 30
days of the date of this Prospectus, to purchase up to additional
shares of Common Stock on the same terms as set forth above, solely to cover
over-allotments. If the option is exercised in full, the total Price to the
Public will be $ ; Underwriting Discounts will be $ ; and
Proceeds to the Company will be $ .
The shares of Common Stock offered hereby are offered by the Underwriters,
subject to prior sale, when, as and if accepted by them and subject to certain
conditions, the right to withdraw, cancel, modify or reject any order in whole
or part, and approval of certain legal matters by counsel. It is expected that
delivery of the shares of Common Stock offered hereby will be made on or about
, 1997.
------------------------
PRIME CHARTER LTD.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
[INSERT GRAPHICS AND/OR PHOTOGRAPHS]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS AND SELLING GROUP
MEMBERS, IF ANY, MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE IN ACCORDANCE WITH RULE 103 OF REGULATION M
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SEE 'UNDERWRITING.'
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Prospective investors should consider
carefully, among other things, the information set forth under 'Risk Factors'
below. Unless otherwise indicated, all information in this Prospectus assumes no
exercise of the over-allotment option and gives effect to the Concurrent
Transactions (as defined below). See 'The Concurrent Transactions' and
'Description of Capital Stock.' As used in this Prospectus, unless the context
indicates otherwise, the terms 'the Company' and 'Clearview' refer to Clearview
Cinema Group, Inc. and its subsidiaries.
THE COMPANY
Clearview Cinema Group, Inc. is a regional motion picture exhibitor that
owns and operates in-town multiplex theaters primarily located in affluent
suburban communities in the New York/New Jersey metropolitan area. The Company's
theaters offer a mix of first-run commercial, art and family-oriented films
designed to appeal primarily to sophisticated moviegoers and families with
younger children. Since its inception in December, 1994, the Company has grown
from four to 16 theaters and from eight to 60 screens. From 1995 to 1996, the
Company's revenues have increased from $2.3 million to $8.2 million and theater
level operating income has increased from $344,000 to $1.6 million.
The Company's strategy is to grow primarily through the acquisition or
development of in-town multiplex theaters. The Company seeks locations in the
retail centers of suburban communities that have the characteristics of the
Company's target audiences. The Company intends to build upon its concentration
of existing theaters and to extend into retail centers in suitable communities
throughout the Middle Atlantic and New England states. The Company also will be
opportunistic when evaluating theaters and locations in communities that meet
many, but not necessarily all, of the Company's criteria. The Company intends to
grow by acquiring theaters, adding screens to its existing theaters and
developing theaters in locations not previously used for motion picture
exhibition.
The theatrical exhibition industry is fragmented. Although the fifty
largest theater circuits owned approximately 76% of the screens operating at May
1, 1995, there are a substantial number of small independent exhibitors with
four or fewer theaters. The large circuits that are growing most rapidly appear
to have begun to concentrate on building new mega-multiplex theaters, rather
than buying established theaters. The Company believes that, in the Middle
Atlantic and New England states, in-town theaters serve audiences that prefer
these theaters to the larger out-of-town multiplex theaters. The Company also
believes that in-town theaters can offer movie selections more attuned to their
local markets, better customer service and more convenience when compared to the
out-of-town multiplexes. Primarily for these reasons, the Company thinks that
the acquisition of in-town theaters can be attractive, and the Company believes
that there are a large number of potential acquisition candidates. The Company
seeks to identify targets that will complement its existing theaters or provide
entry into new markets.
The Company seeks to improve the operating margins of the theaters it
acquires by controlling theater level costs through centralized management, by
increased efficiencies in concession purchasing and through film selection that
is sensitive to the local community's tastes. The Company intends to acquire or
develop clusters of theaters that will increase its flexibility by permitting
the sharing of theater managers and skilled and hourly wage personnel. Clearview
believes that its management information system and internal controls gives its
senior management timely access to comprehensive operating data, allows the
local theater managers to focus on day-to-day operations, and enables the
Company to expand its theater operations without incurring proportionate
increases in general and administrative expenses.
The Company seeks theaters that will be the sole or dominant exhibitors in
their geographic film licensing zones. A geographic film licensing zone or 'film
zone' is a geographic area, recognized by film distributors, that generally has
a three to five mile radius in metropolitan and suburban markets, in which a
film is licensed for exhibition at only one theater in that film zone.
Currently, 75% of the Company's theaters are the sole exhibitors in their film
zones.
3
<PAGE>
Clearview's theaters are community-oriented and place a strong emphasis on
patron satisfaction and customer service. The theaters provide clean and
comfortable environments at convenient in-town locations and offer opportune
movie show times, courtesy telephones for local calls and a large variety of
specialty concession items. The Company's theaters are characterized by custom
interiors and decor designed to enhance the movie-going experience. In addition,
the Company provides party and special event facilities for community residents
and regularly participates in community fundraising and charity functions to
maintain patron loyalty.
The Company's executive offices are located at 7 Waverly Place, Madison,
New Jersey 07940 and its telephone number is (201) 377-4646.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered hereby............... _________ shares
Common Stock to be outstanding after the
Offering................................ _________ shares(1)
Use of proceeds........................... $600,000 will be used to repay certain subordinated indebtedness;
$1.0 million will be used to upgrade existing theaters and construct
additional screens; $_____ million (based on an estimated offering
price of $___ per share) will be used to redeem certain Provident
Warrants (as defined below) issued to The Provident Bank
('Provident') in connection with the Company's current financing
arrangements; and the remaining net proceeds will be used for general
corporate purposes, primarily the acquisition and development of
additional theaters. See 'Use of Proceeds.'
Proposed ________ symbol.................. __________
</TABLE>
- ------------------
(1) Excludes the shares of Common Stock reserved for issuance (a) upon
conversion of the outstanding shares of Class A Convertible Preferred Stock,
$.01 par value (the 'Class A Preferred Stock'), of the Company, (b) upon
exercise of the A/B Warrants (as defined below), the Underwriter Warrants or
the Class A Warrants (as defined below), or (c) under the 1997 Incentive
Plan (as defined below). See 'The Concurrent Transactions,' 'Management and
Directors--1997 Incentive Plan,' 'Certain Transactions,' 'Description of
Capital Stock' and 'Underwriting.'
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data should be read in
conjunction with the consolidated financial statements, including the notes
thereto and 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' appearing elsewhere in this Prospectus. The summary
consolidated financial data presented below are derived from the Company's
consolidated financial statements audited by Wiss & Company, LLP, independent
accountants, whose report covering the Company's financial statements as of
December 31, 1996 and for each of the two years in the period ended December 31,
1996 is included elsewhere in this Prospectus, and the Company's unaudited
consolidated financial statements as of March 31, 1997 and for the periods ended
March 31, 1996 and 1997, which are included elsewhere herein, and from the
Company's audited consolidated balance sheet as of December 31, 1995, which is
not included herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ ------------------------
1995 1996(1) 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Theater Revenues:
Box office............................................. $1,759,131 $6,195,399 $ 781,073 $2,712,210
Concession sales....................................... 554,671 1,861,155 226,425 743,986
Other.................................................. 31,895 141,420 5,505 49,739
---------- ---------- ---------- ----------
2,345,697 8,197,974 1,013,003 3,505,935
---------- ---------- ---------- ----------
Theater Operating Expenses:
Film rental and booking fees........................... 823,791 3,022,377 345,411 1,196,126
Cost of concession sales............................... 99,261 279,549 33,097 108,605
Other theater operating expenses....................... 1,078,370 3,297,825 463,024 1,226,799
---------- ---------- ---------- ----------
2,001,422 6,599,751 841,532 2,531,530
---------- ---------- ---------- ----------
Theater operating income before general and
administrative and other expenses............ 344,275 1,598,223 171,471 974,405
General and administrative expenses.................... 375,262 589,822 95,525 191,806
---------- ---------- ---------- ----------
Earnings (loss) before interest, taxes,
depreciation and amortization(2)............. (30,987) 1,008,401 75,946 782,599
---------- ---------- ---------- ----------
Other Expenses:
Depreciation and amortization.......................... 99,632 684,007 35,874 425,011
Interest............................................... 80,377 549,007 50,661 311,473
---------- ---------- ---------- ----------
180,009 1,233,014 86,535 736,484
---------- ---------- ---------- ----------
Net income (loss).............................. $ (210,996) $ (224,613) $ (10,589) $ 46,115
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (loss) per share $ (.12) $ (.13) $ (.01) $ .01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31, 1997
------------------------- --------------------------
1995(3) 1996 HISTORICAL ADJUSTED(4)
---------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash.................................................. $ 176,203 $ 751,345 $ 1,431,782
Total assets.......................................... 2,029,151 16,601,544 17,459,415
Total long-term debt, including current maturities.... 962,552 10,663,237 11,026,926
Total liabilities..................................... 1,577,822 11,889,739 12,701,495
Redeemable preferred and common stock, at redemption
price(5)............................................ 112,832 2,525,599 3,174,008
Stockholders' equity.................................. 338,497 2,186,206 1,583,912
</TABLE>
5
<PAGE>
NOTES TO SUMMARY CONSOLIDATED FINANCIAL DATA
(1) See Note 7 of the Notes to Consolidated Financial Statements of Clearview
Cinema Group, Inc. with respect to its acquisitions.
(2) Earnings before interest, taxes, depreciation and amortization ('EBITDA') is
a financial measure commonly used in the Company's industry, but should not
be construed as an alternative to operating income (as determined in
accordance with generally accepted accounting principles) as an indicator of
the Company's operating performance or as an alternative to cash flows from
operating activities (as determined in accordance with generally accepted
accounting principles) as a measure of the Company's liquidity.
(3) This information is derived from the Company's audited consolidated balance
sheet as of December 31, 1995, which is not included herein.
(4) Gives effect to the consummation of the Offering, the application of the net
proceeds from the Offering as described under 'Use of Proceeds' and the
Concurrent Transactions. See 'The Concurrent Transactions' and 'Use of
Proceeds.'
(5) Represents the aggregate redemption price (determined pursuant to formulas
set forth in the applicable agreements) for the outstanding shares of Class
A Preferred Stock and for 312,500 shares of Common Stock based on the
respective contractual rights of the holder of the Class A Preferred Stock
and a certain holder of Common Stock to sell their shares to the Company.
See 'Certain Transactions.'
6
<PAGE>
RISK FACTORS
The shares of Common Stock offered hereby involve a high degree of risk.
The following risk factors should be considered carefully in addition to the
other information in this Prospectus before purchasing any of the shares of
Common Stock offered hereby. This Prospectus contains certain forward-looking
statements that involve risks and uncertainties, such as statements concerning
the Company's plans, objectives, expectations and intentions. The cautionary
statements made in this Prospectus should be read as being applicable to all
related forward-looking statements wherever they appear in this Prospectus. The
Company's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include those
discussed below, as well as those discussed elsewhere herein.
LIMITED OPERATING HISTORY AND RESULTS
The Company was incorporated on November 23, 1994 and acquired four
theaters with eight screens on December 21, 1994. The Company, which was
organized as a vehicle to acquire theaters, has acquired 12 additional theaters
since its initial acquisition and had 60 screens as of December 31, 1996.
Therefore, the Company has a limited combined operating history. In addition,
the Company had net losses of $210,996 and $224,613 in 1995 and 1996, a net loss
of $10,589 in the first quarter of 1996 and net income of $46,115 in the first
quarter of 1997, respectively. There can be no assurances that the Company will
have net income in the future. See 'Prospectus Summary--Summary Consolidated
Financial Data,' 'Pro Forma Consolidated Financial Data' and 'Management's
Discussion and Analysis of Financial Condition and Results of Operations.'
EXPANSION PLANS
The Company's strategy is to acquire or develop theaters at a rapid pace
and add screens in its theaters where appropriate. The Company's ability to
expand will depend on a number of factors, including obtaining any required
financing, the selection and availability of suitable locations, the hiring and
training of sufficiently skilled management and other personnel and other
factors, such as general economic and demographic conditions, that are beyond
the control of the Company. There can be no assurances that the Company will be
able to execute this strategy at its contemplated pace or to operate profitably
the theaters that it acquires or develops. See 'Business--Business Plan.'
NEED FOR ADDITIONAL FINANCING
The Company has entered into lease or other binding commitments with
respect to 23 additional screens at four locations that are scheduled to
commence or reopen operations or are to be acquired in 1997. See
'Business--Acquisition History.' The Company is obligated to spend approximately
$1,500,000 of its own funds in connection with the work that is being done at
those theaters. Such funds should be available from the Company's own cash
reserves or under the Company's current bank financing arrangements. At the
present time, the Company is negotiating to obtain a new credit facility (the
'New Facility') from Provident. As currently proposed, the New Facility would
provide a $12 million term loan to refinance the current amounts owed to
Provident and to repay $1.1 million of subordinated indebtedness and a $17
million capital expenditure/acquisition facility to be used to acquire and
renovate or develop theaters. The Company would plan on using that $17 million
facility, together with $ million from the net proceeds of the Offering, to
finance future expansion.
In accordance with the Company's strategic plan, it intends to continue to
acquire theaters and it is pursuing the acquisition of additional locations. Any
such transactions may require the Company to secure new financing in addition to
the financing referred to above. That new financing may be in the form of
additional equity, subordinated debt or bank financing. There can be no
assurances that the Company will be able to obtain such additional financing at
the time it is needed or that such additional financing, if available, will be
on terms that are acceptable to the Company. Furthermore, any such financing may
result in dilution of the interests of the then-current stockholders of the
Company.
The Company's estimates of its cash requirements to develop or acquire and
renovate theaters and service any debts incurred in connection with such
development or acquisition and renovation are and will be based upon
7
<PAGE>
certain assumptions, including assumptions as to the Company's revenues and cash
flow after any such acquisition or development. There can be no assurances that
such assumptions will prove to be accurate or that unforeseen costs will not be
incurred.
DEPENDENCE ON ABILITY TO SECURE FAVORABLE LOCATIONS AND LEASE TERMS
The success of the Company's strategic plan is dependent on its ability to
acquire or develop theaters in favorable locations with advantageous lease
terms. There can be no assurances that the Company will be able to locate or
develop theaters in appropriate communities or, if it does locate any such
theaters, lease them on terms favorable to it. The failure of the Company to
acquire or develop theaters in favorable locations or to lease theaters on
advantageous terms could result in an inability to fully implement its strategic
plan. See 'Business-- Business Plan.'
POSSIBLE RISKS IN THEATER DEVELOPMENT AND RENOVATION
In connection with the development of new theaters, the Company either will
enter into an agreement with the property owner/developer who will oversee
almost all of the construction and completion of a theater or will oversee that
construction and completion itself. When acquiring an existing theater, the
Company generally will take responsibility for the completion of any proposed
renovations or the construction of new screens. As a result, the Company will,
at times, be subject to some of the risks inherent in the development of real
estate, many of which are beyond its control. Such risks include changes in
Federal, state or local laws or regulations, strikes, adverse weather, material
shortages and increases in the costs of labor and materials. There can be no
assurances that any such theater development or renovation will be successfully
completed in a timely manner.
DEPENDENCE ON PRESIDENT AND CHIEF EXECUTIVE OFFICER
The Company's success depends upon the continued contributions of A. Dale
Mayo, its Chairman of the Board, President and Chief Executive Officer. The loss
or unavailability of Mr. Mayo to the Company for an extended period of time
could have a material adverse effect upon the Company's business and
development. To the extent that the services of Mr. Mayo are unavailable to the
Company for any reason, the Company will be required to hire other personnel to
manage and operate the Company. There can be no assurances that the Company will
be able to locate such qualified personnel or employ them on acceptable terms.
The Company has entered into an employment agreement with Mr. Mayo that provides
for his employment through 2003. In addition, the Company maintains 'key man'
life insurance in the amount of $10 million on the life of Mr. Mayo. It is
contemplated that, after the Offering, the face value of such insurance will be
reduced to $4 million. See 'Management and Directors.'
GEOGRAPHIC CONCENTRATION
Each of the Company's current theaters are located in the New York/New
Jersey metropolitan area and the theaters that it is committed to or is
contemplating acquiring or developing are primarily in the same area. As a
result, negative economic or demographic changes in that area would have a
disproportionately large and adverse effect on the success of the Company's
operations when compared to the effect of any such changes on its competitors
that have a wider geographic distribution of theaters.
CONFLICTS OF INTEREST
Brett E. Marks, who is a director of and a consultant to Clearview, is also
a licensed real estate salesman with First New York Realty Co. Inc. ('First New
York'), a New York City-based realty brokerage firm. Mr. Marks' main consulting
work for Clearview relates to the identification of theaters that could be
suitable acquisition candidates for the Company, because of their locations and
the demographics of their communities, and of communities that could be
appropriate for the development of new theaters, given their demographics and
the available locations in such communities, and the performance of due
diligence with respect thereto. If the Company decides to acquire any such
theater, First New York may be entitled to a commission from the lessor of that
theater and Mr. Marks would then be entitled to a commission from First New
York. In connection with Clearview's proposed acquisition of a theater in
Brooklyn, New York, First New York and Mr. Marks will be
8
<PAGE>
entitled to fees of approximately $66,000 and $22,000, respectively. Mr. Marks
and First New York have entered into agreements with Clearview with respect to
their future business relationships. See 'Certain Transactions.'
COMPETITION
The motion picture exhibition industry is highly competitive, particularly
with respect to licensing films, attracting patrons and finding theater sites.
There are a number of well-established theater circuits with substantially
greater financial and other resources than the Company that operate in the New
York/New Jersey metropolitan area and in the Middle Atlantic and New England
states generally. Some of these theater operators have been in existence
significantly longer than the Company and may be better established in the
Company's markets and better capitalized. Moreover, alternative delivery systems
are available for the presentation of filmed entertainment, including cable
television, direct satellite delivery, video cassettes and pay-per-view
television. An expansion of such delivery systems could have a material adverse
effect on movie theater attendance in general and upon the Company's business
and results of operations in particular. See 'Business--Industry Overview' and
'--Competition.'
DEPENDENCE ON FILMS
The ability of the Company to operate successfully depends upon a number of
factors, the most important of which is the availability of marketable motion
pictures. Poor relationships with film distributors, a disruption in the
production of motion pictures or poor commercial success for motion pictures
could have a material adverse effect upon the Company. See 'Business--Film
Licensing.'
DEPENDENCE ON CONCESSION SALES
Concession sales accounted for approximately 24% and 23% of the Company's
revenues in the years ended December 31, 1995 and 1996, respectively; and,
therefore, the financial success of the Company depends, to a significant
extent, on its ability to successfully generate concession sales in the future.
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
Generally, the most marketable motion pictures have been released during
the summer and the Thanksgiving through year-end holiday season, so that the
motion picture exhibition industry's revenues have been seasonal. The emergence
of hit films during other periods can alter this traditional trend. In any case,
the timing of releases is likely to have a substantial effect on the Company's
results of operations and the results for any one quarter are not necessarily
indicative of results of operations for subsequent quarters. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Quarterly Results and Seasonality.'
CERTAIN ANTI-TAKEOVER EFFECTS
Certain provisions of Clearview's proposed Amended and Restated Certificate
of Incorporation (the 'New Certificate') and proposed Amended and Restated
By-laws (the 'New By-laws') could have the effect of delaying, deferring or
preventing a change of control of Clearview not approved by Clearview's Board of
Directors (the 'Board of Directors') or could affect the prices that investors
might be willing to pay in the future for shares of Common Stock. These
provisions include (i) the division of the directors to be elected by the
holders of the Common Stock into three classes, (ii) the right of the holders of
the Class A Preferred Stock to elect directors separately as a class, (iii)
advance notice requirements for stockholder proposals and nominations, (iv) a
requirement that the holders of two-thirds of the Common Stock and the Class A
Preferred Stock, voting together, approve the amendment, alteration or repeal of
certain provisions of the New Certificate and the New By-laws, and (v) the
authority of the Board of Directors to fix the rights and preferences of, and
issue, additional shares of the preferred stock, $.01 par value (the 'Preferred
Stock'), of the Company without further action by the holders of the Common
Stock. See 'The Concurrent Transactions' and 'Description of Capital Stock.'
9
<PAGE>
OWNERSHIP AND SIGNIFICANT INFLUENCE OF PRINCIPAL STOCKHOLDERS
After consummation of the Offering, the current stockholders of the Company
will collectively own approximately __% of the outstanding Common Stock
(approximately __% if the over-allotment option is exercised in full) and
approximately __% of the Common Stock assuming the conversion of all outstanding
shares of Class A Preferred Stock (approximately __% if the over-allotment
option is exercised in full). As a result of this ownership, if the current
stockholders or some combination thereof act in concert, they will have the
ability to exert significant influence over the policies and affairs of the
Company and corporate actions requiring stockholder approval, including the
composition of the Board of Directors. This concentration of ownership could
have the effect of delaying, deferring or preventing a change of control of the
Company, including a business combination with an unaffiliated party, and could
also affect the prices that investors might be willing to pay in the future for
shares of Common Stock. See 'Management and Directors,' 'Principal Stockholders'
and 'Description of Capital Stock.'
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of shares of Common Stock in the Offering will experience
immediate and substantial dilution of $ in net tangible book value per
share with respect to their shares of Common Stock. In addition, the Company
intends to grant options to certain officers of the Company to purchase up to
shares of Common Stock at the initial public offering price. See
'Dilution,' 'Management and Directors--1997 Incentive Plan' and 'Principal
Stockholders.'
ABSENCE OF PRIOR PUBLIC MARKET
Prior to the Offering, there has been no public market for the Common Stock
and there can be no assurances that an active trading market for the Common
Stock will develop or be sustained. The initial public offering price for the
shares of Common Stock offered hereby will be determined by negotiation between
the Company and the Representative and may not be indicative of the market price
of the Common Stock after consummation of the Offering. See 'Underwriting.'
There can be no assurances that the market price of the Common Stock will not
decline below the initial public offering price. After consummation of the
Offering, the market price of the Common Stock will be subject to fluctuations
in response to a variety of factors, including variations in the Company's
operating results, changes in competitors' circumstances and general economic,
political and market conditions.
SHARES ELIGIBLE FOR FUTURE SALE
A total of 1,735,000 shares of Common Stock held by the Company's existing
stockholders will be eligible for sale pursuant to exemptions from registration
under the Securities Act of 1933, as amended (the 'Securities Act'), including
exemptions provided by Rule 144 under the Securities Act. The Company has also
granted registration rights to certain stockholders who will beneficially own
2,971,250 shares of Common Stock following consummation of the Offering. In
addition, the Company intends to register 500,000 shares of Common Stock
reserved for issuance pursuant to the 1997 Incentive Plan. See 'Management and
Directors--1997 Incentive Plan.' On the other hand, the Company and its
existing stockholders have agreed that they will not offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, or file or cause
to be filed with the Securities and Exchange Commission (the 'Commission') a
registration statement under the Securities Act relating to, any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
any shares of Common Stock, without the prior written consent of the
Representative, for a period of one year after the date of this Prospectus. No
prediction can be made as to the effect, if any, that future sales of any of
these shares of Common Stock or the availability of these shares for future sale
will have on the market price of the Common Stock prevailing from time to time.
Any sales of a substantial number of these shares of Common Stock in the public
market following the Offering, or the perception that such sales could occur,
could adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital through an offering of its equity securities.
See 'Shares Eligible for Future Sale' and 'Underwriting.'
10
<PAGE>
THE CONCURRENT TRANSACTIONS
Immediately prior to the consummation of the Offering, the Company's
outstanding capital stock will consist of 1,735,000 shares of Common Stock and
779 shares of Class A Preferred Stock (which will be convertible into 973,750
shares of Common Stock), and (i) the holders of $1.1 million aggregate principal
amount of 8% subordinated promissory notes of the Company (the '8% Notes') will
hold warrants to purchase 250,000 shares of Common Stock (the 'A/B Warrants');
(ii) the holder of the outstanding shares of Class A Preferred Stock will hold
warrants to purchase 588,750 shares of Common Stock (the 'Class A Warrants');
and (iii) Provident will hold warrants to purchase 196,250 shares of Common
Stock (the 'Provident Warrants').
Immediately prior to the consummation of the Offering, the New Certificate
will become effective (the 'Certificate Amendment'). Among the amendments to the
Company's current Certificate of Incorporation contained in the New Certificate
are changes to the terms of the Class A Preferred Stock that include the
following. The Class A Preferred Stock will only vote separately as a class in
connection with any proposed issuances of shares of Preferred Stock and with
respect to the election of no more than two directors of the Company. The
holders of the shares of Class A Preferred Stock will otherwise vote with the
holders of the shares of Common Stock on all matters other than the election of
directors. The right of the holders of the Class A Preferred Stock to vote
separately as a class with respect to the issuance of shares of Preferred Stock
that rank pari passu or junior to the Class A Preferred Stock, with respect to
dividends or upon liquidation or dissolution, will terminate once the
outstanding shares of Class A Preferred Stock represent less than % of the
combined voting power of the outstanding capital stock of Clearview. Likewise,
the right of the holders of the Class A Preferred Stock to vote for the election
of directors will terminate once the outstanding shares of Class A Preferred
Stock represent less than % of the combined voting power of the outstanding
capital stock of Clearview. Immediately prior to the consummation of the
Offering, a 1250 to 1 stock split on the Common Stock will become effective and
will be accomplished by a dividend of 1249 shares of Common Stock on each then-
outstanding share of Common Stock (the 'Stock Split').
The holders of the A/B Warrants have agreed that they will exchange 162.5
of those A/B Warrants for 137,500 shares of Common Stock after the Stock Split
(the 'Warrant Exchange') and amend two sets of the 8% Notes, with an aggregate
principal amount of $500,000, so that they mature on October 31, 1997. At the
same time, CMNY Capital II, L.P. ('CMNY'), a holder of 75 A/B Warrants, will
terminate its right to sell, under certain conditions, 312,500 shares of Common
Stock to the Company, and the Company will terminate its right to purchase,
under certain conditions, those same shares (the 'Put/Call Termination'). See
'Description of Capital Stock.'
The holder of the outstanding shares of Class A Preferred Stock, MidMark
Capital, L.P. ('MidMark'), has agreed to terminate, immediately prior to the
consummation of the Offering, its right to sell, under certain conditions, to
the Company after June 1, 2001 those shares of Class A Preferred Stock or the
shares of Common Stock into which those shares had been converted (the 'Put
Termination'). In consideration for the termination of this right, the Company
will issue to MidMark 125,000 shares of Common Stock. In connection with the Put
Termination, the Class A Warrants will be amended to make them exercisable for
shares of Common Stock (the 'Warrant Amendment'). (They are currently
exercisable for 471 shares of Class A Preferred Stock.)
The Certificate Amendment, the Stock Split, the Warrant Exchange, the
Put/Call Termination, the Put Termination and the Warrant Amendment are
sometimes referred to in this Prospectus as the 'Concurrent Transactions.' The
consummation of the Offering and the Concurrent Transactions are conditioned
upon one another.
11
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby, after deducting the underwriting discounts and estimated
offering expenses payable by the Company, are estimated to be approximately $
million (assuming an initial public offering price of $ per share). The
Company intends to use the net proceeds as follows:
<TABLE>
<S> <C>
Repayment of senior subordinated promissory note (the 'Senior Note')........................... $ 600,000
Upgrade existing theaters and construct additional screens..................................... 1,000,000
Redeem Provident Warrants to acquire 186,250 shares of Common Stock............................
General corporate purposes, primarily the acquisition and development of additional theaters...
</TABLE>
Pending such uses, net proceeds will be invested in short-term, interest
bearing, investment grade securities.
The Senior Note that will be repaid with a portion of the net proceeds from
the Offering was issued by the Company as part of the consideration for three
theaters acquired by the Company in December, 1996. The principal amount of the
Senior Note is $600,000 and its interest rate until December 13, 1997 is 12% per
annum and increases 2% each year thereafter to a maximum of 18%. The Senior Note
will mature at the earlier to occur of December 13, 2001 or the consummation of
an initial public offering of debt or equity securities by the Company.
DIVIDEND POLICY
Clearview currently intends to retain future earnings, if any, to support
its operations and to fund the development and growth of its business and does
not anticipate paying any cash dividends on its Common Stock or Class A
Preferred Stock in the foreseeable future. Clearview paid $30,000 in dividends
in the aggregate in 1995 and $10,000 in dividends in the aggregate in 1996. The
payment of any future dividends will be at the discretion of the Board of
Directors and will depend upon the Company's earnings, financial condition,
capital requirements, level of indebtedness and other factors that the Board of
Directors deems relevant, subject to any contractual restrictions with respect
to the payment of dividends. The New Facility would prohibit the payment of any
dividends. Payment of dividends on the Common Stock is also subject to the
requirement that the Company pay dividends on the Class A Preferred Stock at the
same time that dividends are paid on the Common Stock in a per share amount
equal to the product of the dividend payable per share of Common Stock and the
number of shares of Common Stock into which a share of Class A Preferred Stock
is then convertible.
12
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997 and as adjusted to reflect the sale of the shares of
Common Stock offered hereby (at an assumed initial public offering price of
$ per share), the application of the net proceeds therefrom as described
under 'Use of Proceeds' and the Concurrent Transactions. See 'The Concurrent
Transactions' and 'Use of Proceeds.' This table should be read in conjunction
with the Company's historical consolidated financial statements, including the
notes thereto, and 'Management's Discussion and Analysis of Financial Condition
and Results of Operations' appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
LONG-TERM DEBT (INCLUDING CURRENT PORTIONS):
Notes payable--bank and other................................................ $ 9,326,926
Subordinated debt--related parties........................................... 1,100,000
Subordinated debt--other..................................................... 600,000
-----------
Total...................................................................... $11,026,926
-----------
REDEEMABLE PREFERRED STOCK AT REDEMPTION PRICE.................................... 2,780,703
-----------
REDEEMABLE COMMON STOCK AT REDEMPTION PRICE....................................... 393,305
-----------
STOCKHOLDERS' EQUITY:
Undesignated Preferred Stock:
Authorized 2,498,697 shares, issued and outstanding--none.................. --
Class A Preferred Stock, par value $.01, authorized 1,303 shares; outstanding
779 shares.................................................................. 8
Common Stock, par value $.01, authorized 10,000,000 shares; outstanding
1,735,000 shares............................................................ 17,350
Additional paid-in capital................................................... 5,248,931
Accumulated deficit.......................................................... (508,369)
Less: Redemption price of redeemable stock................................... (3,174,008)
-----------
Total stockholders' equity................................................. 1,583,912
-----------
Total capitalization....................................................... $15,784,846
-----------
-----------
</TABLE>
13
<PAGE>
DILUTION
The net tangible book value of the Company as of March 31, 1997 was
$ , or $ per share of Common Stock. Net tangible book value per share
represents the amount of the Company's tangible assets less total liabilities
divided by the number of shares of Common Stock outstanding. After giving effect
to the sale of the shares of Common Stock offered hereby (at an assumed initial
public offering price of $ per share) and after deduction of the
underwriting discounts and estimated offering expenses payable by the Company
and the application of the net proceeds therefrom, the Company's net tangible
book value as of March 31, 1997 would have been $ , or $ per share.
This represents an immediate increase in net tangible book value of $ per
share for existing stockholders and an immediate dilution of $ per share to
the purchasers of shares of Common Stock in the Offering. The following table
illustrates the per share dilution to investors in the Offering:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share(1)............................................. $
------
Net tangible book value per share before the offering.......................................... $
------
Increase per share attributable to the sale of shares of Common Stock in the Offering(2).......
------
Net tangible book value per share after the Offering(2)........................................ $
------
Dilution per share to new investors(3)......................................................... $
------
------
</TABLE>
- ------------------
(1) Before deduction of underwriting discounts and estimated offering expenses
payable by the Company.
(2) After deduction of underwriting discounts and estimated offering expenses
payable by the Company.
(3) Dilution is determined by subtracting net tangible book value per share
after the Offering from the assumed initial public offering per share.
The following table summarizes as of March 31, 1997 the differences between
the existing stockholders and new investors with respect to the number of shares
of Common Stock purchased from the Company, the total consideration paid and the
average price per share paid by existing stockholders and by new investors at an
assumed initial public offering price of $ per share, before deduction of
the underwriting discounts and estimated offering expenses payable by the
Company:
<TABLE>
<CAPTION>
TOTAL CONSIDERATION
SHARES PURCHASED ----------------------------------
----------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders....................................... % $ (1) % $
------ ------- ------ ------- ------
New investors............................................... % % $
------ ------- ------ ------- ------
Total.................................................. 100.0% $ 100.0%
------ ------
</TABLE>
- ------------------
(1) Total consideration from existing stockholders represents [to be provided].
14
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated statement of operations of
the Company gives effect to the acquisitions by Clearview (see Note 1 of Notes
to Pro Forma Consolidated Statement of Operations) as if they had occurred on
January 1, 1996. This pro forma financial data is based on the estimates and
assumptions set forth herein and in the notes thereto. This pro forma financial
data has been prepared utilizing the historical consolidated financial
statements and notes thereto, which are included elsewhere in this Prospectus.
The following unaudited pro forma financial information is presented for
informational purposes only and is not necessarily indicative of (i) the results
of operations of the Company that actually would have occurred had the
acquisitions been consummated on the date indicated or (ii) the results of
operations of the Company that may occur or be obtained in the future. The
following information is qualified in its entirety by reference to and should be
read in conjunction with 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' and the Company's consolidated financial
statements, including the notes thereto, and the other historical financial
information appearing elsewhere in this Prospectus.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NELSON
HISTORICAL FERMAN MAGIC LESSER ADJUSTMENTS PRO FORMA
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Theater Revenues:
Box office...................... $ 6,195,399 $1,515,839 $1,743,015 $ 802,043 $10,256,296
Concession sales................ 1,861,155 114,922 521,737 110,882 2,608,696
Other........................... 141,420 23,308 149,986 2,775 317,489
----------- ---------- ---------- --------- -----------
8,197,974 1,654,069 2,414,738 915,700 13,182,481
----------- ---------- ---------- --------- -----------
Theater Operating Expenses:
Film rental and booking fees.... 3,022,377 564,142 809,353 456,563 4,852,435
Cost of concession sales........ 279,549 -- 85,090 -- 364,639
Other theater operating
expenses...................... 3,297,825 622,997 865,639 530,704 5,317,165
----------- ---------- ---------- --------- -----------
6,599,751 1,187,139 1,760,082 987,267 10,534,239
----------- ---------- ---------- --------- -----------
Theater operating income (loss)
before general and
administrative and other
expenses...................... 1,598,223 466,930 654,656 (71,567) 2,648,242
General and administrative
expenses........................ 589,822 282,220 3,147 12,800 887,989
----------- ---------- ---------- --------- -----------
Earnings (loss) before interest,
taxes, depreciation and
amortization.................. 1,008,401 184,710 651,509 (84,367) 1,760,253
----------- ---------- ---------- --------- -----------
Other Expenses:
Depreciation and amortization... 684,007 -- 168,704 -- $ 743,752 1,596,463
Interest........................ 549,007 35,965 45,408 -- 667,751 1,298,131
----------- ---------- ---------- --------- ----------- -----------
1,233,014 35,965 214,112 -- 1,411,503 2,894,594
----------- ---------- ---------- --------- ----------- -----------
Net income (loss)........... $ (224,613) $ 148,745 $ 437,397 $ (84,367) $(1,411,503) $(1,134,341)
----------- ---------- ---------- --------- ----------- -----------
----------- ---------- ---------- --------- ----------- -----------
</TABLE>
15
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Note 1 Theater Acquisitions:
During 1996, the Company acquired nine theaters located in New Jersey and
New York. The acquisitions were accounted for under the purchase method of
accounting. Under the purchase method of accounting, the results of operations
of an acquired entity are included in the Company's historical consolidated
financial statements from its acquisition date. Under that method of accounting,
the assets of an acquired theater are included based on an allocation of its
aggregate purchase prices as of their dates of acquisition. The acquisitions are
described as follows:
Nelson Ferman Acquisition
The Company purchased three New Jersey theaters and one New York theater in
May, 1996 from four entities that were affiliates of Nelson Ferman, Inc. The
aggregate acquisition cost of $7.0 million was paid by means of $5.0 million in
cash and the issuance of shares of Common Stock.
Lesser Acquisition
The Company purchased two New York theaters in July, 1996 from Bedford
Cinema Corp. and Kisco Cinema, Inc. The acquisition cost of $1,499,000 was paid
in cash.
Magic Cinemas Acquisition
The Company purchased three New Jersey theaters in December, 1996 from
Magic Cinemas, LLC. The purchase price of $5.0 million was paid with a $4.4
million secured note and the Senior Note.
Note 2 Presentation and Pro forma Adjustments:
The unaudited pro forma consolidated statement of operations for the year
ended December 31, 1996 has been prepared as if the acquisitions described in
Note 1 had been consummated as of January 1, 1996.
Pro forma adjustments have been made for the following:
(a) Depreciation expense based on the increase in the book value
of the acquired theaters' property and equipment, which resulted from the
recording of the three purchases and the depreciation of the leaseholds
over the terms of the respective leases.
(b) Amortization expense adjustments reflect, over a 15-year
period, the amortization of the excess of cost over the fair value of
theater assets acquired.
(c) Interest expense adjustments reflect interests costs on debt
obligations incurred as if the related acquisition financing had occurred
January 1, 1996.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's results of operations and
financial condition should be read in conjunction with 'Prospectus
Summary--Summary Consolidated Financial Data' and the Company's consolidated
financial statements, including the notes thereto, appearing elsewhere in this
Prospectus.
OVERVIEW
The Company has achieved significant growth in theaters and screens since
its formation in December, 1994. Since inception, the Company has acquired 12
theaters with 50 screens, has added two screens to an existing theater, is
adding four screens to another existing theater and is developing two new
theaters with 15 screens. The Company expects that its future revenue growth
will be derived primarily from the acquisition of existing theaters, the
development of new theaters and adding screens to existing theaters. The Company
has had no theater closings since inception.
The Company's revenues are predominantly generated from box office
receipts, concession sales and on-screen advertising. Direct theater costs
include film rental and booking fees and the cost of concessions. Other theater
operating expenses consist primarily of theater labor and related fringe benefit
costs and occupancy costs (including rent and/or real estate taxes, utilities,
repairs and maintenance, cleaning costs and supplies). Film rental costs are
directly related to the popularity of a film and the length of time since that
film's release. Film rental costs generally decline as a percentage of box
office receipts the longer the film has been showing. As certain concession
items, such as fountain drinks and popcorn, are purchased in bulk and not
prepackaged for individual servings, the Company has significant gross profit
margins on those items.
The Company believes that any future increases in minimum wage requirements
or negotiated increases in union wages will not significantly increase its
theater operating expenses as a percentage of total revenues.
General and administrative expenses consist primarily of corporate overhead
costs, such as management and office salaries and related fringe benefit costs,
professional fees, insurance costs and general office expenses. The Company
believes that its current internal controls and management information system
will allow the Company to expand its number of screens without incurring
proportionate increases in general and administrative expenses.
In September, 1995, the Company acquired three theaters with 11 screens in
Nassau County, New York in an all-cash transaction. In May, 1996, the Company
added four theaters with 19 screens in New York and New Jersey for a combination
of stock and cash. In July, 1996, Clearview bought two theaters with seven
screens in Westchester County, New York for cash. In December, 1996, Clearview
acquired three more theaters with 13 screens in Bergen County, New Jersey for
cash. See 'Business--Acquisition History.'
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Total Revenues. Total revenues for the first quarter of 1997 increased
246.1% to $3,505,935 from $1,013,003 in the comparable 1996 period. The increase
in revenues resulted primarily from a 259.5% increase in attendance to 539,748
attendees from 150,121 attendees in the first quarters of 1997 and 1996,
respectively. This increase is attributable primarily to the Company's
acquisition of nine theaters during 1996. For the three months ended March 31,
1997 and 1996, the Company had a total of 60 screens and 21 screens in
operation, respectively. Average ticket prices for the Company's theaters
remained relatively constant during the first quarters of 1997 and 1996. Total
concession sales increased 228.6% for the first quarter of 1997 to $743,986 from
$226,425 in the comparable 1996 period.
Film Rental & Booking Fees. Film rental and booking fees increased 246.3%
to $1,196,126 in the first quarter of 1997 from $345,411 in the first quarter of
1996. As a percentage of box office receipts, film rental and booking fees
stayed relatively constant at 44.1% and 44.2% for the three months ended March
31, 1997 and 1996, respectively.
Cost of Concession Sales. Cost of concession sales for the first quarter
of 1997 increased 228.1% to $108,605 from $33,097 for the first quarter of 1996.
As a percentage of concession revenues, the cost of concession sales remained
constant at 14.6% for the quarters ended March 31, 1997 and March 31, 1996.
17
<PAGE>
Other Theater Operating Expenses. Other theater operating expenses
increased 165.0% to $1,226,799 in the first quarter of 1997 from $463,024 during
the first quarter of 1996. This increase is attributable solely to the nine
theaters acquired in 1996, which acquisitions occurred after the first quarter
of 1996. As a percentage of total revenues, other theater operating expenses
decreased to 35.0% in the first quarter of 1997 from 45.7% in the first quarter
of 1996. The decrease, as a percentage of total revenues, is primarily due to
the Company's efficient management of its variable costs, such as labor and
utilities, and the lower average per-theater fixed costs, such as occupancy
costs, taxes and common area maintenance costs, of the theaters acquired in 1996
as compared to the Company's other theaters.
Total Theater Operating Expenses. Total theater operating expenses
increased by 200.8% to $2,531,530 in the first quarter of 1997 from $841,532 in
the first quarter of 1996. As a percentage of total revenues, total theater
operating expenses decreased to 72.2% from 83.1% for the three months ended
March 31, 1997 and 1996, respectively.
Theater Level Operating Income. Theater level operating income for the
first quarter of 1997 increased 468.3% to $974,405 from $171,471 for the
comparable 1996 period. As a percentage of total revenues, theater level
operating income increased to 27.8% from 16.9% for the first quarters of 1997
and 1996, respectively. Theater level operating income increased as a percentage
of total revenues due primarily to the relatively fixed nature of certain of the
Company's other theater operating expenses, principally occupancy costs, certain
improvements in operating efficiency, and the lower average occupancy costs
per-theater for the theaters acquired in 1996 as compared to the Company's other
theaters.
General and Administrative Expenses. These expenses increased by 100.8% to
$191,806 in the first quarter of 1997 from $95,525 in the first quarter of 1996.
This increase is due principally to the hiring of additional personnel and
increases in salaries resulting from the transition from seven locations and 21
screens at the beginning of 1996 to 16 locations and 60 screens at the beginning
of 1997. As a percentage of total revenues, however, general and administrative
expenses decreased to 5.5% for the first quarter of 1977 from 9.4% for the first
quarter of 1996. This decrease is primarily due to the Company's internal
controls and management information system which allowed the Company to expand
its number of screens without incurring proportionate increases in general and
administrative expenses.
Depreciation and Amortization. Depreciation and amortization expense in
the first quarter of 1997 increased 1084.7% to $425,011 from $35,874 in the
first quarter of 1996. This increase was primarily a result of the acquisition
of the nine theaters acquired in 1996, which significantly increased the
Company's depreciable and amortizable assets.
Interest Expense. Interest expense increased 514.8% in the first quarter
of 1997 to $311,473 from $50,661 in the first quarter of 1996. This increase was
attributable to the significant increase in the Company's total debt during
1996, which was primarily incurred in connection with the Company's acquisitions
in that year.
Net Income. Net income in the first quarter of 1997 increased to $46,115
from a net loss of $10,589 in the first quarter of 1996. This increase in net
income is attributable primarily to the additional screens operated by the
Company in 1997 as a result of its acquisitions in 1996, improved theater level
operating margins and an increase in general and administrative expenses which
was less, on a percentage basis, than the growth in total revenues.
YEARS ENDED DECEMBER 31, 1996 AND 1995
Total Revenues. Total revenues for 1996 increased 249.5% to $8,197,974
from $2,345,697 in 1995. This increase in total revenues was primarily a result
of an increase in attendance of 249.2% to 1,101,251 attendees from 315,406
attendees in 1996 and 1995, respectively. The increase in attendance occurred
principally because of the addition of 39 screens during 1996 and the first full
year of operation of the 13 screens added during 1995. Average ticket prices for
the Company's theaters remained relatively constant during 1995 and 1996. Total
concession sales increased 235.5% in 1996 to $1,861,155 from $554,671 in 1995
principally for the same reasons.
Film Rental & Booking Fees. Film rental and booking fees increased 266.9%
for 1996 to $3,022,377 from $823,791 for 1995. As a percentage of box office
receipts, film rental and booking fees increased to 48.8% from 46.8% for the
years ended December 31, 1996 and 1995, respectively. This increase is primarily
attributable to the Company's acquisition of the six theaters acquired in May
and July of 1996 (film rental and booking fees as a
18
<PAGE>
percentage of box office receipts are generally higher during the summer months
than most of the rest of the year).
Cost of Concession Sales. Cost of concession sales for 1996 increased
181.6% to $279,549 from $99,261 for 1995. As a percentage of concession
revenues, the cost of concession sales decreased to 15.0% from 17.9% for the
years ended December 31, 1996 and 1995, respectively. The Company's gross margin
on concession revenues improved in 1996 when compared to 1995 as a result of
obtaining volume discounts.
Other Theater Operating Expenses. Other theater operating expenses
increased 205.8% to $3,297,825 for 1996 from $1,078,370 for 1995 primarily due
to the Company's acquisitions during 1996. As a percentage of total revenues,
other theater operating expenses decreased to 40.2% from 46.0% for the years
ended December 31, 1996 and 1995, respectively. This reduction was due to the
Company's careful management of its theater labor and fringe benefit costs and
the lower average per-theater fixed costs, such as occupancy costs, taxes and
common area maintenance costs, of the theaters acquired in 1996 as compared to
the Company's other theaters. As a percentage of box office receipts, theater
labor and fringe benefit costs decreased to 20.9% from 23.2% for the years ended
December 31, 1996 and 1995, respectively.
Total Theater Operating Expenses. Total theater operating expenses for
1996 increased 229.8% to $6,599,751 from $2,001,422 for 1995. As a percentage of
total revenues, total theater operating expenses decreased to 80.5% from 85.3%
for the years ended December 31, 1996 and 1995, respectively.
Theater Level Operating Income. Theater level operating income for 1996
increased 364.2% to $1,598,223 from $344,275 for 1995. As a percentage of total
revenues, theater level operating income increased to 19.5% from 14.7% for the
years ended December 31, 1996 and 1995, respectively. This increase in the
Company's theater level operating income margin was primarily due to certain
improvements in operating efficiency and the lower average occupancy costs
per-theater of the theaters acquired in 1996 as compared to the Company's other
theaters.
General and Administrative Expenses. General and administrative expenses
for 1996 increased 57.2% to $589,822 from $375,262 for 1995. This increase is
due principally to the hiring of additional personnel and increases in salaries
resulting from the transition from seven locations and 21 screens at the
beginning of 1996 to 16 locations and 60 screens by the end of 1996. As a
percentage of total revenues, however, general and administrative expenses
decreased to 7.2% from 16.0% for the years ended December 31, 1996 and 1995,
respectively. This decrease is primarily due to the Company's internal controls
and management information system which allowed the Company to expand its number
of screens without incurring proportionate increases in general and
administrative expenses.
Depreciation and Amortization. Depreciation and amortization expense for
1996 increased 586.5% to $684,007 from $99,632 for 1995. This increase was
primarily a result of the acquisition of the nine theaters acquired in 1996,
which significantly increased the Company's depreciable and amortizable assets.
Interest Expense. Interest expense for 1996 increased 583.0% to $549,007
from $80,377 for 1995. The increase was primarily attributable to the
significant increase in the Company's total debt during 1996, which was
primarily incurred to finance the Company's acquisitions during that year.
Net Loss. Net loss for 1996 increased 6.5% to $224,613 from a net loss of
$210,996 for 1995. The increase in net loss was primarily due to the Company's
acquisitions during 1996 that resulted in a significant increase in depreciation
and amortization expense, which is a non-cash expense, and a large increase in
interest expense, which is a cash expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company derives substantially all of its revenues from box office
receipts and concession sales and, therefore, benefits from the fact that it
has, in effect, no accounts receivable and minimal inventory requirements. On
the other hand, the Company's most significant operating expenses, film rental
and booking fees, are typically paid to distributors 30 to 45 days following the
receipt of the applicable cash ticket payments. In addition, most of the rest of
the Company's operating expenses, such as theater payroll and theater rent, are
paid bi-weekly or monthly, respectively. The period between the receipt of cash
from operations and use of that cash to pay the related expenses provides
certain operating capital to the Company.
19
<PAGE>
Since the Company is in an industry which is capital intensive,
substantially all of its assets are non-current. The Company's primary current
asset is cash, while inventories are relatively insignificant throughout the
fiscal year. The Company had negative working capital of $1,632,485 at March 31,
1997, $1,873,086 at December 31, 1996 and $378,531 at December 31, 1995,
respectively. The increase in negative working capital is primarily attributable
to the increase in the current portion of long-term debt.
The Company has financed its day-to-day operations principally from the
cash flow generated by its operating activities. Such cash flow totaled
$1,154,409 in 1996, as compared to $118,820 in 1995. The difference between the
Company's net income and its cash flow from operating activities are principally
due to the Company's depreciation and amortization expenses of $684,007 in 1996
and $99,632 in 1995, which are non-cash expenses, and an increase in accounts
payable. The Company's cash flow generated by its operating activities was a
negative $77,092 and a positive $780,455 in the first quarters of 1996 and 1997,
respectively. The difference between the Company's net income and its cash flow
from operating activities in the first quarters of 1997 and 1996 is primarily
due to the Company's depreciation and amortization expenses of $425,011 and
$35,874 in the first quarters of 1997 and 1996, respectively, which are non-cash
expenses, and an increase in accounts payable.
The Company's capital requirements have arisen principally in connection
with theater acquisitions, the renovation of existing theaters, the development
of new theaters and the addition of screens to an existing theater. Such capital
expenditures have been financed principally with bank borrowings,
seller-provided financing, equity financing and internally-generated cash.
Capital expenditures, exclusive of theater acquisitions, totaled approximately
$852,000 in 1996 and $631,000 in 1995. During 1996, the Company funded its
capital expenditures, including theater acquisitions, through approximately $4.3
million of bank borrowings, $5.0 million of seller-provided financing, $2.5
million of gross proceeds from the sale of shares of Class A Preferred Stock and
$2.0 million from the issuance of shares of Common Stock to the seller of a
theater. In January, 1997, the Company retired $4.4 million of that
seller-provided financing with additional bank borrowings and $100,000 in cash.
The Company seeks to lease theaters rather than purchase properties for
development due to the significantly lower capital requirements for leasing and
because it believes that its potential return on investment when leasing a
theater is higher than its potential return on investment if it owns that
theater and the underlying real estate.
The Company anticipates that its capital expenditures, including for
acquisitions, in 1997 will be approximately $25.0 million. The Company believes
that its capital needs for the acquisition, renovation and development of
theaters for the next 12 to 18 months will be met by means of an expansion of
its current credit facility, from internally-generated cash flow and from the
net proceeds from the Offering.
QUARTERLY RESULTS AND SEASONALITY
Historically, the most successful films have been released during the
summer and Thanksgiving through year-end holiday season. Consequently, motion
picture exhibitors generally have had proportionately higher revenues during
such periods, although the seasonality of motion picture exhibition revenue has
become less pronounced in recent years as studios have begun to release major
motion pictures more evenly throughout the year. The Company believes that its
regular exhibition of art films has contributed to a moderation in the
seasonality of its own revenues as compared to the seasonality of the revenues
of some of its competitors. Nevertheless, the Company's revenues and income in
any particular quarter will be substantially the result of the commercial
success of the particular films being exhibited during such quarter.
EFFECT OF INFLATION
Inflation has not had a significant impact on the Company's operations to
date.
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<PAGE>
BUSINESS
GENERAL
Clearview is a regional motion picture exhibitor that owns and operates
in-town multiplex theaters primarily located in affluent suburban communities in
the New York/New Jersey metropolitan area. The Company's theaters offer a mix of
first-run commercial, art and family-oriented films designed to appeal primarily
to sophisticated moviegoers and families with younger children. Since its
inception in December, 1994, the Company has grown from four to 16 theaters and
from eight to 60 screens. From 1995 to 1996, the Company's revenues have
increased from $2.3 million to $8.2 million and theater level operating income
has increased from $344,000 to $1.6 million.
The Company's strategy is to grow primarily through the acquisition or
development of in-town multiplex theaters. The Company seeks locations in the
retail centers of suburban communities that have the characteristics of the
Company's target audiences. The Company intends to build upon its concentration
of existing theaters and to extend into retail centers in suitable communities
throughout the Middle Atlantic and New England states. The Company also will be
opportunistic when evaluating theaters and locations in communities that meet
many, but not necessarily all, of the Company's criteria. The Company intends to
grow by acquiring theaters, adding screens to its existing theaters and
developing theaters in locations not previously used for motion picture
exhibition.
The theatrical exhibition industry is fragmented. Although the fifty
largest theater circuits owned approximately 76% of the screens operating at May
1, 1995, there are a substantial number of small independent exhibitors with
four or fewer theaters. The large circuits that are growing most rapidly appear
to have begun to concentrate on building new mega-multiplex theaters, rather
than buying established theaters. The Company believes that, in the Middle
Atlantic and New England states, in-town theaters serve audiences that prefer
these theaters to the larger out-of-town multiplex theaters. The Company also
believes that in-town theaters can offer movie selections more attuned to their
local markets, better customer service and more convenience when compared to the
out-of-town multiplexes. Primarily for these reasons, the Company thinks that
the acquisition of in-town theaters can be attractive, and the Company believes
that there are a large number of potential acquisition candidates. The Company
seeks to identify targets that will complement its existing theaters or provide
entry into new markets.
The Company seeks to improve the operating margins of the theaters it
acquires by controlling theater level costs through centralized management, by
increased efficiencies in concession purchasing and through film selection that
is sensitive to the local community's tastes. The Company intends to acquire or
develop clusters of theaters that will increase its flexibility by permitting
the sharing of theater managers and skilled and hourly wage personnel. Clearview
believes that its management information system and internal controls gives its
senior management timely access to comprehensive operating data, allows the
local theater managers to focus on day-to-day operations, and enables the
Company to expand its theater operations without incurring proportionate
increases in general and administrative expenses.
The Company seeks theaters that will be the sole or dominant exhibitors in
their geographic film licensing zones. A geographic film licensing zone or 'film
zone' is a geographic area, recognized by film distributors, that generally has
a three to five mile radius in metropolitan and suburban markets, in which a
film is licensed for exhibition at only one theater in that film zone.
Currently, 75% of the Company's exhibitors are the sole exhibitors in their film
zones.
Clearview's theaters are community-oriented and place a strong emphasis on
patron satisfaction and customer service. The theaters provide clean and
comfortable environments at convenient in-town locations and offer opportune
movie show times, courtesy telephones for local calls and a large variety of
specialty concession items. The Company's theaters are characterized by custom
interiors and decor designed to enhance the movie-going experience. In addition,
the Company provides party and special event facilities for community residents
and regularly participates in community fundraising and charity functions to
maintain patron loyalty.
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<PAGE>
INDUSTRY OVERVIEW
Theatrical exhibition is the primary initial distribution channel for new
motion pictures. The Company believes that the success of most films produced in
the United States during their domestic theatrical exhibition remains the best
indicator of their overall success. Other forms of delivery systems, such as
cable television, direct satellite delivery, video cassettes and pay-per-view
television, do not appear to have adversely affected the level of theater
admissions in the United States or the number of films released for theatrical
exhibition in the United States. This is evidenced by the relatively stable
theater attendance numbers and the increase in the number of films released for
theatrical exhibition in recent years. The Company believes that the
proliferation of distribution channels and the growth of the overseas markets
for films produced in the United States have, in fact, raised the potential
revenues that successful U.S. films can generate. Thus, the Company also
believes that the film industry will continue to increase the number of films
available for theatrical exhibition which will permit the U.S.-based theater
industry to continue to expand.
The National Association of Theater Owners ('NATO') estimates that there
were approximately 360 theatrical motion picture exhibitors in the United States
at the end of 1995. Of these, 235 operated four or fewer theaters. In the
five-year period 1991 to 1995, the average ticket price for publicly-traded
exhibitors has increased approximately 6%; compared to the U.S. Consumer Price
Index, which has increased by approximately 12%. During the same period,
admission revenues for these exhibitors increased from approximately $1.37
billion to approximately $2.32 billion.
The multiplex theater was introduced to the moviegoing public in the 1960's
and multiplexing is now considered the industry standard. The advantages of a
multiplex theatrical format include the following: (i) the ability to play a
range of movies to fit the various tastes of the moviegoing public; (ii) the
ability to accommodate the expected size of the audience for a particular movie;
(iii) the ability to run a popular movie for a longer period of time and to
exhibit newer films immediately upon their release; and (iv) the ability to show
a single film in two auditoriums simultaneously, thereby effectively increasing
the viewing capacity for a popular film.
BUSINESS PLAN
GROWTH STRATEGY
The Company intends to acquire or develop primarily in-town, four to eight
screen, multiplex theaters in affluent suburban communities in the New York/New
Jersey metropolitan area in retail centers that are the focus of community life
or are being revitalized. The Company also plans to expand its operations into
other Middle Atlantic and New England states.
o Selectively Acquire Theaters
The Company believes that one of its strengths is its ability to
successfully identify available theaters in appropriate locations. A significant
number of theaters in the types of communities in which Clearview would want to
locate are closely-held operations that often do not have sufficient capital to
expand or renovate or are not managed as efficiently as possible. In addition,
because many of the major movie theater circuits are focused on acquiring or
developing mega-multiplex theaters, the Company believes that it can offer an
attractive 'exit strategy' for small independent operators. The Company has also
identified certain larger motion picture circuits with theaters that may be
suitable for acquisition.
o Add Screens to Existing Theaters
The Company plans to add screens to existing theaters when the Company
believes that this will increase revenues and cash flow. By adding screens, the
Company is able to offer a larger selection of films that can attract more
patrons. Dividing an auditorium into two or more smaller auditoriums, thus, can
create additional revenue with only a marginal increase in expenses.
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<PAGE>
o Develop New Theaters
The Company believes that it can successfully identify locations in
suitable communities that can be developed into theaters. Opportunities have
been presented by real estate developers who wish to enhance their properties
with the presence of a movie theater, which opportunities often would require
limited direct investment by the Company. In addition, Clearview has been
approached by the governments or community development agencies of towns in the
New York/New Jersey metropolitan area that are interested in revitalizing parts
of their communities and believe that a movie theater can provide impetus to
such redevelopment.
OPERATING STRATEGY
The Company believes that there are several aspects of its operating
strategy that help to differentiate it from other exhibitors.
o Theater Facilities/Environment
Clearview's theaters are located in towns and communities rather than in
shopping malls or on highways. Each of the Company's theaters is located on a
major street in its town and is easily accessible. They are generally surrounded
by upscale stores and restaurants and parking is typically available at each
location. An important aspect of Clearview's operating strategy is to provide a
clean, comfortable and visually appealing environment, which usually includes
silk flower arrangements, chandeliers and a decorative fireplace. When Clearview
acquires a theater it typically refurbishes the existing seats and retrofits
them with cup holders. In addition, Clearview will generally redecorate the
lobby, upgrade the concession stand and provide a courtesy phone so that patrons
can make local telephone calls. The concession stand at each theater offers
high-margin snack and food items, such as fruit juices, bottled water, ice
cream, cappuccino and Swiss chocolates, as well as soft drinks, popcorn and an
assortment of candy items.
o Film Selection
The Company believes that its mix of films is unique among the larger
motion picture circuits. By concurrently showing first-run commercial, art and
family-oriented films, Clearview seeks to appeal to three main groups: families
with younger children (10 years of age and younger), baby boomers generally and
older moviegoers in affluent suburban communities. Because Clearview regularly
plays art films in most of its theaters throughout the year, it has been able to
establish good relationships with the distributors of those types of films.
These relationships, in turn, have resulted in increased flexibility concerning
the movement of prints, length of run and film rent. Clearview is sensitive to
the tastes of its audience in each community and adjusts its mix of films
accordingly.
o Customer Satisfaction
Customer satisfaction is one of Clearview's highest priorities. Clearview
believes that its theaters are perceived as good neighbors and it encourages
community involvement through regular participation in community fundraising and
charity functions. Most of the Company's theaters accommodate birthday parties
and other special events. Typically, food and beverages are provided by the
theater at such events. As a service-oriented business where cleanliness,
upkeep, safety and interaction with the general public are integral to success,
Clearview believes that it is vital that its employees be dedicated and
energetic. The Company mandates an extensive set of procedures to keep its
theaters clean and to ensure proper film presentation. Adherence to employee
dress and appearance codes and to specific rules of behavior is also required of
all its theater employees.
o Centralized Decision Making
The Company has developed sophisticated internal controls and installed a
computerized management information system of the type used by some of the
largest movie circuits to control and account for all aspects of their
day-to-day operations. Clearview believes that its internal controls and
management information system enable it to expand the number of locations and
screens in its circuit without a proportionate increase in general and
administrative expenses. The Company can closely track and manage theater and
concession revenues. The
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management information system has on-line capabilities to collect information
concerning box office receipts, ticketing, concession sales, inventory control
and booking.
o Operating Efficiencies
The Company seeks to acquire or develop theaters in communities that are
close to the communities where the Company's existing theaters are located. This
enables theaters to share skilled personnel and for the appropriate district
manager to coordinate the theaters' activities. In addition, the Company has
begun experimenting with advertising theaters in communities that are close to
each other under a single 'umbrella' to increase awareness and occupancy levels.
Adding screens at theaters that the Company acquires will enable it to offer a
diverse selection of films, serve patrons from common support facilities, and
stagger movie showing times to increase attendance and improve the utilization
of seating capacity.
ACQUISITION HISTORY
Since its initial acquisition in December, 1994, Clearview has completed
four transactions. From December 31, 1994 to December 31, 1996, the number of
Clearview theaters increased from four to 16 and the number of Clearview screens
increased from eight to 60. A summary of Clearview's acquisitions is set forth
in the following table.
<TABLE>
<CAPTION>
DATE OF NO. OF SCREENS
ACQUISITION/DEVELOPMENT COMMUNITY COUNTY, STATE CURRENT PLANNED
- ------------------------------------------------ ------------------- --------------- ------- -------
<S> <C> <C> <C> <C>
December 21, 1994 Bernardsville Somerset, NJ 3 3
December 21, 1994 Chester Morris, NJ 2 6
December 21, 1994 Madison Morris, NJ 4 4
December 21, 1994 Manasquan Monmouth, NJ 1 1
September 8, 1995 Baldwin Nassau, NY 2 2
September 8, 1995 New Hyde Park Nassau, NY 2 2
September 8, 1995 Port Washington Nassau, NY 7 7
May 29, 1996 Clifton Passiac, NJ 6 6
May 29, 1996 Emerson Bergen, NJ 4 4
May 29, 1996 New City Rockland, NY 6 6
May 29, 1996 Washington Township Bergen, NJ 3 3
July 18, 1996 Bedford Westchester, NY 2 2
July 18, 1996 Mount Kisco Westchester, NY 5 5
December 13, 1996 Bergenfield Bergen, NJ 5 5
December 13, 1996 Closter Bergen, NJ 4 4
December 13, 1996 Tenafly Bergen, NJ 4 4
June, 1997 Summit Union, NJ 0 5**
July, 1997 Brooklyn Kings, NY 0 4*
November, 1997 Bayonne Hudson, NJ 0 10**
-- --
Totals 60 83
</TABLE>
- ------------------
* Company has signed a lease.
** Currently under development.
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FILM LICENSING
The Company licenses films from distributors on a film-by-film and
theater-by-theater basis. Prior to negotiating for film licenses, senior
management of Clearview, working with three outside film buyers, evaluates the
prospects for upcoming films using many factors, including cast, director, plot,
performance of similar films, estimated film rental costs and expected Motion
Picture Association of America rating. Senior management makes the final
determination regarding which films to license. Clearview's success when
licensing particular films depends in large part upon its knowledge of trends
and the historical film preferences of the residents in the markets served by
its theaters, as well as on the availability of motion pictures that the Company
believes will be successful in those markets.
Films are licensed from film distributors owned by the major film
production companies and from independent film distributors that generally
distribute films for smaller production companies for exhibition at particular
theaters in a film zone. Film distributors typically recognize geographic film
licensing zones with radii of three to five miles in metropolitan and suburban
markets, depending primarily on population density. Of Clearview's current
theaters, 75% are the sole exhibitors in their film zones, permitting the
Company to choose which films it wishes to exhibit at these theaters.
In film zones where Clearview is the sole exhibitor, film licenses are
generally obtained by Clearview selecting a film from among those offered and
negotiating directly with its distributor. In film zones where there are
multiple exhibitors, a distributor will either require the exhibitors in the
film zone to bid for a film or will allocate films among the exhibitors in the
film zone. When films are licensed under the allocation process, a distributor
will choose which exhibitor is to be offered a movie and then that exhibitor
will have to negotiate film rental terms directly with that distributor. Over
the past several years, distributors have almost exclusively used the allocation
process rather than the bidding process to license their films in the New
York/New Jersey metropolitan area. When films are licensed through a bidding
process, exhibitors compete for licenses based upon the film rental fees to be
paid. The Company currently does not bid for films in any of its film zones,
although it may be required to do so in the future.
Clearview predominantly licenses 'first run' films. If the Company believes
that a film has substantial remaining potential following its first run, it may
license that film for a 'second run.' Second runs enable Clearview to exhibit a
variety of films during periods in which there are few new releases and to offer
its target audience an opportunity to see a film that did not fit into
Clearview's first run schedule. Film distributors establish second run
availability on a national or market-by-market basis after a film's release from
first run theaters and generally permit each theater within a market to exhibit
that film.
Film licenses typically specify rental fees based on the higher of a gross
box office receipts formula or theater admissions revenue formula. In addition,
if a distributor deems a film to be extremely promising, exhibitors may be
required to pay non-refundable guarantees of film rental fees or to make
refundable advance payments of film rental fees or both in order to obtain a
license for that film. Under a gross box office receipts formula, the
distributor receives a specified percentage of box office receipts from the
licensed film, with the percentage declining over the term of the film run.
First run commercial and family-oriented film rental fees typically begin at
approximately 70% to 50% of box office receipts for the licensed film (depending
on the type of film and its distributor) and gradually decline, over a period of
four to seven weeks, to as low as 30% of box office receipts. First run art film
rental fees and second run commercial and family-oriented film rental fees
typically begin at 35% of box office receipts for the licensed film and often
decline to 30% of box office receipts after the first week. Under a theater
admissions revenue formula (commonly known as a '90/10' clause), the distributor
receives a specified percentage (i.e., 90%) of the excess of box office receipts
for a given film over a negotiated allowance for theater overhead expenses.
Although generally not specifically contemplated by the provisions of film
licenses, the terms of film licenses often are adjusted or renegotiated
subsequent to the initial releases of films.
The Company's business is dependent upon the availability of marketable
first run commercial, family-oriented and art motion pictures and its
relationships with distributors. Many distributors provide first run movies to
the motion picture exhibition industry; however, distribution has been
historically dominated by a limited number of distributors (Warner Brothers,
Paramount, 20th Century Fox, Universal, Disney/Touchstone,
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<PAGE>
MGM/UA and Columbia/Tri-Star) which, since 1989, have typically accounted for
well over 75% of domestic admission revenues and virtually every one of the top
25 grossing films in a given year. No single major distributor dominates the
market. Disruption in the production of motion pictures by the major studios
and/or independent producers, poor commercial success of motion pictures or poor
relationships with distributors could have a material adverse effect upon the
Company's business and results of operations.
The Company licenses films from each of the major distributors and believes
that its relationships with these distributors are good. The Company also
licenses films from independent film distributors on a consistent basis. Because
these distributors often have difficulty licensing films at theaters that are
well-maintained and technologically up-to-date, these distributors have
cooperated with the Company when it seeks to move prints, modify the length of a
film's run or change a film's rent. From year to year, the admissions revenues
of the Company attributable to individual distributors will vary depending upon
the films they distribute. Set forth below are the top fifteen distributors for
the Company for 1995 and 1996, ranked by the number of films shown.
DISTRIBUTORS RANKED BY NUMBER OF FILMS
<TABLE>
<CAPTION>
1995 1996
- ---------------------------------------------------------- -------------------------------------------------------
NAME # OF FILMS NAME # OF FILMS
- -------------------------------------------- ----------- ----------------------------------------- -----------
<S> <C> <C> <C>
Buena Vista 23 Buena Vista 31
Warner Brothers 19 Sony 22
20th Century Fox 14 Warner Brothers 21
Miramax 13 Miramax 20
Sony 13 Paramount 17
Paramount 12 20th Century Fox 16
MCA/Universal 11 MCA/Universal 15
MGM/UA 9 MGM/UA 13
New Line 6 New Line 9
Gramercy 4 Gramercy 6
Savoy 4 Fine Line 4
Fine Line 3 Orion 4
Columbia 1 Samuel Goldwyn 4
Samuel Goldwyn 1 Sony Classic 4
Triumph 1 October 3
</TABLE>
One of the three film buyers with whom the Company works is employed by
Cineplex Odeon. Some of the Company's theaters, excluding any theaters for which
that buyer helps acquire films, compete with theaters owned by Cineplex Odeon.
The Company believes that, to date, this arrangement has been beneficial.
COMPETITION
The motion picture exhibition industry is highly competitive, particularly
with respect to licensing films, attracting patrons and acquiring or developing
theaters. The Company's theaters compete with theaters operated by national and
regional circuits and by smaller independent exhibitors. The Company believes
that the principal competitive factors with respect to film licensing include
licensing terms, the seating capacity, location and reputation of an exhibitor's
theaters, the quality of projection and sound equipment at an exhibitor's
theaters and an exhibitor's ability and willingness to promote films.
Competition for patrons is dependent upon factors such as the availability of
popular films, the location of theaters, the comfort and quality of theaters and
ticket prices. The Company believes that it competes favorably with respect to
each of these factors.
There were approximately 360 domestic motion picture exhibitors at the end
of 1995. Motion picture exhibitors vary substantially in size, from small
independent operators of single screen theaters to large national chains of
multi-screen theaters. Many of the Company's larger competitors have been in
existence significantly longer than the Company and may be better established in
the markets where the Company's theaters are or may, in the future, be located.
Certain of the Company's larger competitors have sought to increase the number
of theaters and screens in operation in particular markets. Such increases may
cause those markets or portions
26
<PAGE>
thereof to become overscreened, which could negatively impact the earnings of
the Company's theaters, if any, in those markets.
The Company analyzes the level of competition in a geographic area prior to
and in the early stages of the negotiation of any development or acquisition of
a theater. This analysis is crucial as many of the Company's potential theater
locations are primarily in well-established communities that have previously
experienced the building of the large out-of town multiplexes and the addition
of screens to in-town theaters.
The Company's theaters also face competition from a number of other motion
picture delivery systems, such as cable television, direct satellite delivery,
video cassettes and pay-per-view television. The impact of such delivery systems
on the motion picture exhibition industry is difficult to determine precisely,
and there can be no assurances that existing or future delivery systems will not
have an adverse impact on attendance at movie theaters. The Company believes
that the public will continue to recognize the advantages of viewing a movie on
a large screen with superior audio-visual quality as a shared experience in a
public forum and that alternative delivery systems do not provide an experience
comparable to the out-of-home entertainment experience of attending a movie in a
theater. The Company believes that movie theaters also face competition from
other forms of outside-the-home entertainment that compete for the public's
leisure time and disposable income. Clearview believes that movie exhibition is
priced competitively relative to other out-of-home entertainment options, such
as music concerts, sporting events and live theater.
EMPLOYEES
As of April 30, 1997, the Company had 300 employees, of which seven worked
at the corporate headquarters, 38 are theater managers and projectionists and
255 are hourly employees. Clearview employs one primary manager and one or more
relief managers at each of its theaters. In most of its theaters, each shift
(which is five to six hours) has a manager and a projectionist or a single
manager/projectionist. Generally, the theater manager serves as the
projectionist if the applicable theater has four or fewer screens. In the larger
theaters there are separate managers and projectionists. In addition, each of
the Company's four district managers, who is also a manager of a theater in his
district, has certain supervisory obligations. The Company has entered into an
agreement with the International Alliance of Theatrical Stage Employees union
that provides for a skilled projectionist for every shift at a substantial
number of its theaters. The Company believes that its relationship with such
union is good.
REGULATORY ENVIRONMENT
The distribution of motion pictures is in large part regulated by federal
and state antitrust laws and has been the subject of numerous antitrust cases.
The Company has never been a party to any of such cases or the resulting
decrees, but its licensing operations are subject to those decrees. The consent
decrees resulting from such cases bind certain major motion picture distributors
and require the films of those distributors to be offered and licensed to
exhibitors, including the Company, on a theater-by-theater basis. Consequently,
exhibitors, such as the Company, cannot assure themselves of a supply of films
by entering into long-term arrangements with major distributors, but must
negotiate for licenses on a film-by-film and theater-by-theater basis.
The Federal Americans With Disabilities Act (the 'Disabilities Act')
prohibits discrimination on the basis of disability in public accommodations and
employment. The Disabilities Act became effective as to public accommodations in
January, 1992 and as to employment in July, 1992. The Company will have new
theaters constructed to be accessible to the disabled and believes that it is
otherwise in substantial compliance with all current applicable regulations
relating to accommodations for the disabled. The Company intends to comply with
any future regulations relating to accommodating the needs of the disabled, and
the Company does not currently anticipate that such compliance will require the
Company to expend substantial funds.
The Company's theater operations are also subject to federal, state and
local laws governing such matters as wages and working conditions, health and
sanitation requirements and licensing. A significant portion of the Company's
employees are paid just above the federal minimum wage and, accordingly, already
adopted and further increases in that minimum wage could increase the Company's
labor costs.
27
<PAGE>
In connection with the construction, renovation and operation of its
theaters, the Company and its contractors and landlords are required to obtain
proper building and operating permits and to comply with the other requirements
of local zoning and other laws and regulations. The Company does not anticipate
that compliance with such laws and regulations will have a material adverse
effect on its business.
PROPERTIES
The Company leases or sub-leases all of its theaters other than the two
theaters in Tenafly and Bergenfield, New Jersey, which are owned by the Company.
The three theaters in Nassau County are being operated under agreements under
which the Company has the right beginning in September, 1997 to acquire the
underlying leaseholds and related theater equipment upon paying the optionor an
amount to be calculated based on the operating cash flow of the theaters. The
option will expire in September, 2000 if not exercised, and the three theaters
would then be returned to the optionor.
When a theater is developed for Clearview or Clearview acquires a theater
from a landlord, the term of the relevant lease, including all renewal options,
is usually about forty years. If a lease is acquired from an exhibitor,
typically the lease is assigned to Clearview and still has a substantial term.
Most of Clearview's current leases have terms, including all renewal options, of
at least twenty years and provide for periodic rent increases.
The Company's corporate office is located in approximately 2,000 square
feet of space in Madison, New Jersey, and is subject to a lease agreement, the
term of which expires on February 28, 1998.
LEGAL PROCEEDINGS
From time to time the Company is involved in routine litigation in the
ordinary course of its business. Currently, the Company does not have pending
any litigation that would have a material adverse effect upon the Company.
28
<PAGE>
MANAGEMENT AND DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
Under the Company's current Certificate of Incorporation and By-laws,
members of the Board of Directors serve one-year terms and are elected by the
holders of the Common Stock and Class A Preferred Stock voting as a single
class. Under the New Certificate and New By-laws, the members of the Board of
Directors will be divided into two groups, one group to be elected by the
holders of the Common Stock (the 'Common Directors') and the other group to be
elected by the holders of the Class A Preferred Stock (the 'Preferred
Directors'). Furthermore, under those documents, the Common Directors will be
divided into three classes, with the classes as nearly equal in the number of
directors as possible, while the Preferred Directors will not. At each annual
meeting of stockholders, Common Directors will be elected for three-year terms
to succeed the Common Directors of the class whose terms are expiring, while
Preferred Directors will be elected for one-year terms. See 'Description of
Capital Stock.'
Set forth below is certain information as of March 31, 1997 concerning the
Company's directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------------------
<S> <C> <C>
A. Dale Mayo 55 Chairman of the Board, President, Chief Executive
Officer, Director
Paul Kay 57 Vice President -- Operations
Sueanne Hall Mayo 50 Vice President -- Management Information Systems,
Secretary, Director
Joan M. Romine 45 Treasurer, Chief Financial Officer
Wayne L. Clevenger 53 Director
Robert Davidoff 70 Director
Brett E. Marks 35 Director
Denis Newman 66 Director
</TABLE>
A. DALE MAYO has been the Chairman of the Board, President and Chief
Executive Officer and a director of the Company since its incorporation. He was
the president of Clearview Cinema Corp.(1) from 1987 to 1993. Mr. Mayo is a
member of the Foundation of Motion Picture Pioneers and the Motion Picture Club.
He is married to Sueanne Hall Mayo. Mr. Mayo will be a Class __ Common Director,
with a term expiring in _____________, after the Offering.
PAUL KAY has been the Vice President-Operations of the Company since its
incorporation. He was the vice president and general manager of Clearview Cinema
Corp.(1) from 1987 to 1993.
SUEANNE HALL MAYO has been the Vice President-Management Information
Systems and Secretary of the Company since 1997 and a director since its
incorporation. She joined the Company upon its incorporation as its Vice
President-Finance and Treasurer. She was the treasurer of Clearview Cinema Corp.
from 1987 to 1993.(1) Ms. Mayo is married to A. Dale Mayo. Ms. Mayo will be a
Class __ Common Director, with a term expiring in __________, after the
Offering.
JOAN M. ROMINE has been the Treasurer and Chief Financial Officer of the
Company since 1997. Prior to joining the Company in 1996 as its Controller, she
was the controller of Magic Cinemas, L.L.C. from 1995 through 1996 and
controller, treasurer and secretary of Hanita Cutting Tools, Inc., a U.S.
subsidiary of an international metal working company, from 1988 through 1995.
- ------------------
(1) Clearview Cinema Corp. was formed in 1987 by Mr. Mayo and two other persons
to operate one theater and it acquired an additional three theaters over the
next several years. It was sold in 1993, after Mr. Mayo and his
then-partners were unable to agree on its future, with Mr. Mayo retaining
the rights to the Clearview name and trademark and one of those theaters.
29
<PAGE>
WAYNE L. CLEVENGER has been a director of the Company since 1996. He has
been a managing director of MidMark Advisors, Inc., the general partner of
MidMark Equity Partners, L.P., since 1994 and a managing director of MidMark
Associates, Inc., the general partner of MidMark Capital, L.P., since 1994. Mr.
Clevenger was a managing director of MidMark Management, Inc., a private
investing management company, from 1989 through 1994. He also serves on the
board of directors of Exide Electronics Group, Inc. Mr. Clevenger will be a
Preferred Director after the Offering.
ROBERT DAVIDOFF has been a director of the Company since 1994. He is a
managing director of Carl Marks & Co., Inc. and the general partner of CMNY
Capital II, L.P. Mr. Davidoff also serves on the boards of directors of Marisa
Christina, Inc., Rex Stores, Inc., Hubco Exploration, Inc., SIDARI Corp., Consco
Enterprises, Inc. and Paging Partners Corp. Mr. Davidoff will be a Class __
Common Director, with a term expiring in ______________, after the Offering.
BRETT E. MARKS has been a director of the Company since its incorporation
and was its Vice President-- Development from such date to 1997. He has been the
executive vice president of First New York, a mid-sized realty brokerage firm
specializing in commercial leasing and investment sales, from _______________ to
the present, and the president of Marks Capital Management, a real estate
management company, from 1989 to the present. Mr. Marks will be a Class __
Common Director, with a term expiring in _______, after the Offering.
DENIS NEWMAN has been a director of the Company since 1996. He has been a
managing director of MidMark Advisors, Inc., the general partner of MidMark
Equity Partners, L.P., since 1994; a managing director of MidMark Associates,
Inc., the general partner of MidMark Capital, L.P., since 1994; and a managing
director of MidMark Management, Inc. since 1989. Mr. Newman also serves on the
board of directors of First Brands Corporation. Mr. Newman will be a Preferred
Director after the Offering.
DIRECTOR COMPENSATION
The Company does not currently compensate its directors or reimburse them,
as such, for their expenses incurred in connection with attendance at Board of
Directors' meetings and has no current plans to change this policy after
consummation of the Offering.
THE BOARD OF DIRECTORS
The Board of Directors currently has six members. The Board of Directors
has no committees at the present time. Prior to the consummation of the
Offering, an audit committee will be created.
EXECUTIVE COMPENSATION
The following table set forth information concerning the compensation of
the Company's Chairman of the Board, President and Chief Executive Officer who
was the only executive officer of the Company whose annual salary and bonus
exceeded $100,000 during 1996.
SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------
NAME SALARY ($) BONUS ($)
- ------------------------------------ ---------- ---------
<S> <C> <C>
A. Dale Mayo $ 99,167(1) $37,371(1)
</TABLE>
- ------------------
(1) Since May 29, 1996, Mr. Mayo's compensation has been calculated pursuant to
the Employment Agreement (as described below). Prior to that date, Mr.
Mayo's annual compensation was equal to 2% of the first $5,000,000 in gross
revenues of the Company plus 1% of gross revenues in excess of $5,000,000.
30
<PAGE>
1997 INCENTIVE PLAN
The Clearview Cinema Group, Inc. 1997 Stock Incentive Plan (the '1997
Incentive Plan') is intended to assist the Company in attracting and retaining
highly competent key employees and consultants and to act as an incentive for
such individuals to achieve long-term Company objectives. The 1997 Incentive
Plan will be administered by the Board of Directors.
The 1997 Incentive Plan provides for awards of up to 500,000 shares of
Common Stock. The number of shares available for issuance under the 1997
Incentive Plan will be subject to adjustment for changes in Clearview's capital
structure or upon the occurrence of certain significant corporate events such as
mergers. All key employees and consultants of the Company or any of its
subsidiaries will be eligible to participate, including officers who are also
directors of the Company. No participant can receive awards under the 1997
Incentive Plan in any calendar year in respect of more than 150,000 shares of
Common Stock.
The 1997 Incentive Plan has no fixed expiration date. The Board of
Directors will establish expiration and exercise dates for awards under the 1997
Incentive Plan on an award-by-award basis. However, for the purpose of awarding
incentive stock options ('incentive stock options') under Section 422 of the
Internal Revenue Code of 1986, as amended (the 'Code'), the 1997 Incentive Plan
will expire ten years from its effective date. In addition, certain provisions
of the 1997 Incentive Plan relating to 'performance-based' compensation under
Section 162(m) of the Code will expire five years from that effective date.
The Board of Directors may grant incentive stock options, options that do
not qualify as incentive stock options ('non-qualified stock options') or a
combination thereof. The terms and conditions of any stock options granted,
including the quantity, price, waiting periods and other conditions on exercise,
will be determined by the Board of Directors. The exercise price for each stock
option will be determined by the Board of Directors in its discretion; provided,
that the exercise price per share for each stock option will be at least equal
to the fair market value of one share of Common Stock on the date when that
stock option is granted.
Stock appreciation rights ('SARs') and limited SARs may be granted by the
Board of Directors either separately from or in tandem with non-qualified stock
options or incentive stock options. A SAR entitles its holder to receive, upon
its exercise, a payment equal to (i) the excess of the fair market value of a
share of Common Stock on its exercise date over the SAR exercise price, times
(ii) the number of shares of Common Stock with respect to which the SAR is
exercised. Upon exercise of a SAR, payment will be made in cash, shares of
Common Stock or a combination thereof, as determined by the Board of Directors.
The Board of Directors may also award shares of Common Stock subject to
restrictions specified by the Board of Directors in its discretion ('Restricted
Shares'). Restricted Shares are subject to forfeiture if their holder does not
meet certain conditions such as continued employment over a specified forfeiture
period (the 'Forfeiture Period') and/or the attainment of specified performance
targets over the Forfeiture Period. Any performance targets will be determined
by the Board of Directors and may, but need not, include specified levels of one
or more of operating income, earnings per share, return on investment, return on
stockholders' equity or earnings before interest, taxes, depreciation and
amortization.
The Board of Directors may grant performance awards upon such terms and
conditions as the Board of Directors deems appropriate. A performance award
would entitle its recipient to receive a payment from the Company, the amount of
which is based upon the attainment of predetermined performance targets over a
specified award period. Performance awards may be paid in cash, shares of Common
Stock or a combination thereof, as determined by the Board of Directors. Any
award periods will be established at the discretion of the Board of Directors.
The performance targets will also be determined by the Board of Directors and
may, but need not, include specified levels of one or more of operating income,
earnings per share, return on investment, return on stockholders' equity or
earnings before interest, taxes, depreciation and amortization. When
circumstances occur which cause predetermined performance targets to be an
inappropriate measure of achievement, the Board of Directors, in its discretion,
may adjust the performance targets.
In the event of a Change in Control (as defined in the 1997 Incentive
Plan), all stock options and SARs will immediately become exercisable, the
restrictions on all Restricted Shares will immediately lapse and all performance
awards will immediately become payable.
31
<PAGE>
EMPLOYMENT AGREEMENT
Pursuant to an Employment Agreement by and between the Company and Mr. Mayo
dated May 29, 1996 (the 'Employment Agreement'), Mr. Mayo agreed to serve as
Chairman of the Board, President and Chief Executive Officer of the Company. As
compensation, Mr. Mayo is to receive an annual base salary of not less than
$120,000, plus an annual bonus equal to one percent of the Company's gross
revenues in excess of $7,000,000; provided, however, that such total
compensation may not exceed $750,000 in any one year. The initial term of the
Employment Agreement expires on May 29, 2003. Thereafter, the term of the
Employment Agreement will be automatically extended for successive one-year
periods ending on May 29, unless terminated by either party upon at least six
months' advance notice. The Employment Agreement also provides that, for a
period of three years after its termination, Mr. Mayo may not, directly or
indirectly, engage, have a financial interest in or become interested in any
other businesses similar to or in competition with the Company within a
fifty-mile radius of any theater owned or operated by the Company as of the date
of that termination.
CERTAIN TRANSACTIONS
Pursuant to a Contribution and Exchange Agreement dated December 21, 1994,
the Company issued to A. Dale Mayo ('Mayo') and Brett E. Marks ('Marks') 687,500
and 250,000 shares of Common Stock, respectively, in exchange for (i) all of the
outstanding shares of capital stock of Clearview Theater Group, Inc., CCC
Madison Triple Cinema Corp., CCC Chester Twin Cinema Corporation and CCC
Manasquan Cinema Corporation (collectively, the 'Subsidiaries') and (ii) certain
promissory notes of certain Subsidiaries with an aggregate principal amount of
$250,000. The principal assets of the Subsidiaries were the leases for the movie
theaters in Bernardsville, Chester, Madison and Manasquan, New Jersey and the
related leasehold improvements and equipment. Concurrently with that
contribution, pursuant to an Investment and Stockholders Agreement dated
December 21, 1994, the Company sold 312,500 shares of Common Stock to CMNY for
an aggregate purchase price of $500,000 in cash.
Mayo had formed CCC Chester Twin Cinema Corporation in August, 1993 to be
the lessee of the Chester Twin Theater. In September, 1993, as part of the
consideration in the sale of Clearview Cinema Corp., Mayo acquired the capital
stock of Clearview Theater Group, Inc. The terms of the sale were negotiated at
arm's length between the owners of Clearview Cinema Corp. and the purchaser. In
February, 1994, Mayo sold to Marks 49% of the capital stock of CCC Madison
Triple Cinema Corp. and of CCC Chester Twin Cinema Corporation for $10,000 and
$5,000, respectively. Simultaneously, Marks loaned CCC Madison Triple Cinema
Corp. $125,000 and received a promissory note in exchange. In May, 1994, Mayo
formed CCC Manasquan Cinema Corporation to be the lessee of the Algonquin
Theater in Manasquan, New Jersey.
No third party was retained by Clearview, Mayo, Marks or CMNY to value the
interests being exchanged by Mayo and Marks or to determine the relationship
between those values and the purchase price paid by CMNY for its shares of
Common Stock. The valuation to be placed on those interests and that
relationship was determined by the arm's length negotiations between Mayo and
Marks and the representatives of CMNY. Under the Investment and Stockholders
Agreement, CMNY has the right to sell its shares of Common Stock to the Company
for a 30-day period commencing in 2002 at a price based upon a formula and if
CMNY does not exercise that right the Company has the right to purchase those
shares of Common Stock from CMNY for the 90-day period commencing after the
expiration of that 30-day period at a price based upon the same formula. As set
forth in that agreement, those rights terminate upon the occurrence of certain
events. CMNY and Clearview have agreed to terminate those rights in connection
with the Offering. See 'The Concurrent Transactions.'
As of __________, 1997, Marks and the Company entered into a consulting and
confidentiality agreement pursuant to which Marks as a consultant will assist
the Company in the identification of possible locations for the development of
theaters and of theaters that are potential acquisition candidates and provide
other services as requested by the Company. Marks is also an executive vice
president of First New York. To the extent, if any, that Marks identifies any
person who is interested in leasing a site to Clearview in his capacity as an
employee of First New York and Clearview determines to lease that site, First
New York may be entitled to a commission from that person and Marks would then
be entitled to a commission from First New York. In connection with the
Company's proposed acquisition of a theater in Brooklyn, New York, First New
York and Marks will be entitled to commissions of $66,000 and $22,000,
respectively. In order to formalize the relationships among the parties,
32
<PAGE>
First New York, Marks and Clearview have entered into an agreement dated as of
_________, 1997. In that agreement, First New York has acknowledged that Marks,
as a consultant to Clearview, will be engaged in activities that might, under
other circumstances, result in commissions being earned by First New York and
Marks, but that it will be within Clearview's sole discretion to determine
whether any such activity will result in commissions being payable to them.
Robert G. Davidoff ('Davidoff'), a director of the Company, is the general
partner of CMNY and a managing director of CMCO, Inc. ('CMCO'). On August 31,
1995, CMNY, CMCO and Davidoff each purchased from the Company 8% Notes with the
principal amounts of $300,000, $50,000 and $50,000, respectively. Each of these
8% Notes matures on August 31, 1997, which term is to be amended in connection
with the Put/Call Termination to October 31, 1997. In connection with the sale
of these 8% Notes, the Company issued each purchaser two A/B Warrants to
purchase in the aggregate 93,750 shares, 15,625 shares and 15,625 shares of
Common Stock, respectively. See 'Description of Capital Stock--Warrants.'
On October 11, 1995, Davidoff and CMCO each purchased an additional 8% Note
with a principal amount of $50,000 each. Each of these 8% Notes matures on
October 11, 1997, which term is to beamended in connection with the Put/Call
Termination to October 31, 1997. In connection with the purchase of these 8%
Notes, the Company issued each purchaser two A/B Warrants to purchase in the
aggregate 15,625 shares and 15,625 shares of Common Stock, respectively. See
'Description of Capital Stock--Warrants.'
On December 13, 1996, Davidoff and CMCO each purchased an additional 8%
Note with a principal amount of $300,000 each. Each of these 8% Notes matures on
December 13, 1998. In connection with the sale of these 8% Notes, the Company
issued each purchaser two A/B Warrants to purchase in the aggregate 46,875
shares and 46,875 shares of Common Stock, respectively. See 'Description of
Capital Stock--Warrants'
If the Company does not pay the 8% Notes that are due on August 31, 1997
and October 31, 1997 (or, after their amendment, October 31, 1997), the Company
will extend the term of those 8% Notes an additional five years. If that occurs,
the Company must issue to each holder of one of those 8% Notes a warrant with
terms substantially similar to the A/B Warrants. Each of those holders would
receive warrants exercisable for the number of shares of Common Stock set forth
below:
<TABLE>
<CAPTION>
AUGUST 31, 1995 8% NOTES OCTOBER 11, 1995 8% NOTES
------------------------ -------------------------
<S> <C> <C>
CMNY 93,750 --
CMCO 15,625 15,625
Davidoff 15,625 15,625
</TABLE>
If the Company pays the 8% Notes that are due on December 13, 1998 by
December 13, 1997, then one of the A/B Warrants owned by each of Davidoff and
CMCO exercisable for 23,437.50 shares of Common Stock each will terminate. If
the Company does not pay those 8% Notes on December 13, 1998 and, instead
extends their maturity, the Company will have a similar obligation to issue new
warrants to Davidoff and CMCO exercisable for 46,875 shares of Common Stock
each.
The Company intends to pay all of the 8% Notes in 1997 from borrowings
under the New Credit Facility.
The terms of the 8% Notes and the A/B Warrants were negotiated at arm's
length by representatives of CMNY, CMCO, Davidoff and the Company.
Wayne L. Clevenger and Denis Newman, each of whom is a director of the
Company, are managing directors of MidMark Associates, Inc., which is the
general partner of MidMark. MidMark has acquired from the Company a total of 779
shares of Class A Preferred Stock and two Class A Warrants to purchase a total
of 588,750 shares of Common Stock. See 'Description of Capital Stock --Preferred
Stock--Class A Preferred Stock' and '--Warrants--Class A Warrants.' Pursuant to
the two Preferred Stock and Warrant Purchase Agreements under which MidMark
acquired its shares of Class A Preferred Stock and Class A Warrants, MidMark has
the right exercisable on or after June 1, 2001 to sell to the Company all of
those shares or the shares of Common Stock into which they have been converted
at a purchase price determined in accordance with a formula that is based on the
Company's gross revenues or six times the Company's combined income for its
theater operations (excluding general and administrative expenses, interest and
taxes, but including depreciation and amortization). In connection with the
Offering, MidMark has agreed to terminate this right. See 'The
33
<PAGE>
Concurrent Transactions' and 'Shares Eligible for Future Sale.' If the Company
issues additional warrants in connection with the extension of the maturity of
any 8% Notes, the Company would be obligated under the agreements with MidMark
to issue additional shares of Class A Preferred Stock and Class A Warrants for
no additional payment.
Pursuant to a Management Consulting Agreement by and between MidMark
Associates, Inc. ('MidMark Associates') and the Company dated ___________, 1997
(the 'Consulting Agreement'), MidMark Associates will provide the Company with
business and organizational strategy and financial and investment management
advice for a fee equal to $60,000 per year. The Consulting Agreement terminates
on ___________, _____________ unless renewed.
Pursuant to an agreement by and among the Company, Roxbury Cinema, Inc.
(which owns the Cinema Ten Succasunna Theater), F&N Cinema, Inc. (which owns the
Parsipanny Twelve Theater), and John Nelson, Seth Ferman and Pamela Ferman, the
Company purchased a right of first refusal from each of those persons for
$200,000 with respect to those two theaters. The right must be exercised, if at
all, within a short period after any of the above persons delivers to Clearview
a notice of his, her or its desire to transfer any rights in these theaters. The
right of first refusal will expire on May 29, 1999 if not previously exercised.
In accordance with the agreement pursuant to which Clearview consummated
the acquisition of four theaters in May, 1996, Mr. Nelson, Mr. Ferman and Ms.
Ferman entered into a Non-Competition Agreement with the Company, in which they
agreed not to, directly or indirectly, (i) engage or become interested in the
operation of any movie theater within a seven and one-half mile radius of any of
those theaters or (ii) disclose to anyone, or use in competition with the
Company, any information with respect to any confidential or secret aspect of
the operations of those theaters.
34
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table (including the notes thereto) sets forth certain
information as of _________________, 1997 regarding the beneficial ownership of
the Common Stock after giving effect to the Concurrent Transactions and the
redemption of certain Provident Warrants and as adjusted to reflect the sale of
the shares of Common Stock being offered hereby by: (i) each person (or group of
affiliated persons) known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock; (ii) each director of the Company; (iii)
each executive officer of the Company; and (iv) all of the Company's directors
and executive officers as a group. Each stockholder possesses sole voting and
investment power with respect to the shares listed, unless otherwise noted.
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OF COMMON
STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED BEFORE THE OWNED AFTER THE
OFFERING OFFERING
-------------------- --------------------
NAME AND ADDRESS(1) NUMBER PERCENT NUMBER PERCENT
- --------------------------------- --------- ------- --------- -------
<S> <C> <C> <C> <C>
A. Dale Mayo(2) 1,422,500 47.88
MidMark Capital, L.P.(3) 1,098,750 36.98
CMNY Capital II, L.P.(4) 450,000 15.15
John Nelson(2)(5) 216,875 7.30
Wayne L. Clevenger(3)(6) 1,098,750 36.98
Robert Davidoff(4)(7) 450,000 15.15
Brett E. Marks(2)(8) 245,000 8.25
Denis Newman(3)(6) 1,098,750 36.98
Paul Kay(2) 20,000 *
Sueanne Hall Mayo(9) 0 0
All directors and executive
officers as a group 2,971,250 100.00
</TABLE>
- ------------------
* Less than 1%
(1) The address of each person set forth above is 7 Waverly Place, Madison, New
Jersey except as otherwise noted.
(2) Mr. Mayo owns directly 662,500 shares of Common Stock. The other 760,000
shares are owned by other stockholders of the Company, including Brett
Marks, John Nelson and Paul Kay, subject to voting trust agreements for
which Mr. Mayo is the trustee. Under those agreements, Mr. Mayo has the
right to exercise all voting rights with respect to those shares for a
period of twenty years or until they are sold in a public offering under the
Securities Act or in accordance with Rule 144 under the Securities Act.
(3) The address for MidMark Capital, L.P. and Messrs. Clevenger and Newman is
c/o MidMark Management, Inc., 466 Southern Boulevard, Chatham, New Jersey.
MidMark Capital, L.P. beneficially owns its 1,098,750 shares of Common Stock
by means of its ownership of 779 shares of Class A Preferred Stock, which
represent all of the outstanding shares of Class A Preferred Stock, and
125,000 shares of Common Stock.
(4) The address for CMNY Capital II, L.P. and Mr. Davidoff is c/o Carl Marks &
Co., Inc., 135 East 57th Street, New York, New York.
(5) The address for Mr. Nelson is c/o Roxbury Cinemas, Inc., Route 10,
Succasunna, New Jersey.
(6) Mr. Clevenger and Mr. Newman indirectly own shares of Common Stock by virtue
of their positions as managing directors of MidMark Associates, Inc., the
general partner of MidMark Capital, L.P.
(7) Mr. Davidoff owns of these shares indirectly by virtue of his
position as a managing director of CMCO and the general partner of CMNY.
(8) The address for Mr. Marks is c/o First New York Realty Co. Inc., 310 Madison
Avenue, New York, New York.
(9) Ms. Mayo disclaims beneficial ownership of the shares owned by Mr. Mayo.
35
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following is a description of the material provisions of the New
Certificate, the New By-laws, the A/B Warrants, the Provident Warrants and the
Class A Warrants but does not purport to be complete. Copies of the New
Certificate, the New By-laws, the A/B Warrants, the Provident Warrants and the
Class A Warrants have been filed as exhibits to the Registration Statement of
which this Prospectus forms a part.
Immediately prior to the consummation of the Offering, the authorized
capital stock of the Company will consist of 10,000,000 shares of Common Stock
and 2,500,000 shares of Preferred Stock.
COMMON STOCK
The holders of shares of Common Stock are entitled to one vote for each
share held on all matters submitted to a vote of the holders of the Common Stock
and, except for the election of directors, the Class A Preferred Stock and do
not have cumulative voting rights. Holders of shares of Common Stock are
entitled to receive dividends, if any, as declared by the Board of Directors out
of funds legally available therefor. Upon liquidation, dissolution or winding up
of the Company, holders of shares of Common Stock are entitled to share ratably
in the net assets of the Company available after the payment of all debts and
other liabilities of the Company, subject to the prior rights of outstanding
shares of Preferred Stock. Holders of shares of Common Stock have no preemptive,
subscription, redemption or conversion rights. The outstanding shares of Common
Stock are, and the shares of Common Stock offered in the Offering will be, when
issued and paid for, validly issued, fully paid and nonassessable. The rights,
preferences and privileges of holders of shares of Common Stock are subject to,
and may be adversely affected by, the rights of the holders of shares of the
Class A Preferred Stock or any other series of Preferred Stock the Company may
designate and issue in the future.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue shares of Preferred Stock in one or more series and to
fix the number of shares, designations, voting powers, preferences, optional and
other special rights and the restrictions or qualifications thereof, subject to
the rights of the holders of the Class A Preferred Stock discussed below. The
rights, preferences, privileges and powers of each series of Preferred Stock may
differ with respect to dividend rates, amounts payable on liquidation, voting
rights, conversion rights, redemption provisions, sinking fund provisions and
other matters. The issuance of shares of Preferred Stock could decrease the
amount of earnings and assets available for distribution to holders of shares of
Common Stock and could adversely affect the rights and powers, including voting
rights, of holders of shares of Common Stock. The existence of authorized and
undesignated shares of Preferred Stock may also have a depressive effect on the
market price of the Common Stock. In addition, the issuance of any shares of
Preferred Stock could have the effect of delaying, deferring or preventing a
change of control of the Company by a third party. Upon consummation of the
Offering, no shares of Preferred Stock other than the Class A Preferred Stock
will be outstanding, and the Company has no current intention to issue any
additional shares of Preferred Stock.
CLASS A PREFERRED STOCK
The holders of the Class A Preferred Stock are entitled to receive
preferential dividends, when and as declared by the Board of Directors, in a per
share amount equal to the product of the dividend payable per share of Common
Stock and the number of shares of Common Stock into which a share of Class A
Preferred Stock is then convertible. So long as any shares of Class A Preferred
Stock are outstanding, unless all dividends on the Class A Preferred Stock have
been paid, no dividend or other distribution may be paid or made on the Common
Stock or any other capital stock of the Company ranking junior as to dividends
to the Class A Preferred Stock and no such capital stock may be acquired by the
Company, other than by means of any distributions or exchanges of capital stock
of the Company ranking junior to the Class A Preferred Stock.
In the event of any sale of all or substantially all of the assets of the
Company or any liquidation, dissolution or winding up of the Company, the
holders of the Class A Preferred Stock will be entitled to receive an amount per
share equal to the Liquidation Value (as defined below) plus all declared but
unpaid dividends per share on the Class A Preferred Stock, prior to any
distribution to holders of the Common Stock or any other capital stock of the
Company ranking junior upon liquidation or dissolution to the Class A Preferred
Stock. Liquidation Value
36
<PAGE>
is equal to $2,558.85 per share, subject to adjustment upon any changes in the
Class A Preferred Stock by means of dividends of shares of Class A Preferred
Stock or subdivisions or combinations of the Class A Preferred Stock.
Generally, the holders of the Class A Preferred Stock will vote with the
holders of the Common Stock on all matters submitted to a vote of the
stockholders of the Company other than the election of members of the Board of
Directors. The holders of the Class A Preferred Stock will vote separately as a
class for two Preferred Directors so long as the outstanding shares of Class A
Preferred Stock represent more than ___% of the combined voting power of the
outstanding capital stock of the Company or for one Preferred Director so long
as the outstanding shares of Class A Preferred Stock represent at least ___% and
no less than ___% of the combined voting power of the outstanding capital stock
of the Company. The holders of the Class A Preferred Stock will vote separately
as a class with respect to any proposed amendment to the New Certificate that
would affect their rights as such holders adversely and with respect to any
proposed issuance of capital stock of the Company ranking senior to the Class A
Preferred Stock as to dividends or upon liquidation or dissolution. The holders
of the Class A Preferred Stock will also vote separately as a class with respect
to any proposed issuance of capital stock of the Company (other than Common
Stock) ranking pari passu or junior to the Class A Preferred Stock as to
dividends or upon liquidation or dissolution so long as the outstanding shares
of Class A Preferred Stock represent more than ___% of the combined voting power
of the outstanding capital stock of the Company.
The shares of Class A Preferred Stock are convertible at any time at the
option of the holders thereof into shares of Common Stock at a conversion ratio
of 1250 as of the consummation of the Offering which is equal to the Liquidation
Value divided by the Conversion Price of $2.047 as of the consummation of the
Offering. Upon the occurrence of any Qualifying Liquidity Event, the shares of
Class A Preferred Stock will automatically convert into shares of Common Stock.
A Qualifying Liquidity Event includes a bona fide unconditional offer to
purchase those shares at a price equal to the product of the conversion ratio
and four times the then-current Conversion Price from the Company, a third party
or an underwriter or the ability to sell the shares of Common Stock into which
such shares of Class A Preferred Stock are convertible on the open market so
long as certain trading price and liquidity conditions are met. The Conversion
Price is subject to adjustment if the Company pays a dividend in shares of the
Common Stock, subdivides or combines the Common Stock, reclassifies the Common
Stock or issues or is deemed to have issued shares of Common Stock for a
consideration per share less than the then-current Conversion Price.
WARRANTS
The Company has outstanding the following warrants to acquire shares of
Common Stock.
<TABLE>
<CAPTION>
SECURITIES ISSUABLE NUMBER ISSUABLE
TITLE OR SERIES EXPIRATION DATE EXERCISE PRICE UPON EXERCISE UPON EXERCISE
- ---------------------------------- ------------------ --------------- -------------------- ---------------
<S> <C> <C> <C> <C>
A/B Warrant....................... August 31, 2000 $1.60/share Common Stock 62,500
A/B Warrant....................... August 31, 2001 $1.60/share Common Stock 62,500
A/B Warrant....................... October 11, 2000 $1.60/share Common Stock 15,625
A/B Warrant....................... October 11, 2001 $1.60/share Common Stock 15,625
A/B Warrant....................... December 13, 2001 $3.20/share Common Stock 46,875
A/B Warrant....................... December 13, 2002 $3.20/share Common Stock 46,875
Provident Warrants................ May 29, 2003 $.01/share Common Stock 91,250
Provident Warrants................ December 13, 2003 $.01/share Common Stock 105,000
Class A Warrants.................. June 1, 2006 $.01/share Common Stock 588,750
</TABLE>
A/B WARRANTS
All of the A/B Warrants are currently exercisable through their respective
expiration dates except for two A/B Warrants issued on December 13, 1996 which
will be cancelled if the Company pays the 8% Notes issued on that day in full no
later than December 13, 1997. The exercise price of the A/B Warrants and the
number of shares of Common Stock issuable upon exercise of the A/B Warrants are
subject to adjustment for subdivisions of the outstanding shares of Common Stock
or dividends in stock on the outstanding shares of Common Stock.
37
<PAGE>
PROVIDENT WARRANTS
Three Provident Warrants were issued to Provident pursuant to a Warrant
Agreement, dated May 29, 1996, as amended on December 13, 1996. Two of the three
Provident Warrants expire on May 29, 2003, and the third Provident Warrant
expires on December 13, 2003.
The holder of any Provident Warrant has the right to sell that Provident
Warrant to the Company at any time after the earliest of (a) April 30, 1999, (b)
the consummation of an underwritten public offering of Common Stock, (c) an
event of default under the credit agreement with Provident, (d) the Company's
prepayment in full of the loans under that credit agreement, or (e) the
consummation of certain capital transactions (as defined in the Warrant
Agreement). The Company has the right to buy the Provident Warrants at any time
on or after the first anniversary of the first day that the 'put' described
above becomes exercisable. Upon the exercise of either of these rights, the
purchase price will be based on the difference between a value for the Company's
common equity determined pursuant to a formula and $2.047 per share of Common
Stock. That value is to be calculated as the greatest of (i) a value based on
the Company's operating income, (ii) the value derived from the transaction
which gives rise to the right to be paid for the Provident Warrants, and (iii)
the value determined by an independent investment bank as the fair market value
of the Common Stock.
The number of shares of Common Stock for which the Provident Warrants are
exercisable are subject to adjustment in the event of subdivisions or
combinations of the Common Stock, the issuance of shares of Common Stock as a
dividend, the sale of shares of Common Stock, any options, rights or warrants to
subscribe for or purchase shares of Common Stock or any other security or
instrument directly or indirectly convertible into or exchangeable for shares of
Common Stock at a price or an implied price less than $2.047 per share, and
certain capital reorganizations, reclassifications, mergers and consolidations.
CLASS A WARRANTS
The Class A Warrants are not exercisable until June 1, 2001 unless, prior
to that date, the Company sells all or substantially all of its assets,
liquidates, dissolves or winds up or merges or consolidates with another
corporation in a transaction immediately after which persons who held voting
securities of the Company having more than 50% of the combined voting power of
the outstanding voting securities of the Company do not hold voting securities
of the surviving corporation having more than 50% of the combined voting power
of the outstanding voting securities of the surviving corporation or a majority
of the outstanding shares of Common Stock are acquired by a single person or
group of affiliated persons. The number of shares of Common Stock for which the
Class A Warrants are exercisable will be subject to reduction if any of the
events described in the preceding sentence occur or if there is an underwritten
public offering of shares of Common Stock pursuant to an effective registration
statement under the Securities Act or if the Common Stock is listed on a
national securities exchange or registered as a class under the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and the Fair Market Value
(as defined below) of the Common Stock is greater than the Floor Price (at the
time of the closing of the Offering this will be equal to $5.46 per share). Fair
Market Value for purposes of any of such transactions is equal to the
consideration paid or payable to the holders of the Common Stock assuming the
exercise of all warrants to purchase shares of Common Stock and the conversion
of all securities convertible into shares of Common Stock (other than the Class
A Warrants). Fair Market Value for purposes of a public offering or any listing
or registration of the Common Stock is based on the average closing prices or
last bid prices for the Common Stock for any 120-day trading period following
the closing of such offering or listing or registration, so long as the closing
price or bid price on each day in that period exceeds the Floor Price. The
reduction in the number of shares of Common Stock purchasable upon exercise of
the Class A Warrants is based upon a formula and, if the Fair Market Value is
high enough, could result in the Class A Warrants not being exercisable for any
shares. The Floor Price and the number of shares of Common Stock that the Class
A Warrants are exercisable for are also subject to adjustment for subdivisions
or combinations of the Common Stock, the issuance of shares of Common Stock as a
dividend and certain capital reorganizations and reclassifications, mergers and
consolidations.
38
<PAGE>
PROVISIONS OF THE NEW CERTIFICATE AND THE NEW BY-LAWS
The New Certificate and the New By-laws contain a number of provisions
relating to corporate governance and the rights of stockholders. Certain of
these provisions may be deemed to have a potential 'anti-takeover' effect
insofar as such provisions may delay, defer or prevent a change of control of
the Company, including, but not limited, to the following provisions:
The New By-laws contain certain notification requirements relating to
nominations to the Board of Directors and to the raising of business matters at
stockholder meetings. Such requirements provide that a notice of proposed
stockholder business must be timely given in writing to the Secretary of the
Company prior to the appropriate meeting. To be timely, notice relating to an
annual meeting must be given not less than 60, nor more than 90, days in advance
of such meeting; provided, that if the date of the annual meeting is changed by
more than 30 days from the anniversary date of the prior annual meeting, written
notice must be given no later than the fifth day after the first public
disclosure of the date of the meeting. The New By-laws provide that special
meetings of stockholders may be called only by certain officers of the Company
or the Board of Directors.
The New Certificate contains certain provisions permitted under the
Delaware General Corporation Law (the 'DCL') regarding the liability of
directors. These provisions eliminate the personal liability of a director to
the Company and its stockholders for monetary damages for breach of fiduciary
duty as a director other than for any breach of that director's duty of loyalty,
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, for any transaction from which the director
derived an improper personal benefit or for an unlawful payment of dividends or
redemption of stock. Those provisions do not affect the availability of
equitable remedies such as an action to enjoin or rescind a transaction
involving a breach of fiduciary duty. The New Certificate further provides that
the Company will indemnify its directors and officers, and may indemnify any
authorized representative of the Company, to the fullest extent permitted by the
DCL. The Company believes that such provisions will assist the Company in
attracting and retaining qualified individuals to serve as directors and
officers.
The New By-laws provide that the number of directors constituting the
entire Board of Directors will be established by the Board of Directors except
as otherwise provided in the New Certificate, but will consist of not less than
three Common Directors. Common Directors may be removed by the holders of the
Common Stock only for cause and new Common Directors may be elected
simultaneously with such removal. The New By-laws further provide that any
amendment of the New By-laws to permit the removal of Common Directors without
cause by the holders of the Common Stock will not apply to any incumbent
director for the balance of his or her term.
The New Certificate provides that the Common Directors will be divided into
three classes serving staggered three-year terms. Each class will consist, as
nearly as possible, of one-third of the whole number of Common Directors. The
classification of the Common Directors and the separate voting for the Preferred
Directors has the effect of making it more difficult for stockholders to change
the composition of the Board of Directors in a relatively short period of time.
At least three annual meetings of stockholders will generally be required to
effect a change in a majority of the Board of Directors.
The New By-laws may be amended by a majority of the Board of Directors,
subject to the right of the stockholders to amend the New By-laws by the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Common Stock and Class A Preferred Stock voting as a single class. The New
Certificate may be amended by the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock and Class A Preferred Stock voting as
a single class, except that the affirmative vote of the holders of at least
two-thirds of such shares is required to amend certain provisions, including the
provisions establishing a classified board.
39
<PAGE>
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is
______________________.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, ________ shares of Common Stock will be
outstanding (_______ shares if the over-allotment option is exercised in full).
Of these shares, the _________ shares of Common Stock sold in the Offering
(___________ shares if the over-allotment option is exercised in full) will be
freely tradeable under the Securities Act, except that any shares of Common
Stock purchased by affiliates of the Company ('Affiliates'), as that term is
defined in Rule 144 under the Securities Act ('Rule 144'), may generally be sold
only in compliance with the limitations of Rule 144 described below. The
remaining 1,872,500 shares of Common Stock (the 'Restricted Shares') held by
existing stockholders were sold by the Company in reliance on exemptions from
the registration requirements of the Securities Act and may be restricted
securities within the meaning of Rule 144.
In general, under Rule 144 as currently in effect, beginning after the
effective date of the Registration Statement of which this Prospectus is a part,
a stockholder, including an Affiliate, who has beneficially owned his or her
Restricted Shares for at least one year from the date those Restricted Shares
were acquired from the Company or an Affiliate, is entitled to sell, within any
three-month period, a number of such shares that does not exceed certain volume
restrictions; provided, that certain requirements concerning availability of
public information, manner of sale and notice of sale are satisfied. In
addition, under Rule 144(k), if a period of at least two years has elapsed from
the date any Restricted Shares were acquired from the Company or an Affiliate, a
stockholder that is not an Affiliate at the time of sale and has not been an
Affiliate for at least three months prior to the sale is entitled to sell those
shares without compliance with the above-referenced requirements of Rule 144. An
Affiliate must comply with the volume restrictions and the other requirements
referred to above whenever that Affiliate sells any securities of the Company.
Following consummation of the Offering, the Company intends to register on
Form S-8 under the Securities Act 500,000 shares of Common Stock reserved for
issuance under the 1997 Incentive Plan. Shares registered on Form S-8 will be
available for resale in the open market subject to the limitations applicable to
Affiliates as provided in Rule 144.
The Company and its existing stockholders have agreed not to offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, or
file or cause to be filed with the Commission a registration statement under the
Securities Act relating to, any shares of Common Stock or securities convertible
into or exchangeable or exercisable for any shares of Common Stock, without the
prior written consent of the Representative, for a period of one year from the
date of this Prospectus. The Representative may, in its sole discretion and at
any time without notice, release all or a portion of the shares subject to such
restrictions therefrom. See 'Underwriting.'
Prior to the Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that future sales
of shares of Common Stock, including Restricted Shares, or the availability of
shares of Common Stock, including Restricted Shares, for future sale, will have
on the market price of the Common Stock prevailing from time to time. Sales of a
substantial number of Restricted Shares in the public market following the
Offering, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock and could impair the Company's
ability to raise capital through an offering of its equity securities.
Under a registration rights agreement to be entered into as of the
consummation of the Offering, Mayo, CMNY and MidMark will each have the right to
have the Company prepare and file two registrations statements for him or it at
any time after the first anniversary of the consummation of the Offering,
subject to certain conditions. In addition those stockholders and the other
stockholders who are parties to that agreement will have unlimited piggyback
registration rights so long as they are not eligible to sell shares of Common
Stock in accordance with Rule 144(k) and subject to customary 'cutback'
provisions. The agreement contains typical provisions relating to the expenses
of any such registrations and the rights to indemnification among the parties
and the Company.
40
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part (the 'Underwriting Agreement'),
the Underwriters named below, acting through Prime Charter Ltd. as the
Representative, have severally agreed to purchase from the Company, and the
Company has agreed to sell to the Underwriters, an aggregate of __ shares of
Common Stock. The Underwriting Agreement provides that the Underwriters'
obligations to pay for and accept delivery of the shares of Common Stock are
subject to certain conditions precedent, and that the Underwriters are committed
to purchase all of the shares of Common Stock if any shares are purchased. Under
certain circumstances, the commitments of non-defaulting Underwriters may be
increased as set forth in the Underwriting Agreement.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Prime Charter Ltd.....................................................................................
---------
Total............................................................................................
---------
---------
</TABLE>
The Underwriters propose initially to offer the shares of Common Stock
offered hereby to the public at the offering price set forth on the front cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $________ per share. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $____________ per share to
certain other dealers. After the Offering, the public offering price, concession
and reallowance may be changed by the Underwriters.
The Company has agreed to pay to the Representative on behalf of the
Underwriters a non-accountable expense allowance equal to 2 1/2% of the gross
proceeds of the Offering, $100,000 of which has been paid by the Company to
cover some of the underwriting costs and due diligence expenses related to the
Offering.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to
____________ additional shares of Common Stock at the initial public offering
price, less underwriting discounts and a pro-rata portion of the non-accountable
expense allowance. The Underwriters may exercise this option solely to cover
over-allotments, if any, made on the sale of the shares of Common Stock offered
hereby. To the extent that this option is exercised, each Underwriter will
become obligated, subject to certain conditions, to purchase approximately the
same percentage of such additional shares of Common Stock as the percentage of
shares of Common Stock it was originally obligated to purchase pursuant to the
Underwriting Agreement.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
At the request of the Company, the Underwriters have reserved up to
_________ shares of Common Stock for sale at the initial offering price to
certain directors, officers, employees and agents of the Company and its
subsidiaries. The number of shares of Common Stock available to the general
public will be reduced to the extent that those persons purchase reserved
shares. Any reserved shares that are not so purchased by those persons at the
closing of the Offering will be offered by the Underwriters to the general
public on the same terms as the other shares offered by this Prospectus.
The Company has agreed to sell to the Representative or its designees, for
nominal consideration, the Underwriter Warrants to purchase an aggregate of
________ shares of Common Stock. The shares of Common Stock subject to the
Underwriter Warrants will be in all respects identical to the shares of Common
Stock offered to the public hereby. The Underwriter Warrants will be exercisable
for a four-year period commencing one year after the effective date of the
Registration Statement of which this Prospectus forms a part at a per share
exercise price equal to 120% of the initial offering price. During the period
beginning one year from the effective date of the Registration Statement and
ending five years after such effective date, the Company has agreed at its
expense
41
<PAGE>
to register under the Securities Act the shares of Common Stock issued or
issuable upon exercise of the Underwriter Warrants and, for the period beginning
one year from the effective date of the Registration Statement and ending seven
years after such effective date, to include such shares of Common Stock in any
appropriate registration statement which is filed by the Company. The
Underwriter Warrants will contain anti-dilution provisions providing for
appropriate adjustment of the exercise price and number of shares that may be
purchased upon the occurrence of certain events. The Underwriter Warrants may be
exercised by paying the exercise price in cash, through the surrender of shares
of Common Stock, through a reduction in the number of shares covered thereby, or
by using a combination of such methods.
The Company and its existing stockholders have agreed not to offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, or
file or cause to be filed with the Commission a registration statement under the
Securities Act relating to, any shares of Common Stock or securities convertible
into or exchangeable or exercisable for any shares of Common Stock, without the
prior written consent of the Representative, for a period of one year from the
date of this Prospectus. See 'Shares Eligible for Future Sale.'
Application will be made to list the Common Stock on .
Prior to the Offering, there has been no public market for the Common
Stock. Accordingly, the initial public offering price for the shares of Common
Stock offered hereby will be determined by negotiation between the Company and
the Representative. In determining that price, consideration will be given to
various factors, including market conditions for initial public offerings, the
history of and prospects for the Company's business, the Company's past and
present operations, its past and present earnings and current financial
position, an assessment of the Company's management, the market for securities
of companies in businesses similar to those of the Company, the general
condition of the securities markets and other relevant factors. There can be no
assurances, however, that the initial public offering price will correspond to
the price at which the Common Stock will trade in the public market subsequent
to the Offering or that an active trading market for the Common Stock will
develop and continue after the Offering.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby and certain other
legal matters relating to the Offering will be passed upon for the Company by
Kirkpatrick & Lockhart LLP, Pittsburgh, Pennsylvania. Certain legal matters
relating to the Offering will be passed upon for the Underwriters by Dewey
Ballantine, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and for each of the two years in the period ended December 31, 1996, the
combined statements of income of Nelson Ferman Theaters at Emerson, New City,
Allwood and Washington Township for the periods ended May 29, 1996 and December
31, 1995, and the combined statements of income of Magic Cinemas at Bergenfield,
Tenafly and Closter for the periods ended December 13, 1996 and December 31,
1995 included in this Prospectus have been so included in reliance on the
reports of Wiss & Company, LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
SB-2 under the Securities Act and the rules and regulations promulgated
thereunder covering the shares of Common Stock offered hereby. For the purposes
hereof, the term 'Registration Statement' means that original Registration
Statement, any and all amendments thereto and the schedules and exhibits to such
original Registration Statement or any such amendment. This Prospectus omits
certain information contained in the Registration Statement and reference is
made to the Registration Statement for further information with respect to the
Company and the shares of Common Stock offered hereby. Each statement contained
in this Prospectus as to the contents of any contract, agreement or other
document filed as an exhibit to the Registration Statement is qualified in its
entirety by
42
<PAGE>
reference to such exhibit for a more complete description of the matter
involved. The Registration Statement may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission maintained at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such materials may be obtained from the Public Reference
Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the prescribed rates. The Commission
also maintains a web site at http://www.sec.gov which contains reports, proxy
statements and other information regarding registrants that file electronically
with the Commission.
As a result of the Offering, the Company will be subject to the
informational requirements of the Exchange Act. The Company will fulfill its
obligations with respect to the requirements of the Exchange Act by filing
periodic reports and other information with the Commission.
43
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
Independent Auditors' Report............................................................................. F-2
Consolidated Balance Sheets at December 31, 1996 and (unaudited) March 31, 1997.......................... F-3
Consolidated Statements of Operations for the years ended December 31, 1995 and 1996 and the (unaudited)
three months ended March 31, 1996 and 1997............................................................ F-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 1995 and 1996
and the (unaudited) three months ended March 31, 1997................................................. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1995 and 1996 and the (unaudited)
three months ended March 31, 1996 and 1997............................................................ F-6
Notes to Consolidated Financial Statements............................................................... F-7
NELSON FERMAN THEATERS AT EMERSON, NEW CITY, ALLWOOD AND WASHINGTON TOWNSHIP
Independent Auditors' Report............................................................................. F-15
Combined Statements of Income for the year ended December 31, 1995 and the period ended May 29, 1996..... F-16
Notes to Combined Statements of Income................................................................... F-17
MAGIC CINEMAS AT BERGENFIELD, TENAFLY AND CLOSTER
Independent Auditors' Report............................................................................. F-18
Combined Statements of Income for the year ended December 31, 1995 and the period ended December 13,
1996.................................................................................................. F-19
Notes to Combined Statements of Income................................................................... F-20
</TABLE>
F-1
<PAGE>
The stock split described in Note 8 had not been effected at the date of
this report. When it has been consummated, we would be in a position to render
the following report:
INDEPENDENT AUDITORS' REPORT
'Board of Directors
Clearview Cinema Group, Inc.
We have audited the consolidated balance sheet of Clearview Cinema Group,
Inc. and subsidiaries as of December 31, 1996 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for
each of the two years in the period ended December 31, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Clearview
Cinema Group, Inc. and subsidiaries at December 31, 1996 and the results of
their operations and their cash flows for each of the two years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
WISS & COMPANY, LLP
Woodbridge, New Jersey
February 10, 1997 (except as to Note 8
for which the date is 1997)'
F-2
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................................................. $ 751,345 $ 1,431,782
Inventories...................................................................... 45,102 47,624
Other current assets............................................................. 34,866 161,007
------------ -----------
Total current assets.......................................................... 831,313 1,640,413
------------ -----------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION.............................. 12,253,217 12,284,621
------------ -----------
OTHER ASSETS:
Intangible assets, less accumulated amortization................................. 2,711,518 2,673,355
Project acquisition costs........................................................ 434,326 414,602
Escrow deposits.................................................................. 294,529 294,529
Deferred offering costs.......................................................... -- 65,179
Security deposits and other assets............................................... 76,641 86,716
------------ -----------
3,517,014 3,534,381
------------ -----------
$ 16,601,544 $17,459,415
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt............................................. $ 977,897 $ 1,098,329
Current maturities of subordinated notes payable, related parties................ 500,000 500,000
Accounts payable and accrued expenses............................................ 1,226,502 1,674,569
------------ -----------
Total current liabilities..................................................... 2,704,399 3,272,898
------------ -----------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities.......................................... 7,985,340 8,228,597
Subordinated notes payable, less current maturities:
Related parties............................................................... 600,000 600,000
Other......................................................................... 600,000 600,000
------------ -----------
9,185,340 9,428,597
------------ -----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK AT REDEMPTION PRICE..................................... 2,132,294 2,780,703
------------ -----------
REDEEMABLE COMMON STOCK AT REDEMPTION PRICE........................................ 393,305 393,305
------------ -----------
STOCKHOLDERS' EQUITY:
Undesignated Preferred Stock:
Authorized 2,498,697 shares, issued and outstanding--none..................... -- --
Class A Preferred Stock, par value $.01, authorized 1,303 shares; outstanding 779
shares........................................................................ 8 8
Common Stock, par value $.01, authorized 10,000,000 shares; outstanding 1,735,000
shares........................................................................ 17,350 17,350
Additional paid-in capital....................................................... 5,248,931 5,248,931
Accumulated deficit.............................................................. (554,484) (508,369)
Less: Redemption price of redeemable stock....................................... (2,525,599) (3,174,008)
------------ -----------
Total stockholders' equity.................................................... 2,186,206 1,583,912
------------ -----------
$ 16,601,544 $17,459,415
------------ -----------
------------ -----------
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ ------------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
THEATER REVENUES:
Box office............................................. $1,759,131 $6,195,399 $ 781,073 $2,712,210
Concession............................................. 554,671 1,861,155 226,425 743,986
Other.................................................. 31,895 141,420 5,505 49,739
---------- ---------- ---------- ----------
2,345,697 8,197,974 1,013,003 3,505,935
---------- ---------- ---------- ----------
THEATER OPERATING EXPENSES:
Film rental and booking fees........................... 823,791 3,022,377 345,411 1,196,126
Cost of concession sales............................... 99,261 279,549 33,097 108,605
Other theater operating expenses....................... 1,078,370 3,297,825 463,024 1,226,799
---------- ---------- ---------- ----------
2,001,422 6,599,751 841,532 2,531,530
---------- ---------- ---------- ----------
THEATER OPERATING INCOME BEFORE GENERAL AND
ADMINISTRATIVE AND OTHER EXPENSES...................... 344,275 1,598,223 171,471 974,405
GENERAL AND ADMINISTRATIVE EXPENSES...................... 375,262 589,822 95,525 191,806
---------- ---------- ---------- ----------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION........................................... (30,987) 1,008,401 75,946 782,599
---------- ---------- ---------- ----------
OTHER EXPENSES:
Depreciation and amortization.......................... 99,632 684,007 35,874 425,011
Interest............................................... 80,377 549,007 50,661 311,473
---------- ---------- ---------- ----------
180,009 1,233,014 86,535 736,484
---------- ---------- ---------- ----------
NET INCOME (LOSS)........................................ $ (210,996) $ (224,613) $ (10,589) $ 46,115
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
AVERAGE WEIGHTED COMMON SHARES AND EQUIVALENTS
OUTSTANDING............................................ 1,735,000 1,735,000 1,735,000 3,743,750
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET INCOME (LOSS) PER COMMON SHARE....................... $ (0.12) $ (0.13) $ (0.01) $ 0.01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------- -------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------- --------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1995................. -- $ -- 1,250,000 $12,500 $ 758,700 $ (78,875)
YEAR ENDED DECEMBER 31, 1995:
Dividends paid.......................... -- -- -- -- -- (30,000)
Net loss................................ -- -- -- -- -- (210,996)
------ ------- --------- ------- ---------- -----------
BALANCES, DECEMBER 31, 1995............... -- -- 1,250,000 12,500 758,700 (319,871)
YEAR ENDED DECEMBER 31, 1996:
Proceeds from sale of preferred stock,
net of related costs of $154,911..... 779 8 -- -- 2,345,081 --
Dividends paid.......................... -- -- -- -- -- (10,000)
Issuance of common stock:
For cash............................. -- -- 26,250 262 69,738 --
Upon conversion of debt.............. -- -- 25,000 250 79,750 --
For assets acquired.................. -- -- 433,750 4,338 1,995,662 --
Net loss.................................. -- -- -- -- -- (224,613)
------ ------- --------- ------- ---------- -----------
BALANCES, DECEMBER 31, 1996............... 779 $ 8 1,735,000 $17,350 $5,248,931 $(554,484)
THREE MONTHS ENDED MARCH 31, 1997
(Unaudited):
Net income.............................. -- -- -- -- -- 46,115
------ ------- --------- ------- ---------- -----------
779 $ 8 1,735,000 $17,350 $5,248,931 $(508,369)
------ ------- --------- ------- ---------- -----------
------ ------- --------- ------- ---------- -----------
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- -----------------------
1995 1996 1996 1997
----------- ----------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................... $ (210,966) $ (224,613) $ (10,589) $ 46,115
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation and amortization....................... 99,632 684,007 35,874 425,011
Changes in operating assets and liabilities:
Inventories....................................... (4,938) (28,455) (3,042) (2,522)
Other current assets.............................. (62,014) 32,954 (2,012) (126,141)
Security deposits and other assets................ (9,600) (40,716) (1,667) (10,075)
Accounts payable and accrued liabilities.......... 306,706 731,232 (95,656) 448,067
----------- ----------- --------- ----------
Net cash flows from operating activities....... 118,820 1,154,409 (77,092) 780,455
----------- ----------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment..................... (630,675) (6,607,946) (56,353) (305,347)
Purchase of intangible assets.......................... (35,576) (686,906) -- (93,181)
Project acquisition costs.............................. (285,557) -- (3,959) --
Escrow deposits........................................ (287,182) (7,347) (50,000) --
----------- ----------- --------- ----------
Net cash flows from investing activities....... (1,238,990) (7,302,199) (110,312) (398,528)
----------- ----------- --------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from long term debt........................... 400,000 4,317,228 32,192 625,000
Payments on long term debt............................. (17,448) (136,543) (2,337) (261,311)
Proceeds from subordinated notes payable,
related parties..................................... 580,000 600,000 72,000 --
Proceeds from issuance of preferred stock.............. -- 2,500,000 -- --
Proceeds from issuance of common stock................. -- 70,000 -- --
Payments on option..................................... (80,000) (120,000) (45,000) --
Costs related to issuance of
preferred stock..................................... -- (154,911) -- --
Debt issuance costs.................................... -- (342,842) -- --
Deferred offering costs................................ -- -- -- (65,179)
Dividends paid......................................... (30,000) (10,000) (10,000) --
----------- ----------- --------- ----------
Net cash flows from operating activities....... 852,552 6,722,932 46,855 298,510
----------- ----------- --------- ----------
NET CHANGE IN CASH....................................... (267,618) 575,142 (140,549) 680,437
CASH, BEGINNING OF YEAR.................................. 443,821 176,203 176,203 751,345
----------- ----------- --------- ----------
CASH, END OF YEAR........................................ $ 176,203 $ 751,345 $ 35,654 $1,431,782
----------- ----------- --------- ----------
----------- ----------- --------- ----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid.......................................... $ 42,877 $ 623,656 $ 58,161 $ 235,371
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Income taxes paid...................................... $ 1,670 $ 2,814 $ 1,230 $ 1,746
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Non-cash investing and financing activities:
Conversion of subordinated note payable-- related
party into common stock........................... $ -- $ 80,000 $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Project acquisition costs in exchange for option
payable........................................... $ 200,000 $ -- $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Common stock issued for purchase of assets.......... $ -- $ 2,000,000 $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Acquisition of assets through issuance of note
payable and subordinated note payable............. $ -- $ 5,000,000 $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information after February 10, 1997 is unaudited)
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation--The consolidated financial statements include
the accounts of Clearview Cinema Group, Inc. ('Clearview') and its wholly-owned
subsidiaries (collectively referred to as 'the Company'). All significant
intercompany balances and transactions have been eliminated in consolidation.
Nature of the Business--The Company is a regional motion picture exhibitor
that owns and operates in-town multiplex theaters primarily located in affluent
suburban communities in the New York/New Jersey metropolitan area. The Company's
theaters show a mix of first-run commercial, art and family-oriented films that
is designed to appeal primarily to sophisticated moviegoers and families with
younger children.
Revenues and Film Rental Costs--The Company recognizes revenues from box
office admissions and concession sales at the time of sale. Film rental costs
are based on a film's box office receipts and length of the film's run.
Seasonality--The Company's business is seasonal with a substantial portion
of its revenues and profits being derived during the summer months (June through
August) and the holiday season (November and December).
Estimates and Uncertainties--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results, as determined at a later date,
could differ from those estimates.
Inventories--Inventories consist of concession products and are stated at
the lower of cost (first-in, first-out method) or market.
Property and Equipment--Property and equipment are stated at cost.
Buildings and improvements, theater equipment and office furniture and equipment
are depreciated using straight line and accelerated methods over the estimated
useful lives of the assets. In general, the estimated useful lives used in
computing depreciation and amortization are: buildings and improvements--39
years; theater equipment--5 to 7 years; office furniture and equipment--5 to 7
years. Leaseholds and improvements are amortized over the terms of the
respective leases using the straight-line method.
Intangible Assets--Intangible assets consist of cost in excess of fair
value of businesses acquired (goodwill), organization costs, covenant not
compete, and debt issuance costs. Costs are amortized on a straight line basis
over the following lives: goodwill--15 years, organization costs--5 years and
covenant not to compete--3 years.
Costs related to the issuance of debt are capitalized. Such costs are
amortized over the term of the related debt.
Deferred Offering Costs--Offering costs have been deferred, pending the
outcome of the offering contemplated herein. If the offering is successful,
these costs will be charged against additional paid-in capital; otherwise, they
will be charged to expense.
Rent Expense--Certain theaters included in the consolidated financial
statements have operating leases which contain predetermined increases in the
rentals payable during the terms of such leases. For these leases, the aggregate
rental expense over the lease term is recognized on a straight-line basis over
the lease term. The differences between the expense charged to operations in any
year and amounts payable under the leases during such year are recorded as
deferred rent expense, which will ultimately reverse over the lease term.
Additional rent is paid for common area maintenance and may also be charged
based on a percentage of net revenue in excess of a predetermined amount.
Financial Instruments--Financial instruments include cash, other assets,
subordinated notes and accounts payable, accrued expenses and long-term debt.
With the exception of subordinated notes payable, the amounts reported for
financial instruments are considered to be reasonable approximations of their
fair values, based on market information of financial instruments with similar
characteristics available to management.
F-7
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:--(CONTINUED)
The following estimated fair values of the Company's subordinated notes
payable at December 31, 1996 have been determined using available market
information and appropriate valuation methodologies. The use of different market
assumptions and/or estimation methodologies could have a material effect on the
estimated fair value amounts.
<TABLE>
<CAPTION>
CARRYING FAIR
FINANCIAL INSTRUMENT AMOUNT VALUE
- -------------------------------------------------------------------------------- -------- --------
<S> <C> <C>
Subordinated Notes:
Related Parties:
Maturities,
August 1997................................................................ $400,000 $391,000
October 1997............................................................... 100,000 94,000
December 1998.............................................................. 600,000 561,642
Other......................................................................... 600,000 600,000
</TABLE>
The fair value of the long-term debt is based on interest rates that
management believes would be currently available for loans with similar terms
and characteristics as those presently outstanding.
Concentration of Credit Risk--The Company maintains its cash balances in
several financial institutions in accounts which are insured by the Federal
Deposit Insurance Corporation for up to $100,000 each. At December 31, 1996, the
Company had uninsured balances totaling approximately $763,000.
Income Taxes--Deferred tax assets and liabilities are computed annually for
temporary differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
temporary differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amounts expected to be realized.
Net Income (Loss) Per Common Share--Net income (loss) per common share is
based upon the weighted average number of outstanding common shares. However,
common shares, preferred shares and warrants issued after December 31, 1995 have
been treated as outstanding for all reported periods. The shares issuable upon
the exercise of outstanding warrants and options or upon conversion of
outstanding debt have been excluded during those periods where net losses are
reported, since the effect would be antidilutive.
Interim Reporting--The interim financial statements included herein reflect
all adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. Such adjustments
consist solely of normal recurring accruals. Results for interim periods are not
necessarily indicative of results for a full year.
NOTE 2--PROPERTY AND EQUIPMENT:
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
<S> <C> <C>
Land........................................................... $ 400,000 $ 400,000
Buildings...................................................... 1,302,098 1,302,767
Leaseholds and improvements.................................... 8,985,097 9,089,530
Office furniture and equipment................................. 2,347,117 2,564,016
------------ -----------
13,034,312 13,356,313
Less: Accumulated depreciation and amortization................ 781,095 1,071,692
------------ -----------
$ 12,253,217 $12,284,621
------------ -----------
------------ -----------
</TABLE>
F-8
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 3--INTANGIBLE ASSETS:
Intangible assets are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
<S> <C> <C>
Goodwill....................................................... $ 2,151,437 $ 2,207,361
Debt issue costs............................................... 378,264 409,649
Covenant not to compete........................................ 210,000 210,000
Organization costs............................................. 36,362 42,234
------------ -----------
2,776,063 2,869,244
Less: Accumulated amortization................................. 64,545 195,889
------------ -----------
$ 2,711,518 $ 2,673,355
------------ -----------
------------ -----------
</TABLE>
NOTE 4--ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
<S> <C> <C>
Film rental and booking fees payable........................... $ 699,444 $ 916,767
Accounts payable--other........................................ 243,278 366,772
Sales taxes.................................................... 49,228 49,866
Accrued payroll................................................ 68,632 42,394
Accrued interest............................................... 55,351 76,663
Other accrued expenses......................................... 110,569 222,107
------------ -----------
$ 1,266,502 $ 1,674,569
------------ -----------
------------ -----------
</TABLE>
NOTE 5--LONG-TERM DEBT, CREDIT AGREEMENT AND SUBORDINATED NOTE PAYABLE:
Long-term debt--A summary of long-term debt follows:
<TABLE>
<CAPTION>
INTEREST DECEMBER 31, MARCH 31,
DESCRIPTION RATE 1996 1997
- ----------------------------------------------------------------------- ----------- ------------ -----------
<S> <C> <C> <C>
Notes payable to bank, interest payable in monthly 2% above
installments, principal due in quarterly installments bank's
through July 2002.................................................... prime rate $4,175,000 $8,946,440
Note payable--seller, refinanced as described below.................... -- 4,400,000 --
Notes payable in monthly installments of principal and interest of
$5,029, due October 2004............................................. 11.25% 337,009 331,343
Other.................................................................. 51,228 49,183
------------ -----------
8,963,237 9,326,926
Less: Current maturities............................................... 977,897 1,098,329
------------ -----------
$7,985,340 $8,228,597
------------ -----------
------------ -----------
</TABLE>
F-9
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 5--LONG-TERM DEBT, CREDIT AGREEMENT AND SUBORDINATED NOTE
PAYABLE:--(CONTINUED)
Long-term debt matures as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1997........................................................ $ 977,897
1998........................................................ 1,386,383
1999........................................................ 1,595,260
2000........................................................ 1,821,564
2001........................................................ 2,994,883
2002 and thereafter......................................... 187,250
----------
$8,963,237
----------
----------
</TABLE>
Notes payable to the bank are collateralized by substantially all of the
assets of the Company.
Refinancing--In January 1997, seller-financing of $4,400,000 was paid with
$100,000 from the Company's operating cash and the proceeds of a $4,300,000 bank
term note, under the Company's Amended Credit Agreement with its principal
lender. The bank term note bears interest at 2% above the bank's prime rate
(payable monthly), with quarterly principal payments, commencing in July 1997
and ending October 2001, with a balloon payment of $1,225,000 due in December
2001. Accordingly, the note payable at December 31, 1996 has been classified in
accordance with the terms of this new bank term note.
Under a second amendment to the Amended Credit Agreement with its principal
lender, the Company has additional borrowing availability of $1,250,000, of
which $625,000 was drawn in March 1997.
In accordance with the Amended Credit Agreement, the Company maintains a
$10,000,000 key-man life insurance policy on its President and Chief Executive
Officer.
Subordinated note payable, other--The Company has a $600,000 subordinated
note payable to the seller of the Bergen County theaters (see Note 7). Interest
is due monthly at rates set forth below. The principal and any unpaid interest
is due December 2001 or immediately upon the consummation of any public
offering.
<TABLE>
<CAPTION>
PERIOD: RATE
- ------- ----
<S> <C>
December 1996 through 1997.......................................... 12%
December 1997 through 1998.......................................... 14%
December 1998 through 1999.......................................... 16%
December 1999 and thereafter........................................ 18%
</TABLE>
See Note 10 for related party subordinated notes payable.
NOTE 6--INCOME TAXES:
Deferred income taxes reflect the net effects of temporary differences
between the amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The principal temporary difference
arises from the net operating loss carryforwards and results in a deferred tax
asset of approximately $175,000 at December 31, 1996 and $85,000 at December 31,
1995.
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. The Company has
determined, based on its recurring net losses since inception, that a full
valuation allowance is appropriate at December 31, 1996 and 1995.
F-10
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 6--INCOME TAXES:--(CONTINUED)
A reconciliation of the provision (benefit) for income taxes computed at
the federal statutory rate of 34% and the effective tax rate of income (loss)
before income taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------- -------------------
1995 1996 1996 1997
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Computed taxes (benefit) on net income (loss) at federal statutory
rate.............................................................. $(72,000) $(76,000) $(4,000) $ 16,000
State income taxes (benefit), net of federal income tax effect...... (13,000) (14,000) (1,000) 3,000
Tax effect of net operating losses not currently usable............. 85,000 90,000 5,000
Recognition of tax benefit of prior years' losses................... -- -- -- (19,000)
-------- -------- ------- --------
Provision (benefit) for income taxes................................ $ -- $ -- $ -- $ --
-------- -------- ------- --------
-------- -------- ------- --------
</TABLE>
The Company has available at December 31, 1996 net operating loss
carryforwards totaling approximately $406,000 that may be applied against future
consolidated federal taxable income and the future state taxable income of the
respective subsidiary companies. The loss carryforwards will expire through
2011.
Current tax law limits the use of net operating loss carryforwards after
there has been a substantial change in ownership (as defined) during a
three-year period. Because of the possible future changes in common stock
ownership, the use of the Company's net operating loss carryforwards may be
subject to an annual limitation. To the extent amounts available under the
annual limitation are not used, they may be carried forward for the remainder of
15 years from the year the losses were originally incurred.
NOTE 7--THEATER ACQUISITIONS:
During 1996, the Company acquired a total of nine theaters located in New
Jersey and New York. The acquisitions have been accounted for under the purchase
method of accounting. Under the purchase method of accounting, the results of
operations of the acquired theaters are included in the accompanying
consolidated financial statements from their respective acquisition dates. The
assets of the acquired theaters are included based on an allocation of the
respective purchase prices. The acquisitions are described as follows:
May 1996--The Company purchased three New Jersey theaters and one New York
theater in May 1996. The total cost of $7,000,000 was paid by $5,000,000 in cash
and the issuance of 433,750 shares of the Company's Common Stock, valued at
$2,000,000. The total cost was allocated as follows: $835,000--theater
equipment, $5,965,000--leasehold interests and $200,000--covenant not to
compete.
July 1996--The Company purchased two New York theaters in July 1996. The
total cost of $1,499,000 was paid in cash and was allocated as follows:
$1,489,000--leasehold interests and $10,000--covenant not to compete.
December 1996--The Company purchased three theaters in Bergen County, New
Jersey in December 1996. The total cost of $5,000,000 was paid with a $4,400,000
secured note and $600,000 subordinated note (see Note 5). The purchase price was
allocated as follows: $400,000--land, $1,300,000--buildings and leasehold
improvements, $832,000--theater equipment, $848,000--leasehold interests and
$1,620,000--goodwill.
NOTE 8--STOCKHOLDERS' EQUITY:
Stock Split--In May 1997, the Company's Board of Directors approved a 1,250 to 1
stock split which has been retroactively reflected in the accompanying
consolidated financial statements.
Preferred Stock--The Company's Certificate of Incorporation authorizes the
issuance of up to 2,500,000 shares of Preferred Stock. The Board of Directors is
authorized to issue shares of Preferred Stock from time to time in one or more
series and to establish and designate any such series and to fix the number of
shares and the relative conversion rights, voting rights, terms of redemption
and liquidation.
F-11
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 8--STOCKHOLDERS' EQUITY:--(CONTINUED)
During May and July 1996, the Company sold a total of 779 shares of Class A
Preferred Stock and preferred warrants for $2,500,000. The warrants, which
expire in June 2006, entitle the holder to purchase up to 471 shares of Class A
Preferred Stock at an exercise price defined in the warrants.
The holders of the Class A Preferred Stock are entitled to receive
preferential dividends, when and as declared by the Board of Directors. So long
as any shares of Class A Preferred Stock are outstanding, unless all dividends
on the Class A Preferred Stock have been paid, no dividend or other distribution
may be paid or made on the common stock or any other capital stock of the
Company ranking junior as to dividends to the Class A Preferred Stock. In the
event of any sale of all or substantially all of the assets of the Company or
any liquidation, dissolution or winding up of the Company, the holders of the
Class A Preferred Stock will be entitled to receive an amount per share equal to
a Liquidation Value (as defined) plus all declared but unpaid dividends per
share on the Class A Preferred Stock, prior to any distribution to holders of
the common stock or any other capital stock of the Company ranking junior upon
liquidation or dissolution to the Class A Preferred Stock. The shares of Class A
Preferred Stock are convertible at any time at the option of the holders thereof
into shares of common stock at a conversion ratio of 1,250 to 1 as of the
consummation of the offering contemplated herein. Upon the occurrence of certain
events, the shares of Class A Preferred Stock will automatically convert into
shares of common stock.
The preferred warrants are not exercisable until June 1, 2001 unless, prior
to that date, the Company sells all or substantially all of its assets,
liquidates, dissolves or winds up or merges or consolidates with another
corporation in a transaction in which certain voting rights are not maintained
by the holders of the Company's voting stock. The number of shares of Class A
Preferred Stock for which the preferred warrants are exercisable will be subject
to reduction upon the occurrence of certain events. See 'The Concurrent
Transactions' and 'Description of Capital Stock' included elsewhere herein for
additional information.
Redemption Rights--A certain common stockholder has the right to sell its
shares of common stock to the Company for a 30-day period commencing in 2002 at
a redemption price based upon a formula. If such stockholder does not exercise
that right, the Company has the right to purchase those shares of common stock
from such stockholder for the 90-day period commencing after the expiration of
that 30-day period at a price based upon the same formula. Those rights
terminate upon the occurrence of certain events. Such stockholder and the
Company have agreed to terminate those rights in connection with the offering
contemplated herein.
The holder of the Class A Preferred Stock has the right, exercisable on or
after June 1, 2001, to sell to the Company all of those shares or the shares of
common stock into which they have been converted at a redemption price
determined in accordance with a specified formula. In connection with the
offering contemplated herein, such holder has agreed to terminate this right.
See 'The Concurrent Transactions' included elsewhere herein for additional
information.
Other Warrants--In connection with certain bank financing as described in
Note 5 and pursuant to a May 1996 warrant agreement (amended in December 1996),
the Company issued seven-year warrants to its principal lender to purchase
196,250 shares of the Company's common stock.
NOTE 9--COMMITMENTS AND CONTINGENCIES:
Theater Leases--Certain of the Company's subsidiaries have entered into
lease arrangements for their respective theater facilities. The following is a
schedule of future minimum rental payments required for all
F-12
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 9--COMMITMENTS AND CONTINGENCIES:--(CONTINUED)
non-cancellable operating leases (for theater facilities) that have initial or
remaining lease terms in excess of one year at December 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- -----------------------------------------------------------
<S> <C>
1997.................................................. $ 954,878
1998.................................................. 959,851
1999.................................................. 943,821
2000.................................................. 865,071
2001.................................................. 777,819
2002 and thereafter................................... 6,868,926
-----------
$11,370,366
-----------
</TABLE>
Rent expense for theater operating leases in 1996 and 1995 was
approximately $802,000 and $290,000, respectively.
In addition, the Company leases its administrative facilities under a
lease, expiring in February 1998, which requires minimum annual payments of
$22,200.
Lease, Project Acquisition Costs and Escrow Deposits--During September
1995, the Company entered into an option agreement providing for the lease of
three New York theater locations with the option to purchase certain assets
relating to the three theaters. In consideration of the option granted by the
agreement, the Company made an initial $200,000 payment which was financed by
the potential seller. The option to purchase the assets is initially exercisable
in September 1997. Until then, the Company is required to make two annual
payments of at least $150,000, which it considers to be the equivalent of
interest expense. An annual payment of $186,402 was made in 1996. If the Company
does not exercise the option in 1997, it will be required to make three
additional annual payments of at least $150,000 through the second exercisable
date of September 2000. However, if, at the first exercisable date, revenues
generated from the three theaters do not reach levels specified by the
agreement, the Company has the right to terminate the agreement and will no
longer be obligated for any remaining payments. The agreement also requires the
Company to maintain an escrow deposit, which totaled approximately $294,000 at
December 31, 1996 and March 31, 1997. Capitalized costs related to this project
were approximately $274,000 at December 31, 1996 and March 31, 1997 and are
included in project acquisition costs. It is the Company's present intention to
ultimately exercise this option.
The Company has also incurred certain costs associated with the development
of an additional theater location. At December 31, 1996 and March 31, 1997,
these project costs amounted to approximately $160,000 and $140,000,
respectively.
Employment Agreement--The Company is obligated through May 2003 to pay its
President and Chief Executive Officer an annual base salary of $120,000, plus an
additional amount based on gross revenue, such total not to exceed $750,000.
Consulting Agreement--The Company has entered a consulting agreement with
an affiliate of a shareholder, wherein for certain management services, the
Company will pay $50,000 per year through May 1998, then at the rate of 50% of
the Chief Executive Officer's base salary through May 2003 or until the
shareholder should sell its shares.
F-13
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 10--RELATED PARTY TRANSACTIONS:
Related party subordinated notes payable are subordinate to the bank debt
described in Note 5 and consist of the following:
<TABLE>
<CAPTION>
INTEREST
DESCRIPTION RATE DECEMBER 31, 1996
----------- -------- -----------------
<S> <C> <C>
Notes payable to a director of the Company, $50,000 due in each of August and October
1997 and $300,000 due in December 1998, all with interest payable quarterly........ 8 % $ 400,000
Notes payable to an affiliated entity of a director, $50,000 due in each of August
and October 1997 and $300,000 due in December 1998, all with interest payable
quarterly.......................................................................... 8 % 400,000
Note payable to a stockholder, due in August 1997, with interest payable quarterly... 8 % 300,000
-----------------
1,100,000
Less: Current maturities............................................................. 500,000
-----------------
$ 600,000
-----------------
-----------------
</TABLE>
In connection with the issuance of this subordinated debt, the Company
issued warrants to purchase a total of 156,250 shares of the Company's Common
Stock at $1.60 per share, expiring through October 2001; and warrants to
purchase 93,750 shares of the Company's Common Stock at $3.20 per share,
expiring through December 2002. Of such warrants, all are currently exercisable,
except for the warrants exercisable for 46,875 shares that would expire in
December 2002. Those warrants will be canceled if the Company pays the related
debt in full no later than December 13, 1997.
The Company has the option of converting the outstanding principal of each
of the above notes on their maturity dates to new notes. The new notes will bear
interest at the rate of 8% per annum with interest and principal due in 20 equal
quarterly installments. Upon exercising its option, the Company would
concurrently issue 5-year warrants to purchase 156,250 shares of the Company's
Common Stock at an exercise price of $1.60 per share or warrants to purchase
93,750 shares of the Company's Common Stock at $3.20 per share.
The related party subordinated notes payable mature as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------
<S> <C>
1997.................................................................. $ 500,000
1998.................................................................. 600,000
----------
$1,100,000
----------
----------
</TABLE>
F-14
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Clearview Cinema Group, Inc.
We have audited the combined statements of income of the Nelson Ferman Theaters
at Emerson, New City, Allwood and Washington Township, movie theaters formerly
owned by affiliates of Nelson Ferman, Inc., for the period of January 1, 1996
through May 29, 1996 (date of sale) and the year ended December 31, 1995. These
combined financial statements are the responsibility of the management of the
Nelson Ferman Theaters. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provides a reasonable basis
for our opinion.
In our opinion, combined financial statements referred to above present fairly,
in all material respects, the results of operations of Nelson Ferman Theaters at
Emerson, New City, Allwood and Washington Township, for the periods then ended
in conformity with generally accepted accounting principles.
WISS & COMPANY, LLP
Woodbridge, New Jersey
April 1, 1997
F-15
<PAGE>
NELSON FERMAN THEATERS AT EMERSON, NEW CITY, ALLWOOD AND
WASHINGTON TOWNSHIP
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, THROUGH
DECEMBER 31, MAY 29,
1995 1996
------------ ------------------
<S> <C> <C>
THEATER REVENUES:
Box office.................................................................... $3,679,118 $1,515,839
Concession.................................................................... 584,946 114,922
Other......................................................................... 21,797 23,308
------------ ------------------
4,285,861 1,654,069
------------ ------------------
THEATER OPERATING EXPENSES:
Film rental and booking fees.................................................. 1,787,212 564,142
Other theater operating expenses.............................................. 1,370,367 622,997
------------ ------------------
3,157,579 1,187,139
------------ ------------------
THEATER OPERATING INCOME BEFORE GENERAL AND ADMINISTRATIVE AND OTHER EXPENSES... 1,128,282 466,930
GENERAL AND ADMINISTRATIVE EXPENSES............................................. 705,300 282,220
------------ ------------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION.................. 422,982 184,710
------------ ------------------
OTHER EXPENSES:
Depreciation and amortization................................................. 161,563 --
Interest...................................................................... 20,613 35,965
------------ ------------------
182,176 35,965
------------ ------------------
NET INCOME...................................................................... $ 240,806 $ 148,745
------------ ------------------
------------ ------------------
</TABLE>
See accompanying Notes to Combined Statements of Income.
F-16
<PAGE>
NELSON FERMAN THEATERS AT EMERSON, NEW CITY,
ALLWOOD AND WASHINGTON TOWNSHIP
NOTES TO COMBINED STATEMENTS OF INCOME
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Combination and Nature of the Business--The combined
financial statements include the accounts of four theater affiliates of Nelson
Ferman, Inc. ('Nelson Ferman'): Emerson ('Emerson'), New City ('New City'),
Allwood ('Allwood') and Washington Township ('Washington'), collectively, the
'NF Theater Group'. Until May 29, 1996, these theaters were part of an
independent theater circuit with locations in New Jersey and New York. All
significant intercompany balances and transactions have been eliminated in
combination.
The NF Theater Group operated multi-screen first run theaters in New Jersey
and New York.
Revenue Recognition--The NF Theater Group recognizes revenue for ticket
sales at the time of sale. Concessions sales are recognized as a commission from
a third party, when earned.
Estimates and Uncertainties--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results, as determined at a later date,
could differ from those estimates.
Property and Equipment--Property and equipment are stated at cost. Theater
equipment is depreciated over a period of 5 to 7 years using straight line and
accelerated methods over the estimated useful lives of the assets. Leasehold
improvements are amortized over the life of the underlying leases.
Rent Expense--The NF Theater Group leased its theater facilities pursuant
to various long-term leases. Additional rent was paid for common area
maintenance and was also charged based on a percentage of net revenue in excess
of a predetermined amount. Rent for the NF Theater Group amounted to
approximately $162,000 for the period ended May 29, 1996 and $344,000 for the
year ended December 31, 1995.
Income Taxes--The members of the NF Theater Group had elected under Section
1361 of the Internal Revenue Code of 1986, as amended, to be taxed as 'S'
corporations. Under those provisions, all earnings and losses of the members of
the NF Theater Group were reported on the tax returns of their shareholders.
Accordingly, no provisions have been made for federal income tax reporting
purposes. The NF Theater Group continues to be subject to state income taxes at
reduced rates.
NOTE 2--RELATED PARTY TRANSACTIONS:
Operating Expenses and Management Fees--The NF Theater Group's operations
through the date of sale were significantly controlled by Nelson Ferman. In that
regard, the cash deposited in the operating accounts of each theater was
transferred to Nelson Ferman, which used the funds to pay operating expenses,
along with the funds from other Nelson Ferman affiliated theaters, using an
integrated system.
In addition to the normal operating expenses, the NF Theater Group was
allocated a management fee from Nelson Ferman based on total corporate overhead.
The management fee allocation amounted to approximately $705,000 for the year
ended December 31, 1995 and $282,000 for the period ended May 29, 1996.
NOTE 3--SUBSEQUENT EVENT:
On May 29, 1996, substantially all of the NF Theater Group's assets,
including leasehold interests, equipment and various operating contracts were
sold to Clearview Cinema Group, Inc. ('Clearview') for $7,000,000, including
$5,000,000 in cash and $2,000,000 in shares of common stock of Clearview.
The theaters began operating, effective May 30, 1996, as Clearview theaters
at which time the third party concession commission arrangements were
discontinued and Clearview commenced operating the concession facilities. The
results of operations of the NF Theater Group subsequent to the acquisition are
included in Clearview's results of operations.
See Note 7 of the Notes to Consolidated Financial Statements of Clearview
Cinema Group, Inc. and Subsidiaries included elsewhere herein for additional
information.
F-17
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Clearview Cinema Group, Inc.
We have audited the combined statements of income of Magic Cinemas at
Bergenfield, Tenafly and Closter, movie theaters formerly owned by Magic
Cinemas, LLC, for the period of January 1, 1996 through December 13, 1996 (date
of sale) and the year ended December 31, 1995. These combined financial
statements are the responsibility of the management of Magic Cinemas, LLC. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provides a reasonable basis
for our opinion.
In our opinion, combined financial statements referred to above present fairly,
in all material respects, the results of operations of Magic Cinemas at
Bergenfield, Tenafly and Closter, for the periods then ended in conformity with
generally accepted accounting principles.
WISS & COMPANY, LLP
Woodbridge, New Jersey
April 10, 1997
F-18
<PAGE>
MAGIC CINEMAS AT BERGENFIELD, TENAFLY AND CLOSTER
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
THROUGH
YEAR ENDED DECEMBER 13,
DECEMBER 31, 1995 1996
------------------ ------------
<S> <C> <C>
THEATER REVENUES:
Box office.................................................................... $1,772,745 $1,743,015
Concession.................................................................... 504,905 521,737
Other......................................................................... 136,225 149,986
------------------ ------------
2,413,875 2,414,738
------------------ ------------
THEATER OPERATING EXPENSES:
Film rental and booking fees.................................................. 832,834 809,353
Cost of concession sales...................................................... 89,925 85,090
Other theater operating expenses.............................................. 768,530 865,639
------------------ ------------
1,691,289 1,760,082
------------------ ------------
THEATER OPERATING INCOME BEFORE GENERAL AND ADMINISTRATIVE AND OTHER COSTS...... 722,586 654,656
GENERAL AND ADMINISTRATIVE EXPENSES............................................. 173,186 3,147
------------------ ------------
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION.................. 549,400 651,509
------------------ ------------
OTHER EXPENSES:
Depreciation and amortization................................................. 255,067 168,704
Interest...................................................................... 243,290 45,408
------------------ ------------
498,357 214,112
------------------ ------------
NET INCOME...................................................................... $ 51,043 $ 437,397
------------------ ------------
------------------ ------------
</TABLE>
See accompanying Notes to Combined Statements of Income.
F-19
<PAGE>
MAGIC CINEMAS AT BERGENFIELD, TENAFLY AND CLOSTER
NOTES TO COMBINED STATEMENTS OF INCOME
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Combination and Nature of the Business--The combined
financial statements include the accounts of three theater divisions of Magic
Cinemas, LLC: Bergenfield ('Bergenfield'), Tenafly ('Tenafly') and Closter
('Closter'), collectively, the 'Magic Theater Group'. Until December 13, 1996,
these theaters were divisions of Magic Cinemas, LLC ('Magic'), an independent
theater circuit with locations in New Jersey and Pennsylvania. All significant
intercompany balances and transactions have been eliminated in combination.
The Magic Theater Group operated multi-screen first run theaters in New
Jersey.
Revenue Recognition--The Magic Theater Group recognizes revenue for ticket
and concessions sales at the time of sale. Rental income is recognized in the
month that it is earned.
Estimates and Uncertainties--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results, as determined at a later date,
could differ from those estimates.
Property and Equipment--Property and equipment are stated at cost.
Buildings and improvements, theater equipment and office furniture and equipment
are depreciated using straight line and accelerated methods over the estimated
useful lives of the assets. Leasehold improvements are amortized over the term
of the related leases using the straight-line method. In general, the estimated
useful lives used in computing depreciation and amortization are: buildings and
improvements--39 years; theater equipment--5 to 7 years; office furniture and
equipment--5 to 7 years.
Rent Expense--The Closter facility has an operating lease which contains
predetermined increases in the rental payable during the term of such lease. For
this lease, the aggregate rental expense is recognized on a straight-line basis
over the lease term. The differences between the expense charged to operations
in any year and amounts payable under the leases during such year are recorded
as deferred rent expense, which will ultimately reverse over the lease term.
Additional rent is paid for common area maintenance and may also be charged
based on a percentage of net revenue in excess of a predetermined amount.
Rent expense for the Closter theater amounted to approximately $77,000 for
the period ended December 13, 1996 and $50,000 for the year ended December 31,
1995.
Theaters located in Bergenfield and Tenafly were owned by the Magic Theater
Group.
Income Taxes--For the year ended December 31, 1995, the Magic Theater Group
had elected under Section 1361 of the Internal Revenue Code of 1986, as amended,
to be taxed as 'S' corporations and, for the period ended December 13, 1996,
Magic was treated as a partnership for Federal and New Jersey state income tax
reporting purposes. Under these provisions, all earnings and losses were
reported on the tax returns of the respective shareholders, partners or members.
Accordingly, no provisions have been made for federal income tax reporting
purposes.
NOTE 2--RELATED PARTY TRANSACTIONS:
Operating Expenses and Management Fees--The Magic Theater Group's
operations through the date of sale by Magic were significantly controlled by
Magic. In that regard, the cash deposited to the Magic Theater Group's operating
accounts was transferred to Magic which used the funds to pay operating
expenses, along with funds from other Magic-owned theaters, on a company-wide
basis using an integrated system.
In addition to the normal operating expenses, the Magic Theater Group was
allocated a management fee from the corporate division of Magic based on
corporate overhead. A nominal allocation was made for the period ended December
13, 1996. The management fee amounted to approximately $149,000 for the year
ended December 31, 1995.
F-20
<PAGE>
MAGIC CINEMAS AT BERGENFIELD, TENAFLY AND CLOSTER
NOTES TO COMBINED STATEMENTS OF INCOME--(CONTINUED)
NOTE 2--RELATED PARTY TRANSACTIONS:--(CONTINUED)
Interest Expense--Interest expense for the period ended December 13, 1996
and the year ended December 31, 1995 was for interest paid and/or owed to
related parties. On March 22, 1996, the underlying related party debt was
restructured into equity.
NOTE 3--SUBSEQUENT EVENTS:
On December 13, 1996, substantially all of the Magic Theater Group's
assets, including land, building, equipment and various operating contracts and
leases were sold to Clearview Cinema Group, Inc. ('Clearview') at a sale price
of $5,000,000. The theaters began operating, effective December 14, 1996, as
Clearview theaters and the results of operations subsequent to the acquisition
are included in Clearview's results of operations.
See Note 7 of the Notes to the Consolidated Financial Statements of
Clearview Cinema Group, Inc. and Subsidiaries included elsewhere herein for
additional information.
F-21
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. ANY INFORMATION OR REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR
MADE, MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN
RESPECT OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS. HOWEVER, IN THE EVENT
OF A MATERIAL CHANGE, THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED
ACCORDINGLY.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.............................
Risk Factors...................................
The Concurrent Transactions....................
Use of Proceeds................................
Dividend Policy................................
Capitalization.................................
Dilution.......................................
Pro Forma Consolidated Financial Data..........
Management's Discussion and Analysis of
Financial Condition and Results of
Operations...................................
Business.......................................
Management and Directors.......................
Certain Transactions...........................
Principal Stockholders.........................
Description of Capital Stock...................
Shares Eligible For Future Sale................
Underwriting...................................
Legal Matters..................................
Experts........................................
Additional Information.........................
Index to Financial Statements..................
</TABLE>
UNTIL ____________, 1997 (25 DAY AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
_______ SHARES
[LOGO]
CLEARVIEW CINEMA
GROUP, INC.
COMMON STOCK
-------------------
PROSPECTUS
-------------------
PRIME CHARTER LTD.
______________, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is hereby made to Section 145 of the General Corporation Law of
the State of Delaware (the 'DCL'), which provides that a corporation will have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (a 'proceeding'), by
reason of the fact the he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, with respect to the payment of certain
amounts under certain circumstances.
Article IX (the 'Article') of the Amended and Restated Certificate of
Incorporation of Clearview Cinema Group, Inc. ('Clearview') provides that the
Company will indemnify and hold harmless, to the fullest extent permitted by
applicable law, any person who was or is made or is threatened to be made a
party or is otherwise involved in any proceeding by reason of the fact that he,
or a person for whom he is the legal representative, is or was a director,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust, enterprise or non-profit entity,
including service with respect to employee benefit plans.
The Article provides that the rights to indemnification and advancement of
expenses conferred by the Article are presumed to have been relied upon by
directors and officers of the Company in serving or continuing to serve the
Company and are enforceable as contract rights. Said rights are not exclusive of
any other rights to which those seeking indemnification may otherwise be
entitled. The Article further provides that the Company may enter into contracts
to provide its directors and officers with specific rights to indemnification,
which contracts may confer rights and protections to the maximum extent
permitted by the DCL. In addition, the Company may create trust funds, grant
security interests, obtain letters of credit, or use other means to ensure
payment of such amounts as may be necessary to perform the obligations provided
for in the Article or in any such contract.
The Article states that any repeal or modification of the Article by the
stockholders of the Company will not adversely affect any right or protection of
a director of the Company existing at the time of such repeal or modification
with respect to acts or omissions occurring prior to such repeal or
modification.
The Article further provides that the personal liability of a director of
the Company is eliminated to the fullest extent permitted by Section 102(b)(7)
of the DCL, as the same may be amended and supplemented. The Article states
that, without limiting the generality of the foregoing, no director will be
personally liable to the Company or any of its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the DCL (relating to
unlawful distributions and redemptions of shares), or (iv) for any transaction
from which the director derived an improper personal benefit.
II-1
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees payable to the Securities and
Exchange Commission and other estimated expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................................... $3,484.85
Listing Fee........................................................................... *
Printing and Engraving Expenses....................................................... *
Accounting Fees and Expenses.......................................................... *
Legal Fees and Expenses............................................................... *
Blue Sky Qualification Fees and Expenses.............................................. *
Transfer Agent Fees and Expenses...................................................... *
Miscellaneous......................................................................... *
---------
Total............................................................................ *
---------
---------
</TABLE>
- ------------------
* To be filed by amendment.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Pursuant to an Investment and Stockholders Agreement dated December 21,
1994, the Company sold 250 shares of its common stock, $.01 par value (the
'Common Stock') to CMNY Capital II, L.P. ('CMNY') for an aggregate purchase
price of $500,000 in cash. Concurrently, the Company, pursuant to a Contribution
and Exchange Agreement dated December 21, 1994, issued to A. Dale Mayo ('Mayo')
and Brett E. Marks ('Marks') 550 and 200 shares of Common Stock, respectively,
in exchange for (i) all of the outstanding shares of capital stock of the
Clearview Theater Group, Inc., CCC Madison Triple Cinema Corp., CCC Chester Twin
Cinema Corporation and CCC Manasquan Cinema Corporation (collectively, the
'Subsidiaries') and (ii) certain promissory notes of certain Subsidiaries with
an aggregate principal amount of $250,000.
On June 20, 1995, Michael C. Rush ('Rush') purchased (i) 20 shares of
Common Stock, pursuant to a Stock Purchase Agreement, for an aggregate purchase
price of $40,000 in cash from Mayo and (ii) a convertible promissory note in the
principal amount of $80,000 from the Company. The terms of the convertible
promissory note provided Rush with the right to convert that note at any time on
or prior to June 20, 1996 into 20 shares of Common Stock, and Rush exercised
that right on May 15, 1996.
On August 31, 1995, the Company issued three 8% Subordinated Promissory
Notes with the principal amounts of $300,000, $50,000 and $50,000 (each a
'Subordinated Note') to CMNY, CMCO and Davidoff, respectively. The principal of
these Subordinated Notes is payable in one installment on August 31, 1997. With
each Subordinated Note sold, the Company issued one Common Stock Purchase
Warrant A ('Warrant A') and one Common Stock Purchase Warrant B ('Warrant B';
Warrants A and Warrants B being collectively referred to herein as the
'Warrants'). Each of these Warrants entitle its holder for a five-year period to
purchase a specified number of shares of Common Stock at an exercise price of
$2,000 per share, subject to adjustment as set forth in each Warrant. Each
Warrant A is exercisable from September 1, 1996 through August 31, 2001, and
each Warrant B is exercisable from August 31, 1995 through August 31, 2000.
On October 11, 1995, the Company issued two additional Subordinated Notes
with a principal amount of $50,000 each to Davidoff and CMCO. The principal of
these Subordinated Notes is payable in one installment on October 11, 1997. With
each Subordinated Note sold, the Company issued one Warrant A and one Warrant B.
Each of these Warrants entitle its holder for a five-year period to purchase a
specified number of shares of Common Stock at an exercise price of $2,000 per
share, subject to adjustment as set forth in each Warrant. Each of these
Warrants is the same as the Warrants previously issued with an exercise price of
$2,000 per share, except that each Warrant A is exercisable on or after October
11, 1996 through October 11, 2001, and each Warrant B is exercisable any time on
or after October 11, 1995 through October 11, 2000.
On December 13, 1996, the Company issued two more Subordinated Notes with a
principal amount of $300,000 each to Davidoff and CMCO. With each Subordinated
Note sold, the Company issued one Warrant A
II-2
<PAGE>
and one Warrant B. Each of these Warrants entitle its holder for a five-year
period to purchase a specified number of shares of Common Stock at an exercise
price of $4,000 per share, subject to adjustment as set forth in each Warrant.
However, each Warrant A is cancelable and non-exercisable if the Company repays
the corresponding Subordinated Note in full prior to December 13, 1997. Each
Warrant A is exercisable on or after December 13, 1997 through December 13,
2002, and each Warrant B is exercisable any time on or after December 13, 1996
through December 13, 2001.
Each of the holders of the Subordinated Notes received Warrants exercisable
for the number of shares of Common Stock set forth below:
<TABLE>
<CAPTION>
AUGUST 31, 1995 OCTOBER 11, 1995 DECEMBER 13, 1996
8% NOTES 8% NOTES 8% NOTES
--------------- ---------------- -----------------
<S> <C> <C> <C>
CMNY 75 -- --
CMCO 12.5 12.5 37.5
Davidoff 12.5 12.5 37.5
</TABLE>
The Company acquired the assets of Emerson Cinema, Inc. in exchange for 347
shares of Common Stock pursuant to the Agreement and Plan of Reorganization
dated May 29, 1996 ('Plan of Reorganization').
Pursuant to a Subscription Agreement dated July 31, 1996, Rush purchased
another 5 shares of Common Stock at $4,000 per share for an aggregate purchase
price of $20,000. Also on that date, Paul and Cindy Kay purchased 16 shares of
Common Stock from the Company at $3,124 per share for an aggregate purchase
price of $50,000.
Pursuant to the Warrant Agreement dated May 29, 1996, the Company issued to
The Provident Bank ('Provident') two Common Stock Purchase Warrants (the
'Provident Warrants'). Each of the Provident Warrants entitles Provident to
purchase, at $.01 per share, 65 shares and 8 shares, respectively, of Common
Stock. These Provident Warrants are exercisable at any time from May 29, 1996
through May 29, 2003.
The Company, in accordance with Amendment No. 1 to the Warrant Agreement
dated December 13, 1996, issued to Provident another Provident Warrant, which
entitles Provident to purchase 84 shares of Common Stock at $.01 per share. That
Provident Warrant is exercisable at any time from December 13, 1996 through
December 13, 2003.
The Company sold a total of 779 shares of its Class A Convertible Preferred
Stock, $.01 par value ('Class A Preferred Stock'), and two warrants ('MidMark
Warrants') to purchase a total of 471 shares of Class A Preferred Stock to
MidMark Capital, L.P. ('MidMark'). Pursuant to a Preferred Stock and Warrant
Purchase Agreement dated May 29, 1996 and for an aggregate purchase price of
$1,750,000, MidMark purchased 684 shares of Class A Preferred Stock and a
MidMark Warrant to purchase, at $.01 per share, 228 shares of Class A Preferred
Stock and/or up to that number of shares of Common Stock into which such shares
of Class A Preferred Stock are convertible. Pursuant to a Preferred Stock and
Warrant Purchase Agreement dated July 2, 1996 and for an aggregate purchase of
$750,000, MidMark purchased another 95 shares of Class A Preferred Stock and
another MidMark Warrant to purchase, at $.01 per share, 243 shares of Class A
Class A Preferred Stock and/or up to that number of shares of Common Stock into
which such shares of Preferred Stock are convertible. The MidMark Warrants are
exercisable during a period commencing no later than June 1, 2001 and ending on
June 1, 2006.
In connection with all of the above-described sales of securities, the
Company relied upon the exemption from registration set forth in Section 4(2) of
the Securities Act of 1933, as amended.
ITEM 27. EXHIBITS.
The following exhibits are filed as part of this registration statement:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
1.01* Form of Underwriting Agreement
3.01(a) Current Certificate of Incorporation of Clearview Cinema Group, Inc.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
3.01(b)* Proposed Amended and Restated Certificate of Incorporation of Clearview Cinema Group, Inc.
3.02(a) Current By-laws of Clearview Cinema Group, Inc.
3.02(b)* Proposed Amended and Restated By-laws of Clearview Cinema Group, Inc.
4.01* Specimen Common Stock Certificate
5.01* Opinion of Kirkpatrick & Lockhart LLP as to the validity of the securities being registered
9.01 Voting Trust Agreement by and between Brett E. Marks and A. Dale Mayo as Voting Trustee, dated
December 21, 1994
9.02 Voting Trust Agreement by and between Michael C. Rush and A. Dale Mayo as Voting Trustee, dated
June 20, 1995
9.03 Voting Trust Agreement by and between Emerson Cinema, Inc. and A. Dale Mayo as Voting Trustee,
dated May 29, 1996
9.04 Voting Trust Agreement by and among Paul Kay, Cindy Kay and A. Dale Mayo as Voting Trustee, dated
July 31, 1996
10.01 Contribution, Exchange & Termination Agreement by and among Clearview Cinema Group, Inc. (the
'Company'), A. Dale Mayo, and Brett E. Marks, dated December 21, 1994
10.02 Investment and Stockholders Agreement by and among the Company, A. Dale Mayo, Brett E. Marks and
CMNY Capital II, L.P., dated December 21, 1994
10.03 First Amendment to Investment and Stockholders Agreement by and among the Company, A. Dale Mayo,
Brett E. Marks and CMNY Capital II, L.P., dated May 29, 1996
10.04 Agreement by Michael C. Rush, dated June 20, 1995, to join the Investment and Stockholders
Agreement dated December 21, 1994
10.05 Stockholders and Registration Rights Agreement by and among the Company, A. Dale Mayo, Brett E.
Marks, Michael C. Rush, MidMark Capital, L.P. and Emerson Cinema, Inc., dated May 29, 1996
10.06 Agreement by Paul Kay and Cindy Kay, dated July 31, 1996, to join the Stockholders and
Registration Rights Agreement dated May 29, 1996
10.07* [to be supplied]
10.08 Employment Agreement by and between the Company and A. Dale Mayo, dated May 29, 1996
10.09 Management and Monitoring Fee Agreement by and between the Company and MidMark Associates, Inc.,
dated May 29, 1996
10.10 Credit Agreement by and among the Company, CCC Madison Triple Cinema Corp., CCC Chester Twin
Cinema Corporation, CCC Manasquan Cinema Corporation, Clearview Theater Group, Inc., CCC Herricks
Cinema Corp., CCC Port Washington Cinema Corp., CCC Grand Avenue Cinema Corp., CCC Washington
Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New City Cinema Corp. and
343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema Corp.), and The Provident Bank, dated
May 29, 1996
10.11 Joinder Agreement by CCC Bedford Cinema Corp. and CCC Kisco Cinema Corp., dated July 18, 1996
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
10.12 Joinder Agreement and First Amendment to Credit Agreement, by and among the Company, CCC Madison
Triple Cinema Corp., CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema Corporation,
Clearview Theater Group, Inc., CCC Herricks Cinema Corp., CCC Port Washington Cinema Corp., CCC
Grand Avenue Cinema Corp., CCC Washington Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson
Cinema Corp., CCC New City Cinema Corp., 343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema
Corp.), CCC Bedford Cinema Corp., CCC Kisco Cinema Corp., CCC Closter Cinema Corp., CCC
Bergenfield Cinema Corp., CCC Tenafly Cinema Corp. and CCC B.C. Realty Corp. and The Provident
Bank, dated December 13, 1996
10.13 Second Amendment to Credit Agreement, by and among the Company, CCC Madison Triple Cinema Corp.,
CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema Corporation, Clearview Theater Group,
Inc., CCC Herricks Cinema Corp., CCC Port Washington Cinema Corp., CCC Grand Avenue Cinema Corp.,
CCC Washington Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New City
Cinema Corp., 343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema Corp.), CCC Bedford Cinema
Corp., CCC Kisco Cinema Corp., CCC Closter Cinema Corp., CCC Bergenfield Cinema Corp., CCC Tenafly
Cinema Corp. and CCC B.C. Realty Corp. and The Provident Bank, dated March 27, 1997
10.14 Amended and Restated Pledge Agreement by and between the Company and The Provident Bank, dated
July 18, 1996
10.15 Amendment No. 1 to Pledge Agreement by and between the Company and The Provident Bank, dated
December 13, 1996
10.16 Subordination Agreement by and among The Provident Bank, the Company, CMNY Capital II, L.P. and
Robert G. Davidoff, dated May 29, 1996
10.17 8% Subordinated Promissory Note for the principal amount of $300,000 payable to CMNY Capital II,
L.P., dated August 31, 1995
10.18 8% Subordinated Promissory Note for the principal amount of $50,000 payable to CMCO, Inc., dated
August 31, 1995
10.19 8% Subordinated Promissory Note for the principal amount of $50,000 payable to Robert G. Davidoff,
dated August 31, 1995
10.20 8% Subordinated Promissory Note for the principal amount of $50,000 payable to CMCO, Inc., dated
October 11, 1995
10.21 8% Subordinated Promissory Note for the principal amount of $50,000 payable to Robert G. Davidoff,
dated October 11, 1995
10.22 8% Subordinated Promissory Note for the principal amount of $300,000 payable to CMCO, Inc., dated
December 13, 1996
10.23 8% Subordinated Promissory Note for the principal amount of $300,000 payable to Robert G.
Davidoff, dated December 13, 1996
10.24 Senior Subordinated Promissory Note for the principal amount of $600,000 payable to Magic Cinemas
L.L.C., dated December 13, 1996
10.25 Preferred Stock and Warrant Purchase Agreement by and among MidMark Capital, L.P., the Company and
A. Dale Mayo, dated May 29, 1996
10.26 Preferred Stock and Warrant Purchase Agreement by and among MidMark Capital, L.P., the Company and
A. Dale Mayo, dated July 2, 1996
10.27 Warrant Agreement by and between the Company and The Provident Bank, dated May 29, 1996
10.28 Amendment No. 1 to Warrant Agreement by and between the Company and The Provident Bank, dated
December 13, 1996
10.29 Form of Common Stock Purchase Warrant A
10.30 Form of Common Stock Purchase Warrant B
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
10.31 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 1 issued to The Provident Bank,
dated May 29, 1996
10.32 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 2 issued to The Provident Bank,
dated May 29, 1996
10.33 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 3 issued to The Provident Bank,
dated December 13, 1996
10.34 Clearview Cinema Group, Inc. Preferred Stock Warrant W-1 issued to MidMark Capital, L.P., dated
May 29, 1996
10.35 Clearview Cinema Group, Inc. Preferred Stock Warrant W-2 issued to MidMark Capital, L.P., dated
July 2, 1996
10.36 Agreement by and among Cinema Grand Avenue, Inc., Triplex Movies at Port Washington, Inc. and the
Company, CCC Grand Avenue Cinema Corp., CCC Port Washington Cinema Corp., dated September 8, 1995
(the 'Collective Agreement')
10.37 Agreement by and among Cinema Herricks, Inc., the Company, and CCC Herricks Cinema Corp. dated
September 8, 1995 (the 'Management Agreement')
10.38 Letter modifying Management Agreement and Collective Agreement dated November 17, 1995
10.39 Escrow Agreement by and among Cinema Grand Avenue, Inc., Triplex Movies at Port Washington, Inc.,
the Company, CCC Grand Avenue Cinema Corp. and CCC Port Washington Cinema Corp., dated September
8, 1995
10.40 Escrow Agreement by and among Cinema Herricks, Inc., the Company and CCC Cinema Herricks Corp.,
dated September 8, 1995
10.41 Agreement and Plan of Reorganization among the Company, CCC Emerson Cinema Corp. and Emerson
Cinema, Inc., dated May 29, 1996
10.42 Indemnification Escrow Agreement, by and among the Company, CCC Emerson, Inc. and Jack Wenarsky
('Escrow Agent'), dated May 29, 1996
10.43 Asset Purchase Agreement among the Company, CCC Washington Cinema Corp., CCC Allwood Cinema Corp.,
CCC New City Cinema Corp., Township of Washington Cinema, Inc., Allwood Clifton Cinema, Inc., and
New City Cinema, Inc., dated May 29, 1996
10.44 Indemnification Escrow Agreement by and among the Company, CCC Washington Cinema Corp., CCC
Allwood Cinema Corp., CCC New City Cinema Corp. and Township of Washington Theatre, Inc., Allwood
Clifton Cinema, Inc., New City Cinema, Inc. and Jack Wenarsky ('Escrow Agent'), dated May 29, 1996
10.45 Right of First Refusal Agreement by and among the Company, Roxbury Cinema, Inc., F&N Cinema, Inc.,
John Nelson, Seth Ferman and Pamela Ferman, dated May 29, 1996
10.46 Non-Competition Agreement, by and among the Company, CCC Emerson Cinema, Inc. and John Nelson,
Pamela Ferman and Seth Ferman, dated May 29, 1996
10.47 Asset Purchase Agreement among Magic Cinemas L.L.C., CCC Tenafly Cinema Corp., CCC Bergenfield
Cinema Corp., CCC Closter Cinema Corp. and the Company, dated December 13, 1996
11.01* Statement regarding computation of per share earnings
21.01 Subsidiaries of the Company
23.01 Consent of Wiss & Company LLP
27.01* Financial Data Schedules
</TABLE>
- ------------------
* To be filed by Amendment.
II-6
<PAGE>
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the 'Securities Act'), may be permitted to directors,
officers and controlling persons of the registrant pursuant to the provisions
described under Item 24 above, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the registrant will, unless in the opinion of its counsel
the question has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
Town of Madison, State of New Jersey, on May 23, 1997.
CLEARVIEW CINEMA GROUP, INC.
By: /s/ A. DALE MAYO
---------------------------------
A. Dale Mayo
Chairman of the Board,
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints A. Dale Mayo his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her in his or her name, place and stead, in any and all capacities,
to sign any and all amendments to this registration statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------------------------------------- ------------------------------------------------------- --------------
<S> <C> <C>
/s/ A. DALE MAYO Chairman of the Board, President, Chief Executive May 23, 1997
- --------------------------------------- Officer and Director
A. Dale Mayo
/s/ SUEANNE H. MAYO Director May 23, 1997
- ---------------------------------------
Sueanne H. Mayo
/s/ JOAN M. ROMINE Treasurer and Chief Financial Officer May 23, 1997
- ---------------------------------------
Joan M. Romine
/s/ WAYNE CLEVENGER Director May 23, 1997
- ---------------------------------------
Wayne Clevenger
/s/ ROBERT DAVIDOFF Director May 23, 1997
- ---------------------------------------
Robert Davidoff
/s/ BRETT E. MARKS Director May 23, 1997
- ---------------------------------------
Brett E. Marks
/s/ DENIS NEWMAN Director May 23, 1997
- ---------------------------------------
Denis Newman
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C> <C>
1.01* Form of Underwriting Agreement
3.01(a) Current Certificate of Incorporation of Clearview Cinema Group, Inc.
3.01(b)* Proposed Amended and Restated Certificate of Incorporation of Clearview Cinema Group,
Inc.
3.02(a) Current By-laws of Clearview Cinema Group, Inc.
3.02(b)* Proposed Amended and Restated By-laws of Clearview Cinema Group, Inc.
4.01* Specimen Common Stock Certificate
5.01* Opinion of Kirkpatrick & Lockhart LLP as to the validity of the securities being
registered
9.01 Voting Trust Agreement by and between Brett E. Marks and A. Dale Mayo as Voting
Trustee, dated December 21, 1994
9.02 Voting Trust Agreement by and between Michael C. Rush and A. Dale Mayo as Voting
Trustee, dated June 20, 1995
9.03 Voting Trust Agreement by and between Emerson Cinema, Inc. and A. Dale Mayo as Voting
Trustee, dated May 29, 1996
9.04 Voting Trust Agreement by and among Paul Kay, Cindy Kay and A. Dale Mayo as Voting
Trustee, dated July 31, 1996
10.01 Contribution, Exchange & Termination Agreement by and among Clearview Cinema Group,
Inc. (the 'Company'), A. Dale Mayo, and Brett E. Marks, dated December 21, 1994
10.02 Investment and Stockholders Agreement by and among the Company, A. Dale Mayo, Brett E.
Marks and CMNY Capital II, L.P., dated December 21, 1994
10.03 First Amendment to Investment and Stockholders Agreement by and among the Company, A.
Dale Mayo, Brett E. Marks and CMNY Capital II, L.P., dated May 29, 1996
10.04 Agreement by Michael C. Rush, dated June 20, 1995, to join the Investment and
Stockholders Agreement dated December 21, 1994
10.05 Stockholders and Registration Rights Agreement by and among the Company, A. Dale Mayo,
Brett E. Marks, Michael C. Rush, MidMark Capital, L.P. and Emerson Cinema, Inc., dated
May 29, 1996
10.06 Agreement by Paul Kay and Cindy Kay, dated July 31, 1996, to join the Stockholders and
Registration Rights Agreement dated May 29, 1996
10.07* [to be supplied]
10.08 Employment Agreement by and between the Company and A. Dale Mayo, dated May 29, 1996
10.09 Management and Monitoring Fee Agreement by and between the Company and MidMark
Associates, Inc., dated May 29, 1996
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C> <C>
10.10 Credit Agreement by and among the Company, CCC Madison Triple Cinema Corp., CCC
Chester Twin Cinema Corporation, CCC Manasquan Cinema Corporation, Clearview Theater
Group, Inc., CCC Herricks Cinema Corp., CCC Port Washington Cinema Corp., CCC Grand
Avenue Cinema Corp., CCC Washington Cinema Corp., CCC Allwood Cinema Corp., CCC
Emerson Cinema Corp., CCC New City Cinema Corp. and 343-349 Springfield Avenue Corp.
(n/k/a CCC Summit Cinema Corp.), and The Provident Bank, dated May 29, 1996
10.11 Joinder Agreement by CCC Bedford Cinema Corp. and CCC Kisco Cinema Corp., dated July
18, 1996
10.12 Joinder Agreement and First Amendment to Credit Agreement, by and among the Company,
CCC Madison Triple Cinema Corp., CCC Chester Twin Cinema Corporation, CCC Manasquan
Cinema Corporation, Clearview Theater Group, Inc., CCC Herricks Cinema Corp., CCC Port
Washington Cinema Corp., CCC Grand Avenue Cinema Corp., CCC Washington Cinema Corp.,
CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New City Cinema Corp., 343-349
Springfield Avenue Corp. (n/k/a CCC Summit Cinema Corp.), CCC Bedford Cinema Corp.,
CCC Kisco Cinema Corp., CCC Closter Cinema Corp., CCC Bergenfield Cinema Corp., CCC
Tenafly Cinema Corp. and CCC B.C. Realty Corp. and The Provident Bank, dated December
13, 1996
10.13 Second Amendment to Credit Agreement, by and among the Company, CCC Madison Triple
Cinema Corp., CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema Corporation,
Clearview Theater Group, Inc., CCC Herricks Cinema Corp., CCC Port Washington Cinema
Corp., CCC Grand Avenue Cinema Corp., CCC Washington Cinema Corp., CCC Allwood Cinema
Corp., CCC Emerson Cinema Corp., CCC New City Cinema Corp., 343-349 Springfield Avenue
Corp. (n/k/a CCC Summit Cinema Corp.), CCC Bedford Cinema Corp., CCC Kisco Cinema
Corp., CCC Closter Cinema Corp., CCC Bergenfield Cinema Corp., CCC Tenafly Cinema
Corp. and CCC B.C. Realty Corp. and The Provident Bank, dated March 27, 1997
10.14 Amended and Restated Pledge Agreement by and between the Company and The Provident
Bank, dated July 18, 1996
10.15 Amendment No. 1 to Pledge Agreement by and between the Company and The Provident Bank,
dated December 13, 1996
10.16 Subordination Agreement by and among The Provident Bank, the Company, CMNY Capital II,
L.P. and Robert G. Davidoff, dated May 29, 1996
10.17 8% Subordinated Promissory Note for the principal amount of $300,000 payable to CMNY
Capital II, L.P., dated August 31, 1995
10.18 8% Subordinated Promissory Note for the principal amount of $50,000 payable to CMCO,
Inc., dated August 31, 1995
10.19 8% Subordinated Promissory Note for the principal amount of $50,000 payable to Robert
G. Davidoff, dated August 31, 1995
10.20 8% Subordinated Promissory Note for the principal amount of $50,000 payable to CMCO,
Inc., dated October 11, 1995
10.21 8% Subordinated Promissory Note for the principal amount of $50,000 payable to Robert
G. Davidoff, dated October 11, 1995
10.22 8% Subordinated Promissory Note for the principal amount of $300,000 payable to CMCO,
Inc., dated December 13, 1996
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C> <C>
10.23 8% Subordinated Promissory Note for the principal amount of $300,000 payable to Robert
G. Davidoff, dated December 13, 1996
10.24 Senior Subordinated Promissory Note for the principal amount of $600,000 payable to
Magic Cinemas L.L.C., dated December 13, 1996
10.25 Preferred Stock and Warrant Purchase Agreement by and among MidMark Capital, L.P., the
Company and A. Dale Mayo, dated May 29, 1996
10.26 Preferred Stock and Warrant Purchase Agreement by and among MidMark Capital, L.P., the
Company and A. Dale Mayo, dated July 2, 1996
10.27 Warrant Agreement by and between the Company and The Provident Bank, dated May 29,
1996
10.28 Amendment No. 1 to Warrant Agreement by and between the Company and The Provident
Bank, dated December 13, 1996
10.29 Form of Common Stock Purchase Warrant A
10.30 Form of Common Stock Purchase Warrant B
10.31 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 1 issued to The
Provident Bank, dated May 29, 1996
10.32 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 2 issued to The
Provident Bank, dated May 29, 1996
10.33 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 3 issued to The
Provident Bank, dated December 13, 1996
10.34 Clearview Cinema Group, Inc. Preferred Stock Warrant W-1 issued to MidMark Capital,
L.P., dated May 29, 1996
10.35 Clearview Cinema Group, Inc. Preferred Stock Warrant W-2 issued to MidMark Capital,
L.P., dated July 2, 1996
10.36 Agreement by and among Cinema Grand Avenue, Inc., Triplex Movies at Port Washington,
Inc. and the Company, CCC Grand Avenue Cinema Corp., CCC Port Washington Cinema Corp.,
dated September 8, 1995 (the 'Collective Agreement')
10.37 Agreement by and among Cinema Herricks, Inc., the Company, and CCC Herricks Cinema
Corp. dated September 8, 1995 (the 'Management Agreement')
10.38 Letter modifying Management Agreement and Collective Agreement dated November 17, 1995
10.39 Escrow Agreement by and among Cinema Grand Avenue, Inc., Triplex Movies at Port
Washington, Inc., the Company, CCC Grand Avenue Cinema Corp. and CCC Port Washington
Cinema Corp., dated September 8, 1995
10.40 Escrow Agreement by and among Cinema Herricks, Inc., the Company and CCC Cinema
Herricks Corp., dated September 8, 1995
10.41 Agreement and Plan of Reorganization among the Company, CCC Emerson Cinema Corp. and
Emerson Cinema, Inc., dated May 29, 1996
10.42 Indemnification Escrow Agreement, by and among the Company, CCC Emerson, Inc. and Jack
Wenarsky ('Escrow Agent'), dated May 29, 1996
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C> <C>
10.43 Asset Purchase Agreement among the Company, CCC Washington Cinema Corp., CCC Allwood
Cinema Corp., CCC New City Cinema Corp., Township of Washington Cinema, Inc., Allwood
Clifton Cinema, Inc., and New City Cinema, Inc., dated May 29, 1996
10.44 Indemnification Escrow Agreement by and among the Company, CCC Washington Cinema
Corp., CCC Allwood Cinema Corp., CCC New City Cinema Corp. and Township of Washington
Theatre, Inc., Allwood Clifton Cinema, Inc., New City Cinema, Inc. and Jack Wenarsky
('Escrow Agent'), dated May 29, 1996
10.45 Right of First Refusal Agreement by and among the Company, Roxbury Cinema, Inc., F&N
Cinema, Inc., John Nelson, Seth Ferman and Pamela Ferman, dated May 29, 1996
10.46 Non-Competition Agreement, by and among the Company, CCC Emerson Cinema, Inc. and John
Nelson, Pamela Ferman and Seth Ferman, dated May 29, 1996
10.47 Asset Purchase Agreement among Magic Cinemas L.L.C., CCC Tenafly Cinema Corp., CCC
Bergenfield Cinema Corp., CCC Closter Cinema Corp. and the Company, dated December 13,
1996
11.01* Statement regarding computation of per share earnings
21.01 Subsidiaries of the Company
23.01 Consent of Wiss & Company LLP
27.01* Financial Data Schedules
</TABLE>
- ------------------
* To be filed by Amendment.
Exhibit 3.01(a)
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CLEARVIEW CINEMA GROUP, INC.
FIRST. The name of the corporation is Clearview Cinema Group, Inc. The
Corporation's original Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on November 23, 1994.
SECOND. The original Certificate of Incorporation of the Corporation is
amended and restated to read in full as follows:
ARTICLE I
The name of the corporation is Clearview Cinema Group, Inc.
ARTICLE II
The address of the corporation's registered office in the State of Delaware
is 1013 Centre Road, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is Corporation Service Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV
The total number of all shares of capital stock which the corporation shall
have authority to issue is 11,303 shares consisting of:
1. Common Stock. 10,000 shares of Common Stock, with a par value of $0.01
per share; and
2. Preferred Stock. 1,303 shares of Preferred Stock with a par value of
$0.01 per share, which shall have the following terms:
(a) Designation. There is hereby established a class of preferred stock,
which shall consist of 1,303 shares and shall be designated as the "Class A
Convertible Preferred Stock," par value $.01 per share (herein called the "Class
A Convertible Preferred Stock"), of Clearview Cinema Group, Inc. (the
"Corporation").
<PAGE>
(b) Dividends. The holder of each share of Class A Convertible Preferred
Stock shall be entitled to receive out of any funds legally available therefor,
when and as declared by the Board of Directors, preferential dividends thereon
in a per share amount equal to the product of (A) the per share dividend value
declared from time-to-time (and not revoked), in cash or property, on the Common
Stock (as defined herein) of the Corporation multiplied by (B) the number of
shares of Common Stock into which each such share of Class A Convertible
Preferred Stock shall be convertible on the record date for the payment of such
Common Stock dividend. Such preferential dividend shall be declared by the Board
of Directors of the Corporation contemporaneously with the declaration of any
dividend on the Common Stock.
So long as any shares of Class A Convertible Preferred Stock shall remain
outstanding, no dividend or other distribution (except in stock of the
Corporation of a class ranking junior to the Class A Convertible Preferred Stock
as to dividends and the distribution of assets upon liquidation) shall be paid
or made on Common Stock of the Corporation or on any other shares of stock of
the Corporation ranking junior to the Class A Convertible Preferred Stock as to
dividends or the distribution of assets upon liquidation (herein called "junior
shares") and no Common Stock or other junior shares shall be purchased or
otherwise acquired by the Corporation or any corporation, limited liability
company, partnership or other entity of which more than fifty percent (50%) of
the shares of stock, or other ownership interests having ordinary voting power
(including stock or such other ownership interests having such voting power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, limited liability company,
partnership or other entity, are at the time owned, directly or indirectly,
through one or more intermediaries, or both, by the Corporation (each, a
"Subsidiary" and collectively, "Subsidiaries"), other than by exchange therefor
of junior shares, or out of the proceeds of the substantially concurrent sale of
junior shares, unless all dividends on the Class A Convertible Preferred Stock
shall have been paid.
Subject to the above limitation, and any limitations contained in Section
(d) hereof or elsewhere herein, dividends may be paid on Common Stock or junior
shares if such payment is not otherwise restricted or prohibited by law.
(c) Liquidation Rights. In the event of any Liquidation Event (as defined
herein), the holders of Class A Convertible Preferred Stock shall be entitled to
receive from the assets of the Corporation, whether represented by capital
stock, paid-in capital or retained earnings, payment in cash of an amount equal
to the aggregate Liquidation Value (as defined herein) of such Class A
Convertible Preferred Stock, plus a further amount equal to any dividends that
have been (or, pursuant to Section (b) hereof, were required to have been)
declared on the Class A Convertible Preferred Stock but which remain unpaid,
before any distribution of assets shall be made to the holders of the Common
Stock or other junior shares. If, upon such Liquidation Event, the assets
distributable to the holders of Class A Convertible Preferred Stock shall be
insufficient to permit the payment in full to such holders of the preferential
amounts to which they are entitled, then such assets shall be distributed
ratably among the shares of Class A Convertible Preferred Stock.
The Liquidation Value of each share of Class A Convertible Preferred Stock
shall initially be equal to $2,558.85. In case the Corporation shall (1) pay a
dividend on Class A Convertible Preferred Stock in shares of its Class A
Convertible Preferred Stock, (2) subdivide its outstanding shares of Class A
Convertible Preferred Stock, or (3) combine its outstanding shares
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<PAGE>
of Class A Convertible Preferred Stock into a smaller number of shares, the
Liquidation Value in effect immediately prior thereto shall be adjusted so that
the holder of any share of Class A Convertible Preferred Stock thereafter
surrendered for liquidation shall be entitled to receive from the Corporation,
after the happening of any of the events described above, cash in the amount
such holder would have been entitled to receive had such share of Class A
Convertible Preferred Stock been liquidated immediately prior to the happening
of such event. An adjustment made pursuant to this paragraph shall become
effective (i) upon the effective date in the case of a subdivision or
combination and (ii) upon the record date in the case of a dividend of shares.
After payment in full to the holders of Class A Convertible Preferred
Stock, the remaining assets of the Corporation available for payment and
distribution to stockholders may be paid and distributed to the holders of
Common Stock or other junior shares.
For the purposes hereof, the term "Liquidation Event" shall mean any (A)
merger or consolidation other than a merger or consolidation in which persons
who, immediately prior to the closing of such transaction, were holders of
voting securities of the Corporation having in the aggregate in excess of fifty
percent (50%) of the voting power of the Corporation hold, immediately after
such transaction, voting securities of the surviving entity having in excess of
fifty percent (50%) of the voting power of the surviving entity, (B) sale of all
or substantially all of the assets of the Corporation, or (C) liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
(d) Voting Rights.
(i) General. Holders of Class A Convertible Preferred Stock shall be
entitled to that number of votes per share (including fractions thereof) as
shall be equal to the number of shares of Common Stock into which each such
share of Class A Convertible Preferred Stock may be converted on the record
date (calculated to the nearest 1/100th of a share), voting as a single
class with the holders of Common Stock of the Corporation at all meetings,
and with respect to all consent solicitations, of stockholders and upon all
matters that are required to be submitted to the stockholders of the
Corporation, except upon matters with respect to which the holders of Class
A Convertible Preferred Stock and Common Stock have separate voting rights
as provided elsewhere in the Certificate of Incorporation of the
Corporation, or otherwise as required by Delaware law.
(ii) Certain Corporate Actions. While any shares of Class A
Convertible Preferred Stock shall remain outstanding, the Corporation shall
not, without the prior consent (given in writing or at a meeting duly
called for that purpose) of holders of a majority of the shares of Class A
Convertible Preferred Stock then outstanding, do any of the following:
(A) Enter into, or permit any Subsidiary to enter into, by internal
expansion, acquisition or otherwise, any line of business not related
to the business of the Corporation and its Subsidiaries.
(B) Engage in any of the following transactions:
1. Any merger or consolidation other than a merger or consolidation
in
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<PAGE>
which persons who, immediately prior to the closing of such
transaction, were holders of voting securities of the Corporation
having in the aggregate in excess of fifty percent (50%) of the
voting power of the Corporation hold, immediately after such
transaction, voting securities of the surviving entity having in
excess of fifty percent (50%) of the voting power of the
surviving entity; or
2. Any purchase or other acquisition (in one transaction or a series
of related transactions) of capital stock or other equity
securities or assets of any other entity by the Corporation or of
any Subsidiary, other than acquisitions of the securities of
entities whose sole line of business is the ownership and/or
operation of movie theaters or the acquisition of the assets used
or useful in the ownership or operation of movie theaters.
(C) Incur, or enter into any agreement to incur or guaranty, or permit any
Subsidiary to incur or enter into any agreement to incur or guaranty,
any indebtedness for money borrowed, or amend any such agreement,
except for agreements in existence on the date of the initial issuance
of shares of Class A Convertible Preferred Stock.
(D) Adopt any amendment to the Certificate of Incorporation of the
Corporation (including, without limitation, any amendment evidenced by
a Certificate of Designation adopted by the Board of Directors of the
Corporation) or By-laws of the Corporation.
(E) Except upon the exercise of options, rights, warrants or similar
instruments outstanding on, and upon the terms thereof in effect on,
the date of initial issuance of shares of Class A Convertible
Preferred Stock, issue or sell any shares of Class A Convertible
Preferred Stock or Common Stock at a price per share which, when
viewed as representing a percentage of the fully-diluted equity of the
Corporation, would value 100% of the fully-diluted equity of the
Corporation at less than the applicable amount set forth in the table
below.
Date of Issuance Fully-Diluted Value
---------------- -------------------
Until 12/31/97 $10,250,000
1/1/98 to 12/31/98 $13,250,000
1/1/99 to 12/31/99 $16,250,000
1/1/00 to 12/31/00 $19,250,000
1/1/01 to 12/31/01 $22,250,000
1/1/02 to 12/31/02 $25,250,000
1/1/03 to 12/31/03 $28,250,000
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<PAGE>
1/1/04 and thereafter $31,250,000
(e) Conversion Rights.
(i) (A) Optional Conversion Upon Election by Holder. The holder of any
share or shares of Class A Convertible Preferred Stock shall have the right
to convert, at such holder's option and subject to the provisions of this
Section (e), any such share or shares, plus all accrued and unpaid
dividends thereon, into such number of fully paid and non-assessable shares
of Common Stock (calculated as to each conversion to the nearest 1/100th of
a share) of the Corporation as is obtained by dividing the Liquidation
Value per share surrendered for conversion plus all accrued and unpaid
dividends thereon by $2,558.85 (as such amount may be adjusted from time to
time as hereinafter provided, the "Conversion Price"); provided, however,
that such Conversion Price shall be subject to adjustment upon the
happening of certain contingencies as provided in paragraph (ii) of this
Section (e).
The transfer books of the Corporation shall not be closed at any time
prior to the termination of the conversion right of the holder of Class A
Convertible Preferred Stock, but this provision shall not prevent the
fixing of a record date for the determination of stockholders for any
proper purpose.
For purposes of this Section (e), "Common Stock" shall mean stock of
the Corporation of any class, whether now or hereafter authorized, which
has the right to participate in the distribution of either earnings or
assets of the Corporation without limit as to the amount or percentage;
provided, however, that Common Stock issuable upon conversion of Class A
Convertible Preferred Stock and for determination of dividends from
time-to-time payable on shares of Class A Convertible Preferred Stock, in
each case as herein provided, shall mean only Common Stock authorized at
the time of original issue of the Class A Convertible Preferred Stock and
stock of any other class into which the then authorized Common Stock may
thereafter have been changed. In determining the number of shares of Common
Stock outstanding at any particular time, for the purpose of computations
pursuant to the formula in paragraph (ii) of this Section (e), there shall
not be included Common Stock then owned of record or beneficially by the
Corporation or any Subsidiary.
(B) Mandatory Conversion Upon Consummation of Qualifying Liquidity
Event. (1) Upon the consummation of a Qualifying Liquidity Event (as
defined herein) as to any holder, each of the outstanding shares of Class A
Convertible Preferred Stock then held by such holder, and all accrued but
unpaid dividends thereon shall automatically convert into such number of
fully paid and non-assessable shares of Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) of the Corporation as is
obtained by dividing the Liquidation Value per share to be surrendered for
conversion plus all accrued and unpaid dividends thereon by the Conversion
Price; provided, however, that such Conversion Price shall be subject to
adjustment upon the happening of certain contingencies as provided in
paragraph (ii) of this Section (e).
(2) As used herein, a "Qualifying Liquidity Event" shall mean the
first to occur of any of the following events:
(i) Following the receipt by all of the holders of Class A Convertible
Preferred Stock of a binding, unconditional written offer to purchase all
of the shares of
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<PAGE>
Common Stock into which such shares are convertible for a cash purchase
price equal to or greater than the Minimum Purchase Price (as defined
below) from the Corporation, any holder of Common Stock and/or any third
party (including in connection with any merger or consolidation involving
the Corporation), the first to occur of (i) the date upon which a specific,
written rejection notice is delivered to the offeror by such holder
declining such offer, or (ii) if no such rejection notice is delivered,
thirty (30) days after the date of receipt of such written offer by such
holder.
(ii) Following the receipt by all of the holders of Class A
Convertible Preferred Stock of a binding, unconditional written offer from
an underwriter to purchase all of the shares of Common Stock into which
such shares are convertible at a purchase price equal to or greater than
the Minimum Purchase Price in connection with a firm commitment
underwritten public offering of Common Stock pursuant to a registration
statement under the Securities Act of 1933, as amended, the successful
closing of such underwritten public offering.
(iii) Following the listing by the Corporation of shares of Common
Stock on the New York Stock Exchange, the American Stock Exchange or the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), and/or the registration of the Common Stock as a class under
the Securities Exchange Act of 1934, as amended, the date upon which all of
the shares of Common Stock into which such shares are convertible become
freely transferable pursuant to Securities and Exchange Commission Rule 144
(or any successor rule or regulation) and may be disposed of by such holder
in a single transaction in compliance with the volume limitations of Rule
144(e); provided that the daily "Common Stock Market Prices" (as
hereinafter defined) for each of the one hundred and twenty (120)
consecutive "Trading Days" (as hereinafter defined) immediately preceding
such date shall have been equal to or greater than the Minimum Purchase
Price, and provided, further, that the average weekly reported volume of
trading in the Common Stock during the four calendar weeks preceding such
date shall have been equal to or greater than the number of shares of
Common Stock into which such shares are convertible.
(3) As used herein, the term "Minimum Purchase Price" means, as to any
holder of Class A Convertible Preferred Stock, that price per share of
Common Stock which shall equal Four Hundred Percent (400%) of the
then-applicable Conversion Price.
(4) As used herein, the term "Common Stock Market Price" for any day
means (1) if the Common Stock is listed or admitted for trading on the New
York Stock Exchange (or any successor to such exchange), or, if not so
listed or admitted, on any national or regional securities exchange, the
last sale price, or the closing bid price if no sale occurred, of the
Common Stock on the principal securities exchange on which the Common Stock
is listed, or (2) if not listed or traded as described in clause (1), the
last reported sales price of the Common Stock on the National Market System
of the NASDAQ, or any similar system of automated dissemination of
quotations of securities prices then in common use, if so quoted, or (3) if
not quoted as described in clause (2), the mean between the high bid and
the low asked quotations for the Common Stock as reported by the National
Quotation Bureau Incorporated if at least two securities dealers have
inserted both bid and asked quotations for the Common Stock on as least
five of the ten preceding days. If the Common Stock is quoted on a national
securities or central market system in lieu of a market or quotation system
described above, then the closing price shall be determined in the manner
set forth in clause (1) of the preceding
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<PAGE>
sentence if actual transactions are reported and in the manner set forth in
clause (3) of the preceding sentence if bid and asked quotations are
reported but actual transactions are not.
(5) As used herein, the term "Trading Day" shall mean (1) a date on
which the New York Stock Exchange (or any successor to such exchange) is
open for the transaction of business, or (2) if the Common Stock is not at
such time listed or admitted for trading on the New York Stock Exchange (or
any successor to such Exchange), a date upon which the principal national
or regional securities exchange upon which the Common Stock is listed or
admitted to trading is open for the transaction of business, or (3) if not
listed or admitted to trading as described in clauses (1) or (2), and if at
such time the sales price of Common Stock is quoted on the National Market
System of the NASDAQ, or any similar system of automated dissemination of
quotations of securities prices then in common use, a date for which such
system provides quotations with respect to securities upon which it
reports, or (4) if not so quoted, and if at such time the bid and asked
prices of the Common Stock are reported by the National Quotation Bureau
Incorporated, a date for which the National Quotation Bureau Incorporated
provides bid and asked prices with respect to securities upon which it
reports, or (5) if not so quoted, any business day.
(ii) Adjustment of Conversion Price. The Conversion Price shall be subject
to adjustment as follows:
(A) In case the Corporation shall (1) pay a dividend in shares of its
Common Stock, (2) subdivide its outstanding shares of Common
Stock, (3) combine its outstanding shares of Common Stock into a
smaller number of shares, or (4) issue by reclassification of its
shares of Common Stock any capital stock of the Corporation, the
Conversion Price in effect immediately prior thereto shall be
adjusted so that, after the happening of any of the events
described above, the holder of any share of Class A Convertible
Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock such
holder would have owned or been entitled to receive had such
share of Class A Convertible Preferred Stock been converted
immediately prior to the happening of such event. An adjustment
made pursuant to this subparagraph (A) shall become effective (i)
upon the effective date in the case of a subdivision, combination
or reclassification and (ii) upon the record date in the case of
a dividend of shares.
(B) Subject to subparagraph (ii)(E) below, in case the Corporation
shall issue or sell any shares of Common Stock for a
consideration per share less than the Conversion Price in effect
immediately prior to the issue or sale, then in any such event
the Conversion Price shall be reduced to a lower price
(calculated to the nearest full cent) determined by dividing (i)
the sum of (x) the number of shares of Common Stock outstanding
or deemed to be outstanding pursuant to subparagraph (ii)(C)
below immediately prior to such issue or sale, multiplied by the
Conversion Price in effect immediately prior to such issue or
sale and (y) the aggregate amount of the consideration received
by the Corporation upon such issue or sale by (ii) the total
number of shares of Common Stock outstanding or deemed
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<PAGE>
to be outstanding pursuant to subparagraph (iii)(C) below
immediately after such issue or sale.
(C) Subject to subparagraph (ii)(E) below, in case the Corporation
shall issue or sell options, rights or warrants entitling the
holders thereof to subscribe for or purchase shares of Common
Stock, the Conversion Price shall be adjusted on the date of such
issuance or sale, as set forth in subparagraph (B) above, based
on a sale price equal to the sum of the price of such instrument
and its minimum exercise price if the total thereof shall be less
than the Conversion Price in effect immediately prior to such
issue or sale, and assuming the exercise or conversion of all
such options, rights or warrants so issued or sold.
(D) In case the Corporation shall issue or sell any other security or
instrument directly or indirectly convertible into or
exchangeable for Common Stock ("Convertible Securities"), the
Conversion Price shall be adjusted on the date of issue or sale,
as set forth in subparagraph (B) above, based on a sale price
equal to the sum of the purchase price of such Convertible
Security and the price at which its conversion to Common Stock
may be experienced if the total thereof shall be less than the
Conversion Price immediately prior to such issue or sale, and
assuming the conversion of all such Convertible Securities so
issued or sold.
(E) Notwithstanding any of the provisions contained in this Section
(e)(ii), in no event shall there be an adjustment of the
Conversion Price as a result of (x) the exercise of any warrants,
rights, options or conversion privileges that were outstanding as
of the date of the initial issuance of shares of Class A
Convertible Preferred Stock, (y) the exercise of any warrants,
options, rights or similar instruments issued after the date
hereof for which adjustment has already been made pursuant to
Section (e)(ii)(C) above or which were issued without adjustment
pursuant to the terms contained in the last sentence of Section
(e)(ii)(C).
(F) If any rights, options or warrants or Convertible Securities
shall by their terms provide for an increase or decrease, with
the passage of time or the occurrence or non-occurrence of an
event, in the minimum amount of additional consideration payable
to the Corporation upon the exercise thereof, the Conversion
Price then applicable shall, forthwith upon any such increase or
decrease becoming effective, be readjusted to reflect such
increase or decrease in such minimum amount.
If any rights, options or warrants or Convertible Securities as
to which an adjustment has been previously made pursuant to this
Section (e)(ii) shall expire without having been exercised, the
Conversion Price shall forthwith be adjusted to the Conversion
Price which would have been in effect had an adjustment been made
on the basis that the only rights or warrants or Convertible
Securities previously issued or sold were those rights or
warrants or Convertible Securities actually exercised or not yet
expired.
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<PAGE>
(G) No adjustment in the number of shares of Common Stock into which
each share of Class A Convertible Preferred Stock is convertible
need be made unless the adjustment would require an increase or
decrease of at least one percent (1%) in the number of shares of
Common Stock into which each share of Series A Preferred Stock
would have otherwise been converted at the time such adjustment
is otherwise so required to be made, provided, however, such
adjustment shall be carried forward and made at the time of and
together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall
aggregate at least one percent (1%) of the number of shares of
Common Stock into which each share of Class A Convertible
Preferred Stock would have otherwise been converted.
(H) No adjustment in the number of shares of Common Stock into which
each share of Class A Convertible Preferred Stock is convertible
need be made under this Section for any change in the par value
of the Common Stock. If an adjustment is made to the number of
shares of Common Stock into which each share of Class A
Convertible Preferred Stock is convertible upon establishment of
a record date for distribution subject to this Section and if
such distribution is subsequently canceled, the number of shares
of Common Stock into which each share of Class A Convertible
Preferred Stock is convertible then in effect shall be
readjusted, effective as of the date when the Board of Directors
of the Corporation determines to cancel such distribution, to the
number of shares of Common Stock into which each share of Class A
Convertible Preferred stock is convertible as would have been in
effect is such record date had not been fixed. No adjustment need
by made under this Section if the Corporation issues or
distributes to each holder of Class A Convertible Preferred Stock
the shares of Common Stock or other junior shares, rights,
options or warrants which each holder would have been entitled to
receive had Class A Convertible Preferred Stock been converted
into Common Stock prior to or simultaneously with the happening
of such event or the record date with respect thereto.
(iv) Adjustment upon Certain Events. In case of:
(A) any capital reorganization of the Corporation, or
(B) the consolidation or merger of the Corporation with or into
another corporation, or
(C) a statutory share exchange whereby the Corporation's Common Stock
is converted into property other than cash, or
(D) the sale, transfer or other disposition of all or substantially
all of the property, assets or business of the Corporation as a
result of which sale, transfer or other disposition property
other than cash shall be payable or
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<PAGE>
distributable to the holders of the Common Stock, which, in each
such case does not otherwise constitute a Liquidation Event,
then, in each such case, each share of Class A Convertible
Preferred Stock shall thereafter be convertible into the number
and class of shares or other securities or property of the
Corporation, or of the corporation resulting from such
consolidation or merger or with or to which such statutory share
exchange, sale, transfer or other disposition shall have been
made, to which the Common Stock otherwise issuable upon
Conversion of such share of Class A Convertible Preferred Stock
would have been entitled upon such reorganization, consolidation,
merger, statutory share exchange, or sale, transfer or other
disposition if outstanding at the time thereof; and in any such
case appropriate adjustment shall be made in the application of
the provisions set forth in this Section (e) with respect to the
conversion rights thereafter of the holders of the Class A
Convertible Preferred Stock, to the end that such provisions
shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares or securities or other property
thereafter issuable or deliverable upon the conversion of Class A
Convertible Preferred Stock. Proper provision shall be made as a
part of the terms of any such reorganization, consolidation,
merger, statutory share exchange or sale, transfer or other
disposition whereby the conversion rights of the holders of Class
A Convertible Preferred Stock shall be protected and preserved in
accordance with the provisions of this paragraph (iv). The
provisions of this paragraph (iv) shall similarly apply to
successive capital reorganizations, consolidations, mergers,
statutory share exchanges, sales, transfers or other dispositions
of property as aforesaid.
(v) Notice of Adjustments. Whenever the Conversion Price shall be adjusted
as provided in paragraph (iii) or (iv) of this Section (e) the Corporation, as
soon as practicable and in no event later than ten (10) full business days
thereafter, shall mail a notification to each holder of Class A Convertible
Preferred Stock and/or any securities which by their terms are convertible into
Class A Convertible Preferred Stock, stating the adjusted Conversion Price
determined as provided in said paragraph (iii) or (iv) and setting forth in
reasonable detail the facts requiring such adjustment, at the address of such
holder then appearing on the record books of the Corporation. If any question
shall at any time arise with respect to the adjusted Conversion Price, such
question shall be determined by a firm of independent public accountants
selected by the Corporation, who may be the Corporation's auditors, and such
determination shall be binding upon the Corporation and the holders of such
shares. The adjustments to the Conversion Price which are required by this
Section (e) shall be effective at any time that there shall be outstanding any
shares of Class A Convertible Preferred Stock and/or other securities which by
their terms are convertible into Class A Convertible Preferred Stock.
(vi) Notice of Corporate Action. In case the Corporation shall propose to:
(A) pay any dividend in stock upon its Common Stock or to make any other
distribution (other than cash dividends) to the holders of its Common
Stock; or
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<PAGE>
(B) offer to the holders of its Common Stock rights to subscribe to any
additional shares of any class or any other rights or options; or
(C) effect any reclassification of its Common Stock (other than a
reclassification involving merely the subdivision or combination of
outstanding Common Stock), or to effect any capital reorganization, or
shall propose to consolidate with or merge into another corporation,
or engage in any statutory share exchange requiring the approval of
its stockholders or to sell, transfer or otherwise dispose of all or
substantially all of its property, assets or business; or
(D) engage in any Liquidation Event;
then, in each such case, the Corporation shall deliver to the holders of record
of Class A Convertible Preferred Stock at their respective addresses then
appearing on the record books of the Corporation notice of such proposed action,
such notice to be delivered at least seven (7) business days prior to the record
date for the purpose of determining holders of the Common Stock entitled to the
benefits of the action referred to in subparagraph (A) or (B) or to vote with
respect to the action referred to in subparagraph (C) or (D) or, if no record
date is taken for any such purpose, the date of the taking of such proposed
action. Such notice shall specify the date on which the books of the Corporation
shall close, or a record be taken, for such stock dividend, distribution or such
rights or options, or the date on which such reclassification, reorganization,
consolidation, merger, statutory share exchange, or Liquidation Event shall take
place, as the case may be, and the date of participation therein by the holders
of Common Stock if any such date is to be fixed. If such notice relates to any
proposed action referred to in subparagraph (C) or (D) above, it shall set forth
facts with respect thereto as shall be reasonably necessary to inform the
holders of such shares as to the effect of such action upon their conversion
rights.
(vii) Surrender of Certificate Upon Conversion. In order to convert shares
of Class A Convertible Preferred Stock into Common Stock in accordance with the
provisions of paragraph (i) of this Section (e), the holder thereof shall
surrender, at the office in the United States designated by the Company in
writing from time to time for registration of transfers and exchanges, the
certificate or certificates therefor, duly endorsed to the Corporation or in
blank, and give written notice to the Corporation at said office that such
holder elects to convert such shares and shall state in writing therein the name
or names (with addresses) in which such holder wishes the certificate or
certificates for Common Stock to be issued. Shares of Class A Convertible
Preferred Stock shall be deemed to have been converted on the date of the
surrender of such certificate or certificates for shares for conversion as
provided above, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock on such date. As soon as practicable on
or after the date of conversion as aforesaid, the Corporation will issue and
deliver a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with cash for any fraction of a
share, as hereinafter in paragraph (ix) provided, to the person or persons
entitled to receive the same.
(viii) Cancellation. All shares of Class A Convertible Preferred Stock
converted into Common Stock shall have the status of authorized and unissued
shares of preferred stock of the Corporation undesignated as to class or series
and shall not be reissued as Class A
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Convertible Preferred Stock.
(ix) No Fractional Shares. The Corporation shall not issue fractional
shares of Common Stock upon any conversion of shares of Class A Convertible
Preferred Stock. As to any final fraction of a share which the holder of one or
more shares of Class A Convertible Preferred Stock would be entitled to receive
upon conversion the Corporation shall pay a cash adjustment in an amount equal
to the same fraction of the Conversion Price.
(x) Reservation of Shares. The Corporation shall at all times have reserved
for issuance that number of authorized and unissued shares of Common Stock
sufficient for the conversion of all shares of Class A Convertible Preferred
Stock at the time outstanding, as such number may vary from time-to-time.
(xi) Fully Paid and Nonassessable Shares. The Corporation warrants that all
Common Stock issued upon conversion of shares of Class A Convertible Preferred
Stock will upon issue be fully paid and nonassessable by the Corporation and
free from original issue taxes.
ARTICLE V
The corporation is to have perpetual existence.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to adopt, amend or repeal the
By-laws of the corporation.
ARTICLE VII
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation. Elections of directors
need not be by written ballot unless the by-laws of the corporation shall so
provide.
ARTICLE VIII
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
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ARTICLE IX
(a) The personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by Section 102(b)(7) of the General
Corporation Law of the State of Delaware, as the same may be amended and
supplemented. Without limiting the generality of the foregoing, no director
shall be personally liable to the Corporation or any of its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
(b) The Corporation shall indemnify and hold harmless, to the fullest
extent permitted by applicable law as it presently exists or may hereafter be
amended, any person who was or is made or is threatened to be made a party or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding") by reason of the fact that he,
or a person for whom he is the legal representative, is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust, enterprise or non-profit
entity, including service with respect to employee benefit plans, against all
liability and loss suffered and expenses reasonably incurred by such person. The
Corporation shall be required to indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was authorized by the
Board of Directors of the Corporation. The rights to indemnification and
advancement of expenses conferred by this Article shall be presumed to have been
relied upon by directors and officers of the Corporation in serving or
continuing to serve the Corporation and shall be enforceable as contract rights.
Said rights shall not be exclusive of any other rights to which those seeking
indemnification may otherwise be entitled. The Corporation may enter into
contracts to provide such persons with specific rights to indemnification, which
contracts may confer rights and protections to the maximum extent permitted by
the Delaware General Corporation Law. The Corporation may create trust funds,
grant security interests, obtain letters of credit, or use other means to ensure
payment of such amounts as may be necessary to perform the obligations provided
for in this Article or in any such contract.
(c) Any repeal or modification of this Article IX by the stockholders of
the Corporation shall not adversely affect any right or protection of a director
of the Corporation existing at the time of such repeal or modification with
respect to acts or omissions occurring prior to such repeal or modification.
THIRD. The foregoing amendment and restatement of the Certificate of
Incorporation has been approved by the Board of Directors of the Corporation.
FOURTH. The foregoing amendment and restatement of the Certificate of
Incorporation has been duly adopted in accordance with the provisions of
Sections 242 and 245
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of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Clearview Cinema Group, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed and attested this ____
day of May, 1996.
Attest: CLEARVIEW CINEMA GROUP, INC.
By:__________________________________ By:_______________________________
Sueanne Hall Mayo, A. Dale Mayo
Vice President/Finance, Treasurer President and Secretary
and Assistant Secretary
Exhibit 3.02(a)
BY-LAWS
OF
CLEARVIEW CINEMA GROUP, INC.
-----------------------
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1.1. Place of Meetings. Meetings of the stockholders shall be held
at such place within or without the State of Delaware as shall be designated by
the Board of Directors or the person or persons calling the meeting.
Section 1.2. Annual Meetings. The annual meeting of the stockholders for
the election of directors and the transaction of such other business as may
properly come before the meeting shall be held after the close of the
Corporation's fiscal year on such date and at such time as shall be designated
by the Board of Directors.
Section 1.3. Special Meetings. Special meetings may be called at any time
by the President or the Board of Directors.
Section 1.4. Notice of Meetings. A written notice stating the place, date,
and hour of each meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called shall be given by, or at the direction
of, the Secretary or the person or persons authorized to call the meeting to
each stockholder of record entitled to vote at such meeting, not less than ten
(10) days nor more than sixty (60) days before the date of the meeting, unless a
greater period of time is required by law in a particular case.
Section 1.5. Record Date. In order to determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. If no record
date is fixed: (i) the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice
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is waived, at the close of business on the day next preceding the day on which
the meeting is held; and (ii) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the day on
which the first written consent is expressed. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 1.6. Informal Action. Any action required to be taken at any annual
or special meeting of stockholders of the Corporation, or any action which may
be taken at any annual or special meeting of the stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE II
DIRECTORS
Section 2.1. Powers of Directors. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which shall exercise all powers that may be exercised or performed by
the Corporation and that are not by statute, the Certificate of Incorporation or
these By-laws directed to be exercised or performed by the stockholders.
Section 2.2. Number, Election and Term of Office. The Board of Directors
shall consist initially of three (3) members and thereafter shall consist of not
less than three (3) nor more than nine (9) members as fixed from time to time by
the Board of Directors. Directors need not be stockholders of the Corporation.
The directors shall be elected by the stockholders at the annual meeting or any
special meeting called for such purpose. Each director shall hold office until
his or her successor shall be duly elected and qualified or until his or her
earlier resignation or removal. A director may resign at any time upon written
notice to the Corporation.
Section 2.3. Vacancies. Vacancies and newly created
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directorships resulting from any increase in the authorized number of directors
may be filled by a majority vote of the directors then in office, although less
than a quorum, or by a sole remaining director. The occurrence of a vacancy
which is not filled by action of the Board of Directors shall constitute a
determination by the Board of Directors that the number of directors is reduced
so as to eliminate such vacancy, unless the Board of Directors shall specify
otherwise. When one or more directors shall resign from the Board, effective at
a future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective.
Section 2.4. Meetings of Directors. Regular meetings of the Board of
Directors shall be held at such time and place as the Board of Directors shall
from time to time by resolution appoint; and no notice shall be required to be
given of any such regular meeting. A special meeting of the Board of Directors
may be called by the President or any director by giving two (2) days' notice to
each director by letter, telegram, telephone or other oral message. Except as
otherwise provided by these By-laws, a majority of the total number of directors
shall constitute a quorum for the transaction of business, and the vote of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 2.5. Informal Action. Any action required or permitted to be taken
at any meeting of the Board of Directors, or of any committee thereof, may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
Section 2.6. Telephone Participation in Meetings. Members of the Board of
Directors, or any committee designated by the Board, may participate in a
meeting of the Board of Directors or such committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section shall constitute presence in person at such meeting.
ARTICLE III
OFFICERS
Section 3.1. Enumeration. The officers of the Corporation shall be elected
by the Board of Directors and shall consist of a President, such number of Vice
Presidents (if any) as
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the Board of Directors shall from time to time elect, a Secretary, a Treasurer,
and such other officers (if any) as the Board of Directors shall from time to
time elect. The Board of Directors may at any time elect one of its members as
Chairman of the Board of the Corporation, who shall preside at meetings of the
Board of Directors and of the stockholders and shall have such powers and
perform such duties as shall from time to time be prescribed by the Board of
Directors. Any two or more offices may be held by the same person.
Section 3.2. President. The President shall be the chief executive officer
of the Corporation, and shall have general and active charge and control over
the business and affairs of the Corporation, subject to the Board of Directors.
If there shall be no Chairman of the Board, or in his or her absence or
inability to act, the President shall preside at meetings of the Board of
Directors and of the stockholders. The President shall sign all certificates for
shares of the capital stock of the Corporation and may, together with the
Secretary, execute on behalf of the Corporation any contract which has been
approved by the Board of Directors.
Section 3.3. Vice President. The Vice President or, if there shall be more
than one, the Vice Presidents, in the order of their seniority unless otherwise
specified by the Board of Directors, shall have all of the powers and perform
all of the duties of the President during the absence or inability to act of the
President. Each Vice President shall also have such other powers and perform
such other duties as shall from time to time be prescribed by the Board of
Directors or the President.
Section 3.4. Secretary. The Secretary shall record the proceedings of the
meetings of the stockholders and directors in a book to be kept for that
purpose, and shall give notice as required by statute or these By-laws of all
such meetings. The Secretary shall have custody of the seal of the Corporation
and of all books, records, and papers of the Corporation, except such as shall
be in the charge of the Treasurer or of some other person authorized to have
custody and possession thereof by resolution of the Board of Directors. The
Secretary may, together with the President, execute on behalf of the Corporation
any contract which has been approved by the Board of Directors. The Secretary
shall also have such other powers and perform such other duties as are incident
to the office of the secretary of a corporation or as shall from time to time be
prescribed by, or pursuant to authority delegated by, the Board of Directors.
Section 3.5. Treasurer. The Treasurer shall keep full and accurate accounts
of the receipts and disbursements of the Corporation in books belonging to the
Corporation, shall deposit all moneys and other valuable effects of the
Corporation in the name and to the credit of the Corporation in such
depositories as
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may be designated by the Board of Directors, and shall also have such other
powers and perform such other duties as are incident to the office of the
treasurer of a corporation or as shall from time to time be prescribed by, or
pursuant to authority delegated by, the Board of Directors.
Section 3.6. Other Officers and Assistant Officers. The powers and duties
of each other officer or assistant officer who may from time to time be chosen
by the Board of Directors shall be as specified by, or pursuant to authority
delegated by, the Board of Directors at the time of the appointment of such
other officer or assistant officer or from time to time thereafter. In addition,
each officer designated as an assistant officer shall assist in the performance
of the duties of the officer to which he or she is assistant, and shall have the
powers and perform the duties of such officer during the absence or inability to
act of such officer.
Section 3.7. Term and Compensation. Officers shall be elected by the Board
of Directors from time to time, to serve at the pleasure of the Board. Each
officer shall hold office until his or her successor is elected and qualified,
or until his or her earlier resignation or removal. The compensation of all
officers shall be fixed by, or pursuant to authority delegated by, the Board of
Directors from time to time.
ARTICLE IV
INDEMNIFICATION
Section 4.1. Indemnification in Actions, Suits or Proceedings Other Than
Those by or in the Right of the Corporation. Subject to Section 4.3, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that he
is or was a director or officer of the Corporation, or is or was a director or
officer of the Corporation and is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of
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itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 4.2. Indemnification in Actions, Suits or Proceedings by or in the
Right of the Corporation. Subject to Section 4.3, the Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director or officer of the Corporation, or is or was a director or
officer of the Corporation and is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation; except that no indemnification under this
Section 4.2 shall be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the Corporation unless and
only to the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper.
Section 4.3. Authorization of Indemnification. Any indemnification under
Sections 4.1 and 4.2 (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section 4.1
or 4.2, as the case may be. Such determination shall be made (a) by a majority
vote of the directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (b) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written opinion, or
(c) by the sotckholders. To the extent, however, that a director or officer of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding described in Section 4.1 or 4.2, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
Section 4.4. Reliance. For purpose of any determination
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under Section 4.3, a person shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, or, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe his conduct was unlawful, if his action was
based on the records or books of account of the Corporation or Another
Enterprise (as defined below), on information supplied to him by the officers of
the Corporation or Another Enterprise in the course of their duties, on the
advice of legal counsel for the Corporation or Another Enterprise or on
information or records given or reports made to the Corporation or Another
Enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or Another
Enterprise, but the fact that his action was not so based on any of the
foregoing shall not result in it being deemed that he did not act in good faith
or in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation or, with respect to any criminal action or
proceeding, he had reasonable cause to believe his conduct was unlawful. The
term "Another Enterprise" as used in this Section 4.4 shall mean any corporation
(other than the Corporation), partnership, joint venture, trust or other
enterprise, which such person is or was serving at the request of the
Corporation as a director, officer, employee or agent. The provisions of this
Section 4.4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Section 4.1 or 4.2, as the case may be.
Section 4.5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 4.3, and notwithstanding the
absence of any determination thereunder, any director or officer may apply to
any court of competent jurisdiction in the State of Delaware for indemnification
to the extent otherwise provided under Sections 4.1 and 4.2. The basis of such
indemnification by a court shall be a determination by such court that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section 4.1
or 4.2, as the case may be. Neither a contrary determination in the specific
case under Section 4.3 nor the absence of any determination thereunder shall be
a defense to such application or create a presumption that the director or
officer seeking indemnification has not met any applicable standard of conduct.
Any application for indemnification made to any court pursuant to this Section
4.5 shall be made in such manner and form as may be required by the applicable
rules of such court or, in the absence thereof, by direction of the court to
which such application is made. Notice of any application for indemnification
pursuant to this Section 4.5 shall be given to the Corporation promptly upon the
filing of such application. If successful, in whole or in part, the director or
officer seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.
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Section 4.6. Expenses Payable in Advance. Expenses (including attorneys'
fees) incurred by a director or officer in defending or investigating any
threatened or pending civil, criminal, administrative or investigative action,
suit or proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding, upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article IV if such an undertaking is required
by the General Corporation Law of the State of Delaware.
Section 4.7. Non-exclusiveness and Advancement of Expenses. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article IV shall not be exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, it being the policy of the Corporation that
indemnification of the persons specified in Sections 4.1 and 4.2 shall be made
to the fullest extent permitted by law. The provisions of this Article IV shall
not be deemed to preclude the indemnification of any person who is not specified
in Section 4.1 or 4.2 but whom the Corporation has the power or obligation to
indemnify under the provisions of the General Corporation Law of the State of
Delaware, including, without limitation, the provisions of subsection (h) of
Section 145 thereof, or otherwise.
Section 4.8. Effectiveness. A finding that any provision of this Article IV
is invalid or of limited application shall not affect any other provision of
this Article IV nor shall a finding that any portion of any provision of this
Article IV is invalid or of limited application affect the balance of such
provision.
Section 4.9. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article IV.
Section 4.10. Indemnification Expenditures. The Board of Directors, without
approval of the stockholders, shall have the power to borrow money on behalf of
the Corporation, including the power to pledge the assets of the Corporation,
from time to time to
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discharge the Corporation's obligations with respect to indemnification, the
advancement and reimbursement of expenses, and the purchase and maintenance of
insurance referred to in this Article IV.
Section 4.11. Certain Definitions. For purposes of this Article IV,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director or officer of the
Corporation which imposes duties on, or involves services by, such director or
officer with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
IV.
Section 4.12. Survival of Indemnification and Advancement of Expenses. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article IV shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 4.13. Limitation on Indemnification. Notwithstanding anything
contained in this Article IV to the contrary, except for proceedings to enforce
rights to indemnification (which shall be governed by Section 4.5), the
Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 4.14. Repeal or Modification. Any repeal or modification of this
Article IV shall not adversely affect any rights to indemnification and
advancement of expenses of a director or officer of the Corporation existing
pursuant to this Article IV with respect to any acts or omissions occurring
prior to such repeal or modification.
Section 4.15. Indemnification of Employees and Agents. The Corporation may,
to the extent authorized from time to time by the Board of Directors, provide
rights to indemnification and to the advancement of expenses to employees and
agents of the Corporation similar to those conferred in this Article IV on
directors and officers of the Corporation.
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ARTICLE V
SHARES OF CAPITAL STOCK
Section 5.1. Issuance of Stock. Shares of capital stock of any class now or
hereafter authorized, securities convertible into or exchangeable for such
stock, or options or other rights to purchase such stock or securities may be
issued or granted in accordance with authority granted by resolution of the
Board of Directors.
Section 5.2. Stock Certificates. Certificates for shares of the capital
stock of the Corporation shall be in the form adopted by the Board of Directors,
shall be signed by the President and by the Secretary or Treasurer, and may be
sealed with the seal of the Corporation. All such certificates shall be numbered
consecutively, and the name of the person owning the shares represented thereby,
with the number of such shares and the date of issue, shall be entered on the
books of the Corporation.
Section 5.3. Transfer of Stock. Shares of capital stock of the Corporation
shall be transferred only on the books of the Corporation, by the holder of
record in person or by the holder's duly authorized representative, upon
surrender to the Corporation of the certificate for such shares duly endorsed
for transfer, together with such other documents (if any) as may be required to
effect such transfer.
Section 5.4. Lost, Stolen, Destroyed, or Mutilated Certificates. New stock
certificates may be issued to replace certificates alleged to have been lost,
stolen, destroyed, or mutilated, upon such terms and conditions, including proof
of loss or destruction, and the giving of a satisfactory bond of indemnity, as
the Board of Directors from time to time may determine.
Section 5.5. Regulations. The Board of Directors shall have power and
authority to make all such rules and regulations not inconsistent with these
By-laws as it may deem expedient concerning the issue, transfer, and
registration of shares of capital stock of the Corporation.
Section 5.6. Holders of Record. The Corporation shall be entitled to treat
the holder of record of any share or shares of capital stock of the Corporation
as the holder and owner in fact thereof for all purposes and shall not be bound
to recognize any equitable or other claim to, or right, title, or interest in,
such share or shares on the part of any other person, whether or not the
Corporation shall have express or other notice thereof, except as otherwise
provided by the laws of the State of Delaware.
Section 5.7. Restriction on Transfer. A restriction on
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the hypothecation, transfer or registration of transfer of shares of the
corporation may be imposed either by these By-laws or by an agreement among any
number of stockholders or such holders and the corporation. No restriction so
imposed shall be binding with respect to those securities issued prior to the
adoption of the restriction unless the holders of such securities are parties to
an agreement or voted in favor of the restriction.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1. Corporate Seal. The Corporation may adopt a seal in such form
as the Board of Directors shall from time to time determine.
Section 6.2. Fiscal Year. The fiscal year of the Corporation shall be as
designated by the Board of Directors from time to time.
Section 6.3. Authorization. All checks, notes, vouchers, warrants, drafts,
acceptances, and other orders for the payment of moneys of the Corporation shall
be signed by such officer or officers or such other person or persons as the
Board of Directors may from time to time designate.
Section 6.4. Financial Reports. Financial statements or reports shall not
be required to be sent to the stockholders of the Corporation, but may be so
sent in the discretion of the Board of Directors, in which event the scope of
such statements or reports shall be within the discretion of the Board of
Directors, and such statements or reports shall not be required to have been
examined by or to be accompanied by an opinion of an accountant or firm of
accountants.
Section 6.5. Effect of By-laws. No provision in these By-laws shall vest
any property right in any stockholder.
ARTICLE VII
AMENDMENTS
The authority to adopt, amend or repeal By-laws of the Corporation is
expressly conferred upon the Board of Directors, which may take such action by
the affirmative vote of a majority of the whole Board of Directors at any
regular or special meeting duly convened after notice of that purpose, subject
always to the power
11
<PAGE>
of the stockholders to adopt, amend or repeal By-laws.
12
<PAGE>
BY-LAWS
OF
Clearview Cinema Group, Inc.
TABLE OF CONTENTS
Page
ARTICLE I MEETINGS OF STOCKHOLDERS ..................................... 1
- ---------------------------------------
Section 1.1. Place of Meetings ............................................ 1
Section 1.2. Annual Meetings .............................................. 1
Section 1.3. Special Meetings ............................................. 1
Section 1.4. Notice of Meetings ........................................... 1
Section 1.5. Record Date .................................................. 1
Section 1.6. Informal Action .............................................. 2
ARTICLE II DIRECTORS .................................................... 2
- ------------------------
Section 2.1. Powers of Directors .......................................... 2
Section 2.2. Number, Election, and Term of Office ......................... 2
Section 2.3. Vacancies .................................................... 3
Section 2.4. Meetings of Directors ........................................ 3
Section 2.5. Informal Action .............................................. 3
Section 2.6. Telephone Participation in Meetings .......................... 4
ARTICLE III OFFICERS ..................................................... 4
- -----------------------
Section 3.1. Enumeration .................................................. 4
Section 3.2. President .................................................... 4
Section 3.3. Vice President ............................................... 4
Section 3.4. Secretary .................................................... 4
Section 3.5. Treasurer .................................................... 5
Section 3.6. Other Officers and Assistant Officers ........................ 5
Section 3.7. Term and Compensation ........................................ 5
ARTICLE IV INDEMNIFICATION .............................................. 5
- ------------------------------
Section 4.1. Indemnification in Action, Suits or
Proceedings Other Than Those by or in the
Right of the Corporation ..................................... 6
Section 4.2. Indemnification in Actions, Suits or
Proceedings by or in the Right of the
Corporation .................................................. 6
Section 4.3. Authorization of Indemnification ............................. 6
Section 4.4. Reliance ..................................................... 7
Section 4.5. Indemnification by a Court ................................... 7
Section 4.6. Expenses Payable in Advance .................................. 8
<PAGE>
Section 4.7. Non-exclusiveness and Advancement of
Expenses ..................................................... 8
Section 4.8. Effectiveness ................................................ 8
Section 4.9. Insurance .................................................... 8
Section 4.10. Indemnification Expenditures ................................. 9
Section 4.11. Certain Definitions .......................................... 9
Section 4.12. Survival of Indemnification and
Advancement of Expenses....................................... 9
Section 4.13. Limitation on Indemnification ................................ 9
Section 4.14. Repeal or Modification ....................................... 9
Section 4.15. Indemnification of Employees and Agents ......................10
ARTICLE V SHARES OF CAPITAL STOCK ......................................10
- --------------------------------------
Section 5.1. Issuance of Stock ............................................10
Section 5.2. Stock Certificates............................................10
Section 5.3. Transfer of Stock ............................................10
Section 5.4. Lost, Stolen, Destroyed, or Mutilated
Certificates .....................................10
Section 5.5. Regulations ..................................................10
Section 5.6. Holders of Record ............................................11
Section 5.7. Restriction on Transfer ......................................11
ARTICLE VI GENERAL PROVISIONS ..........................................11
- ---------------------------------
Section 6.1. Corporate Seal ................................................11
Section 6.2. Fiscal Year ...................................................11
Section 6.3. Authorization .................................................11
Section 6.4. Financial Reports .............................................11
Section 6.5. Effect of By-laws .............................................11
ARTICLE VII AMENDMENTS ....................................................11
- -------------------------
<PAGE>
BY-LAWS
OF
CLEARVIEW CINEMA GROUP, INC.
Exhibit 9.01
VOTING TRUST AGREEMENT
December ___, 1994
This VOTING TRUST AGREEMENT (this "Trust Agreement") is made by and between
Brett E. Marks ("Marks") and A. Dale Mayo (the "Trustee").
Marks owns in the aggregate 200 shares (the "Stock") of the common stock of
Clearview Cinema Group, Inc., a Delaware Corporation (the "Company"). The Stock
is subject to an Investment and Stockholders Agreement dated December __, 1994,
among the Company, Marks, the Trustee and the other parties named therein.
In accordance with Section 218 of the General Corporation Law of the State
of Delaware, Marks desires to enter into this Voting Trust Agreement with
respect to the Stock, and the Trustee is willing to accept the voting rights in
respect of the Stock and to serve as the voting trustee under the terms and
conditions hereof.
The parties hereto, intending to be legally bound hereby, agree as follows:
1. Simultaneously with the execution and delivery hereof, Marks shall
deliver the certificates representing the Stock, duly executed for transfer, to
Mayo to be held under this Trust Agreement.
2. (A) Promptly after the delivery required by paragraph 1, the Trustee
shall deliver the certificates representing the Stock to the Company for
transfer and shall cause the shares represented thereby to be transferred to his
name as Trustee under this Trust Agreement. The new certificates representing
the Stock registered in the name of the Trustee shall be delivered to the
Trustee by the Company, and the Trustee shall hold those certificates in his
custody.
(B) The Trustee shall hold the shares of the Stock transferred to him
hereunder, and all other shares of the common stock that Marks shall transfer to
him, in trust for the purposes and subject to the terms and conditions of the
Agreement.
<PAGE>
3. At the same time as the delivery by the Trustee of the certificates to
the Company in accordance with the provisions of paragraph 2, the Trustee shall
issue to Marks a Voting Trust Certificate for the number of shares of the Stock
deposited by Marks, which Voting Trust Certificate shall be in substantially the
following form:
[Front Side]
CLEARVIEW CINEMA GROUP, INC.
(a Delaware corporation)
Certificate No. _____ _____ Shares
VOTING TRUST CERTIFICATE
THIS IS TO CERTIFY that, subject to the provisions hereof and of
the Trust Agreement as hereinafter defined, Brett E. Marks, or
registered assigns, will be entitled to receive, on December __, 2004,
or upon the earlier termination of the Trust Agreement, but only upon
surrender of this certificate, a certificate or certificates for _____
shares of common stock of Clearview Cinema Group, Inc., a Delaware
corporation (hereinafter called the "Company"), or of any other
corporation into which shares of common stock of the Company shall
have been reclassified or converted, or for which they shall have been
exchanged.
Until the expiration or termination of the Trust Agreement, the
undersigned Trustee shall pay or deliver all cash dividends, and
certain other distributions mentioned in the Trust Agreement, on or in
respect of the common stock from time to time held by the undersigned
Trustee thereunder, to the person who, on the record date for the
determination of stockholders entitled to receive the dividends and
other distributions, was the registered owner of this Voting Trust
Certificate.
This certificate has been issued under and pursuant to the
provisions of a Voting Trust Agreement (the "Trust Agreement"), by and
between Brett E. Marks, as a stockholder of the Company and A. Dale
Mayo, as Trustee, dated as of December __, 1994, as the same may be
amended from time to time. The Trust Agreement more fully defines and
sets forth the rights and obligations of the owner and holder of this
certificate and of the Trustee and is incorporated in and made a part
of this Voting Trust Certificate with the same effect as if set forth
in full.
Subject to any restriction contained on the reverse side of this
certificate, this Voting Trust
<PAGE>
Certificate is transferable by its registered owner, in person or by
duly authorized attorney, on the books to be maintained for that
purpose by the undersigned Trustee, upon the terms and conditions
provided in the Trust Agreement.
WITNESS THE DUE EXECUTION HEREOF on this ______ day of
____________, 199_.
________________________(SEAL)
A. Dale Mayo
Trustee under Voting Trust
Agreement, dated December __,
1994.
[Reverse side]
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
any state Blue Sky or securities laws. These securities
cannot be resold without registration under such Act or
applicable state securities laws or an exemption therefrom.
In addition, the securities represented by this certificate
are subject to an Investment and Stockholders Agreement
dated December ___, 1994 among the Company and the parties
named therein, as the same may be modified from time to
time, and may not be sold, offered, transferred, assigned,
pledged, hypothecated or otherwise disposed of except in
compliance with the provisions of that agreement.
4. The Voting Trust Certificate issued under this Trust Agreement shall be
transferable in the same manner, with the same effect, and subject to the same
restrictions as certificates for shares of the Stock. The Voting Trust
Certificate shall be transferable only at the principal executive office of the
Company or at any other place that the Company may maintain for its corporate
books and records.
5. The Trustee has no authority to sell or otherwise dispose of or encumber
any of the Stock.
6. The Trustee shall possess and be entitled, subject to the provisions of
this Agreement, to exercise all the rights and powers of an absolute owner of
all the shares of Stock deposited under this Trust Agreement, including without
limitation the right to receive dividends on the Stock (subject to paragraph 7
below) and the right to vote, consent in writing,
<PAGE>
or otherwise act with respect to any corporate or stockholders' action, to
increase or reduce the capital stock of the Company, to classify or reclassify
any of the shares as now or hereafter authorized into preferred or common stock
or other classes of stock with or without par value, to amend the Certificate of
Incorporation or by-laws of the Company, to merge or consolidate the Company
with other corporations, to sell all or any part of its assets, to create any
mortgage lien on any of its property, or for any other corporate act or purpose.
Except as otherwise provided herein, no voting right shall pass to others by or
under the Voting Trust Certificate or by or under this Trust Agreement or by or
under any agreement express or implied. All shares of Stock shall be voted as
directed by the Trustee and shall be deemed to be represented for the purposes
of determining a quorum.
7. (A) All dividends paid on the Stock from time to time held under this
Trust Agreement, except stock dividends, shall be remitted by the Trustee,
promptly upon receipt, to the person or persons who, on the record date for the
determination of stockholders entitled to receive the dividends, were the record
owners of the Voting Trust Certificates representing the shares on which the
dividends were declared.
(B) Dividends paid in shares of common stock of the Company shall be
retained by the Trustee and added to the Stock held under this Trust Agreement.
The Trustee shall promptly issue to the appropriate persons Voting Trust
Certificates representing any Stock that the Trustee shall receive as a dividend
and retain in accordance with the provisions of this paragraph 7. Those Voting
Trust Certificates shall be in the form as set forth in this Trust Agreement,
with any changes that are appropriate.
(C) All warrants or rights to subscribe to any class of voting stock of
the Company ("Warrants") that shall be received by the Trustee in respect or on
account of the Stock held under this Trust Agreement shall be distributed by the
Trustee to the holders of the Voting Trust Certificates in the same manner as he
is required to distribute cash dividends under this Trust Agreement. If any
voting stock is purchased by Marks pursuant to the Warrants, Marks shall
immediately deliver the certificates representing all the shares of stock so
purchased, duly executed for transfer, to the Trustee to be added to the Stock
held under the Trust Agreement. The Trustee shall promptly issue to Marks Voting
Trust Certificates representing any Stock that shall be so delivered to and held
by the Trustee in accordance with the provisions of this paragraph 7. The Voting
Trust Certificates shall be in the form as set forth in this Trust Agreement,
with any changes that are appropriate. No sale or other transfer of any of the
Warrants shall be made without first offering the Company a prior opportunity to
purchase the Warrants for a reasonable amount.
8. Marks, at any time from and after the date of this Trust Agreement, must
deposit any additional capital stock of the Company purchased or owned by him
(but not specifically described
<PAGE>
within the Trust Agreement) with the Trustee. Additional shares of Stock so
deposited shall become subject to all the terms and conditions of this Trust
Agreement to the same extent as if it were originally deposited under this Trust
Agreement.
9. (A) If, as the result of any split-up, combination or reclassification
of any Stock held by the Trustee under this Trust Agreement, or as the result of
any merger, consolidation, reorganization or sale of assets to which the Company
shall be a party, the Stock held by the Trustee under this Trust Agreement shall
be reclassified, converted into or become exchangeable for any other securities,
either of the Company or of any other corporation, the Trustee shall exchange or
surrender the Stock held by it for those other securities and shall deliver the
certificates evidencing the same to the Company or other appropriate agency in
exchange or surrender. The Trustee shall hold the securities received upon the
exchange or surrender for the purposes and upon the same conditions as are
provided in this Trust Agreement in respect of the shares of the Stock.
(B) Upon any exchange or surrender, the Trustee may, if he considers it
to be advisable, issue new Voting Trust Certificates in lieu of and in exchange
for the outstanding Voting Trust Certificates. The Voting Trust Certificates
shall be in the form set forth in this Trust Agreement, with any changes that
are appropriate.
10. (A) The Trustee may serve as a director or officer of the Company or
any successor corporation, and he or any firm of which he may be a member, or
any corporation of which he may be a stockholder, director or officer, may
contract with the Company or any successor corporation, or be pecuniarily
interested in any transaction to which the Company or any successor corporation
may be a party, or in which it may be interested, as fully as though he were not
a Trustee.
(B) The Trustee shall not be liable to any stockholder or the
registered owner or holder of any Voting Trust Certificate for any error of
judgment or for any neglect or default except for his own malfeasance.
(C) The Trustee shall not receive any compensation for his services
as Trustee, and he shall not be required to give any bond or security for the
discharge of his duties as Trustee.
(D) The Trustee hereby accepts the trust hereunder, subject to all
the terms and conditions contained in this Trust Agreement, and he agrees to
exercise the powers and perform the duties of Trustee as set forth in this Trust
Agreement.
11. (A) The trust created by this Trust Agreement is expressly declared to
be irrevocable.
(B) (i) This Trust Agreement (except for Paragraph 13 governing
indemnification) shall terminate with
<PAGE>
respect only to the shares of Stock that are sold by Marks (a) from and after
the date the Company consummates an underwritten public offering, pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended, (b) pursuant
to the registration rights granted to Marks in Section 10 of the Stockholders
Agreement, or (c) pursuant to the right of participation granted to Marks in
Section 9.7 of the Stockholders Agreement. A termination of this Trust Agreement
as to any shares of Stock sold pursuant to clauses (a), (b) or (c) of the
preceding sentence shall not affect any shares of Stock continuing to be owned
by Marks (the "Remaining Shares"), and this Trust Agreement shall continue in
force with respect to the Remaining Shares until terminated pursuant to
Paragraph 11(B)(ii).
(ii) This Trust Agreement (except for Paragraph 13 governing
indemnification) shall terminate upon the earlier of (a) the twentieth
anniversary hereof, (b) written notice of termination by the Trustee, or (c) the
death of the Trustee.
(C) (i) In the event of any proposed sale of Stock pursuant to clauses (a),
(b) or (c) of the first sentence of Paragraph 11(B)(i), Marks shall notify the
Trustee of the proposed sale and of the number of shares to be sold, and, upon
receipt of (a) confirmation, in a form reasonably requested by the Trustee, of
the consummation of the sale and (b) the Voting Certificate(s) representing the
purchased Stock, the Trustee shall deliver or request that the Company deliver
to the purchaser stock certificates for the purchased Stock, and, if necessary,
shall deliver to Marks a Voting Certificate for the Remaining Shares.
(ii) In the event of termination of this Trust Agreement pursuant to
Paragraph 11(B)(ii), as soon as practicable after the termination, the Trustee
shall deliver to or upon the order of the registered owners of the Voting Trust
Certificates, and upon surrender thereof, the shares of Stock represented
thereby, together with any other shares of voting stock of the Company subject
to this Trust Agreement.
12. Any notice or other communication required or permitted by this Trust
Agreement to be given by any party hereto shall be in writing, and any
communication and payment or delivery of securities required to be made by any
party to any other party shall be sent by first class prepaid mail, certified or
registered, return receipt requested, addressed in the case of Marks, to the
address that is provided by Marks and, in the case of the Trustee to:
A. Dale Mayo
7 Waverly Place
Madison, New Jersey 07940
or in any other manner as any party shall hereafter designate by notice to the
other party.
<PAGE>
13. The Trustee shall be indemnified and held harmless from any and all
expenses, costs, damages and other liabilities arising out of the acceptance of
this trust and the issue of the Voting Trust Certificates, each Voting Trust
Certificate holder being liable for and agreeing to contribute his proportionate
share thereof; and, whenever any funds shall come into the hands of the Trustee
for distribution, he may deduct therefrom a sum sufficient to indemnify himself
and divide the balance pro rata among the holders of the Voting Trust
Certificates. The rights and obligations provided in this Paragraph 13 shall
survive the termination of this Trust Agreement.
14. This Trust Agreement shall be legally binding upon, and shall inure to
the benefit of, Marks and his respective heirs, legal representatives,
successors and assigns.
15. The validity and effectiveness of this Trust Agreement shall be
governed by, and its provisions shall be construed and enforced in accordance
with, the laws of the State of Delaware.
16. If, for any reason, any provision or part of this Trust Agreement is
held invalid, that invalidity shall not affect any other provision or the rest
of provision of this Trust Agreement, as the case may be, and each provision or
part shall, to the full extent consistent with law, continue in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
-------------------------
Brett E. Marks
-------------------------
A. Dale Mayo
Exhibit 9.02
VOTING TRUST AGREEMENT
June 20, 1995
This VOTING TRUST AGREEMENT (this "Trust Agreement") is made by and between
Michael C. Rush ("Rush") and A. Dale Mayo (the "Trustee").
Rush owns in the aggregate 20 shares (the "Stock") of the common stock of
Clearview Cinema Group, Inc., a Delaware Corporation (the "Company"). The Stock
is subject to an Investment and Stockholders Agreement dated December 21, 1994,
among the Company, the Trustee and the other parties named therein pursuant to
an Agreement, of even date herewith, executed by Rush, in which Rush joined and
agreed to be bound by the terms and conditions of the Investment and
Stockholders Agreement.
In accordance with Section 218 of the General Corporation Law of the State
of Delaware, Rush desires to enter into this Voting Trust Agreement with respect
to the Stock, and the Trustee is willing to accept the voting rights in respect
of the Stock and to serve as the voting trustee under the terms and conditions
hereof.
The parties hereto, intending to be legally bound hereby, agree as follows:
1. Simultaneously with the execution and delivery hereof, Rush shall
deliver the certificates representing the Stock, duly executed for transfer, to
Mayo to be held under this Trust Agreement.
2. (A) Promptly after the delivery required by paragraph 1, the Trustee
shall deliver the certificates representing the Stock to the Company for
transfer and shall cause the shares represented thereby to be transferred to his
name as Trustee under this Trust Agreement. The new certificates representing
the Stock registered in the name of the Trustee shall be delivered to the
Trustee by the Company, and the Trustee shall hold those certificates in his
custody.
(B) The Trustee shall hold the shares of the Stock transferred to him
hereunder, and all other shares of the common stock that Rush shall transfer to
him, in trust for the purposes and subject to the terms and conditions of this
Trust Agreement.
<PAGE>
3. At the same time as the delivery by the Trustee of the certificates to
the Company in accordance with the provisions of paragraph 2, the Trustee shall
issue to Rush a Voting Trust Certificate for the number of shares of the Stock
deposited by Rush which Voting Trust Certificate shall be in substantially the
following form:
[Front Side]
CLEARVIEW CINEMA GROUP, INC.
(a Delaware corporation)
Certificate No. _____ _____ Shares
VOTING TRUST CERTIFICATE
THIS IS TO CERTIFY that, subject to the provisions hereof and of
the Trust Agreement as hereinafter defined, Michael C. Rush, or
registered assigns, will be entitled to receive, on June 20, 2015, or
upon the earlier termination of the Trust Agreement, but only upon
surrender of this certificate, a certificate or certificates for _____
shares of common stock of Clearview Cinema Group, Inc., a Delaware
corporation (hereinafter called the "Company"), or of any other
corporation into which shares of common stock of the Company shall
have been reclassified or converted, or for which they shall have been
exchanged.
Until the expiration or termination of the Trust Agreement, the
undersigned Trustee shall pay or deliver all cash dividends, and
certain other distributions mentioned in the Trust Agreement, on or in
respect of the common stock from time to time held by the undersigned
Trustee thereunder, to the person who, on the record date for the
determination of stockholders entitled to receive the dividends and
other distributions, was the registered owner of this Voting Trust
Certificate.
This certificate has been issued under and pursuant to the
provisions of a Voting Trust Agreement (the "Trust Agreement"), by and
between Michael C. Rush, as a stockholder of the Company and A. Dale
Mayo, as Trustee, dated as of June 20, 1995, as the same may be
amended from time to time. The Trust Agreement more fully defines and
sets forth the rights and obligations of the owner and holder of this
certificate and of the Trustee and is incorporated in and made a part
of this Voting Trust Certificate with the same effect as if set forth
in full.
<PAGE>
Subject to any restriction contained on the reverse side of this
certificate, this Voting Trust Certificate is transferable by its
registered owner, in person or by duly authorized attorney, on the
books to be maintained for that purpose by the undersigned Trustee,
upon the terms and conditions provided in the Trust Agreement.
WITNESS THE DUE EXECUTION HEREOF on this ______ day of
________________, 199_.
________________________(SEAL)
A. Dale Mayo
Trustee under Voting Trust
Agreement, dated June 20, 1995,
1995.
[Reverse side]
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state Blue Sky or
securities laws. These securities cannot be resold without registration
under such Act or applicable state securities laws or an exemption
therefrom.
In addition, the securities represented by this certificate are subject to
an Investment and Stockholders Agreement dated December 21, 1994 among the
Company and the parties named therein, as the same may be modified from
time to time, and may not be sold, offered, transferred, assigned, pledged,
hypothecated or otherwise disposed of except in compliance with the
provisions of that agreement.
4. The Voting Trust Certificate issued under this Trust Agreement shall be
transferable in the same manner, with the same effect, and subject to the same
restrictions as certificates for shares of the Stock. The Voting Trust
Certificate shall be transferable only at the principal executive office of the
Company or at any other place that the Company may maintain for its corporate
books and records.
5. The Trustee has no authority to sell or otherwise dispose of or encumber
any of the Stock.
6. The Trustee shall possess and be entitled, subject to the provisions of
this Agreement, to exercise all the rights and powers of an absolute owner of
all the shares of Stock
<PAGE>
deposited under this Trust Agreement, including without limitation the right to
receive dividends on the Stock (subject to paragraph 7 below) and the right to
vote, consent in writing, or otherwise act with respect to any corporate or
stockholders' action, to increase or reduce the capital stock of the Company, to
classify or reclassify any of the shares as now or hereafter authorized into
preferred or common stock or other classes of stock with or without par value,
to amend the Certificate of Incorporation or by-laws of the Company, to merge or
consolidate the Company with other corporations, to sell all or any part of its
assets, to create any mortgage lien on any of its property, or for any other
corporate act or purpose. Except as otherwise provided herein, no voting right
shall pass to others by or under the Voting Trust Certificate or by or under
this Trust Agreement or by or under any agreement express or implied. All shares
of Stock shall be voted as directed by the Trustee and shall be deemed to be
represented for the purposes of determining a quorum.
7. (A) All dividends paid on the Stock from time to time held under this
Trust Agreement, except stock dividends, shall be remitted by the Trustee,
promptly upon receipt, to the person or persons who, on the record date for the
determination of stockholders entitled to receive the dividends, were the record
owners of the Voting Trust Certificates representing the shares on which the
dividends were declared.
(B) Dividends paid in shares of common stock of the Company shall be
retained by the Trustee and added to the Stock held under this Trust Agreement.
The Trustee shall promptly issue to the appropriate persons Voting Trust
Certificates representing any Stock that the Trustee shall receive as a dividend
and retain in accordance with the provisions of this paragraph 7. Those Voting
Trust Certificates shall be in the form as set forth in this Trust Agreement,
with any changes that are appropriate.
(C) All warrants or rights to subscribe to any class of voting stock of
the Company ("Warrants") that shall be received by the Trustee in respect or on
account of the Stock held under this Trust Agreement shall be distributed by the
Trustee to the holders of the Voting Trust Certificates in the same manner as he
is required to distribute cash dividends under this Trust Agreement. If any
voting stock is purchased by Rush pursuant to the Warrants, Rush shall
immediately deliver the certificates representing all the shares of stock so
purchased, duly executed for transfer, to the Trustee to be added to the Stock
held under the Trust Agreement. The Trustee shall promptly issue to Rush Voting
Trust Certificates representing any Stock that shall be so delivered to and held
by the Trustee in accordance with the provisions of this paragraph 7. The Voting
Trust Certificates shall be in the form as set forth in this Trust Agreement,
with any changes that are appropriate. No sale or other transfer of any of the
Warrants shall be made without
<PAGE>
first offering the Company a prior opportunity to purchase the Warrants for a
reasonable amount.
8. Rush, at any time from and after the date of this Trust Agreement, shall
deposit with the Trustee any additional capital stock of the Company purchased
or owned by him (whether or not specifically described within the Trust
Agreement), including but not limited to any additional capital stock acquired
by Rush pursuant to the Convertible Note issued to Rush by the Company on June
20, 1995. Additional shares of Stock so deposited shall become subject to all
the terms and conditions of this Trust Agreement to the same extent as if it
were originally deposited under this Trust Agreement.
9. (A) If, as the result of any split-up, combination or reclassification
of any Stock held by the Trustee under this Trust Agreement, or as the result of
any merger, consolidation, reorganization or sale of assets to which the Company
shall be a party, the Stock held by the Trustee under this Trust Agreement shall
be reclassified, converted into or become exchangeable for any other securities,
either of the Company or of any other corporation, the Trustee shall exchange or
surrender the Stock held by it for those other securities and shall deliver the
certificates evidencing the same to the Company or other appropriate agency in
exchange or surrender. The Trustee shall hold the securities received upon the
exchange or surrender for the purposes and upon the same conditions as are
provided in this Trust Agreement in respect of the shares of the Stock.
(B) Upon any exchange or surrender, the Trustee may, if he considers it
to be advisable, issue new Voting Trust Certificates in lieu of and in exchange
for the outstanding Voting Trust Certificates. The Voting Trust Certificates
shall be in the form set forth in this Trust Agreement, with any changes that
are appropriate.
10. (A) The Trustee may serve as a director or officer of the Company or
any successor corporation, and he or any firm of which he may be a member, or
any corporation of which he may be a stockholder, director or officer, may
contract with the Company or any successor corporation, or be pecuniarily
interested in any transaction to which the Company or any successor corporation
may be a party, or in which it may be interested, as fully as though he were not
a Trustee.
(B) The Trustee shall not be liable to any stock- holder or the
registered owner or holder of any Voting Trust Certificate for any error of
judgment or for any neglect, default, negligence (including gross negligence)
except for his own willful and deliberate malfeasance.
(C) The Trustee shall not receive any compensation for his services
as Trustee, and he shall not be required to
<PAGE>
give any bond or security for the discharge of his duties as Trustee.
(D) The Trustee hereby accepts the trust hereunder, subject to all
the terms and conditions contained in this Trust Agreement, and he agrees to
exercise the powers and perform the duties of Trustee as set forth in this Trust
Agreement.
11. (A) The trust created by this Trust Agreement is expressly declared to
be irrevocable.
(B) (i) This Trust Agreement shall terminate with respect only to the
shares of Stock that are sold by Rush (a) from and after the date the Company
consummates an underwritten public offering, pursuant to Rule 144 promulgated
under the Securities Act of 1933, as amended, (b) pursuant to the registration
rights granted to Rush in Section 10 of the Stockholders Agreement, or (c)
pursuant to the right of participation granted to Rush in Section 9.7 of the
Stockholders Agreement. A termination of this Trust Agreement as to any shares
of Stock sold pursuant to clauses (a), (b) or (c) of the preceding sentence
shall not affect any shares of Stock continuing to be owned by Rush (the
"Remaining Shares"), and this Trust Agreement shall continue in force with
respect to the Remaining Shares until terminated pursuant to Paragraph
11(B)(ii).
(ii) This Trust Agreement shall terminate upon the earlier of (a) the
twentieth anniversary hereof, (b) written notice of termination by the Trustee,
or (c) the death of the Trustee.
(C) (i) In the event of any proposed sale of Stock pursuant to clauses
(a), (b) or (c) of the first sentence of Paragraph 11(B)(i), Rush shall notify
the Trustee of the proposed sale and of the number of shares to be sold, and,
upon receipt of (a) confirmation, in a form reasonably requested by the Trustee,
of the consummation of the sale and (b) the Voting Certificate(s) representing
the purchased Stock, the Trustee shall deliver or request that the Company
deliver to the purchaser stock certificates for the purchased Stock, and, if
necessary, shall deliver to Rush a Voting Certificate for the Remaining Shares.
(ii) In the event of termination of this Trust Agreement pursuant to
Paragraph 11(B)(ii), as soon as practicable after the termination, the Trustee
shall deliver to or upon the order of the registered owners of the Voting Trust
Certificates, and upon surrender thereof, the shares of Stock represented
thereby, together with any other shares of voting stock of the Company subject
to this Trust Agreement.
12. Any notice or other communication required or permitted by this Trust
Agreement to be given by any party hereto
<PAGE>
shall be in writing, and any communication and payment or delivery of securities
required to be made by any party to any other party shall be sent by first class
prepaid mail, certified or registered, return receipt requested, addressed in
the case of Rush, to the address that is provided by Rush and, in the case of
the Trustee to:
A. Dale Mayo
c/o Clearview Cinema Group, Inc.
Seven Waverly Place
Madison, New Jersey 07940
or in any other manner as any party shall hereafter designate by notice to the
other party.
13. This Trust Agreement shall be legally binding upon, and shall inure to
the benefit of, Rush and his respective heirs, legal representatives, successors
and assigns.
14. The validity and effectiveness of this Trust Agreement shall be
governed by, and its provisions shall be construed and enforced in accordance
with, the laws of the State of Delaware.
15. If, for any reason, any provision or part of this Trust Agreement is
held invalid, that invalidity shall not affect any other provision or the rest
of provision of this Trust Agreement, as the case may be, and each provision or
part shall, to the full extent consistent with law, continue in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement
as of the day and year first above written.
-------------------------
Michael C. Rush
--------------------------
A. Dale Mayo
Exhibit 9.03
VOTING TRUST AGREEMENT
May 29, 1996
This VOTING TRUST AGREEMENT (this "Trust Agreement") is made by and between
Emerson Cinema, Inc. ("Stockholder") and A. Dale Mayo (the "Trustee").
Stockholder owns in the aggregate 347 shares (the "Stock") of the common
stock of Clearview Cinema Group, Inc., a Delaware Corporation (the "Company").
The Stock is subject to an Stockholders and Registration Rights Agreement dated
as of May 29, 1996, among the Company, the Stockholder, the Trustee and the
other parties named therein.
In accordance with Section 218 of the General Corporation Law of the State
of Delaware, the Stockholder desires to enter into this Voting Trust Agreement
with respect to the Stock, and the Trustee is willing to accept the voting
rights in respect of the Stock and to serve as the voting trustee under the
terms and conditions hereof.
The parties hereto, intending to be legally bound hereby, agree as follows:
1. Simultaneously with the execution and delivery hereof, the Stockholder
shall deliver the certificates representing the Stock, duly executed for
transfer, to Mayo to be held under this Trust Agreement.
2. (A) Promptly after the delivery required by paragraph 1, the Trustee
shall deliver the certificates representing the Stock to the Company for
transfer and shall cause the shares represented thereby to be transferred to his
name as Trustee under this Trust Agreement. The new certificates representing
the Stock registered in the name of the Trustee shall be delivered to the
Trustee by the Company, and the Trustee shall hold those certificates in his
custody.
(B) The Trustee shall hold the shares of the Stock transferred to him
hereunder, and all other shares of the common stock that the Stockholder shall
transfer to him, in trust for the purposes and subject to the terms and
conditions of the Agreement.
3. At the same time as the delivery by the Trustee of the certificates to
the Company in accordance with the provisions of paragraph 2, the Trustee shall
issue to the Stockholder a
<PAGE>
Voting Trust Certificate for the number of shares of the Stock deposited by the
Stockholder, which Voting Trust Certificate shall be in substantially the
following form:
[Front Side]
CLEARVIEW CINEMA GROUP, INC.
(a Delaware corporation)
Certificate No. _____ _____ Shares
VOTING TRUST CERTIFICATE
THIS IS TO CERTIFY that, subject to the provisions hereof and of the
Trust Agreement as hereinafter defined,_________________, or registered
assigns, will be entitled to receive upon the termination of the Trust
Agreement, but only upon surrender of this certificate, a certificate or
certificates for _____ shares of common stock of Clearview Cinema Group,
Inc., a Delaware corporation (hereinafter called the "Company"), or of any
other corporation into which shares of common stock of the Company shall
have been reclassified or converted, or for which they shall have been
exchanged.
Until the expiration or termination of the Trust Agreement, the
undersigned Trustee shall pay or deliver all cash dividends, and certain
other distributions mentioned in the Trust Agreement, on or in respect of
the common stock from time to time held by the undersigned Trustee
thereunder, to the person who, on the record date for the determination of
stockholders entitled to receive the dividends and other distributions, was
the registered owner of this Voting Trust Certificate.
This certificate has been issued under and pursuant to the provisions
of a Voting Trust Agreement (the "Trust Agreement"), by and between
_____________, as a stockholder of the Company and A. Dale Mayo, as
Trustee, dated as of May __, 1996, as the same may be amended from time to
time. The Trust Agreement more fully defines and sets forth the rights and
obligations of the owner and holder of this certificate and of the Trustee
and is incorporated in and made a part of this Voting Trust Certificate
with the same effect as if set forth in full.
Subject to any restriction contained on the reverse side of this
certificate, this Voting Trust Certificate is transferable by its
registered owner, in person or by duly authorized attorney, on the books to
be maintained for that purpose by the undersigned
<PAGE>
Trustee, upon the terms and conditions provided in the Trust Agreement.
WITNESS THE DUE EXECUTION HEREOF on this ______ day of ____________,
199_.
________________________(SEAL)
A. Dale Mayo
Trustee under Voting Trust
Agreement, dated May __, 1996.
[Reverse side]
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state Blue Sky or
securities laws. These securities cannot be resold without registration
under such Act or applicable state securities laws or an exemption
therefrom.
In addition, the securities represented by this certificate are subject to
a Stockholders and Registration Rights Agreement dated May ___, 1996 among
the Company and the parties named therein, as the same may be modified from
time to time, and may not be sold, offered, transferred, assigned, pledged,
hypothecated or otherwise disposed of except in compliance with the
provisions of that agreement.
4. The Voting Trust Certificate issued under this Trust Agreement shall be
transferable in the same manner, with the same effect, and subject to the same
restrictions as certificates for shares of the Stock. The Voting Trust
Certificate shall be transferable only at the principal executive office of the
Company or at any other place that the Company may maintain for its corporate
books and records.
5. The Trustee has no authority to sell or otherwise dispose of or encumber
any of the Stock.
6. The Trustee shall possess and be entitled, subject to the provisions of
this Agreement, to exercise all the rights and powers of an absolute owner of
all the shares of Stock deposited under this Trust Agreement, including without
limitation the right to receive dividends on the Stock (subject to paragraph 7
below) and the right to vote, consent in writing, or otherwise act with respect
to any corporate or stockholders' action, to increase or reduce the capital
stock of the Company, to classify or reclassify any of the shares as now or
hereafter authorized into preferred or common stock or other classes of
<PAGE>
stock with or without par value, to amend the Certificate of Incorporation or
by-laws of the Company, to merge or consolidate the Company with other
corporations, to sell all or any part of its assets, to create any mortgage lien
on any of its property, or for any other corporate act or purpose. Except as
otherwise provided herein, no voting right shall pass to others by or under the
Voting Trust Certificate or by or under this Trust Agreement or by or under any
agreement express or implied. All shares of Stock shall be voted as directed by
the Trustee and shall be deemed to be represented for the purposes of
determining a quorum.
7. (A) All dividends paid on the Stock from time to time held under this
Trust Agreement, except stock dividends, shall be remitted by the Trustee,
promptly upon receipt, to the person or persons who, on the record date for the
determination of stockholders entitled to receive the dividends, were the record
owners of the Voting Trust Certificates representing the shares on which the
dividends were declared.
(B) Dividends paid in shares of common stock of the Company shall be
retained by the Trustee and added to the Stock held under this Trust Agreement.
The Trustee shall promptly issue to the appropriate persons Voting Trust
Certificates representing any Stock that the Trustee shall receive as a dividend
and retain in accordance with the provisions of this paragraph 7. Those Voting
Trust Certificates shall be in the form as set forth in this Trust Agreement,
with any changes that are appropriate.
(C) All warrants or rights to subscribe to any class of voting stock of
the Company ("Warrants") that shall be received by the Trustee in respect or on
account of the Stock held under this Trust Agreement shall be distributed by the
Trustee to the holders of the Voting Trust Certificates in the same manner as he
is required to distribute cash dividends under this Trust Agreement. If any
voting stock is purchased by the Stockholder pursuant to the Warrants, the
Stockholder shall immediately deliver the certificates representing all the
shares of stock so purchased, duly executed for transfer, to the Trustee to be
added to the Stock held under the Trust Agreement. The Trustee shall promptly
issue to the Stockholder Voting Trust Certificates representing any Stock that
shall be so delivered to and held by the Trustee in accordance with the
provisions of this paragraph 7. The Voting Trust Certificates shall be in the
form as set forth in this Trust Agreement, with any changes that are
appropriate. No sale or other transfer of any of the Warrants shall be made
without first offering the Company a prior opportunity to purchase the Warrants
for a reasonable amount.
8. The Stockholder, at any time from and after the date of this Trust
Agreement, must deposit any additional capital stock of the Company purchased or
owned by him (but not specifically described within the Trust Agreement) with
the Trustee and such Additional shares of Stock so deposited shall become
subject to all the terms and conditions of this Trust Agreement to the same
extent as if it were originally deposited
<PAGE>
under this Trust Agreement; provided, however, that any shares of capital stock
of the Company purchased by such stockholder in a public market from and after
the date the Company consummates an underwritten public offering shall not be
subject to this Voting Trust Agreement.
9. (A) If, as the result of any split-up, combination or reclassification
of any Stock held by the Trustee under this Trust Agreement, or as the result of
any merger, consolidation, reorganization or sale of assets to which the Company
shall be a party, the Stock held by the Trustee under this Trust Agreement shall
be reclassified, converted into or become exchangeable for any other securities,
either of the Company or of any other corporation, the Trustee shall exchange or
surrender the Stock held by it for those other securities and shall deliver the
certificates evidencing the same to the Company or other appropriate agency in
exchange or surrender. The Trustee shall hold the securities received upon the
exchange or surrender for the purposes and upon the same conditions as are
provided in this Trust Agreement in respect of the shares of the Stock.
(B) Upon any exchange or surrender, the Trustee may, if he considers it
to be advisable, issue new Voting Trust Certificates in lieu of and in exchange
for the outstanding Voting Trust Certificates. The Voting Trust Certificates
shall be in the form set forth in this Trust Agreement, with any changes that
are appropriate.
10. (A) The Trustee may serve as a director or officer of the Company or
any successor corporation, and he or any firm of which he may be a member, or
any corporation of which he may be a stockholder, director or officer, may
contract with the Company or any successor corporation, or be pecuniarily
interested in any transaction to which the Company or any successor corporation
may be a party, or in which it may be interested, as fully as though he were not
a Trustee.
(B) The Trustee shall not be liable to any stockholder or the
registered owner or holder of any Voting Trust Certificate for any error of
judgment or for any neglect, default, negligence (including gross negligence)
except for his own willful and deliberate malfeasance.
(C) The Trustee shall not receive any compensation for his services
as Trustee, and he shall not be required to give any bond or security for the
discharge of his duties as Trustee.
(D) The Trustee hereby accepts the trust hereunder, subject to all
the terms and conditions contained in this Trust Agreement, and he agrees to
exercise the powers and perform the duties of Trustee as set forth in this Trust
Agreement.
11. (A) The trust created by this Trust Agreement is expressly declared to
be irrevocable.
<PAGE>
(B) (i) This Trust Agreement shall terminate with respect only to the
shares of Stock that are sold by the Stockholder (a) from and after the date the
Company consummates an underwritten public offering, pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended, (b) pursuant to the
registration rights granted to the Stockholder in the Stockholders Agreement, or
(c) pursuant to the right of participation granted to the Stockholder in the
Stockholders Agreement. A termination of this Trust Agreement as to any shares
of Stock sold pursuant to clauses (a), (b) or (c) of the preceding sentence
shall not affect any shares of Stock continuing to be owned by the Stockholder
(the "Remaining Shares"), and this Trust Agreement shall continue in force with
respect to the Remaining Shares until terminated pursuant to Paragraph
11(B)(ii).
(ii) This Trust Agreement shall terminate upon the earlier of (a) the
twentieth anniversary hereof, (b) written notice of termination by the Trustee,
or (c) the death of the Trustee.
(C) (i) In the event of any proposed sale of Stock pursuant to clauses
(a), (b) or (c) of the first sentence of Paragraph 11(B)(i), the Stockholder
shall notify the Trustee of the proposed sale and of the number of shares to be
sold, and, upon receipt of (a) confirmation, in a form reasonably requested by
the Trustee, of the consummation of the sale and (b) the Voting Certificate(s)
representing the purchased Stock, the Trustee shall deliver or request that the
Company deliver to the purchaser stock certificates for the purchased Stock,
and, if necessary, shall deliver to the Stockholder a Voting Certificate for the
Remaining Shares.
(ii) In the event of termination of this Trust Agreement pursuant to
Paragraph 11(B)(ii), as soon as practicable after the termination, the Trustee
shall deliver to or upon the order of the registered owners of the Voting Trust
Certificates, and upon surrender thereof, the shares of Stock represented
thereby, together with any other shares of voting stock of the Company subject
to this Trust Agreement.
12. Any notice or other communication required or permitted by this Trust
Agreement to be given by any party hereto shall be in writing, and any
communication and payment or delivery of securities required to be made by any
party to any other party shall be sent by first class prepaid mail, certified or
registered, return receipt requested, addressed in the case of the Stockholder,
to the address that is provided by the Stockholder and, in the case of the
Trustee to:
A. Dale Mayo
7 Waverly Place
Madison, New Jersey 07940
or in any other manner as any party shall hereafter designate by notice to the
other party.
<PAGE>
13. This Trust Agreement shall be legally binding upon, and shall inure to
the benefit of, the Stockholder and his respective heirs, legal representatives,
and permitted successors and assigns.
14. The validity and effectiveness of this Trust Agreement shall be
governed by, and its provisions shall be construed and enforced in accordance
with, the laws of the State of Delaware.
15. If, for any reason, any provision or part of this Trust Agreement is
held invalid, that invalidity shall not affect any other provision or the rest
of provision of this Trust Agreement, as the case may be, and each provision or
part shall, to the full extent consistent with law, continue in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement
as of the day and year first above written.
Emerson Cinema, Inc.
By: ______________________________
Name:_________________________
Title:________________________
---------------------------------------
A. Dale Mayo
Exhibit 9.04
VOTING TRUST AGREEMENT
July 31, 1996
This VOTING TRUST AGREEMENT (this "Trust Agreement") is made by and between
Paul Kay and Cindy Kay (the "Kays") and A. Dale Mayo (the "Trustee").
The Kays own in the aggregate 16 shares (the "Stock") of the common stock
of Clearview Cinema Group, Inc., a Delaware Corporation (the "Company"). The
Stock is subject to a Stockholders and Registration Rights Agreement dated as of
May 29, 1996 (the "Stockholders Agreement"), among the Company, the Trustee and
the other parties named therein.
In accordance with Section 218 of the General Corporation Law of the State
of Delaware, the Kays desire to enter into this Voting Trust Agreement with
respect to the Stock, and the Trustee is willing to accept the voting rights in
respect of the Stock and to serve as the voting trustee under the terms and
conditions hereof.
The parties hereto, intending to be legally bound hereby, agree as follows:
1. Simultaneously with the execution and delivery hereof, the Kays shall
deliver the certificates representing the Stock, duly executed for transfer, to
Mayo to be held under this Trust Agreement.
2. (A) Promptly after the delivery required by paragraph 1, the Trustee
shall deliver the certificates representing the Stock to the Company for
transfer and shall cause the shares represented thereby to be transferred to his
name as Trustee under this Trust Agreement. The new certificates representing
the Stock registered in the name of the Trustee shall be delivered to the
Trustee by the Company, and the Trustee shall hold those certificates in his
custody.
(B) The Trustee shall hold the shares of the Stock transferred to him
hereunder, and all other shares of the common stock that the Kays shall transfer
to him, in trust for the purposes and subject to the terms and conditions of the
Agreement.
3. At the same time as the delivery by the Trustee of the certificates to
the Company in accordance with the provisions of paragraph 2, the Trustee shall
issue to the Kays a Voting
<PAGE>
Trust Certificate for the number of shares of the Stock deposited by the Kays,
which Voting Trust Certificate shall be in substantially the following form:
[Front Side]
CLEARVIEW CINEMA GROUP, INC.
(a Delaware corporation)
Certificate No. _____ _____ Shares
VOTING TRUST CERTIFICATE
THIS IS TO CERTIFY that, subject to the provisions hereof and of the
Trust Agreement as hereinafter defined, Paul Kay and Cindy Kay, or
registered assigns, will be entitled to receive, on July 31, 2016, or upon
the earlier termination of the Trust Agreement, but only upon surrender of
this certificate, a certificate or certificates for 16 shares of common
stock of Clearview Cinema Group, Inc., a Delaware corporation (hereinafter
called the "Company"), or of any other corporation into which shares of
common stock of the Company shall have been reclassified or converted, or
for which they shall have been exchanged.
Until the expiration or termination of the Trust Agreement, the
undersigned Trustee shall pay or deliver all cash dividends, and certain
other distributions mentioned in the Trust Agreement, on or in respect of
the common stock from time to time held by the undersigned Trustee
thereunder, to the person who, on the record date for the determination of
stockholders entitled to receive the dividends and other distributions, was
the registered owner of this Voting Trust Certificate.
This certificate has been issued under and pursuant to the provisions
of a Voting Trust Agreement (the "Trust Agreement"), by and between Paul
Kay and Cindy Kay, as stockholders of the Company and A. Dale Mayo, as
Trustee, dated as of July 31, 1996, as the same may be amended from time to
time. The Trust Agreement more fully defines and sets forth the rights and
obligations of the owner and holder of this certificate and of the Trustee
and is incorporated in and made a part of this Voting Trust Certificate
with the same effect as if set forth in full.
Subject to any restriction contained on the reverse side of this
certificate, this Voting Trust Certificate is transferable by its
registered owner, in person or by duly authorized attorney, on the books to
be maintained for that purpose by the undersigned
<PAGE>
Trustee, upon the terms and conditions provided in the Trust Agreement.
WITNESS THE DUE EXECUTION HEREOF on this ______ day of ____________,
199_.
________________________(SEAL)
A. Dale Mayo
Trustee under Voting Trust
Agreement, dated July 31, 1996.
[Reverse side]
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state Blue Sky or
securities laws. These securities cannot be resold without registration
under such Act or applicable state securities laws or an exemption
therefrom.
In addition, the securities represented by this certificate are subject to
an Stockholders and Registration Agreement dated July 31, 1996 among the
Company and the parties named therein, as the same may be modified from
time to time, and may not be sold, offered, transferred, assigned, pledged,
hypothecated or otherwise disposed of except in compliance with the
provisions of that agreement.
4. The Voting Trust Certificate issued under this Trust Agreement shall be
transferable in the same manner, with the same effect, and subject to the same
restrictions as certificates for shares of the Stock. The Voting Trust
Certificate shall be transferable only at the principal executive office of the
Company or at any other place that the Company may maintain for its corporate
books and records.
5. The Trustee has no authority to sell or otherwise dispose of or encumber
any of the Stock.
6. The Trustee shall possess and be entitled, subject to the provisions of
this Agreement, to exercise all the rights and powers of an absolute owner of
all the shares of Stock deposited under this Trust Agreement, including without
limitation the right to receive dividends on the Stock (subject to paragraph 7
below) and the right to vote, consent in writing, or otherwise act with respect
to any corporate or stockholders' action, to increase or reduce the capital
stock of the Company, to classify or reclassify any of the shares as now or
hereafter authorized into preferred or common stock or other classes of
<PAGE>
stock with or without par value, to amend the Certificate of Incorporation or
by-laws of the Company, to merge or consolidate the Company with other
corporations, to sell all or any part of its assets, to create any mortgage lien
on any of its property, or for any other corporate act or purpose. Except as
otherwise provided herein, no voting right shall pass to others by or under the
Voting Trust Certificate or by or under this Trust Agreement or by or under any
agreement express or implied. All shares of Stock shall be voted as directed by
the Trustee and shall be deemed to be represented for the purposes of
determining a quorum.
7. (A) All dividends paid on the Stock from time to time held under this
Trust Agreement, except stock dividends, shall be remitted by the Trustee,
promptly upon receipt, to the person or persons who, on the record date for the
determination of stockholders entitled to receive the dividends, were the record
owners of the Voting Trust Certificates representing the shares on which the
dividends were declared.
(B) Dividends paid in shares of common stock of the Company shall be
retained by the Trustee and added to the Stock held under this Trust Agreement.
The Trustee shall promptly issue to the appropriate persons Voting Trust
Certificates representing any Stock that the Trustee shall receive as a dividend
and retain in accordance with the provisions of this paragraph 7. Those Voting
Trust Certificates shall be in the form as set forth in this Trust Agreement,
with any changes that are appropriate.
(C) All warrants or rights to subscribe to any class of voting stock of
the Company ("Warrants") that shall be received by the Trustee in respect or on
account of the Stock held under this Trust Agreement shall be distributed by the
Trustee to the holders of the Voting Trust Certificates in the same manner as he
is required to distribute cash dividends under this Trust Agreement. If any
voting stock is purchased by the Kays pursuant to the Warrants, the Kays shall
immediately deliver the certificates representing all the shares of stock so
purchased, duly executed for transfer, to the Trustee to be added to the Stock
held under the Trust Agreement. The Trustee shall promptly issue to the Kays
Voting Trust Certificates representing any Stock that shall be so delivered to
and held by the Trustee in accordance with the provisions of this paragraph 7.
The Voting Trust Certificates shall be in the form as set forth in this Trust
Agreement, with any changes that are appropriate. No sale or other transfer of
any of the Warrants shall be made without first offering the Company a prior
opportunity to purchase the Warrants for a reasonable amount.
8. The Kays, at any time from and after the date of this Trust
Agreement, must deposit any additional capital stock of the Company purchased or
owned by them (but not specifically described within the Trust Agreement) with
the Trustee. Additional shares of Stock so deposited shall become subject to all
the terms and conditions of this Trust Agreement to the same
<PAGE>
extent as if it were originally deposited under this Trust Agreement.
9. (A) If, as the result of any split-up, combination or reclassification
of any Stock held by the Trustee under this Trust Agreement, or as the result of
any merger, consolidation, reorganization or sale of assets to which the Company
shall be a party, the Stock held by the Trustee under this Trust Agreement shall
be reclassified, converted into or become exchangeable for any other securities,
either of the Company or of any other corporation, the Trustee shall exchange or
surrender the Stock held by it for those other securities and shall deliver the
certificates evidencing the same to the Company or other appropriate agency in
exchange or surrender. The Trustee shall hold the securities received upon the
exchange or surrender for the purposes and upon the same conditions as are
provided in this Trust Agreement in respect of the shares of the Stock.
(B) Upon any exchange or surrender, the Trustee may, if he considers it
to be advisable, issue new Voting Trust Certificates in lieu of and in exchange
for the outstanding Voting Trust Certificates. The Voting Trust Certificates
shall be in the form set forth in this Trust Agreement, with any changes that
are appropriate.
10. (A) The Trustee may serve as a director or officer of the Company or
any successor corporation, and he or any firm of which he may be a member, or
any corporation of which he may be a stockholder, director or officer, may
contract with the Company or any successor corporation, or be pecuniarily
interested in any transaction to which the Company or any successor corporation
may be a party, or in which it may be interested, as fully as though he were not
a Trustee.
(B) The Trustee shall not be liable to any stockholder or the
registered owner or holder of any Voting Trust Certificate for any error of
judgment or for any neglect, default, negligence (including gross negligence)
except for his own willful and deliberate malfeasance.
(C) The Trustee shall not receive any compensation for his services
as Trustee, and he shall not be required to give any bond or security for the
discharge of his duties as Trustee.
(D) The Trustee hereby accepts the trust hereunder, subject to all
the terms and conditions contained in this Trust Agreement, and he agrees to
exercise the powers and perform the duties of Trustee as set forth in this Trust
Agreement.
11. (A) The trust created by this Trust Agreement is expressly declared to
be irrevocable.
(B) (i) This Trust Agreement shall terminate with respect only to the
shares of Stock that are sold by the Kays (a) from and after the date the
Company consummates an underwritten
<PAGE>
public offering, pursuant to Rule 144 promulgated under the Securities Act of
1933, as amended, (b) pursuant to the registration rights granted to the Kays in
the Stockholders Agreement, or (c) pursuant to the right of participation
granted to the Kays in the Stockholders Agreement. A termination of this Trust
Agreement as to any shares of Stock sold pursuant to clauses (a), (b) or (c) of
the preceding sentence shall not affect any shares of Stock continuing to be
owned by the Kays (the "Remaining Shares"), and this Trust Agreement shall
continue in force with respect to the Remaining Shares until terminated pursuant
to Paragraph 11(B)(ii).
(ii) This Trust Agreement shall terminate upon the earlier of (a) the
twentieth anniversary hereof, (b) written notice of termination by the Trustee,
or (c) the death of the Trustee.
(C) (i) In the event of any proposed sale of Stock pursuant to clauses
(a), (b) or (c) of the first sentence of Paragraph 11(B)(i), the Kays shall
notify the Trustee of the proposed sale and of the number of shares to be sold,
and, upon receipt of (a) confirmation, in a form reasonably requested by the
Trustee, of the consummation of the sale and (b) the Voting Certificate(s)
representing the purchased Stock, the Trustee shall deliver or request that the
Company deliver to the purchaser stock certificates for the purchased Stock,
and, if necessary, shall deliver to the Kays a Voting Certificate for the
Remaining Shares.
(ii) In the event of termination of this Trust Agreement pursuant to
Paragraph 11(B)(ii), as soon as practicable after the termination, the Trustee
shall deliver to or upon the order of the registered owners of the Voting Trust
Certificates, and upon surrender thereof, the shares of Stock represented
thereby, together with any other shares of voting stock of the Company subject
to this Trust Agreement.
12. Any notice or other communication required or permitted by this Trust
Agreement to be given by any party hereto shall be in writing, and any
communication and payment or delivery of securities required to be made by any
party to any other party shall be sent by first class prepaid mail, certified or
registered, return receipt requested, addressed in the case of the Kays, to the
address that is provided by the Kays and, in the case of the Trustee to:
A. Dale Mayo
7 Waverly Place
Madison, New Jersey 07940
or in any other manner as any party shall hereafter designate by notice to the
other party.
13. This Trust Agreement shall be legally binding upon, and shall inure to
the benefit of, the Kays and their heirs, legal representatives, successors and
assigns.
<PAGE>
14. The validity and effectiveness of this Trust Agreement shall be
governed by, and its provisions shall be construed and enforced in accordance
with, the laws of the State of Delaware.
15. If, for any reason, any provision or part of this Trust Agreement is
held invalid, that invalidity shall not affect any other provision or the rest
of provision of this Trust Agreement, as the case may be, and each provision or
part shall, to the full extent consistent with law, continue in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement
as of the day and year first above written.
--------------------------------
Paul Kay
--------------------------------
Cindy Kay
--------------------------------
A. Dale Mayo
Exhibit 10.01
CLEARVIEW CINEMA GROUP, INC.
CONTRIBUTION, EXCHANGE, AND TERMINATION
AGREEMENT
December __, 1994
This Contribution, Exchange, and Termination Agreement (this "Agreement")
is made by and among Clearview Cinema Group, Inc., a Delaware corporation (the
"Company"), A. Dale Mayo ("Mayo"), and Brett E. Marks ("Marks").
Mayo owns 1,000 shares of the common stock of Clearview Theater Group,
Inc., a New Jersey corporation ("Theater"), 100 shares of the common stock of
CCC Madison Triple Cinema Corp., a New Jersey corporation ("Madison"), 10 shares
of the common stock of CCC Chester Twin Cinema Corporation, a New Jersey
corporation ("Chester") and 10 shares of the common stock of CCC Manasquan
Cinema Corporation, a New Jersey corporation ("Manasquan," and together with
Theater, Madison, and Chester, the "Cinema Companies"). Marks owns 96 shares of
the common stock of Madison and 9.6 shares of the common stock of Chester. The
shares described in the preceding two sentences (the "Cinema Company Shares")
constitute all of the issued and outstanding capital stock of the Cinema
Companies.
Madison has promissory notes outstanding as follows: (i) a promissory note
in the principal amount of $125,000 payable to Marks and (ii) a promissory note
in the principal amount of $96,000 payable to Mayo. Chester has outstanding a
promissory note in the principal amount of $29,000 payable to Mayo. The
promissory notes described in the preceding two sentences are collectively
referred to in this Agreement as the "Notes."
Madison and Chester are each a party to a management agreement and a
shareholders agreement as follows: (i) Management Agreement between Madison and
A. Dale Mayo & Associates, Inc., dated April 1, 1994, (ii) Management Agreement
between Chester and A. Dale Mayo & Associates, Inc., dated April 1, 1994, (iii)
Shareholders' Agreement among Madison, Mayo, and Marks, dated April 1, 1994, and
(iv) Shareholders' Agreement among Chester, Mayo, and Marks, dated April 1, 1994
(collectively, the "Cinema Company Agreements").
The parties wish to provide for the contribution by Mayo and Marks to the
Company of the Cinema Company Shares and the Notes in exchange for shares of the
common stock of the Company and for the termination of the Cinema Company
Agreements. Simultaneously with the execution and delivery of this Agreement,
<PAGE>
the Company is issuing shares of its common stock to CMNY Capital II, L.P.
("CMNY") pursuant to an Investment and Stockholders Agreement among CMNY, the
Company, Mayo, and Marks, dated the date hereof (the "Stockholders Agreement").
The contribution and exchange of stock provided for in this Agreement is
intended to be a tax-free transaction under Section 351 of the Internal Revenue
Code of 1986, as amended.
Accordingly, the parties hereto, intending to be legally bound, agree as
follows:
1. Contribution and Exchange. Mayo and Marks hereby contribute all their
respective Cinema Company Shares and Notes to the Company in exchange for 550
and 200 shares, respectively, of the common stock of the Company (the "Shares").
Simultaneously upon the execution and delivery of this Agreement, Mayo and Marks
are delivering to the Company stock certificates for the Cinema Company Shares,
duly executed for transfer, and the Company is delivering to each of Mayo and
Marks a stock certificate representing the respective number of the Shares
issued to him.
2. Termination of the Cinema Company Agreements. The Cinema Company
Agreements are hereby terminated.
3. Voting Trust Agreement. Immediately following the issuance of Shares to
Marks pursuant to this Agreement, Marks shall enter into a Voting Trust
Agreement with Mayo, the form of which is attached hereto as Exhibit A.
4. Representations and Warranties.
4.1 Each of Mayo and Marks represents and warrants to the Company and to
each other as follows:
a. He understands that the Shares have not been registered under the
Securities Act of 1933, as amended, (the "Federal Act") or any state securities
laws because of specific exemptions under the provisions thereof that depend in
part upon the representations made by him in this Agreement. He understands that
the Company is relying upon his representations and agreements contained in this
Agreement (and any supplemental information furnished by him) for the purpose of
determining whether this transaction meets the requirements for those
exemptions.
b. He has knowledge, skill and experience in business, financial and
investment matters so that he is capable of evaluating the merits and risks of
an investment in the Shares. To the extent that he has deemed it appropriate to
do so, he has retained, and relied upon, appropriate professional
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<PAGE>
advice regarding the tax, legal and financial merits and consequences of the
investment in the Shares.
c. He has not relied on any representations and warranties of the
Company except as expressly set forth in this Agreement; he has been provided
with access to the books and records and personnel of the Company and the Cinema
Companies and any other information requested by him in connection with any
independent investigation of the Company and the Cinema Companies, their
respective management, and related matters that he deems to be, or that his
advisors (if any) have advised to be, necessary or advisable in connection with
an investment in the Shares; and he and his advisors (if any) have received all
information and data that he and his advisors (if any) believe to be necessary
in order to reach an informed decision as to the advisability of an investment
in the Shares. He is satisfied that there are no material facts regarding the
Company or the Shares as to which he is not aware.
d. He has reviewed his financial condition and commitments, alone and
together with his advisors, if any, and, based on that review, he is satisfied
that (i) he has adequate means of providing for his financial needs and possible
contingencies and has assets or sources of income that, taken together, are more
than sufficient so that he could bear the risk of loss of his entire investment
in the Shares, (ii) he has no present or contemplated future need to dispose of
all or any portion of the Shares to satisfy any existing or contemplated
undertaking, need or indebtedness, and (iii) he is capable of bearing the
economic risk of an investment in the Shares for the indefinite future. He
agrees to furnish any additional information requested by the Company to assure
compliance of this transaction with applicable federal and state securities laws
in connection with the Shares.
e. He understands that the Shares are "restricted securities" under
applicable Federal Securities laws and that the Federal Act and the rules of the
Securities and Exchange Commission provide in substance that he may dispose of
the Shares only pursuant to an effective registration statement under the
Federal Act or an exemption from registration if available.
f. He is acquiring the Shares for investment only and not with a view
to or in connection with any resale or distribution of the Shares, and he has no
present intention of making any sale, assignment, pledge, gift, transfer or
other disposition of the Shares or any interest therein.
g. The Cinema Company Shares being contributed hereby in exchange for
the Shares represent his entire equity interest in the Cinema Companies, and
subsequent to the
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<PAGE>
transactions contemplated by this Agreement he will have no ownership of, nor
any outstanding or contingent agreements, arrangements or commitments, warrants,
options or other rights to subscribe for or purchase, or otherwise acquire by
conversion, exchange or otherwise any of the capital stock of the Cinema
Companies, and none of the Cinema Companies has any liabilities or obligations
to him.
h. He has not relied upon any representations or warranties as to the
value of the Cinema Company, the Cinema Company Shares, the Company or the
Shares.
4.2 The Company represents and warrants to each of Mayo and Marks as
follows:
a. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted.
b. The Shares when issued hereunder will be validly issued, fully paid
and non-assessable. Immediately following the issuance of the Shares hereunder
and the sale of shares of common stock by the Company to CMNY, the outstanding
shares of the Company's capital stock shall consist solely of 200 shares held by
Marks, 550 shares held by Mayo and 250 shares held by CMNY.
c. The Company has made any investigations that it deems necessary as
to the value of the Cinema Company Shares and has not relied upon any
representations and warranties of Mayo or Marks, except as expressly set forth
herein.
5. Shares. The Shares issued hereunder shall be subject to the Stockholders
Agreement, and the certificates evidencing the Shares shall bear the following
legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, (the "Act") or any state Blue
Sky or securities laws. These securities cannot be resold without
registration under the Act or applicable state securities laws or an
exemption therefrom.
In addition, the securities represented by this certificate are subject to
an Investment and Stockholders Agreement dated December ___, 1994 among the
Company and the other parties named therein, as the same may be
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<PAGE>
modified from time to time, and may not be sold, offered, transferred,
assigned, pledged, hypothecated or otherwise disposed of except in
compliance with the provisions of that agreement.
6. Governing Law. This Agreement, except for those provisions mandatorily
governed by Delaware law, shall be construed and enforced in accordance with and
governed by the laws of the State of New York, exclusive of its conflict of laws
provisions.
7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CLEARVIEW CINEMA GROUP, INC.
By: __________________________
A. Dale Mayo
President
-------------------------------
A. Dale Mayo
-------------------------------
Brett E. Marks
CONSENTED AND AGREED TO FOR THE PURPOSE OF SECTION 2 HEREOF:
CCC MADISON TRIPLE CINEMA CORP.
By: _________________________________
A. Dale Mayo
President
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<PAGE>
CCC CHESTER TWIN CINEMA CORPORATION
By: _______________________________
A. Dale Mayo
President
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<PAGE>
A. DALE MAYO & ASSOCIATES, INC.
By: _______________________________
A. Dale Mayo
President
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<PAGE>
EXHIBIT A
VOTING TRUST AGREEMENT
Exhibit 10.02
CLEARVIEW CINEMA GROUP, INC.
INVESTMENT AND STOCKHOLDERS AGREEMENT
December ___, 1994
CLEARVIEW CINEMA GROUP, Inc., a Delaware corporation (the "Company"), A.
Dale Mayo ("Mayo"), Brett E. Marks ("Marks") and CMNY CAPITAL II, L.P., a
Delaware limited partnership (the "Investor" and, together, with Mayo and Marks,
the "Stockholders") hereby agree as follows:
1. Issue and Sale of Securities. The Company has authorized the issue and
sale to the Investor of the following securities described in Section 1.1.
1.1. Equity Securities. At the Closing (as defined herein), the Company
shall issue and sell to the Investor, and the Investor shall purchase, 250
shares (the "Shares" or the "Securities") of the Company's Common Stock, $.01
par value per share (the "Common Stock"), for the purchase price of $2,000 per
share, or an aggregate purchase price of $500,000. Simultaneously with the
Closing, the Company will issue to Mayo and Marks 550 and 200 shares of Common
Stock, respectively, in exchange for the contribution to the Company by Mayo and
Marks of all the outstanding shares of capital stock of the Subsidiaries
(hereinafter defined) and the contribution to the Company by Mayo and Marks to
the Company of certain promissory notes of certain Subsidiaries (as defined
herein) in the aggregate principal amount of $250,000, all in accordance with
the Contribution, Exchange and Termination Agreement (the "Exchange Agreement")
in the form attached hereto as Exhibit 1.1.
1.2. "Put" and "Call" Provisions.
(a) Periods Defined. For purposes of this Section 1.2, (i) the term "Put
Period" shall mean the later 30-day period to occur of: (A) the 30-day period
immediately following the day that is seven years from the Closing Date (as
defined herein), and (B) the 30-day period immediately following the delivery to
the Investor of the first financial statements of the Company delivered after
the seventh anniversary of the Closing Date, and (ii) the term "Call Period"
shall mean the 90-day period following the end of the Put Period.
<PAGE>
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(b) "Put". Subject to the other provisions of this Section 1.2, Investor
may, upon at least 30 days and no more than 60 days prior written notice given
at any time during the Put Period (the "Put Notice"), demand that the Company
purchase all but not less than all the Securities then held by the Investor at a
purchase price computed in accordance with Part (d) hereof.
(c) "Call". Subject to the other provisions of this Section 1.2, Mayo (or
his assignee) or, if Mayo declines to do so, the Company, may, upon at least 30
days and no more than 60 days prior written notice given at any time during the
Call Period (the "Call Notice"), demand that the Investor sell all but not less
than all of the Securities to him or it at a purchase price computed in
accordance with Part (d) hereof.
(d) Conditions of "Put" and "Call".
The "Put" and "Call" rights shall automatically terminate if:
(i) (a) the Company consummates a public sale of any of its securities
or private sale of 20% or more of its securities (as calculated based
on the total number of shares outstanding immediately prior to that
sale) to a person or persons which are not any of the Stockholders (or
their Affiliates (as defined herein)); or
(b) the Company is liquidated or dissolved, all or substantially
of the assets of the Company are sold or the Company is merged into a
another entity and the Company is not the survivor, or any another
transaction is consummated that has the effective result of a merger
in which the Company is not the survivor; and
(ii) the Company, at its option, shall have paid the Investor a
termination fee of $250,000; provided, however, that this clause (ii)
shall not apply in the event of (A) a public offering by the Company
in which the aggregate value of the Shares immediately after the
offering (as determined by the public offering price per share (before
any discount or commission) equals at least $1,500,000 or (B) the
liquidation, dissolution, sale or merger of the Company in which the
Investor receives at least $1,500,000 in consideration in respect of
the Shares.
The net purchase price of the Shares shall be a price per share computed as
the highest price of the following:
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(i) With respect to the Put, the greatest of:
(A) book value per share computed on a fully diluted basis
reflected in the Company's most recent audited annual financial
statements ("Book Value Per Share");
(B) five (5) times the Company's earnings per share computed on a
fully diluted basis for the Company's last fiscal year as reflected in
the Company's most recent audited annual financial statements
("Earnings Per Share"); and
(C) seven (7) times the average of the Company's Earnings Per
Share for the Company's last three fiscal years.
(ii) with respect to the Call, the greatest of:
(A) Book Value Per Share;
(B) six (6) times the Company's Earnings Per Share for its last
fiscal year as reflected in the Company's latest audited annual
financial statements;
(C) eight (8) times the average of the Earnings Per Share for the
Company's last three fiscal years; and
(D) an aggregate of $750,000 multiplied by a fraction the
numerator of which is the number of the Shares then held by the
Investor and its transferees (other than any of the Shares transferred
pursuant to Section 9.7) and the denominator of which is the total
number of the Shares.
In computing the average for the last three fiscal years, the financial
statements closest to the date on which the Company or Investor shall receive
notice in accordance with Section 1.2 Part (b) or (c) above shall determine the
price. If the computation is to be made as of a date that is later than six
months after the expiration of a fiscal year of the Company, the financial
statements for the year next ending after the demand shall be substituted as one
of the fiscal years and the earliest fiscal year utilized in the initial
computation shall be eliminated. Financial statements shall be prepared in
accordance with the provisions of Section 1.2 of this Agreement. Earnings Per
Share shall in all cases be computed after provision for all taxes paid. The
closing shall take place at the offices of the Company
<PAGE>
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no later than 60 days after the date of the determination of the net purchase
price.
(e) In the event of a Call, if within nine months after the payment under
Part (f) below, the Company is merged and the Company is not the survivor,
liquidated, consolidated, or dissolved, or engages in a transaction that has the
effective result of a merger (in which the Company is not the survivor),
liquidation, consolidation or dissolution or if there is a "Change of Control"
of the Company (hereinafter defined) by the sale of shares of Common Stock by it
or its stockholders, and the net (that is, after ordinary and usual expenses)
consideration per share of Common Stock (i) received by the Company or (ii) its
stockholders is greater than the consideration per share paid to the Investor in
respect of the Call, then the Investor shall be paid as additional consideration
an additional amount such that the Investor receives in the aggregate, after
taking into account the payment previously made in respect of the Call, the same
consideration per share as the per share consideration received by the other
Stockholders as a result of the merger, consolidation, sale or other
transaction. The Company shall pay the amount of the increase in the purchase
price in the same form of consideration paid to the stockholders or the Company
in such transaction within 30 days after receipt thereof. "Change of Control"
shall be defined as any change, issuance of shares or transfer in the ownership
of record, of fifty percent (50%) of the Common Stock of the Company.
(f) In the event of a "Call", Mayo (or his assignee) or the Company, as
applicable, shall be permitted a period of 30 days within which to arrange
financing and, subject to the receipt of the proceeds of the financing, shall
pay the full purchase price in cash within 30 days thereafter. If Mayo (or his
assignee) or the Company for any reason does not obtain the funds necessary to
consummate the purchase within such period, then the Call shall terminate
without any liability to any party.
(g) In the event of a "Put", the Company may pay the purchase price in the
form of a note payable in 60 equal monthly installments of principal bearing
interest at 10% per annum, payable monthly computed on the balance of principal
outstanding during the previous month (the "Put Note"). The Put Note shall be
secured by a pledge of the Shares to be purchased. The Put Note shall provide
that the holder may accelerate the payment of the balance and declare the
balance to be due and payable in the event any payment of an installment of
principal or of interest is not made within 10 business days of the date when
due.
<PAGE>
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In the event that the Company does not have sufficient funds legally
available to make any principal or interest payment on the Put Note, the Company
and the Stockholders shall do and shall cause its directors and stockholders to
do all things necessary to effect a recapitalization or otherwise arrange so
that it has funds legally available to make such payment. Nothing contained
herein, however, shall be deemed to require the stockholders to make additional
capital contributions to the Company or otherwise arrange for or supply
additional funds in order to increase the Company's surplus.
(h) Investor's Rights Upon Mayo's Death. The Company shall cause the
Investor to be named as the beneficiary under an insurance policy or policies,
in the aggregate amount of $500,000, owned by the Company and/or its
Subsidiaries and covering the life of A. Dale Mayo (the "Mayo Insurance
Policies") and shall at all times prior to the commencement of the Put Period
use its best efforts to maintain the Mayo Insurance Policies with the Investor
as beneficiary. In the event that the Investor receives the proceeds of the Mayo
Insurance Policies, the Investor shall, within 30 days thereafter, (i) elect by
written notice to the Company to retain the proceeds and to contribute all but
not less than all of the Securities to the Company within 30 days thereafter or
(ii) remit the proceeds in immediately available funds to the Company. The
Investor's rights under this Part (h) to be named as the beneficiary to the Mayo
Insurance Policies shall not be assigned or transferred to any other person.
2. Closing. The closing (the "Closing") at which the Securities shall be
sold to the Investor pursuant to this Agreement shall be held simultaneously
with the signing of this Agreement on the date hereof (the "Closing Date") at
the offices of counsel to the Company, Kirkpatrick & Lockhart, One Rockefeller
Plaza, New York, New York 10020.
3. Conditions. The purchase of and payment for the Securities to be sold
and delivered to the Investor at the Closing as provided in this Agreement is
subject to the accuracy in all material respects of all representations and
warranties by the Company contained herein and to the performance by the Company
of all the terms and conditions on its part to be performed hereunder on or
prior to the Closing Date and to the satisfaction on or prior to the Closing
Date of the following conditions precedent:
3.1. Opinion of Company's Counsel. The Investor shall have received from
Kirkpatrick & Lockhart, counsel to the Company a favorable opinion addressed to
the Investor dated the Closing Date in the form of Exhibit 3.1.
<PAGE>
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3.2. Corporate Resolutions. Certified copies of resolutions in
substantially the form of Exhibit 3.2 adopted by the Company's directors
authorizing and approving this Agreement and the transactions contemplated
hereby and the issuance of the Securities shall have been delivered to the
Investor.
3.3. SBA Forms. Small Business Administration ("SBA") Form 480, entitled
"Size Status Declaration" (Exhibit 3.3-A), and SBA Form 652-D (Exhibit 3.3-B)
and partially completed SBA Form 1031 entitled "Portfolio Financing Report"
(Exhibit 3.3-C) shall be delivered to the Investor. The Company shall furnish
from time to time to the Investor promptly upon reasonable request all
information necessary to enable the Investor to prepare and file SBA Form 684
and any other information reasonably requested or required by any governmental
agency asserting jurisdiction over the Investor.
3.4. Evidence of Insurance. The Company shall have delivered to the
Investor evidence of the existence of the Mayo Insurance Policies and of the
Investor's status as beneficiary under those insurance policies.
3.5. Fees and Expenses of Counsel to Investor. The fees and expenses of
Reid & Priest, counsel to the Investor as provided in Section 13.3 of this
Agreement shall be paid at Closing.
3.6. Consummation of the Exchange Agreement. The transactions provided for
in the Exchange Agreement shall have occurred simultaneously with the Closing.
4. Company's Representations and Warranties. The Company hereby represents
and warrants to the Investor (which representations and warranties shall be
deemed material and to have been relied upon by the Investor), as follows:
4.1. Organization, Good Standing and Authority. Each of the Company and its
Subsidiaries (as hereinafter defined) is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation
without limit as to the duration of its existence. Each of the Company and its
Subsidiaries has the corporate power and adequate authority, rights and
franchises to own its property and carry on its business as now being conducted
and is now duly qualified and in good standing in each state or other
jurisdiction in which the character of the properties owned by it therein or the
conduct of its present business would make such qualification necessary and
where failure to so qualify would have a materially adverse impact on the
business or financial condition of the Company (a "Material Adverse Affect").
The Company has the corporate power and adequate authority to enter into and
perform this Agreement
<PAGE>
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and to issue the Securities. Copies of the following have been received by the
Investor and its counsel with respect to each of the Company and the
Subsidiaries: Certificate of Incorporation, Certificate(s) of Amendment, if any,
and a Certificate of Good Standing of recent date, all certified by the
Secretary of State of the State of the respective corporation's state of
incorporation (Exhibit 4.1-A), a Certificate of Qualification issued by the
appropriate official of each state, if any, in which the ownership of property
or the conduct of business requires it to be qualified to do business (Exhibit
4.1-B) and a copy of its By-Laws certified by its Secretary (Exhibit 4.1-C).
4.2. Business. The Company is principally in the business, directly or
indirectly through other entities, of owning, leasing, operating and/or managing
movie theaters (the "Business"). Immediately after the Closing, the Company will
own all of the outstanding shares of capital stock of the following companies:
CCC Madison Triple Cinema Corp., CCC Manasquan Cinema Corporation, CCC Chester
Twin Cinema Corporation and Clearview Theater Group, Inc. (the "Subsidiaries").
4.3. Capitalization.
(a) The authorized capital stock of the Company consists of 10,000 shares,
consisting of 10,000 shares of Common Stock, having a par value of $.01 per
share. The Company does not have any shares of preferred stock authorized.
Immediately after the Closing, the Company will have 1,000 shares of Common
Stock issued and outstanding as follows: 250 shares held of record by the
Investor, 550 shares held of record by Mayo, and 200 shares held of record by
Marks. Immediately after the Closing, all of the outstanding shares of all
classes of stock of the Company, will be duly authorized validly issued, fully
paid and non-assessable and will have been issued in compliance with all
applicable securities laws.
(b) None of the capital stock of the Company and the Subsidiaries is
subject to any restrictions upon the transfer thereof except as set forth herein
or on Exhibit 4.3. Except as set forth in this Agreement, there are no (i)
outstanding shares of capital stock of any class; or (ii) outstanding or
contingent agreements, arrangements or commitments, warrants, options or other
rights to subscribe for or purchase, or otherwise acquire by conversion,
exchange or otherwise, any of the capital stock of the Company or the
Subsidiaries.
4.4. Financial Statements.
(a) The Subsidiaries have maintained, and the Company and the Subsidiaries
will maintain, their books of account in accordance with applicable laws, rules
and regulations and
<PAGE>
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generally acceptable accounting principles consistently applied ("GAAP") (except
for the absence of footnotes), and such books of account completely and
accurately reflect and will reflect the material transactions and the income,
expenses, assets and liabilities of the Company and the Subsidiaries, including
the nature thereof and the transactions giving rise thereto. Prior to the
Closing, the Company will provide to the Investor financial statements (as set
forth in (b) below), plans of operation including the intended use of the
proceeds from the sale of the Shares, cash flow analyses and projections
(collectively, the "Preliminary Financial Information") in order to support the
Investor's decision with respect to the investment in the Company. The Company
represents and warrants to the Investor that the Preliminary Financial
Information fairly presents in all material respects the financial condition of
the Company and does not contain any untrue statement of a material fact or omit
a material fact necessary to make the information contained in the Preliminary
Financial Information not misleading. The Company acknowledges and agrees that
the Preliminary Financial Information shall be retained by the Investor in its
permanent records.
(b) Included in Exhibit 4.4 (the "Financial Statements") are the: unaudited
balance sheets of the Subsidiaries at September 30, 1994, and the unaudited
statements of operations, stockholder's equity and cash flows of the
Subsidiaries at September 30, 1994.
(c) The Financial Statements have been prepared from the books of account
of the Subsidiaries in conformity with generally accepted accounting principles
("GAAP") consistently applied, (except for the absence of footnotes) and present
fairly the financial position of the Subsidiaries as of the dates of such
statements and the results of operations of the Subsidiaries for the periods
covered thereby.
(d) The Subsidiaries have no liability (absolute, contingent or otherwise)
that is not reflected in the Financial Statements or in the Exhibits hereto and
would under GAAP be required to be reflected therein, except those liabilities
incurred since the dates of the Financial Statements in the ordinary course of
business, consistent with past practice, in arms' length transactions with
unrelated parties and those liabilities that do not have and cannot reasonably
be expected to have, in the aggregate, a Material Adverse Effect on the business
operations or condition (financial or other condition) of the Subsidiaries taken
as a whole.
<PAGE>
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4.5. No Conflict; Corporate Action.
(a) The execution and delivery of this Agreement and the performance of the
provisions hereof have been duly authorized by the Company and do not require
the consent or approval of any governmental body or other regulatory authority
or any third party not yet obtained. All corporate action for the due execution
and delivery of this Agreement, including the creation, issuance and sale of the
Securities, including any applicable state Blue Sky Law, and the performance of
all other transactions contemplated hereby, have been duly and validly obtained
or taken. No right of any of the Company's stockholders or creditors or the
stockholder or creditors of the Subsidiaries is impaired or infringed upon by
this Agreement. This Agreement and those Exhibits that are contracts or
agreements each constitute valid and binding obligations of the Company
enforceable against it in accordance with their respective terms except as
limited by bankruptcy, insolvency or other similar laws at the time in effect
regarding the enforceability of creditors' rights generally and to general
principles of equity.
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated herein will not:
(i) constitute a violation of the Certificate or Articles of
Incorporation or the By-Laws, as amended, of the Company or any of the
Subsidiaries;
(ii) except as provided on Exhibit 4.5, conflict with, and result in
the breach of, constitute a default, with or without notice and/or lapse of
time, under, result in being declared void or voidable any provision of, or
result in any right to terminate or cancel any contract, lease, agreement,
license, commitment or purchase order to which the Company or any of the
Subsidiaries or any of their respective properties is bound;
(iii) constitute a violation of any statute, judgment, order, decree
or regulation or rule of any court, governmental authority or arbitrator
applicable or relating to the Company or any of the Subsidiaries or the
business of the Company or any of the Subsidiaries that could constitute a
Material Adverse Effect; or
(iv) result in (A) the acceleration of any debt or other obligation of
the Company or any of the Subsidiaries, (B) the creation of any lien,
charge or other encumbrance upon any of the assets of the Company or any of
the Subsidiaries, or (C) the termination or
<PAGE>
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cancellation or right to terminate or cancel any obligation owed to the
Company or any of the Subsidiaries.
4.6. Litigation; Governmental Regulation.
(a) Except as provided on Exhibit 4.6-A, there are no actions, suits,
claims or proceedings, whether in equity or at law, or governmental or
administrative investigations pending or, to the best knowledge of the Company,
threatened (i) by, against or otherwise involving the Company or any of the
Subsidiaries, any of the assets of the Company or any of the Subsidiaries or any
asset or property of others leased or used by the Company or any of the
Subsidiaries or (ii) which question or challenge the validity of this Agreement
or any action taken or to be taken pursuant to this Agreement. Nor, to the best
knowledge of the Company, is there any reasonable basis for any such action,
suit, claim or proceeding.
(b) Each of the Company and each Subsidiary is in substantial compliance
with, is not in default or violation in any material respect under, and neither
has been charged with or received any notice at any time of any violation by it
of, any statute, law, ordinance, regulation, decree or order applicable to the
business or operations of the Company or any Subsidiary.
(c) Neither the Company nor any Subsidiary, nor any of the assets of the
Company or any Subsidiary or the transactions contemplated under this Agreement,
are subject to any judgment, order or decree entered in any lawsuit or
proceeding applicable to the business and operations of the Company or any
Subsidiary.
(d) The Company and each Subsidiary have duly filed all reports and returns
required to be filed by them with governmental authorities and have obtained all
governmental permits and licenses and other governmental consents (a complete
list of which permits, licenses and consents is set forth on Exhibit 4.6-D
hereto) which are required in connection with the business and operations of the
Company and each Subsidiary, and which if not filed or obtained might have a
Material Adverse Effect. All of such material permits, licenses and consents are
in full force and effect, and no proceedings for the suspension or cancellation
of any of them is pending or, to the best knowledge of the Company, threatened,
and none of them will be affected by the consummation of the transactions
contemplated hereby.
(e) Each of the Company and each Subsidiary have operated in material
compliance with all laws, rules, statutes, ordinances, orders and regulations.
Neither the Company nor any
<PAGE>
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Subsidiary have received any notice of any violation thereof, nor is the Company
or any Subsidiary aware of any basis therefor.
4.7. Taxes.
(a) Each of the Company and each Subsidiary have duly filed all tax reports
and returns required to be filed in respect of the business and operations of
the Company or the Subsidiaries or their assets as of this date. All such tax
reports and returns are complete, accurate and in compliance with all relevant
laws and regulations in all material respects, and none has been audited by any
governmental authority. Each of the Company and each Subsidiary have paid and
discharged all federal, state, local (including all withheld taxes due to date
hereof) and foreign taxes, interest, penalties or other payments required, as
the case may be, to be paid and then currently due as shown on such tax reports
and returns or otherwise in respect of the assets and the business and employees
of the Company and each Subsidiary as of this date.
(b) Neither the Company nor any Subsidiary has received notice of any tax
deficiency outstanding, proposed or assessed against it, nor does it have any
knowledge of any basis for any tax deficiency or assessment, nor has it executed
any waiver of any statute of limitations on the assessment or collection of the
tax. There are no tax liens upon, pending against or threatened against any of
the assets of the Company or any Subsidiary.
4.8. Brokerage. No finder's fees, brokerage commissions, consulting fees
and like charges are due or to be paid in connection with the transactions
contemplated by this Agreement. If, as a result of the breach of this
representation by a party (the "Indemnitor"), any claim is made against any
other party (the "Indemnified Party") or the Indemnified Party incurs any loss,
damage, cost or expense in defending against or paying any claim for any
finder's fee, brokerage commission or like charge arising in any way, directly
or indirectly, for any reason whatsoever in connection with this Agreement and
the transactions contemplated hereby, the Indemnitor agrees to indemnify the
Indemnified Party and hold the Indemnified Party harmless against any and all
such claims, costs, damages and expenses except to the extent the same arises
from any act or conduct on the part of the Indemnified Party which gave rise to
any such claim.
4.9. Contracts, Etc.
(a) All material contracts, leases, agreements, licenses, commitments and
orders to which the Company or any Subsidiary is a party or by which the Company
or any Subsidiary
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or any of their assets is bound, are listed on Exhibit 4.9-A hereto, and true,
correct, and complete copies of each have heretofore been delivered by the
Company to the Investor or its counsel.
(b) Except for contracts, leases, agreements, licenses, commitments and
orders which individually do not involve income or expense to the Company or any
Subsidiary of more than $5,000 individually and in the aggregate of more than
$20,000 annually, or cannot be terminated by the Company or a Subsidiary, as
applicable, within thirty (30) days' notice without penalty or damages and
except as disclosed on Exhibit 4.9-B (i) there are no existing defaults by the
Company or any Subsidiary under any contract, lease, agreement, license,
commitment or order to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any of their assets is bound, or, to the
best knowledge of the Company, by any other party thereto, and no event, act or
omission has occurred which (with or without notice, lapse of time and/or the
happening or occurrence of any other event) would result in a default by the
Company or any Subsidiary thereunder (or result in there arising any right
adverse to the Company) or, to the best knowledge of the Company, in a default
by any other party thereto; (ii) no contract, lease, agreement, license,
commitment or order contains any term that is unduly burdensome on the Company
or any Subsidiary and (iii) no other party to any contract, lease, agreement,
license commitment or order has asserted the right to renegotiate, or cancel or
terminate prior to the full term thereof, any of the terms or conditions of any
contract lease, agreement, license commitment or order.
4.10. ERISA. Neither the Company nor any Subsidiary maintains or has
maintained any pension plan or other health, welfare or benefit plan subject to
ERISA.
4.11. Properties. The Company and the Subsidiaries have good and marketable
title to all of their properties and assets, whether owned or leased. The
properties and assets of the Company and the Subsidiaries include all of the
assets used in or necessary to the operation of the business of the Company and
the Subsidiaries as such business is currently being conducted and proposed to
be conducted.
4.12. Trademarks and Licenses. Set forth on Exhibit 4.13 is a list and
brief description of all of the Company's and Subsidiaries' registered and
common law trademarks, service marks, tradenames, copyrights and other similar
rights and applications for and all contracts, agreements, licenses or other
rights with respect to each of the foregoing. The Company and the Subsidiaries
own all unencumbered right, title and interest in and to all such proprietary
rights, which are all
<PAGE>
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such rights necessary to the conduct of the business of the Company and the
Subsidiaries. No adverse claims have been made and no dispute has arisen with
respect to any of said proprietary rights; and the operations of the Company and
the Subsidiaries do not infringe any intellectual property right, and the
Company and the Subsidiaries have not received any notice and have no knowledge
of any claimed conflict with respect to any of the foregoing, nor is the Company
or any Subsidiary aware of any claim or assertion that any of the foregoing
proprietary rights are invalid or defective in any way or aware of any facts or
prior act upon which such a claim or assertion could be based. The consummation
of the transactions contemplated by this Agreement will in no way affect the
continuation, validity or effectiveness of any such proprietary rights or
require the consent, waiver, approval, authorization of, notice to, or
designation, registration, declaration or filing with, any party or third party
in respect of any such proprietary rights, contract, agreement, license or other
right.
5. Securities Law Matters; Investor's Representations.
5.1. This Agreement is made by the Company in reliance upon the
representations of the Investor to the Company, which by its execution hereof
the Investor confirms, that the Investor is an "accredited investor" as defined
under Regulation D promulgated under the Securities Act of 1933, as amended (the
"Act"), and is acquiring the Securities to be purchased by it hereunder for
their own account for investment and not with a view to, or for sale in
connection with, any distribution thereof. The Investor represents that it has
no present intention of distributing or reselling any of the Securities.
5.2. Neither the Company nor any agent on its behalf has offered or will
offer any Securities or substantially similar securities or units of securities
for sale to, or solicit any offers to buy any such securities from or otherwise
approach or negotiate in respect of any such securities with, any person or
persons so as thereby to bring the offering and sale of any such Securities
purchased by the Investor hereunder within the provisions of Section 5 of the
Act or to violate any state securities law applicable thereto.
5.3. The Investor represents and warrants that in making its decision to
purchase the Securities it has not relied upon any representations or
warranties, express or implied, except for the representations and warranties
expressly set forth in this Agreement or in any certificate or instrument
delivered by or on behalf of the Company in writing in connection with the
transactions contemplated herein. The Investor further represents and warrants
that the Company has provided the Investor with such access to the books and
records and personnel
<PAGE>
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and other representatives of the Company and the Subsidiaries and to such other
information as the Investor has requested in order to enable the Investor to
make its investment decision.
6. Company Covenants. The Company (and, in the case of Section 6.2, Marks
and Mayo) covenants for the sole benefit of the Investor that, for so long as
the Investor (and/or its Affiliates) shall continue to hold at least 50% of the
Shares, that:
6.1. Restricted Transactions.
(a) Without the approval of a majority of the Board of Directors, which
approval must include the approval of the director or directors designated by
the Investor, the Company shall not, and shall cause each Subsidiary not to,
(i) engage in any material respect in any business other than the
Business;
(ii) except in the case of trade payables, take any action that would
cause any indebtedness of the Company as a result of a default thereunder
to be due and payable or to entitle the holder(s) thereof to accelerate the
payment of the principal amount thereof;
(iii) until the end of the "Put Period," make any payment on account
of the purchase, redemption or other retirement of any shares of its
capital stock or of any warrants, options or similar rights to purchase its
capital stock, or prepay or redeem in whole or in part, either directly or
indirectly, any equity security unless (A) the Investor is allowed to
participate in the purchase, redemption or retirement on a pro-rata basis
based on its ownership of shares in the Company or (B) the payment is in
accordance with the terms in an agreement or plan previously approved
pursuant to clause (iv) of this Section 6.1(a);
(iv) establish any compensation plan or arrangement providing for the
grant of options (or similar rights) for employees, officers or directors
of the Company to purchase any shares in the Company, it being acknowledged
that it is the intent of the parties that the Company establish an employee
stock option plan following the Closing;
(v) enter into any agreement, commitment, arrangement, transaction,
payment or understanding that would involve as a party any Stockholder or
his or its Affiliate (as defined in Section 6.1(b)) other than the
<PAGE>
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sale of shares in the Company (and then subject to Section 9.6);
(vi) enter into any employment or compensation arrangement, written or
oral, with any Stockholder or his or its Affiliate, or otherwise agree to
pay or pay to any Stockholder or his or its Affiliate compensation that is
in excess of an amount as is customary for employees of established
reputation in a same or similar business and similarly situated, except:
(A) during the term of this Agreement, the Company shall employ
Mayo as chief executive officer of the Company. In performing his
duties, Mayo shall devote so much of his time to the business of the
Company as is reasonably required and, except as limited in Section
11, may engage in business ventures of any nature and description,
independently or with others, and the Company and the other
Stockholders shall have no rights in or to those ventures or the
income or profits derived therefrom. As compensation for his services,
Mayo shall receive, in addition to other customary benefits, the
following compensation subject to an annual cap of $750,000 during the
first seven years: (1) a draw of $6,000 per month; and (2) to the
extent the following amount exceeds his draw, but only to the extent
of that excess, 2% of the first $5,000,000, and 1% of all additional
revenues, for each year. Nothing in this Section 6.1(a)(iv)(A) shall
preclude the Company from increasing Mayo's compensation, upon
approval of the majority of the Board of Directors, which approval
must include the approval of the director or directors designated by
the Investor.
(B) As compensation for her services, Sueanne Hall Mayo may
receive, in addition to customary benefits, $45,000 for fiscal year
1995, with that compensation to be increased annually by the greater
of 5% and the applicable "Consumer Price Index" selected by the
Company.
(b) For the purposes of this Agreement, an "Affiliate" of any person or
entity (hereinafter the "Subject Party") means (i) any entity directly or
indirectly, controlling, controlled by, or under common control with the Subject
Party or (ii) any entity in which the Subject Party directly or indirectly has
made any investment (whether in the form of equity, debt or any combination
thereof) or with which the Subject Party is then engaged in any material
transaction or arrangement or (iii) if the Subject Party is a person, any blood
relative of the Subject
<PAGE>
-16-
Party or any spouse of such relative or the spouse of the Subject Party or any
blood relative of such spouse, or (iv) if the Subject Party is an entity, any
person or entity having made an investment (whether in the form of equity, debt
or any combination thereof) directly or indirectly in the Subject Party or (v)
any person or entity that is an Affiliate of any Affiliate ("First Affiliate")
of the Subject Party which First Affiliate is directly or indirectly
controlling, controlled by or under common control with, the Subject Party,
including under this clause (v).
6.2. Board of Directors. At the request of the Investor, the Company shall
cause to be elected to the Company's and each Subsidiaries' Board of Directors
such number of person(s) designated by the Investor as shall constitute in the
aggregate the number of directors, but not less than one, as is closest to
one-fourth of the total number of directors of each of the Company and a
Subsidiary from time to time, and the Stockholders shall vote the shares of
Common Stock held by them to elect such designees to the Company's and each
Subsidiary's Board of Directors; provided, however, that in the event that the
Investor shall hold less than one-fourth of the total outstanding Shares, the
number of directors designated by the Investor shall be adjusted to reflect the
proportion of shares held by the Investor, which adjusted number of directors
shall not be fewer than one. Any provision in the Company's By-Laws to the
contrary notwithstanding, (a) the Company and each Subsidiary shall in any event
provide notice to the Investor and any designated director(s) of the Investor of
each meeting, whether regular or special, of the Board of Directors of the
Company and each Subsidiary, (b) no Board Committee of the Company or any
Subsidiary may be constituted without such number of the designated director(s)
of the Investor as is proportional to the number of designated director(s) of
the Investor on the full Board and (c) the Company and each Subsidiary waive any
bond with respect to the Investor's designated director(s) that might be
required under the Company's or any Subsidiary's By-Laws.
6.3. Taxes. The Company shall, and shall cause each Subsidiary to, promptly
pay and discharge all lawful taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any of its
property, real, personal or mixed, except for taxes, assessments and
governmental charges or levies being contested in good faith by the Company or
any Subsidiary by appropriate proceedings diligently pursued.
6.4. Maintain Existence, etc. The Company shall at all times keep its
corporate existence, rights and franchises in full force and effect and operate,
and cause such Subsidiaries as it considers advisable to own, to operate, in
full compliance with all applicable laws, rules, regulations, ordinances, orders
and decrees.
<PAGE>
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6.5. Financial Statements and Compliance Certificates and Notices.
(a) The Company shall keep, and shall cause each Subsidiary to keep, true
books of record and account in accordance with GAAP and in which full, true and
correct entries in accordance with sound accounting practice will be made of all
income, expenses, dealings and transactions in relation to its business and
activities.
(b) The Company shall deliver to the Investor:
(i) as soon as practicable and in any event within 120 days after the
close of each fiscal year of the Company commencing with the fiscal year
ending December 31, 1994, a consolidated balance sheet of the Company and
its subsidiaries as at the end of such year and the related consolidated
statements of income, retained earnings and cash flows of the Company and
its subsidiaries for such fiscal year, and the consolidated results of
operations and changes in financial position for such fiscal year of the
Company and its subsidiaries in accordance with GAAP setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail certified (without any material qualification) by
independent public accountants selected by the Company and reasonably
satisfactory to the Investor (it being acknowledged that the accounting
firm of Dorfman, Abrams, Music & Co. is acceptable to the Investor);
(ii) as soon as practicable and in any event within 45 days after the
close of each fiscal quarter, the unaudited statements of income, balance
sheets and statements of cash flows for each of the Company and its
subsidiaries, all in reasonable detail and certified by the chief executive
or financial officer of the Company as fairly presenting the Company's
financial position and results of operations subject to normal recurring
year-end audit adjustments and as having been prepared in accordance with
GAAP (except for the absence of footnotes and that such financial
statements may not be prepared on a consolidated basis);
(iii) as soon as practicable and in any event within 45 days after the
close of each calendar month, unaudited balance sheets of each of the
Company and its subsidiaries, the unaudited statements of income of each of
the Company and its subsidiaries, and the statements of cash flows of the
Company and its
<PAGE>
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subsidiaries, as at the end of and for the period commencing at the end of
the previous fiscal year and ending with such month just closed, in each
case prepared by the management of the Company, all in reasonable detail
and certified by the chief executive or financial officer of the Company as
fairly presenting the Company's financial position and results of
operations, subject to normal recurring year-end audit adjustments and as
having been prepared in accordance with GAAP (except for the absence of
footnotes and that such financial statements may not be prepared on a
consolidated basis);
(iv) promptly upon receipt thereof, copies of all final financial
reports (including, without limitation, management letters) if any,
submitted to the Company or any of its subsidiaries by its auditors, in
connection with each annual or interim audit or preview of its books by
such auditors;
(v) promptly upon the issuance thereof, copies of all reports, if any,
of the Company to the SEC and all material reports to any other
governmental agency or any securities exchange, and all reports, notices or
statements sent by the Company to the holders of any indebtedness for
borrowed money;
(vi) promptly upon the commencement thereof, written notice of any
litigation, including arbitrations, and of any proceedings before any
governmental agency that would, if successful, materially affect the
Company or any of its subsidiaries or where the amount involved exceeds
$25,000; and
(vii) from time to time when available and, in any event not less than
one month prior to the commencement of each fiscal year of the Company
(commencing with the fiscal year beginning on January 1, 1996) a summary of
the then existing business plans and financial operating projections for
such fiscal year, if any.
6.6. Inspection. The Investor may, by its designated representative, which
may not be a competitor of the Company (or any of its subsidiaries), at the
Investor's expense visit and inspect upon reasonable notice, and during business
hours, any of the properties of each of the Company and its Subsidiaries,
examine its books of account and discuss its affairs, finances and accounts
with, and be advised of the same by, its officers and auditors, at such
reasonable times and intervals as the Investor may desire.
<PAGE>
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6.7. No Amendments to Corporate Documents. The Company shall not make any
amendment to its By-Laws or its Certificate of Incorporation that would or might
impair or adversely affect any rights of the Investor or holder(s) of the
Securities issued hereunder; provided however, that nothing set forth herein
shall be deemed to restrict the ability of the Company to amend its Certificate
of Incorporation to authorize additional shares of Common Stock or to authorize
any other class of stock.
7. Financing Proceeds. The Company covenants that the proceeds from the
sale of the Shares are to be used for the purposes set forth on Exhibit 7. Any
diversion or use of the proceeds other than as set forth on Exhibit 7 without
the prior written consent of the Investor shall constitute a covenant violation
("Covenant Violation"). Upon any such Covenant Violation, the Company shall
immediately repay to the Investor the entire amount of the purchase price of the
Shares, including any costs and expenses incurred by the Investor in enforcing
its rights in connection with such Covenant Violation. Nothing contained in this
Section shall be construed to restrict or limit in any way the Investor's right
to seek any remedy it deems advisable against the Company for any damages,
costs, expenses or losses it may sustain or to bring an action against the
Company in connection with such Covenant Violation. The Company will notify the
Investor orally and in writing immediately upon the occurrence of such Covenant
Violation.
8. Post-Closing Review and Inspection. No later than ninety (90) days after
the Closing, the Investor shall conduct a review of the offices, properties,
assets, operations and financial and other records of the Company to ensure that
the proceeds of the Financing are being used for the purposes set forth in this
Agreement (the "Post-Closing Review and Inspection"). In connection with its
Post-Closing Review and Inspection, the Investor and its designated
representative or representatives shall have the right to visit and inspect
during normal business hours, any of the operations, offices, properties, or
assets of the Company, and inspect financial and other records, and discuss the
Company's affairs, finances and accounts with the Company's officers, auditors
and counsel. All expenses incurred by the Investor in connection with its
Post-Closing Review and Inspection shall be paid by the Company.
9. Transfers and Issuances of Shares.
9.1. Transfers Only as Permitted by this Agreement. No Stockholder may
transfer any shares in the Company, except as specifically permitted or required
by the provisions of this Agreement, and any purported transfer in any other
manner shall be void.
<PAGE>
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9.2. Permitted Transfers. Any Stockholder may transfer all or a portion of
his shares to (i) his spouse or other member of his immediate family or a trust
or other entity for the benefit of the foregoing, (ii) Mayo, or (iii) a person
which is an Affiliate of the Stockholder by virtue of being controlled by,
controlling or under common control with the Stockholder (any such transferee
pursuant to clause (i), (ii) or (iii), a "Permitted Transferee"); provided,
however, that the Permitted Transferee, as a condition to the transfer, shall
execute and deliver a written agreement, in form and substance satisfactory to
the Company, agreeing to be bound by the provisions of this Agreement applicable
to the Stockholder making the transfer.
9.3. Securities Laws. Nothing contained in this Agreement shall be deemed
to permit any Stockholder to transfer any of his shares in the Company in
violation of applicable securities laws. Any transfer shall not be effected
until the transferor has first given written notice to the Company describing
briefly the manner of any such proposed transfer and the proposed transferee,
and until (a) the Company has received from the Stockholder's counsel an opinion
that such transfer can be made without compliance with the registration
provisions of the Act or applicable state securities laws and without the
necessity of perfection of any exemption pursuant to Regulation A adopted
pursuant to the Act, or (b) the Company and the Stockholder shall have complied
with Rule 144 promulgated under the Act (and in this connection the Company
shall so comply, as hereinafter provided, upon request of the Shareholder), or
(c) a registration statement with respect to the Securities being transferred
that has been filed by the Company is declared effective by the Commission or
steps necessary to perfect an exemption from registration under Regulation A or
otherwise are completed.
9.4. Restrictive Legends. Unless and until otherwise permitted by this
Article, each instrument evidencing Common Stock held by the Stockholders shall
be endorsed or otherwise imprinted with a suitable legend in substantially the
following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any state
Blue Sky or securities laws. These securities cannot be resold without
registration under such Act or applicable state securities laws or an
exemption therefrom.
<PAGE>
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In addition, the securities represented by this certificate are
subject to an Investment and Stockholders Agreement, dated December
___, 1994, among the Company and the other parties named therein, as
the same may be modified from time to time, and may not be sold,
offered, transferred, assigned, pledged, hypothecated or otherwise
disposed of except in compliance with the provisions of that
agreement."
The Company is hereby authorized to place "stop transfer" instructions on its
records or to instruct any transfer agent to prevent the transfer of Securities
except in conformity with this Agreement.
9.5. Right of First Offer.
(a) Except for transfers pursuant to Sections 1.2 or 9.2, if at any time a
Stockholder desires to transfer any of his or its shares in the Company (the
"Offered Shares"), the Stockholder shall offer those shares to the Company and
to the other Stockholders (by giving them notice (the "Offer Notice") stating
the number of shares subject to the offer, the price at which they are offered,
and the other terms and conditions of the offer, including the name and address
of the specific offeree(s), if any).
(b) The Company and the other Stockholders shall have the right to purchase
the Offered Shares in the following priority:
(i) If the Offered Shares are offered by the Investor,
(A) first, up to all the Offered Shares, to Mayo and Marks, or
their assignees, pro rata based upon the Relative Proportions of each
of them, with each of them possessing the right to purchase any
Offered Shares declined by the other; and
(B) second, to the extent of any remaining Offered Shares, to the
Company.
(ii) If the Offered Shares are offered by Mayo,
(A) first, up to all the Offered Shares, to the Investor,
<PAGE>
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(B) second, up to all the Offered Shares, to Marks; and
(C) third, to the extent of any remaining Offered Shares, to the
Company.
(iii) If the Offered Shares are offered by Marks,
(A) first, up to all the Offered Shares, to Mayo;
(B) second, to the extent of any remaining Offered Shares, to the
Investor; and
(C) third, to the extent of any remaining Offered Shares, to the
Company.
For purposes of this Section 9.5, the "Relative Proportion" of any Stockholder
shall mean that portion of the Offered Shares equal to the total number of
Offered Shares multiplied by a fraction the numerator of which is equal to the
number of shares owed by such Stockholder prior to such purchase and the
denominator of which is equal to the number of shares owned by all Stockholders
prior to such purchase that are eligible, and that have elected, to purchase the
Offered Shares.
(c) The option shall be exercisable by notice (the "Acceptance Notice")
given to the selling Stockholder and to the other Stockholders within 30 days
after the date of the notice from the selling Stockholder. If the Stockholders
and the Company, as applicable, do not exercise their respective options to
purchase all the Offered Shares, none of the Offered Shares shall be purchased
by any of them and, at any time within 180 days after the expiration of the
other Stockholders' options, the selling Stockholder may transfer the Offered
Shares to a third party at a price and on terms and conditions no less favorable
to the selling Stockholder than those stated in the offer. But if the transfer
is not made within that 180-day period, those shares shall again be subject to
this Section 9.5. No transfer to a third party may be made, however, unless the
transferee executes and delivers a written agreement (in form and substance
satisfactory to the Company) to be bound by all the provisions of this Agreement
that were applicable to the Stockholder who transferred the share to him or it.
After any such transfer, each reference in this Agreement to the Stockholders
shall include the transferee.
(d) If an option is exercised under this Section 9.5, the persons
exercising the option shall have a period of 30
<PAGE>
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days after the date of the Acceptance Notice to arrange financing and the
closing of the purchase shall be held at the offices of the Company on a date
not more than 30 days later. At the closing, the purchaser or purchasers shall
make any payment required to be paid at the closing and, if called for by the
terms of the purchase, shall deliver a promissory note or notes for the balance,
and the selling Stockholder shall deliver to the purchaser or purchasers a
certificate or certificates for the shares being sold, duly endorsed in blank
for transfer and with all requisite stock transfer tax stamps attached. If a
selling Stockholder is the personal representative of a deceased individual
Stockholder, that Stockholder shall also deliver appropriate estate tax waivers.
9.6. Right to Purchase Additional Shares. If at any time the Company
proposes to issue any of its securities to any person (other than pursuant to a
plan or arrangement approved pursuant to Section 6.1 (a)(iv) or as additional
consideration to a financial institution that is not an Affiliate of any
Stockholder in connection with the making of a loan to the Company (or its
subsidiaries)), each Stockholder shall have the right to purchase, upon the same
terms, a proportionate quantity of those securities (in the proportion that the
number of shares then held by that Stockholder bears to the total number of
shares of the Company's common stock then held by all stockholders; for this
purpose, shares of the Company's common stock issuable upon conversion of
securities then held by all stockholders or upon exercise of warrants then held
by all stockholders shall be deemed to be then held by stockholders). The
Company shall give notice to each Stockholder setting forth the identity of the
person to whom it proposes to issue the securities and the time, which shall not
be fewer than 30 days, within which and the terms and conditions upon which the
Stockholder may purchase the securities, which shall be the same terms and
conditions upon which such person may purchase securities.
9.7. Right of Participation. If at any time any Stockholder desires to sell
any of his shares pursuant to any offer from any person (the "Offeror") other
than a Permitted Transferee, after the expiration of all option exercised
periods under Section 9.5 without the Offered Shares having been accepted for
purchase, he shall give notice of the proposed sale to the other Stockholders,
setting forth the name and address of the prospective buyer, the proposed
purchase price and the other terms and conditions of the offer. Each of the
other Stockholders shall have the option (exercisable by notice given to the
first Stockholder within 20 days of the notice of the proposed sale under this
Section 9.7) to include in the sale in place of shares that would otherwise be
sold to the Offeror by the first Stockholder, such number (but not less than
such
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number) of shares as is equal to the total number of shares to be purchased by
the Offeror multiplied by a fraction, the numerator of which is the number of
shares held by such other Stockholder and the denominator of which is the number
of issued and outstanding shares held by all Stockholders other than the first
Stockholder. A Stockholder shall not agree to sell any shares to an Offeror
unless the Offeror is willing to purchase shares in the manner provided in this
Section 9.7.
10. Registration of Securities.
10.1. Definitions and Restrictions.
(a) The following constitute definitions of certain of the terms used in
this Article:
(i) "Commission" means the Securities and Exchange Commission.
"Company" means the issuer of Registrable Securities.
(ii) "Holder" means the Holder of any "Registrable Securities" as
hereinafter defined in this Section 10.1 and each such Holder's respective
successor(s), transferee(s) and assign(s).
(iii) "Registrable Securities" and "Securities" means, for purposes of
this Article 10 only, the Common Stock now or hereafter held by the
Stockholders. "Unrestricted Securities" shall not be included in
"Registrable Securities" for purposes of this Article.
(iv) "Unrestricted Securities" means at any time Securities that
either (A) have theretofore been registered, offered and distributed to the
public, or (B) have theretofore been sold or transferred without
registration under said Act in a transaction in which (in the opinion of
counsel for the transferor) such registration was not required and which
did not involve any investment representation or investment undertaking by
the transferee with respect to such securities, such as a transfer pursuant
to Regulation A or Rule 144.
(v) "Registration", "register" and like words mean compliance with all
of the laws, rules and regulations (federal, state and local), and
provisions of agreements and corporate documents pertaining to lawful and
unconditional transfer of securities including registration of any offering
of securities on any form including S-1, S-2, S-3 or S-18, or any SB form,
if applicable.
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10.2. Requested Registration.
(a) If either Mayo or the Investor shall notify the Company after December
31, 1996, that he or it proposes to sell or transfer any of the Registrable
Securities and requests registration thereof, the Company shall promptly give
written notice of such request to all other Holders and comply with paragraph
10.2(b) below. If the managing underwriter of the offering being registered
pursuant to this paragraph 10.2(a) advises the Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the number of Registrable Securities that may be included in the underwriting
shall be allocated among all Holders of Registrable Securities in proportion, as
nearly as practicable, to the respective amounts thereof held by or issuable to
such Holders at the time of filing the registration statement for which
registration has been demanded. Any provision herein to the contrary
notwithstanding, the right to request registration shall be limited to two
registrations initiated by each of Mayo and the Investor; provided, however,
that (i) no such request shall require a registration statement to become
effective prior to 180 days after the effective date of a registration statement
that shall have been filed by the Company covering a firm commitment
underwritten public offering of Common Stock in which the Company's shares are
to be traded on NASDAQ-NMS or listed on the American Stock Exchange or the New
York Stock Exchange, if the Company shall theretofore have given written notice
of such registration statement to the Holders of the Registrable Securities
pursuant to this paragraph 10.2(a) or Section 10.6 and shall have thereafter
pursued the preparation, filing and effectiveness of such registration statement
with diligence; and (ii) the Company shall not be required to effect such a
registration unless the Holder(s) requesting registration propose to dispose of
Registrable Securities having an aggregate disposition price (before deduction
of underwriting discounts and expenses of sale) of at least $3,000,000. A right
to demand registration shall be deemed exercised when the registration statement
is effective. If and when the rights hereunder are sought to be exercised, the
Company shall notify all other Holders.
(b) Upon a demand under paragraph 10.2(a) the Company shall (i) file within
90 days a registration statement on the appropriate form referred to in
paragraph 10.2(c) (or any form adopted in lieu thereof) under the Act of the
Registrable Securities that the Company has been requested to register including
any requests of Holder(s) subsequent to notice from the Company to the Holders
as provided in (a) above; (ii) if the offering is pursuant to an underwriting
agreement (the underwriter to be the person selected by the Holders of the
majority of the Securities to be registered), enter into an
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underwriting agreement with underwriters selected by the Holder(s) requesting an
offering of securities, said agreement to be in such form as the underwriter
shall require (and which would not materially and adversely affect the Company),
and enter into indemnification as provided in Section 10.6 hereof; (iii) use its
best efforts to have such registration statement declared effective and remain
effective for at least 180 days; (iv) notify the Holder(s) promptly after it
shall receive notice thereof, of the time when such registration statement has
become effective or any supplement to any prospectus forming a part of such
registration statement has been filed; (v) notify the Holder(s) promptly of any
request by the Commission for the amending or supplementing of such registration
statement or prospectus or additional information; (vi) prepare and file with
the Commission, promptly upon any Holder's request, any amendment or supplement
to such Registration Statement or prospectus that, in the opinion of counsel for
the Holder(s), may be necessary or advisable in connection with the distribution
of the Registrable Securities by the Holder(s); (vii) prepare and promptly file
with the Commission and promptly notify the Holder(s) of the filing of such
amendment or supplement to such registration statement or prospectus as may be
necessary to correct any statement or omission; (viii) in case any Holder(s) is
(are) required to deliver a prospectus, at a time when the prospectus then in
effect may no longer be used under the Act, prepare promptly upon request such
amendment or amendments to such registration statement and such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10 of the Act; (ix) not file any amendment or supplement to the
Registration Statement or prospectus to which any Holder(s) shall reasonably
object after having been furnished a copy at a reasonable time prior to the
filing thereof; (x) advise each Holder promptly after it shall receive notice or
obtain knowledge thereof of the issuance of any stop order by the Commission
suspending the effectiveness of any such Registration Statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; (xi) use its best efforts to
qualify the Securities for sale under the securities laws of such states as such
Holder(s) may reasonably request, except that it shall not be required in
connection therewith or as a condition thereof to execute a general consent to
service or qualify to do business in any such states or otherwise to subject
itself to taxation therein solely because of such qualification; (xii) furnish
to each Holder as soon as available copies of any such registration statement
and each preliminary or final prospectus, or supplement, required to be prepared
pursuant to this Article, all in such quantities as each Holder may from time to
time reasonably request; and (xiii) refrain from issuing, or, selling, or
registering for sale by any other security holder, within the
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90-day period commencing 30 days before and ending 60 days after the effective
date of the registration statement complying with such demand, any securities
not held by the Holders demanding registration.
10.3. Information to be Furnished by Holder. Each Holder shall furnish to
the Company in writing all information within the Holder's possession or
knowledge required by the applicable rules and regulations of the Commission and
by any applicable state securities or Blue Sky Laws concerning the proposed
method of sale or other disposition of the Securities, and the identity of and
compensation to be paid to any proposed underwriter(s) to be employed in
connection therewith.
10.4. Costs and Expenses. The Company shall pay all costs and expenses for
all registrations under this Article 10. The costs and expenses, include,
without limitation, the reasonable fees and expenses of the Company's counsel,
one special counsel selected by the Holders offering such Registrable
Securities, the fees and expenses of accountants and auditors and all other
costs and expenses incident to the preparation, printing and filing of any and
all documents to be filed under the Act, each prospectus and all amendments and
supplements thereof, the costs incurred in connection with the qualification of
the Registrable Securities and the offering thereof under the laws of various
jurisdictions (including fees and disbursements), the cost of listing on any
exchange, the cost of furnishing to each Holder such copies as the Holder shall
reasonably request of any registration statement, each preliminary prospectus,
the final prospectus and each amendment and supplement thereto and all expenses
incident to delivery of the Registrable Securities to any underwriter or
underwriters; but not the commissions or discounts payable by the Holder(s) to
such underwriter(s).
10.5. Incidental Registration.
(a) If the Company shall at any time or times propose for itself or any
other person the registration under the Act of any securities of the Company or
propose an offering under Regulation A or similar regulation (or on any other
form for the general registration of securities), the Company shall give written
notice of such proposed registration to all of the Holders. The Company shall
include in any such registration statement and any related underwriting
agreements such Registrable Securities of any Holder who within 30 days after
the giving of such notice shall request such inclusion. Each such Holder shall
be entitled to all the benefits of this Article. The right to registration
provided in this Section 10.5 is in addition to and not in lieu of the demand
registration rights provided in Section 10.2; all incidental registrations shall
be at the Company's expense as provided in Section 10.4. The
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provisions of this Section 10.5 apply (i) to an offering of any securities
pursuant to a merger, consolidation or acquisition of assets transaction and
(ii) even though the Holder(s) requesting incidental registration is (are) or
may be free, at the time, to sell any or all of the Registrable Securities with
respect to which such registration was requested in accordance with either (A)
Rule 144 (or any similar rule or regulation) promulgated under the Act. (B) The
right to incidental registration shall apply to any registration proposed by the
Company notwithstanding that it is proposed subsequent to a demand under Section
10.2; and upon the Company's proposal, any registration then in process or
effective under Section 10.2 shall, at the option of the Holder(s) having
requested registration, be and become a registration under Section 10.5. If the
managing underwriter of the offering being registered pursuant to this paragraph
10.2 advises the Holders in writing that marketing factors require a limitation
of the number of shares to be underwritten, then the number of Registrable
Securities that may be included in the underwriting shall be allocated among all
Holders of Registrable Securities in proportion, as nearly as practicable, to
the respective amounts thereof held by or issuable to such Holders at the time
of filing the registration statement for which registration has been demanded.
10.6. Indemnification by Company. The Company shall, to the maximum extent
permitted by law, indemnify and hold harmless each Holder registering an
offering of Registrable Securities and any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or such
underwriter, against any losses, claims, damages or liabilities, judgments,
settlements, awards and expenses (including attorneys' fees) (collectively
"Losses"), to which such Holder or underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such Losses are caused
by, based upon, or arise out of or relate to any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
filed under the Act, any prospectus contained therein, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and reimburse each such Holder, underwriter and
controlling person for any legal or other expenses incurred by such Holder,
underwriter or such controlling person in connection with investigating or
defending against any such Loss; provided, however, that the Company shall not
be liable in any such case to the extent that any such Loss arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with written information furnished by the
Holder or underwriter specifically for use in the preparation of such prospectus
or if, in respect to such statement, alleged statement, omission or
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alleged omission, the final prospectus corrected such statement, alleged
statement, omission or alleged omission and a copy of such final prospectus had
not been sent or given at or prior to the confirmation of the sale with respect
to which such Loss relates.
10.7. Indemnification by Holder. Each Holder registering an offering of
Registrable Securities shall, to the maximum extent permitted by law, indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed said registration statement, and any underwriter and each person, if
any, who controls the Company or the underwriter, within the meaning of the Act,
against any Loss to which the Company, or any such director, officer,
underwriter or controlling person may be or become subject under the Act or
otherwise, insofar as such Loss is caused by any untrue or alleged untrue
statement of any material fact contained in said registration statement, said
prospectus, or amendment or supplement thereto, or arises out of or is based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such Loss
is a result of an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished by the Holder for use in the preparation of the
registration statement; or arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any such
preliminary prospectus even if, in respect to such statement, alleged statement,
omission or alleged omission, the final prospectus corrected such statement,
alleged statement, omission or alleged omission is a copy of such final
prospectus had not been sent or given at or prior to the confirmation of the
sale with respect to which such Loss relates. Each Holder's obligation under
this provision shall be several and not joint and in no event exceed the net
proceeds received on account of the offering to which the indemnity relates.
10.8. Notice to Indemnitor. Promptly after receipt by an indemnified party
of notice of the commencement of any action indemnifiable hereunder, such
indemnified party shall, if a claim thereof is to be made against the
indemnifying party pursuant hereto, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability that it may have to any indemnified party. In
case such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, and the indemnifying party,
without acknowledging any validity to the underlying claim, acknowledges its
liability to indemnify the indemnified party therefor, the indemnifying party
shall be entitled to participate in, and, to
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the extent that it may wish, jointly with any other indemnifying party,
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, but may not settle such action without
the consent of the indemnified party. If the indemnifying party undertakes the
defense of any matter for which indemnity is claimed, and if the indemnified
party wishes nevertheless to retain counsel to represent it in such matter, the
fees of such counsel shall be the responsibility solely of the party retaining
such counsel unless the indemnified party has conflicting or separate defenses
in such action, in which case its attorneys' fees will be borne by the
indemnifying party.
10.9. Additional Obligations. If, in order to effect a registration
statement, any Registrable Securities require declaration of or registration
with or approval of any federal or state governmental official or authority
(other than registration under the Act or qualifications or registration under
state securities or Blue Sky laws) before such Registrable Securities may be
sold, the Company at its own expense shall take all reasonable action in
connection with such registration, declaration or approval and will use its best
efforts to cause such Registrable Securities to be duly registered or approved
as may be required; provided, however, that in connection therewith or as a
condition thereof, the Company shall not be required to execute a general
consent to service or to qualify to do business in any such state. The foregoing
shall not include any regulatory requirements applicable solely to any Holder.
10.10. Rule 144 Covenants. With a view to making available to each Holder
the benefits of Rule 144 promulgated under the Act (which term as used herein
includes the present Rule 144 and any other, additional, substitute, supplement,
or analogous rule or regulation of the Commission that may at any time permit a
Holder to sell securities to the public exempt from registration), the Company
agrees, after consummation of a registered public offering, to maintain
registration of its Common Stock under Section 12(g) or 15(d) of the Securities
Exchange Act of 1934, as amended, as required by law, and (i) to file with the
Commission in a timely manner all reports and other documents required to be
filed by an issuer of securities registered under the Securities Exchange Act of
1934, as amended, so as to maintain the availability of Rule 144 to the Holders,
notwithstanding that the Company would not have to maintain such filing but for
this provision of the Agreement; (ii) at its expense, forthwith upon any
Holder's request, to deliver to any Holder a certificate, signed by one of the
Company's principal officers, stating (A) Company's name, address and telephone
number (including area code), (B) Company's Internal Revenue Service
identification number, (C) Company's Securities and Exchange Commission file
number, (D) the number of shares of
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Common Stock outstanding as shown by the most recent report or statement
published by Company and (E) the Company has filed the reports required to be
filed under the Securities Exchange Act of 1934, as amended, for a period of at
least 90 days prior to the date of such certificate and in addition has filed
the most recent annual report required to be filed thereunder and such other or
additional information as shall be necessary to made available to the Holder the
ability to offer and sell the maximum number of shares under Rule 144; and (iii)
when Rule 144 is being complied with, to deliver securities not bearing the
legend prescribed by Section 7.1 of this Article or any other legend restricting
transfer for such Securities, as may be requested from time to time by any
Holder subject to Section 7.2 hereof.
11. Corporate Opportunities. Mayo shall not pursue, either by himself or
through any person other than the Company or its Subsidiaries, any opportunity,
transaction, agreement or other arrangement involving any movie theater that is
located in New Jersey, New York or Connecticut or within a 20 mile radius of any
existing theater then owned or operated by the Company or its subsidiaries (an
"Opportunity"), unless that Opportunity shall first have been presented to the
Company and Mayo shall have followed the procedures set forth in this Section
11. At any time, Mayo may request in writing (a "Determination Request") a
determination by the Company as to whether it intends to pursue any Opportunity.
If the Opportunity that is the subject of the Determination Request has not yet
been presented to the Company, Mayo shall include in the Determination Request a
description in reasonable detail of the Opportunity. Within 30 days of the date
of the Determination Request, the Company shall determine whether it shall
pursue the Opportunity. If the Company (a) is unable for financial reasons to
pursue the Opportunity or (b) by a vote of its Board of Directors (excluding the
vote of Mayo and his Affiliates) determines, for any reason, not to pursue the
Opportunity, then Mayo shall be entitled to pursue the Opportunity by himself or
through any other person, and, except as provided in the subsequent sentence,
neither the Company nor any Stockholder other than Mayo shall have any right in
or to the Opportunity or the profits derived from the Opportunity. If the movie
theater that is the subject of the Opportunity is compatible with the Clearview
concept, upon the Company's request, Mayo shall use his best efforts to cause
the theater to be operated under the Clearview name and management, for which
the Company would be paid customary fees.
12. Mayo Guaranty. Mayo may, but shall not be obligated to, personally
guarantee approximately $350,000 of the debt incurred by a Subsidiary of the
Company in connection with the movie theater located in Bernardsville, New
Jersey. The guaranty (the "Mayo Guaranty"), if made, is not intended to
constitute an equity contribution and any payment made by Mayo in
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connection with the Mayo Guaranty (together with collection costs and attorneys'
fees) shall immediately be reimbursed to Mayo by the Company. The Company shall
use its best efforts to obtain a release of the Mayo Guaranty and, if requested
by Mayo, shall enter into a separate guaranty (the "Company Guaranty") of the
debt guaranteed by Mayo. The obligations of the Company to make any payment to
the Investor upon the Investor's exercise of any "Put" right granted by this
Agreement shall be subordinated to the Company's obligations in connection with
the Mayo Guaranty and the Company Guaranty. In the event that the Company
exercises its "Put" rights at any time while the Mayo Guaranty or any
reimbursement obligation to Mayo in respect thereof is outstanding, the Investor
shall hold any payment received by the Investor (the "Put Payment") in trust
until such time as the Mayo Guaranty has been released and any reimbursement
obligations have been met, and within 30 days after written request by the
Company, shall return the Put Payment to the Company, if the Company, in its
sole discretion, determines the Put Payment to be necessary for the Company to
meet its obligations to in connection with the Mayo Guaranty or the Company
Guaranty.
13. Additional Provisions.
13.1. Modification of Agreement; Consent; Confidentiality. This Agreement
and the documents and instruments referred to herein constitute the entire
agreement among the parties hereto. Any provision in this Agreement to the
contrary notwithstanding, changes in or additions to this Agreement may be made
and/or compliance with any covenant or condition herein set forth may be
omitted, only upon written consent of the parties hereto. The Investor and its
authorized representatives shall (i) maintain the confidentiality of any
confidential or proprietary information of the Company or its Subsidiaries
obtained by them that is not available from other sources, and (ii) will not use
any of such confidential or proprietary information for any purpose other than
in the Investor's capacity as stockholder of the Company.
13.2. Stamp, Tax and Delivery Costs; Payments. The Company shall pay all
stamp and other taxes, if any, that may be payable in respect of the issuance
and sale of any Securities to the Investor, and shall save the Investor harmless
against any loss or liability resulting from nonpayment or delay in payment of
any such tax.
13.3. Counsel Fees. The Company shall reimburse the Investor for its
reasonable fees and disbursements charged by their outside legal counsel in
connection with the preparation, negotiation, execution and delivery of this
Agreement and all other documents delivered in connection herewith, provided
that the aggregate amount of such reimbursement shall not exceed
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$10,000 for this transaction. The Company shall also pay all legal expenses
related to any modifications, waivers, consents or amendments to this Agreement.
13.4. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors and
assigns, except this Agreement and the obligations hereunder may not otherwise
be assigned or disposed of or transferred in any way by the Company without the
consent of the Investor and Mayo.
13.5. Notices. All notices and communications provided for hereunder shall
be deemed to be given when personally delivered or mailed with sufficient
postage by registered or certified mail, return receipt requested, or by
receipted courier service or sent by facsimile transmission:
(a) if to the Company or Mayo, Clearview Cinema Group, Inc., 7 Waverly
Place, Madison, New Jersey, 07940, Telecopy No. (201) 377-4303, Attention: A.
Dale Mayo, or at such other address as may have been furnished to the Investor
in writing by the Company, marked "Attention: President," with a copy to:
Kirkpatrick & Lockhart, One Rockefeller Plaza, New York, New York 10020,
Attention: Warren H. Colodner, Esq.;
(b) if to the Investor, 135 East 57th Street, 26th Floor, New York, New
York 10022, Telecopy No. (212) 980-2630, Attention: Mr. Robert Davidoff, or at
such other address as may be furnished to the Company by the Investor in
writing, with a copy to: Reid & Priest, 40 West 57th Street, New York, New York
10019, Attention: Herbert B. Max, Esq.; or
(c) if to Marks, First New York Realty, 310 Madison Avenue, New York, New
York 10017, Telecopy No. (212) 682-0151.
Any notice or other communication so addressed and so sent shall be deemed
to have been given when mailed or faxed. Failure to send a copy of a notice to
attorneys shall not vitiate any notice sent to a party.
13.6. Governing Law. This Agreement is made in the State of New York and,
except for those provisions mandatorily governed by Delaware law, shall be
governed by and construed in accordance with the laws of said State applicable
to contracts executed and to be performed in said State.
13.7. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
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13.8. Enforcement. As a further inducement to the purchase of the
Securities, the Investor and the Company, acknowledging that they are relying on
the covenants in this Section 13.8, covenant and agree that in any action or
proceeding brought on, under or in connection with or relating to this
Agreement, the Securities or any other document executed or matter contemplated
in connection herewith or therewith, shall and does hereby expressly waive trial
by jury. Each of the Investor and the Company (i) agrees that any legal suit,
action or proceeding arising out of, under, in connection with or relating to
this Agreement, the Securities or any other document executed or matter
contemplated in connection herewith or therewith, may be instituted in any
Federal or State court in the State of New York, City of New York; (ii) waives
any objection it may have now or hereafter to the laying of the venue of any
such suit, action or proceeding; (iii) irrevocably submits to the jurisdiction
of any such Court in any suit, action or proceeding, (iv) agrees not to bring
any such suit, action or proceeding in any other jurisdiction; and (v) consents
to the effecting of service of process in any such suit by the means provided
for notice herein.
13.9. Survival. All representations, warranties covenants and agreements
contained in this Agreement or made by or on behalf of the Company in writing in
connection with the transactions contemplated herein shall survive the Closing,
except that all representations and warranties shall expire one year from the
Closing Date. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant hereto or in connection with
the transactions contemplated herein shall constitute representations and
warranties by the Company hereunder.
13.10. Term. Unless sooner terminated in accordance with their terms, all
of the covenants and other terms of this Agreement shall survive in full force
and effect until the earliest to occur of (i) the liquidation or dissolution of
the Company, (ii) the sale of all or substantially all of the assets of the
Company (iii) the sale of all the shares held by the Stockholders, (iv) the
consummation of an underwritten public offering of the Company's Common Stock
with proceeds to the Company of at least $3,000,000, and (v) the 20th
anniversary of the Closing Date; provided, however, that the provisions of
Section 10 shall not terminate by virtue of a public offering and Section 1.2
and Section 12 shall survive termination of this Agreement.
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13.11. Construction.
(a) The descriptive headings of this Agreement are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.
(b) As used in this Agreement, (i) the term "person" means any individual,
corporation, partnership, joint venture, trust, governmental authority or other
entity, and (ii) the term "shares" means the Shares or any other securities of
the Company whether Common Stock or otherwise.
(c) Any representation or warranty made to the knowledge of any parties
hereto, or as to what any such party is aware of, or statements of similar
purport shall mean that such party has made a reasonable and diligent
investigation of the facts in connection therewith and is making such
representation or warranty based upon the results of such investigation.
(d) The invalidity or unenforceability of any particular provision of this
Agreement in any jurisdiction shall not affect the other provisions hereof or
such provision in other jurisdictions, and this Agreement shall be construed in
such jurisdiction in all respects as if such invalid or unenforceable provisions
were omitted. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision in such jurisdiction there shall be added automatically as a part of
this Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provisions as may be possible and be legal, valid and enforceable.
IN WITNESS WHEREOF, the parties hereto have caused this Investment and
Stockholders Agreement to be duly executed as of the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By:_________________________
A. Dale Mayo
President
CMNY CAPITAL II, L.P.
By: _________________________
Robert Davidoff
General Partner
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_________________________
A. Dale Mayo
_________________________
Brett E. Marks
<PAGE>
EXHIBITS
TO
INVESTMENT AGREEMENT
1.1 Contribution, Exchange and Termination Agreement
3.1 Opinion of Counsel to the Company
3.2 Certified Resolutions of Board of Directors of the
Company
3.3-A Small Business Administration ("SBA") Form 480, Size
Status Declaration
3.3-B SBA Form 652-D
3.3-C SBA Form 1031
4.1-A Certificate of Incorporation, Amendments, if any, and
Certificates of Good Standing for the Company and
Subsidiaries
4.1-B Certificates of Qualification for the Company and
Subsidiaries
4.1-C By-Laws of the Company and Subsidiaries
4.3 Restrictions on capital stock of the Company and
Subsidiaries
4.4 Financial Statements
4.5 Conflicts
4.6-A Litigation
4.6-D Permits, Licenses and Consents
4.9-A Contracts
4.9-D Contract Disputes
4.13 Trademarks and Licenses
7 Use of Proceeds
[Exhibits are not included, but will be provided by the Company upon request.]
Exhibit 10.03
CLEARVIEW CINEMA GROUP, INC.
FIRST AMENDMENT TO
INVESTMENT AND STOCKHOLDERS AGREEMENT
This First Amendment to Investment and Stockholders Agreement is made as of
May ___, 1996, among CLEARVIEW CINEMA GROUP, Inc., a Delaware corporation (the
"Company"), A. Dale Mayo ("Mayo"), Brett E. Marks ("Marks"), Michael C. Rush
("Rush") and CMNY CAPITAL II, L.P., a Delaware limited partnership (the
"Investor").
The Company, Mayo, Marks and the Investor are all parties to the Investment
and Stockholders Agreement dated as of December 21, 1994 (the "Agreement").
Pursuant to an Agreement, dated as of June 20, 1995, Rush agreed to be bound by
the terms and provisions of the Agreement.
The parties hereto have entered into a Stockholders and Registration Rights
Agreement, dated the date hereof among the parties hereto and the other parties
thereto, which Stockholders and Registration Rights Agreement provides, among
other things, for certain rights and obligations of the parties regarding shares
of capital stock held by them, and according desire to amend the Agreement as
set forth herein.
The parties, intending to be bound hereby, agree as following:
1. Amendment of Section 6.
(a) Section 6.1 is hereby amended to add subsection (vii) as follows:
(vii) enter into any agreement with any Lender which shall prohibit
the repayment of interest or principal of monies borrowed from the
Investor or any of its Affiliates; provided, however, that this
Section shall not apply to the Credit Agreement dated as of May __,
1996 among the Company and its Subsidiaries and The Provident Bank,
but shall apply to any amendment to such Agreement which provides for
the extension of the time for final payment of any loan provided
thereunder.
(b) Section 6.2 is hereby deleted in its entirety.
<PAGE>
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2. Amendment of Article 9. Article 9 of the Agreement is hereby deleted in
its entirety.
3. Amendment of Article 10. Article 10 of the Agreement is hereby deleted
in its entirety.
4. Effect of Amendment. Except as expressly amended hereby, the Agreement
shall continue in full force and effect in accordance with the provisions
thereof on the date hereof.
5. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
[REMAINDER OF PAGE BLANK]
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Investment and Stockholders Agreement to be duly executed as of the date first
above written.
CLEARVIEW CINEMA GROUP, INC.
By: ________________________
A. Dale Mayo
President
CMNY CAPITAL II, L.P.
By: ________________________
Robert Davidoff
General Partner
____________________________
A. Dale Mayo
_____________________________
Brett E. Marks
_____________________________
Michael C. Rush
Exhibit 10.04
AGREEMENT
JUNE 20, 1995
WHEREAS, A. Dale Mayo ("Mayo") and the undersigned have executed a Stock
Purchase Agreement, of even date herewith, pursuant to which Mayo sold to the
undersigned 20 shares of Common Stock, par value $0.01 per share, of Clearview
Cinema Group, Inc. (the "Company"), a Delaware corporation (the "Stock Purchase
Agreement Shares"); and
WHEREAS, the Company has executed a Convertible Note in favor of the
undersigned, providing for conversion of the Note on the terms set forth therein
to 20 shares of Common Stock, par value $0.01 per share, of the Company to be
issued pursuant to a Subscription Agreement attached to the Convertible Note as
Exhibit "A" (such shares, if and when issued, the "Subscription Agreement
Shares"); and
WHEREAS, transfer of the Stock Purchase Agreement Shares and issuance of
the Subscription Agreement Shares are restricted pursuant to the terms and
provisions of the Investment and Stockholders Agreement, dated December 21,
1994, by and among the Company, Mayo, Brett E. Marks, and CMNY Capital II, L.P.,
a Delaware limited partnership (the "Investment and Stockholders Agreement");
and
WHEREAS, the parties to the Investment and Stockholders Agreement have
waived compliance with Article 9 of the Investment and Stockholders Agreement in
connection with the transactions contemplated by the Stock Purchase Agreement
and the Subscription Agreement upon condition that the undersigned execute this
Agreement;
NOW, THEREFORE, the undersigned hereby joins in and agrees to be bound by
the terms and provisions of the Investment and Stockholders Agreement, as are
applicable to Stockholders (as defined therein) generally.
___________________________
Michael C. Rush
Exhibit 10.05
STOCKHOLDERS AND REGISTRATION RIGHTS AGREEMENT
This Stockholders and Registration Rights Agreement dated as of May __,
1996 by and among Clearview cinema Group, Inc. (the "Company"), A. Dale Mayo
("Mayo"), Brett E. Marks ("Marks"), CMNY Capital II, L.P. (the "Investor"),
Michael C. Rush ("Rush"), MidMark Capital, L.P. ("MidMark"). and Emerson Cinema,
Inc. ("Emerson"). Each of Mayo, Marks, the Investor, Rush, Midmark, and Emerson
is sometimes referred to herein as a "Stockholder" and collectively as the
"Stockholders."
In consideration of the premises and mutual promises contained herein, the
parties hereto, intending to be legally bound, agree as follows:
1. Board of Directors. (a) The Stockholders and the Company shall vote all
their shares to establish and maintain a Board of Directors of the Company and
each of its subsidiaries of no fewer than five and no more than seven persons
and in accordance with this Section 1. Each of (i) the Investor and MidMark
shall be entitled to nominate that number of directors (but in any event no
fewer than one) as is closest to the proportion of shares of capital stock held
by each of the Investor and MidMark respectively and (ii) Mayo shall be entitled
to nominate the remaining number of directors. By way of example, if the number
of directors shall be six, the Investor shall be entitled to nominate one
director, MidMark shall be entitled to nominate two directors, and Mayo shall be
entitled to nominate three directors. The Stockholders shall vote all their
shares to elect the individuals so nominated to be directors. If Stockholder
that nominated a director gives written notice to all the other Stockholders
that such Stockholder wishes to remove the director nominated by such
Stockholder, the Stockholders shall vote all of their shares in favor of
removing that director. If for any reason any director ceases to hold office,
the Stockholder that nominated that director shall promptly nominate an
individual to fill the vacancy so created for the unexpired term and the
Stockholders shall vote all their shares for the individual nominated to fill
the vacancy.
(b) Any provision in the Company's By-Laws to the contrary notwithstanding,
(i) the Company and each Subsidiary shall in any event provide notice to the
Investor, MidMark and Mayo and any designated director(s) of each of them of
each meeting, whether regular or special, of the Board of Directors of the
Company and each Subsidiary, (ii) no Board Committee of the Company or any
Subsidiary may be constituted without such number of the designated director(s)
of the Investor, MidMark and Mayo as is proportional to the number of designated
director(s) of each of them on the full Board and (iii) the Company and each
<PAGE>
Subsidiary waive any bond with respect to the designated director(s) of each of
the Investor, MidMark or Mayo that might be required under the Company's or any
Subsidiary's By-Laws.
2. Transfers and Issuances of Shares.
2.1 Transfers Only as Permitted by this Agreement. No Stockholder may
transfer any shares in the Company, except as specifically permitted or required
by the provisions of this Agreement, and any purported transfer in any other
manner shall be void.
2.2 Permitted Transfers. Any Stockholder may transfer all or a portion of
his shares to (i) his spouse or other member of his immediate family (including
adopted or foster children) or a trust or other entity for the benefit of the
foregoing, (ii) Mayo, or (iii) a person which is an Affiliate of the Stockholder
by virtue of being controlled by, controlling or under common control with the
Stockholder (any such transferee pursuant to clause (i), (ii) or (iii), a
"Permitted Transferee"); provided, however, that the Permitted Transferee, as a
condition to the transfer, shall execute and deliver a written agreement, in
form and substance satisfactory to the Company, agreeing to be bound by the
provisions of this Agreement applicable to the Stockholder making the transfer.
For the purpose of this Section 2.2, any (i) employee or independent contractor
of Emerson Cinema, Inc. or (ii) spouse or other member of immediate family
(including adopted or foster children) of any current stockholder of Emerson
Cinema, Inc. shall be deemed an Affiliate of Emerson Cinema, Inc.
2.3 Securities Laws. Nothing contained in this Agreement shall be deemed to
permit any Stockholder to transfer any of his shares in the Company in violation
of applicable securities laws. Any transfer shall not be effected until the
transferor has first given written notice to the Company describing briefly the
manner of any such proposed transfer and the proposed transferee, and until (a)
the Company has received from the Stockholder's counsel an opinion that such
transfer can be made without compliance with the registration provisions of the
Act or applicable state securities laws and without the necessity of perfection
of any exemption pursuant to Regulation A adopted pursuant to the Act, or (b)
the Company and the Stockholder shall have complied with Rule 144 promulgated
under the Act (and in this connection the Company shall so comply, as
hereinafter provided, upon request of the Shareholder) or (c) a registration
statement with respect to the Securities being transferred that has been filed
by the Company is declared effective by the Commission or steps necessary to
perfect an exemption from registration under Regulation A or otherwise are
completed.
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<PAGE>
2.4 Restrictive Legends. Unless and until otherwise permitted by this
Article, each instrument evidencing Common Stock held by the Stockholders shall
be endorsed or otherwise imprinted with a suitable legend in substantially the
following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any state
Blue Sky or securities laws. These securities cannot be resold without
registration under such Act or applicable state securities laws or an
exemption therefrom.
In addition, the securities represented by this certificate are
subject to Stockholders Agreement, dated May ___, 1996, among the
Company and the other parties named therein, as the same may be
modified from time to time, and may not be sold, offered, transferred,
assigned, pledged, hypothecated or otherwise disposed of except in
compliance with the provisions of that agreement."
The Company is hereby authorized to place "stop transfer" instructions on its
records or to instruct any transfer agent to prevent the transfer of Securities
except in conformity with this Agreement.
2.5 Right of First Offer.
(a) Except for transfers pursuant to any put right of any Stockholder or
any call right of the Company and except for transfers pursuant to Section 2.2,
if at any time any Stockholder other than MidMark desires to transfer any of his
or its shares in the Company (the "Offered Shares"), the Stockholder shall offer
those shares to the Company and to the other Stockholders (by giving them notice
(the "Offer Notice") stating the number of shares subject to the offer, the
price at which they are offered, and the other terms and conditions of the
offer, including the name and address of the specific offeree(s), if any).
(b) The Company and the other Stockholders shall have the right to purchase
the Offered Shares in the following priority:
(i) first up to all the Offered Shares to
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<PAGE>
Mayo;
(ii) second, to the extent of any remaining Offered Shares, to the
other Stockholders, pro rata based upon the Relative Proportions of each of
them, with each of them possessing the right to purchase any Offered Shares
declined by the other Stockholders pro rata based on the Relative
Proportions of each of them; and
(iii) third, to the extent of any remaining Offered Shares, to the
Company.
For purposes of this Section 2.5, the "Relative Proportion" of any Stockholder
shall mean that portion of the Offered Shares equal to the total number of
Offered Shares multiplied by a fraction the numerator of which is equal to the
number of shares owed by such Stockholder prior to such purchase and the
denominator of which is equal to the number of shares owned by all Stockholders
prior to such purchase that are eligible, and that have elected, to purchase the
Offered Shares. For the purpose of this calculation, shares of the Company's
common stock issuable upon conversion of securities then held by all
stockholders or upon exercise of warrants then held by all stockholders shall be
deemed to be then held by stockholders
(c) The option shall be exercisable by notice (the "Acceptance Notice")
given to the selling Stockholder and to the other Stockholders within 30 days
after the date of the notice from the selling Stockholder. If the Stockholders
and the Company, as applicable, do not exercise their respective options to
purchase all the Offered Shares, none of the Offered Shares shall be purchased
by any of them and, at any time within 180 days after the expiration of the
other Stockholders' options, the selling Stockholder may transfer the Offered
Shares to a third party at a price and on terms and conditions no less favorable
to the selling Stockholder than those stated in the offer. But if the transfer
is not made within that 180-day period, those shares shall again be subject to
this Section 2.5. No transfer to a third party may be made, however, unless the
transferee executes and delivers a written agreement (in form and substance
satisfactory to the Company) to be bound by all the provisions of this Agreement
that were applicable to the Stockholder who transferred the share to him or it.
After any such transfer, each reference in this Agreement to the Stockholders
shall include the transferee.
(d) If an option is exercised under this Section 2.5, the persons
exercising the option shall have a period of 30 days after the date of the
Acceptance Notice to arrange financing and the closing of the purchase shall be
held at the offices of
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<PAGE>
the Company on a date not more than 30 days later. At the closing, the purchaser
or purchasers shall make any payment required to be paid at the closing and, if
called for by the terms of the purchase, shall deliver a promissory note or
notes for the balance, and the selling Stockholder shall deliver to the
purchaser or purchasers a certificate or certificates for the shares being sold,
duly endorsed in blank for transfer and with all requisite stock transfer tax
stamps attached. If a selling Stockholder is the personal representative of a
deceased individual Stockholder, that Stockholder shall also deliver appropriate
estate tax waivers.
2.6 Right to Purchase Additional Shares. If at any time the Company
proposes to issue any of its securities to any person (other than pursuant to a
plan or arrangement providing for the grant of options (or similar rights) to
employees, officers or directors of the Company to purchase shares in the
Company or as additional consideration to a financial institution that is not an
Affiliate of any Stockholder in connection with the making of a loan to the
Company (or its subsidiaries)), each Stockholder shall have the right to
purchase, upon the same terms, a proportionate quantity of those securities (in
the proportion that the number of shares then held by that Stockholder bears to
the total number of shares of the Company's common stock then held by all
stockholders; for this purpose, shares of the Company's common stock issuable
upon conversion of securities then held by all stockholders or upon exercise of
warrants then held by all stockholders shall be deemed to be then held by
stockholders). The Company shall give notice to each Stockholder setting forth
the identity of the person to whom it proposes to issue the securities and the
time, which shall not be fewer than 30 days, within which and the terms and
conditions upon which the Stockholder may purchase the securities, which shall
be the same terms and conditions upon which such person may purchase securities.
2.7 Right of Participation. Except for transfers pursuant to any put right
of any Stockholder or any call right of the Company and except for transfers
pursuant to Section 2.2, if at any time any Stockholder other than MidMark
desires to sell any of his shares pursuant to any offer from any person (the
"Offeror") other than a Permitted Transferee, after the expiration of all option
exercised periods under Section 2.5 without the Offered Shares having been
accepted for purchase, he shall give notice of the proposed sale to the other
Stockholders, setting forth the name and address of the prospective buyer, the
proposed purchase price and the other terms and conditions of the offer. Each of
the other Stockholders shall have the option (exercisable by notice given to the
first Stockholder within 20 days of the notice of the proposed sale under this
Section 2.7)
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<PAGE>
to include in the sale in place of shares that would otherwise be sold to the
Offeror by the first Stockholder, such number (but not less than such number) of
shares as is equal to the total number of shares to be purchased by the Offeror
multiplied by a fraction, the numerator of which is the number of shares held by
such other Stockholder and the denominator of which is the number of issued and
outstanding shares held by all Stockholders other than the first Stockholder. A
Stockholder shall not agree to sell any shares to an Offeror unless the Offeror
is willing to purchase shares in the manner provided in this Section 2.7.
3. Registration of Securities.
3.1 Definitions and Restrictions.
(a) The following constitute definitions of certain of the terms used in
this Article:
(i) "Commission" means the Securities and Exchange Commission.
"Company" means the issuer of Registrable Securities.
(ii) "Holder" means the Holder of any "Registrable Securities" as
hereinafter defined in this Section 3.1 and each such Holder's respective
successor(s), transferee(s) and assign(s).
(iii) "Registrable Securities" and "Securities" means, for purposes of
this Section 3 only, the Common Stock now or hereafter held by the
Stockholders. "Unrestricted Securities" shall not be included in
"Registrable Securities" for purposes of this Article.
(iv) "Unrestricted Securities" means at any time Securities that
either (A) have theretofore been registered, offered and distributed to the
public, or (B) have theretofore been sold or transferred without
registration under said Act in a transaction in which (in the opinion of
counsel for the transferor) such registration was not required and which
did not involve any investment representation or investment undertaking by
the transferee with respect to such securities, such as a transfer pursuant
to Regulation A or Rule 144.
(v) "Registration", "register" and like words mean compliance with all
of the laws, rules and regulations (federal, state and local), and
provisions of agreements and corporate documents pertaining to lawful and
unconditional transfer of securities including registration of any offering
of securities on
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<PAGE>
any form including S-1, S-2, S-3 or S-18, or any SB form, if applicable.
3.2 Requested Registration.
(a) If either Mayo or the Investor shall notify the Company after December
31, 1996, or MidMark shall notify the Company after May __, 1998, that he or it
proposes to sell or transfer any of the Registrable Securities and requests
registration thereof, the Company shall promptly give written notice of such
request to all other Holders and comply with paragraph 3.2(b) below. If the
managing underwriter of the offering being registered pursuant to this paragraph
3.2(a) advises the Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the number of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders of Registrable Securities in proportion, as nearly
as practicable, to the respective amounts thereof held by or issuable to such
Holders at the time of filing the registration statement for which registration
has been demanded. Any provision herein to the contrary notwithstanding, the
right to request registration shall be limited to two registrations initiated by
each of Mayo, the Investor and MidMark; provided, however, that (i) no such
request shall require a registration statement to become effective prior to 180
days after the effective date of a registration statement that shall have been
filed by the Company covering a firm commitment underwritten public offering of
Common Stock in which the Company's shares are to be traded on NASDAQ-NMS or
listed on the American Stock Exchange or the New York Stock Exchange, if the
Company shall theretofore have given written notice of such registration
statement to the Holders of the Registrable Securities pursuant to this
paragraph 3.2(a) or Section 3.6 and shall have thereafter pursued the
preparation, filing and effectiveness of such registration statement with
diligence; and (ii) the Company shall not be required to effect such a
registration unless the Holder(s) requesting registration propose to dispose of
Registrable Securities having an aggregate disposition price (before deduction
of underwriting discounts and expenses of sale) of at least $3,000,000. A right
to demand registration shall be deemed exercised when the registration statement
is effective. If and when the rights hereunder are sought to be exercised, the
Company shall notify all other Holders.
(b) Upon a demand under paragraph 3.2(a) the Company shall (i) file within
90 days a registration statement on the appropriate form referred to in
paragraph 3.2(c) (or any form adopted in lieu thereof) under the Act of the
Registrable Securities that the Company has been requested to register
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<PAGE>
including any requests of Holder(s) subsequent to notice from the Company to the
Holders as provided in (a) above; (ii) if the offering is pursuant to an
underwriting agreement (the underwriter to be the person selected by the Holders
of the majority of the Securities to be registered), enter into an underwriting
agreement with underwriters selected by the Holder(s) requesting an offering of
securities, said agreement to be in such form as the underwriter shall require
(and which would not materially and adversely affect the Company), and enter
into indemnification as provided in Section 3.6 hereof; (iii) use its best
efforts to have such registration statement declared effective and remain
effective for at least 180 days; (iv) notify the Holder(s) promptly after it
shall receive notice thereof, of the time when such registration statement has
become effective or any supplement to any prospectus forming a part of such
registration statement has been filed; (v) notify the Holder(s) promptly of any
request by the Commission for the amending or supplementing of such registration
statement or prospectus or additional information; (vi) prepare and file with
the Commission, promptly upon any Holder's request, any amendment or supplement
to such Registration Statement or prospectus that, in the opinion of counsel for
the Holder(s), may be necessary or advisable in connection with the distribution
of the Registrable Securities by the Holder(s); (vii) prepare and promptly file
with the Commission and promptly notify the Holder(s) of the filing of such
amendment or supplement to such registration statement or prospectus as may be
necessary to correct any statement or omission; (viii) in case any Holder(s) is
(are) required to deliver a prospectus, at a time when the prospectus then in
effect may no longer be used under the Act, prepare promptly upon request such
amendment or amendments to such registration statement and such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 3 of the Act; (ix) not file any amendment or supplement to the
Registration Statement or prospectus to which any Holder(s) shall reasonably
object after having been furnished a copy at a reasonable time prior to the
filing thereof; (x) advise each Holder promptly after it shall receive notice or
obtain knowledge thereof of the issuance of any stop order by the Commission
suspending the effectiveness of any such Registration Statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued; (xi) use its best efforts to
qualify the Securities for sale under the securities laws of such states as such
Holder(s) may reasonably request, except that it shall not be required in
connection therewith or as a condition thereof to execute a general consent to
service or qualify to do business in any such states or otherwise to subject
itself to taxation therein solely because of such qualification; (xii) furnish
to each Holder as soon as available copies of any such registration
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<PAGE>
statement and each preliminary or final prospectus, or supplement, required to
be prepared pursuant to this Section 3, all in such quantities as each Holder
may from time to time reasonably request; and (xiii) refrain from issuing, or,
selling, or registering for sale by any other security holder, within the 90-day
period commencing 30 days before and ending 60 days after the effective date of
the registration statement complying with such demand, any securities not held
by the Holders demanding registration.
3.3 Information to be Furnished by Holder. Each Holder shall furnish to the
Company in writing all information within the Holder's possession or knowledge
required by the applicable rules and regulations of the Commission and by any
applicable state securities or Blue Sky Laws concerning the proposed method of
sale or other disposition of the Securities, and the identity of and
compensation to be paid to any proposed underwriter(s) to be employed in
connection therewith.
3.4 Costs and Expenses. The Company shall pay all costs and expenses for
all registrations under this Section 3. The costs and expenses, include, without
limitation, the reasonable fees and expenses of the Company's counsel, one
special counsel selected by the Holders offering such Registrable Securities,
the fees and expenses of accountants and auditors and all other costs and
expenses incident to the preparation, printing and filing of any and all
documents to be filed under the Act, each prospectus and all amendments and
supplements thereof, the costs incurred in connection with the qualification of
the Registrable Securities and the offering thereof under the laws of various
jurisdictions (including fees and disbursements), the cost of listing on any
exchange, the cost of furnishing to each Holder such copies as the Holder shall
reasonably request of any registration statement, each preliminary prospectus,
the final prospectus and each amendment and supplement thereto and all expenses
incident to delivery of the Registrable Securities to any underwriter or
underwriters; but not the commissions or discounts payable by the Holder(s) to
such underwriter(s).
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<PAGE>
3.5 Incidental Registration.
(a) If the Company shall at any time or times propose for itself or any
other person the registration under the Act of any securities of the Company or
propose an offering under Regulation A or similar regulation (or on any other
form for the general registration of securities), the Company shall give written
notice of such proposed registration to all of the Holders. The Company shall
include in any such registration statement and any related underwriting
agreements such Registrable Securities of any Holder who within 30 days after
the giving of such notice shall request such inclusion. Each such Holder shall
be entitled to all the benefits of this Article. The right to registration
provided in this Section 3.5 is in addition to and not in lieu of the demand
registration rights provided in Section 3.2; all incidental registrations shall
be at the Company's expense as provided in Section 3.4. The provisions of this
Section 3.5 apply (i) to an offering of any securities pursuant to a merger,
consolidation or acquisition of assets transaction and (ii) even though the
Holder(s) requesting incidental registration is (are) or may be free, at the
time, to sell any or all of the Registrable Securities with respect to which
such registration was requested in accordance with either (A) Rule 144 (or any
similar rule or regulation) promulgated under the Act. (B) The right to
incidental registration shall apply to any registration proposed by the Company
notwithstanding that it is proposed subsequent to a demand under Section 3.2;
and upon the Company's proposal, any registration then in process or effective
under Section 3.2 shall, at the option of the Holder(s) having requested
registration, be and become a registration under Section 3.5. If the managing
underwriter of the offering being registered pursuant to this paragraph 3.2
advises the Holders in writing that marketing factors require a limitation of
the number of shares to be underwritten, then the number of Registrable
Securities that may be included in the underwriting shall be allocated among all
Holders of Registrable Securities in proportion, as nearly as practicable, to
the respective amounts thereof held by or issuable to such Holders at the time
of filing the registration statement for which registration has been demanded.
3.6 Indemnification by Company. The Company shall, to the maximum extent
permitted by law, indemnify and hold harmless each Holder registering an
offering of Registrable Securities and any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or such
underwriter, against any losses, claims, damages or liabilities, judgments,
settlements, awards and expenses (including attorneys' fees) (collectively
"Losses"), to which such Holder or underwriter or
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<PAGE>
such controlling person may become subject, under the Act or otherwise, insofar
as such Losses are caused by, based upon, or arise out of or relate to any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement filed under the Act, any prospectus contained
therein, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and reimburse each such
Holder, underwriter and controlling person for any legal or other expenses
incurred by such Holder, underwriter or such controlling person in connection
with investigating or defending against any such Loss; provided, however, that
the Company shall not be liable in any such case to the extent that any such
Loss arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with written
information furnished by the Holder or underwriter specifically for use in the
preparation of such prospectus or if, in respect to such statement, alleged
statement, omission or alleged omission, the final prospectus corrected such
statement, alleged statement, omission or alleged omission and a copy of such
final prospectus had not been sent or given at or prior to the confirmation of
the sale with respect to which such Loss relates.
3.7 Indemnification by Holder. Each Holder registering an offering of
Registrable Securities shall, to the maximum extent permitted by law, indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed said registration statement, and any underwriter and each person, if
any, who controls the Company or the underwriter, within the meaning of the Act,
against any Loss to which the Company, or any such director, officer,
underwriter or controlling person may be or become subject under the Act or
otherwise, insofar as such Loss is caused by any untrue or alleged untrue
statement of any material fact contained in said registration statement, said
prospectus, or amendment or supplement thereto, or arises out of or is based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such Loss
is a result of an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished by the Holder for use in the preparation of the
registration statement; or arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any such
preliminary prospectus even if, in respect to such statement, alleged statement,
omission or alleged omission, the final prospectus corrected such statement,
alleged statement, omission or alleged omission is a copy of such
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<PAGE>
final prospectus had not been sent or given at or prior to the confirmation of
the sale with respect to which such Loss relates. Each Holder's obligation under
this provision shall be several and not joint and in no event exceed the net
proceeds received on account of the offering to which the indemnity relates.
3.8 Notice to Indemnitor. Promptly after receipt by an indemnified party of
notice of the commencement of any action indemnifiable hereunder, such
indemnified party shall, if a claim thereof is to be made against the
indemnifying party pursuant hereto, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability that it may have to any indemnified party. In
case such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, and the indemnifying party,
without acknowledging any validity to the underlying claim, acknowledges its
liability to indemnify the indemnified party therefor, the indemnifying party
shall be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party, similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
but may not settle such action without the consent of the indemnified party. If
the indemnifying party undertakes the defense of any matter for which indemnity
is claimed, and if the indemnified party wishes nevertheless to retain counsel
to represent it in such matter, the fees of such counsel shall be the
responsibility solely of the party retaining such counsel unless the indemnified
party has conflicting or separate defenses in such action, in which case its
attorneys' fees will be borne by the indemnifying party.
3.9 Additional Obligations. If, in order to effect a registration
statement, any Registrable Securities require declaration of or registration
with or approval of any federal or state governmental official or authority
(other than registration under the Act or qualifications or registration under
state securities or Blue Sky laws) before such Registrable Securities may be
sold, the Company at its own expense shall take all reasonable action in
connection with such registration, declaration or approval and will use its best
efforts to cause such Registrable Securities to be duly registered or approved
as may be required; provided, however, that in connection therewith or as a
condition thereof, the Company shall not be required to execute a general
consent to service or to qualify to do business in any such state. The foregoing
shall not include any regulatory requirements applicable solely to any Holder.
3.10 Rule 144 Covenants. With a view to making available to each Holder the
benefits of Rule 144 promulgated
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<PAGE>
under the Act (which term as used herein includes the present Rule 144 and any
other, additional, substitute, supplement, or analogous rule or regulation of
the Commission that may at any time permit a Holder to sell securities to the
public exempt from registration), the Company agrees, after consummation of a
registered public offering, to maintain registration of its Common Stock under
Section 12(g) or 15(d) of the Securities Exchange Act of 1934, as amended, as
required by law, and (i) to file with the Commission in a timely manner all
reports and other documents required to be filed by an issuer of securities
registered under the Securities Exchange Act of 1934, as amended, so as to
maintain the availability of Rule 144 to the Holders, notwithstanding that the
Company would not have to maintain such filing but for this provision of the
Agreement; (ii) at its expense, forthwith upon any Holder's request, to deliver
to any Holder a certificate, signed by one of the Company's principal officers,
stating (A) Company's name, address and telephone number (including area code),
(B) Company's Internal Revenue Service identification number, (C) Company's
Securities and Exchange Commission file number, (D) the number of shares of
Common Stock outstanding as shown by the most recent report or statement
published by Company and (E) the Company has filed the reports required to be
filed under the Securities Exchange Act of 1934, as amended, for a period of at
least 90 days prior to the date of such certificate and in addition has filed
the most recent annual report required to be filed thereunder and such other or
additional information as shall be necessary to made available to the Holder the
ability to offer and sell the maximum number of shares under Rule 144; and (iii)
when Rule 144 is being complied with, to deliver securities not bearing the
legend prescribed by this Agreement or any other legend restricting transfer for
such Securities, as may be requested from time to time by any Holder subject to
this Agreement.
4. Miscellaneous.
4.1 Notices. All notices and communications provided for hereunder shall be
deemed to be given when personally delivered or mailed with sufficient postage
by registered or certified mail, return receipt requested, or by receipted
courier service or sent by facsimile transmission:
(a) if to the Company or Mayo, Clearview Cinema Group, Inc., 7 Waverly
Place, Madison, New Jersey, 07940, Telecopy No. (201) 377-4303, Attention: A.
Dale Mayo, or at such other address as may have been furnished to the Investor
in writing by the Company, marked "Attention: President," with a copy to:
Kirkpatrick & Lockhart, One Rockefeller Plaza, New York, New York 10020,
Attention: Warren H. Colodner, Esq.;
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<PAGE>
(b) if to the Investor, 135 East 57th Street, 26th Floor, New York, New
York 10022, Telecopy No. (212) 980-2630, Attention: Mr. Robert Davidoff, or at
such other address as may be furnished to the Company by the Investor in
writing, with a copy to: Reid & Priest, 40 West 57th Street, New York, New York
10019, Attention: Herbert B. Max, Esq.;
(c) if to Marks, First New York Realty, 310 Madison Avenue, New York, New
York 10017, Telecopy No. (212) 682-0151;
(d) if to Rush, 1 Kenneth Court, Summit New Jersey, 07901, Telecopy: (908)
522 - 0206; or
(d) if to Emerson, to John Nelson, 93 Hope Road, Blairsville, NJ 07825 with
a copy to Jack Wenarsky, Esq., 225 Route 10, Succasunna, New Jersey 07876,
Telecopy: (201) 927-5252.
Any notice or other communication so addressed and so sent shall be deemed
to have been given when mailed or faxed. Failure to send a copy of a notice to
attorneys shall not vitiate any notice sent to a party.
4.2 Remedies. The parties will be irreparably damaged if this Agreement is
not specifically enforced. If any dispute arises concerning any transfer or
other disposition of shares under this Agreement, an injunction may be issued
restraining the transfer or other disposition, pending the determination of the
controversy, without any bond or other security being required. If any dispute
arises concerning the right or obligation to purchase or sell or vote any shares
under this Agreement, the right or obligation shall be specifically enforceable
in a court
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<PAGE>
of competent jurisdiction upon application or petition by the Company or any
Stockholder.
4.3 Confidentiality. Except as required by law, the Stockholders shall
treat as confidential all information regarding the Company now or hereinafter
received by them and shall not use any such information for any purposes other
than in their dealings with the Company.
4.4 Entire Agreement; Modification of Agreement; Consents. This Agreement
constitutes the entire agreement among the parties hereto. Any provision in this
Agreement to the contrary notwithstanding, changes in or additions to this
Agreement may be made and/or compliance with any covenant or condition herein
set forth may be omitted, only upon written consent of the parties hereto.
4.5 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, and their respective permitted successors
and assigns.
4.6 Governing Law. This Amendment shall be construed and enforced in
accordance with the laws of Delaware without regard to any principles of
conflicts of law.
4.7 Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
4.8 Term. Unless sooner terminated in accordance with their terms, all of
the covenants and other terms of this Agreement shall survive in full force and
effect until the earliest to occur of (i) the liquidation or dissolution of the
Company, (ii) the sale of all or substantially all of the assets of the Company
(iii) the sale of all the shares held by the Stockholders, (iv) the consummation
of an underwritten public offering of the Company's Common Stock with gross
proceeds to the Company of at least $5,000,000, and (v) the 20th anniversary of
the Closing Date; provided, however, that the provisions of Section 3 shall not
be terminated by a public offering.
4.9 Construction.
(a) The descriptive headings of this Agreement are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.
(b) As used in this Agreement, (i) the term "person" means any individual,
corporation, partnership, joint venture, trust, governmental authority or other
entity, and (ii) the term "shares" means the Shares or any other securities of
the Company whether Common Stock or otherwise.
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<PAGE>
(c) The invalidity or unenforceability of any particular provision of this
Agreement in any jurisdiction shall not affect the other provisions hereof or
such provision in other jurisdictions, and this Agreement shall be construed in
such jurisdiction in all respects as if such invalid or unenforceable provisions
were omitted. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision in such jurisdiction there shall be added automatically as a part of
this Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provisions as may be possible and be legal, valid and enforceable.
IN WITNESS WHEREOF, the parties hereto have caused this Investment and
Stockholders Agreement to be duly executed as of the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By: ________________________
A. Dale Mayo
President
CMNY CAPITAL II, L.P.
By: ________________________
Robert Davidoff
General Partner
EMERSON CINEMA, INC.
By: ________________________
____________________________
A. Dale Mayo
____________________________
Brett E. Marks
____________________________
Michael C. Rush
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<PAGE>
MIDMARK CAPITAL, L.P.
By: MidMark Associates, L.P.
General Partner
By:_________________________
Denis Newman,
President
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Exhibit 10.06
AGREEMENT
JULY 31, 1996
WHEREAS, the undersigned has executed a Stock Subscription Agreement dated
the date hereof pursuant to which the undersigned has purchased 16 shares of
Common Stock, par value $0.01 per share, of Clearview Cinema Group, Inc. (the
"Company"), a Delaware corporation (the "Shares"); and
WHEREAS, transfer of the Shares is restricted pursuant to the terms and
provisions of the Stockholders and Registration Rights Agreement, dated as of
May 29, 1996, by and among the Company, and its stockholders (the "Stockholders
Agreement"); and
WHEREAS, the parties to the Stockholders Agreement have waived compliance
with Article 2 of the Stockholders Agreement in connection with the transactions
contemplated by the Subscription Agreement upon condition that the undersigned
execute this Agreement;
NOW, THEREFORE, the undersigned hereby joins in and agrees to be bound by
the terms and provisions of the Stockholders Agreement, as are applicable to
Stockholders (as defined therein) generally.
_____________________________
Paul Kay
_____________________________
Cindy Kay
Exhibit 10.08
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of May, 1996, by
and between Clearview Cinema Group, Inc., a Delaware Corporation (the
"Company"), and A. Dale Mayo (the "Employee").
WITNESSETH:
WHEREAS, the Company wishes to employ the Employee as President, Chief
Executive Officer and Chairman of the Board of Directors of the Company for the
period provided in this Agreement, and the Employee is willing to serve in the
employ of the Company on a full-time basis for said period, upon the terms and
conditions set below; and
WHEREAS, the execution and delivery of this Employment Agreement is a
condition to closing under that certain Preferred Stock and Warrant Purchase
Agreement dated as of the date hereof between the Company and MidMark Capital,
L.P.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and intending to be legally bound hereby, the parties agree as
follows:
1. Employment. The Company agrees to employ the Employee, and the Employee
agrees to be employed by the Company, for the period stated in Paragraph 3
hereof and upon the other terms and conditions herein provided.
2. Position and Responsibilities. The Employee shall serve as President,
Chief Executive Office, and Chairman of the Board of Directors of the Company.
The Employee shall be responsible for such duties as are commensurate with his
office and as may from time to time be reasonably assigned to the Employee by
the Board, as the case may be.
3. Term. The term of this Agreement shall be seven years; provided,
however, that the Agreement shall thereafter be automatically extended for
successive one-year terms unless notice shall be given in writing by either of
the Company or Employee at least six months prior to the end of such term (as it
may be extended) that such party desires to terminate this Agreement.
4. Compensation, Reimbursement of Expenses and Vacation.
<PAGE>
(a) Salary and Bonus. For all services rendered by the Employee in any
capacity during his employment under this Agreement, including, without
limitation, service as an executive, officer, director, or member of any
committee of the Company or of any subsidiary, affiliate, or division thereof,
the Company shall pay the Employee as compensation (i) a salary at the rate of
not less than $120,000 per year and (ii) a bonus each year of one percent of
gross revenue in excess of $7,000,000; provided, however, that such bonus
together with Employee's salary shall not exceed $750,000 in any given year.
Such salary shall be payable in accordance with the customary payroll practices
of the Company, but in no event less frequently than monthly, and any such bonus
shall be payable monthly based on estimated revenues and shall be adjusted at
the end of each year.
(b) Reimbursement of Expenses. The Company shall pay, or reimburse the
Employee for, all reasonable travel, entertainment and other expenses incurred
by the Employee in the performance of his obligations under this Agreement.
5. Participation in Benefit Plans. The payments provided in Paragraph 4
hereof are in addition to any benefits to which the Employee may be, or may
become, entitled under the terms of any present or future employee benefit plan
or program of the Company.
6. Termination. (a) The Company shall have the right to terminate this
Agreement prior to the expiration of the term set forth in Section 3 only the
conviction of Employee of theft or embezzlement of money or property, fraud,
unauthorized appropriation of any tangible or intangible assets or property or
any other felony involving dishonesty or moral turpitude. The Company shall have
no obligations to the Employee for any period subsequent to the effective date
of any termination of this Agreement pursuant to this paragraph 6, except for
the payment of salary and benefits earned prior to such termination.
(b) In the event that the Company terminates the Employee's employment for
reason(s) other than those set forth in Section 6(a) prior to expiration of this
Agreement under Paragraph 3 hereof, the Employee shall be entitled to continue
to receive his salary (including bonuses calculated as set forth in Section 4
hereof, until the expiration of this Agreement under Paragraph 3 hereof. During
such period, the Employee shall have a duty to seek other employment, but shall
not be required to accept any position other than a position (i) as a senior
executive officer with the same general responsibilites that the Employee
possessed at the Company at the time of the Employee's termination from the
Company and (ii) with a company equal or larger in earnings and tangible net
worth than the Company at the time of the Employee's termination. The Employee
may, however, accept any full-time position at any level and at any salary with
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<PAGE>
any entity, profit or non-profit, and the Employee, by accepting such
employment, shall be conclusively deemed to have fulfilled his duty to seek
employment under this Section 6. The Company shall be entitled to reduce the
salary (including bonus) paid to the Employee during his employment by another
entity by an amount equal to the amount earned by the Employee from any such
Employment during such period. In the event that a dispute shall arise as to
this Section 6(b), (i) the Company shall continue to pay the Employee's salary
(including bonus) into an escrow account not under the control of the Company
and (ii) the Company shall pay the legal fees and expenses incurred by the
Employee in litigating any dispute under this Section 6 in the event that the
Employee prevails in such dispute.
7. Disability. If the Employee is completely disabled in the written
opinion of a physician mutually agreeable to the Employee (or his legal
representative) and the Company, or in the event that no such physician is
chosen, if the Employee is unable to perform his services on substantially a
full-time basis for a period in excess of six consecutive months or 180 days in
any one year period, the Company shall be entitled to reduce the salary
(including bonus) paid to the Employee by subtracting from such salary and bonus
(i) the salary of such person as is hired by the Company to perform the office
of President, Chief Executive Officer, and Chairman of the Board of Directors
and (ii) any amounts received by the Employee from any disability insurance
policy maintained by the Company in favor of the Employee; provided, however,
that in no event shall the salary (including bonus) paid to the Employee plus
any disability insurance proceeds actually paid to the Employee be less than
$120,000 per year.
8. Death. The Employee's employment shall be terminated upon the Employee's
death; provided, however, that in such event the Company shall pay to the
Employee's estate an amount equal to the Employee's salary (plus bonus based on
the performance of the Company during the six-month period immediately following
the Employee's death) for a six-month period immediately following the
Employee's death. Such payment may be made in a lump sum (based on an estimate
of the applicable bonus amount, to be adjusted, if necessary, following the end
of the six-month period) immediately following such termination or may be paid
over the six-month period in accordance with the normal payroll practices of the
Company.
9. Confidential Information; Non-Competition; Enforceability.
(a) The Employee shall not at any time, whether before or after the
termination of this Agreement, divulge, furnish or make accessible to anyone
(other than in the ordinary course of the business of the Company or any
subsidiary thereof) any
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<PAGE>
knowledge or information with respect to confidential or secret designs,
processes, formulae, plans, devices, material, or research or development work
of the Company or any subsidiary thereof, or with respect to any other
confidential or secret aspect of the business of the Company or any subsidiary
thereof.
(b) For a period of three years after the termination of this Agreement,
the Employee shall not, directly or indirectly, engage or become interested in
(as owner, stockholder, partner or otherwise) the operation of any business
similar to or in competition (direct or indirect) with the Company within a 50
mile radius of any theater then owned and/or operated by the Company or any of
its subsidiaries. If any court construes the covenant in this Section 7 or any
part thereof, to be unenforceable because of its duration or the area covered
thereby, the court shall have the power to reduce the duration or area to the
extent necessary so that such provision is enforceable.
(c) The covenants set forth in this Section 9 shall be deemed separable and
the invalidity of any covenant shall not affect the validity or enforceability
of any other covenant. If any period of time or limitation of geographical area
stated in paragraph 9(b) is longer or greater than the maximum period or
geographical area permitted by law, then the period of time or geographical area
stated therein shall be deemed to be such maximum permissible period of time or
geographical area, as the case may be. All parties recognize that the foregoing
covenants are a prime consideration for the Company to enter into this Agreement
and that the Company's remedies at law for damages in the event of any breach
shall be inadequate. In the event that there is a breach of any of the foregoing
covenants, the Company, shall be entitled to institute and prosecute proceedings
in any court of competent jurisdiction to enforce specific performance of any
such covenants by the Employee or to enjoin the Employee from performing acts in
breach of any such covenant.
10. Tax Withholding. The Company may withhold from any benefits payable
under this Agreement all federal, state, local or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
11. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the Company or any predecessor of the Company and the
Employee.
12. General Provisions.
(a) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee or his beneficiaries or legal
representatives without the
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<PAGE>
Company's prior written consent; provided, however, that nothing in this
Paragraph 9(a) shall preclude (i) the Employee from designating a beneficiary to
receive any benefit payable hereunder following his death, or (ii) the
executors, administrators, or other legal representatives of the Employee or his
estate from assigning any rights hereunder to the person or persons entitled
thereto.
(b) No Attachment. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
(c) Binding Agreement. This Agreement shall be binding upon, and inure to
the benefit of, the Employee and the Company and their respective permitted
successors and assigns.
13. Modification and Waiver.
(a) Amendment of Agreement. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto, and approved by
a majority of the members of the Board of Directors who were not nominated by
Employee.
(b) Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
14. Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall to the full
extent consistent with law continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law continue in full force and effect
15. Headings. The headings of sections herein are included solely for
convenience of reference and shall not
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<PAGE>
control the meaning or interpretation of any of the provisions of this
Agreement.
16. Governing Law. This Agreement has been executed and delivered in the
State of New Jersey, and its validity, interpretation, performance, and
enforcement shall be governed by the laws of said State other than the conflict
of laws provisions of such laws.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its officers thereunto duly authorized, and the Employee has signed this
Agreement, all as of the day and year first above written.
ATTEST: CLEARVIEW CINEMA GROUP, INC.
_______________________________ By:_________________________
Title:_________________________ Title:______________________
WITNESS: Employee
_______________________________ ____________________________
A. Dale Mayo
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Exhibit 10.09
MANAGEMENT AND MONITORING FEE AGREEMENT
THIS AGREEMENT is made as of May 29, 1996, between Clearview Cinema Group,
Inc., a Delaware corporation (the "Company") and MidMark Associates, Inc., a New
Jersey corporation ("MidMark").
WHEREAS, the Company is engaged in the business of the ownership and
operation of cinemas, and MidMark is experienced in business and organizational
strategy, and financial and investment management; and
WHEREAS, the Company desires to retain MidMark to provide business and
organizational strategy, and financial and investment management services to the
Company, upon the terms and conditions hereinafter set forth, and MidMark is
willing to undertake such obligations;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Appointment.
The Company hereby engages MidMark and MidMark hereby agrees under the
terms and conditions set forth herein to provide certain services to the Company
as described in Section 2 hereof.
2. Duties of MidMark; Other Services.
(a) MidMark shall provide the Company with business and organizational
strategy, and financial and investment management services. The Company is
free to accept or reject any advice rendered to it by MidMark hereunder.
(b) In addition, officers of MidMark shall serve as directors of the
Company upon nomination by MidMark Capital, L.P. and election pursuant to
the terms of that certain Stockholders and Registration Rights Agreement
dated as of the date hereof by and among the Company and its stockholders,
and the Management Fee provided for herein shall serve as full compensation
for such services, in lieu of any separate or additional directors' fees.
3. Compensation of MidMark.
During the term of this Agreement and subject to Section 3(c) below, the
Company agrees to pay MidMark, on a
<PAGE>
monthly basis, a management fee (the "Management Fee") in cash determined as
follows:
(a) Until the second anniversary date of this Agreement, the
Management Fee shall be paid at the rate of $50,000 per year.
(b) On and after the second anniversary date of this Agreement, the
Management Fee shall be paid at a rate equal to one-half (50%) of the "base
compensation" paid to the President or, if different, the Chief Executive
Officer of the Company at such time.
(c) Notwithstanding the foregoing, if MidMark Capital, L.P., an
affiliate of MidMark which is today purchasing 684 newly-issued shares of
Company Class A Convertible Preferred Stock and which is contemplated to
purchase an additional 293 newly-issued shares of Company Class A
Convertible Preferred Stock, shall sell or otherwise transfer (other than a
transfer for no consideration to an affiliate) all or any portion of such
shares or the shares of Common Stock into which such shares are
convertible, then it is contemplated that the officers of MidMark serving
as directors shall take a correspondingly lesser role in the management and
oversight of the Company; therefore, the Management Fee which would
otherwise be payable shall be reduced by a percentage which represents the
difference between the highest number of shares owned by MidMark and the
number of shares owned by MidMark following such sale or transfer.
4. Term and Termination of Agreement.
This Agreement shall be for a term of seven years commencing on the date
hereof (provided, however, that this Agreement shall terminate sooner if and
when the Management Fee shall cease to be payable pursuant to the provisions of
Section 3(c)).
5. Liability.
MidMark is not and never shall be liable to any creditor of the Company and
the Company agrees to indemnify and hold MidMark harmless from and against any
and all such claims of alleged creditors and against all costs, charges and
expenses (including reasonable attorneys' fees and expenses) incurred or
sustained by it or the other party in connection with any action, suit or
proceeding to which it may be made a party by any alleged creditor. The Company
also agrees to indemnify and hold MidMark harmless from and against any and all
liabilities, losses or damages suffered, paid or incurred by MidMark arising out
of, or in any way connected with, or as a result of, the execution and delivery
of this Agreement, or the performance by MidMark of the
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<PAGE>
Services hereunder, except for claims arising out of or related to the
negligence or willful misconduct of MidMark.
6. Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties' successors and permitted assigns. However, neither this Agreement nor
any of the rights of the parties hereunder may be transferred or assigned by
either party hereto. Any attempted transfer or assignment in violation of this
Section 6 shall be void.
7. Relationship of the Parties.
Nothing contained in this Agreement is intended or is to be construed to
constitute MidMark and the Company as partners or joint venturers or either
party as an employee of the other party. Neither party hereto shall have any
express or implied right or authority to assume or create any obligations on
behalf of or in the name of the other party or to bind the other party to any
contract, agreement or undertaking with any third party.
8. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions
hereof may be waived, only by a written instrument signed by the parties
hereto or, in the case of waiver, by the party waiving compliance.
(b) Notices. Any notice or other communication required or which may
be given hereunder shall be in writing and shall be delivered personally,
telecopied, or sent by certified, registered, or express mail, postage
prepaid, to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice, and shall be
deemed given when so delivered personally or telecopies, or if mailed, two
days after the date of mailing, as follows:
(i) if to the Company, to:
Mr. A. Dale Mayo
Chief Executive Officer
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: 201-377-4303
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<PAGE>
(ii) if to MidMark, to:
MidMark Associates, Inc.
466 Southern Boulevard
Chatham, New Jersey 07928
Telecopy: 201-822-8911
(c) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior contracts and other agreements.
(d) Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation
of this Agreement.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(f) Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed and enforced in accordance with and subject to,
the laws of the State of New Jersey applicable to agreements made and to be
performed entirely within such State. Each of the parties hereto consents
and agrees to the jurisdiction of any State or Federal court sitting in the
County of Morris, State of New Jersey, and waives any objection based on
venue or forum non conveniens with respect to any action instituted
therein, and agrees that any dispute concerning the conduct of any part in
connection with this Agreement or otherwise shall be heard only in the
courts described above.
(g) Severability. If any term, provision, covenant or restriction of
this Agreement, or any part thereof, is held by a court of competent
jurisdiction or any foreign, federal, state, county or local government or
any other governmental, regulatory or administrative agency or authority to
be invalid, void, unenforceable or against public policy for any reason,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
CLEARVIEW CINEMA GROUP, INC.
By:
---------------------
Name: A. Dale Mayo
Title: President
MIDMARK ASSOCIATES, INC.
By:
---------------------
Name: Dennis Newman
Title: President
- 5 -
Exhibit 10.10
CREDIT AGREEMENT
BY AND AMONG
CLEARVIEW CINEMA GROUP, INC.,
CCC MADISON TRIPLE CINEMA CORP.
CCC CHESTER TWIN CINEMA CORPORATION
CCC MANASQUAN CINEMA CORPORATION
CLEARVIEW THEATRE GROUP, INC.
CCC HERRICKS CINEMA CORP.
CCC PORT WASHINGTON CINEMA CORP.
CCC GRAND AVENUE CINEMA CORP.
CCC WASHINGTON CINEMA CORP.
CCC ALLWOOD CINEMA CORP.
CCC EMERSON CINEMA CORP.
CCC NEW CITY CINEMA CORP.
343-349 SPRINGFIELD AVENUE CORP.
Borrowers
THE PROVIDENT BANK,
Agent
AND
VARIOUS LENDERS DESCRIBED HEREIN
dated as of
May 29, 1996
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TABLE OF CONTENTS
Page
ARTICLE I. INTERPRETATION...................................................7
Section 1.1. Provisions Pertaining to Definitions.........................7
Section 1.2. Definitions..................................................7
ARTICLE II. THE LOANS......................................................25
Section 2.1. Commitments.................................................25
Section 2.2. Making the Loans............................................25
Section 2.3. Draws, Advances and Settlement of Payments and Advances.....26
Section 2.4. The Notes...................................................27
Section 2.5. Interest Payable on the Loans...............................27
Section 2.6. Repayments and Prepayments of Principal.....................27
Section 2.7. Payments and Computations...................................31
Section 2.8. Payments to be Free of Deductions...........................32
Section 2.9. Use of Proceeds.............................................33
Section 2.10. Additional Costs, Etc......................................33
Section 2.11. Agent and Lender Statements................................34
Section 2.12. Allocation of Liability....................................34
ARTICLE III. SECURITY AGREEMENT............................................35
Section 3.1. Security Interest...........................................35
Section 3.2. Mortgages and Liens on Real Property........................35
Section 3.3. Pledge of Stock.............................................36
Section 3.4. Financing Statements; Additional Documents..................36
Section 3.5. Accounts; Chattel Paper; Lease Agreements...................37
Section 3.6. Release of Collateral.......................................37
ARTICLE IV. CONDITIONS PRECEDENT TO DISBURSEMENTS..........................37
Section 4.1. Conditions Precedent to Initial Closing.....................37
Section 4.2. Conditions Precedent to Subsequent Loans....................42
Section 4.3. Post Closing Requirements...................................42
ARTICLE V. GENERAL REPRESENTATIONS AND WARRANTIES..........................44
Section 5.1. Existence, Etc..............................................44
Section 5.2. Authority, Etc..............................................45
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Section 5.3. Binding Effect of Documents, Etc............................46
Section 5.4. No Events of Default, Etc...................................46
Section 5.5. Financial Statements........................................46
Section 5.6. Changes; None Adverse.......................................47
Section 5.7. Title to Assets; Material Leases............................47
Section 5.8. Intellectual Property.......................................47
Section 5.9. Indebtedness for Borrowed Money.............................47
Section 5.10. Litigation.................................................48
Section 5.11. No Materially Adverse Contracts............................48
Section 5.12. Taxes and Tax Returns, Etc.................................48
Section 5.13. Contracts with Affiliates, Etc.............................49
Section 5.14. Employee Benefit Plans.....................................49
Section 5.15. Governmental Regulation....................................49
Section 5.16. Securities Activities......................................49
Section 5.17. Disclosure.................................................50
Section 5.18. No Material Default........................................50
Section 5.19. Environmental Conditions...................................50
Section 5.20. Licenses and Permits.......................................51
Section 5.21. General Collateral Representation..........................51
ARTICLE VI. AFFIRMATIVE COVENANTS OF BORROWER..............................52
Section 6.1. Reports and Other Information...............................52
Section 6.2. Maintenance of Property; Authorization; Insurance...........56
Section 6.3. Key Man Life Insurance......................................57
Section 6.4. Corporate Existence.........................................57
Section 6.5. Inspection Rights...........................................57
Section 6.6. Payment of Taxes and Claims.................................57
Section 6.7. Compliance with Laws........................................58
Section 6.8. Notice of Other Events......................................58
Section 6.9. Communication with Accountants..............................58
Section 6.10. Payment of Indebtedness....................................59
Section 6.11. Performance of Obligations Under Certain Documents.........59
Section 6.12. Governmental Consents and Approvals........................59
Section 6.13. Employee Benefit Plans and Guaranteed Pension Plans........59
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Section 6.14. Further Assurances.........................................60
Section 6.15. Interest Rate Risk Management..............................60
Section 6.16. Borrower's Depository Accounts.............................60
Section 6.17. Use of Proceeds............................................60
Section 6.18. Subsidiaries...............................................61
ARTICLE VII. FINANCIAL COVENANTS........................................61
Section 7.1. Interest Coverage Ratio.....................................61
Section 7.2. Debt Service Coverage.......................................61
Section 7.3. Minimum Net Worth...........................................61
Section 7.4. Debt to Cash Flow...........................................61
Section 7.5. Limitation on Capital Expenditures..........................61
ARTICLE VIII. NEGATIVE COVENANTS OF BORROWER...............................62
Section 8.1. Limitation on Nature of Business............................62
Section 8.2. Limitation on Fundamental Changes...........................62
Section 8.3. Restricted Payments.........................................62
Section 8.4. Lease Obligations...........................................63
Section 8.5. Management Compensation.....................................63
Section 8.6. Limitation on Disposition of Assets.........................63
Section 8.7. Limitation on Investments...................................64
Section 8.8. Acquisition of Margin Securities............................65
Section 8.9. Limitation on Mortgages, Liens and Encumbrances.............65
Section 8.10. No Additional Negative Pledges.............................66
Section 8.11. No Restrictions on Subsidiary Distributions to Borrowers...66
Section 8.12. Limitation on Indebtedness.................................66
Section 8.13. Limitation on Sales and Leasebacks.........................66
Section 8.14. Transactions with Affiliates...............................66
Section 8.15. No Additional Bank Accounts................................67
ARTICLE IX. EVENTS OF DEFAULT AND REMEDIES.................................67
Section 9.1. Events of Default...........................................67
Section 9.2. Termination of Commitments and Acceleration of Obligations..69
Section 9.3. Remedies....................................................69
Section 9.4. No Implied Waiver; Rights Cumulative........................71
Section 9.5. Set-Off; Pro Rata Sharing...................................72
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ARTICLE X. CONCERNING THE AGENT AND THE LENDERS............................72
Section 10.1. Appointment of the Agent...................................72
Section 10.2. Authority..................................................72
Section 10.3. Acceptance of Appointment..................................73
Section 10.4. Collateral Matters.........................................73
Section 10.5. Agency for Perfection......................................74
Section 10.6. Application of Moneys......................................75
Section 10.7. Reliance by the Agent......................................75
Section 10.8. Exculpatory Provisions.....................................75
Section 10.9. Action by the Agent........................................76
Section 10.10. Amendments, Waivers and Consents..........................76
Section 10.11. Indemnification...........................................76
Section 10.12. Reimbursement of the Agent................................77
Section 10.13. Sharing of Funds Received.................................77
Section 10.14. Dealing with Lenders......................................77
Section 10.15. Agent as Lender...........................................77
Section 10.16. Duties Not to be Increased................................78
Section 10.17. Lender Credit Decisions...................................78
Section 10.18. Resignation of Agent......................................78
Section 10.19. Assignment of Notes; Participation........................78
ARTICLE XI. PROVISIONS OF GENERAL APPLICATION..............................79
Section 11.1. Term of Agreement..........................................79
Section 11.2. Notices....................................................79
Section 11.3. Survival of Representations................................81
Section 11.4. Amendments.................................................81
Section 11.5. Costs, Expenses, Taxes and Indemnification.................81
Section 11.6. Language...................................................82
Section 11.7. Binding Effect; Assignment.................................82
Section 11.8. Governing Law; Jurisdiction and Venue......................82
Section 11.9. WAIVER OF JURY TRIAL.......................................83
Section 11.10. Waivers...................................................83
Section 11.11. Interpretation and Proof of Loan Documents................83
Section 11.12. Integration of Schedules and Exhibits.....................83
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Section 11.13. Headings..................................................83
Section 11.14. Counterparts..............................................84
Section 11.15. Section Severability.....................................84
Section 11.16. One General Obligation....................................84
<PAGE>
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THIS CREDIT AGREEMENT dated as of May 29, 1996 ("Credit Agreement") is by
and among CLEARVIEW CINEMA GROUP, INC., a Delaware corporation (hereinafter,
together with its successors in title and assigns called "Holdings"), CCC
MADISON TRIPLE CINEMA CORP., a New Jersey corporation, CCC CHESTER TWIN CINEMA
CORPORATION, a New Jersey corporation, CCC MANASQUAN CINEMA CORPORATION, a New
Jersey corporation, CLEARVIEW THEATRE GROUP, INC., a New Jersey corporation, CCC
HERRICKS CINEMA CORP., a Delaware corporation, CCC PORT WASHINGTON CINEMA CORP.,
a Delaware corporation, CCC GRAND AVENUE CINEMA CORP., a Delaware corporation,
CCC WASHINGTON CINEMA CORP., a Delaware corporation, CCC ALLWOOD CINEMA CORP., a
Delaware corporation, CCC EMERSON CINEMA CORP., a Delaware corporation, CCC NEW
CITY CINEMA CORP., a Delaware corporation, and 343-349 SPRINGFIELD AVENUE CORP.,
a New Jersey corporation, (hereinafter, together with their successors in title
and assigns called "Borrowers" and each of which is a "Borrower"), the banks and
lending institutions set forth on Schedule 1 hereto (the "Lenders") and THE
PROVIDENT BANK, an Ohio banking corporation ("Provident") executing this
Agreement in its capacity of Agent for the Lenders under this Agreement
(hereinafter called "Provident" or "Agent").
ARTICLE I.
INTERPRETATION
Section 1.1. Provisions Pertaining to Definitions. For all purposes of this
Credit Agreement (except where such interpretations would be inconsistent with
the context or the subject matter):
(a) The expression "this Agreement" shall mean this Credit Agreement
(including all of the Schedules and Exhibits annexed hereto) as originally
executed, or, if supplemented, amended or restated from time to time, as so
supplemented, amended or restated;
(b) Where appropriate, words importing the singular only shall include
the plural and vice versa, and all references to dollars shall be United
States Dollars; and
(c) Accounting terms not otherwise defined herein shall have the
meanings customarily given in accordance with Generally Accepted Accounting
Principles (as hereinafter defined) and all financial computations or
determinations to be made under this Credit Agreement shall, unless
otherwise specifically provided herein, be made in accordance with the
financial statements delivered pursuant to Section 4.1(v) and shall be made
on a Consolidated basis.
Section 1.2. Definitions. In addition to terms defined elsewhere in this
Agreement, the following terms shall have the following meanings in this
Agreement:
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"Accountants" mean Dorfman, Abrams Music and Co., or any nationally
recognized firm of certified public accountants selected by Holdings and
acceptable to Agent and Lenders.
"Account Debtor" means any Person obligated for the payment of an Account.
"Accounts" mean, with respect to any person, such Person's accounts, rental
agreements and other contract rights, rights to payment and other forms of
obligation for the payment of money, whether now existing or existing in the
future, including, without limitation, all accounts receivable (whether or not
specifically listed on schedules furnished to the Agent), all accounts created
by or arising from all of such Person's sales of goods, financial instruments,
documents, permits or other items, or rendition of services, including funds
transfer services, made under any of such Person's trade names or styles, or
through any of such Person's Subsidiaries or divisions, and all accounts
acquired by assignment in the ordinary course of business; unpaid seller's
rights (including rescission, replevin, reclamation and stopping in transit)
relating to the foregoing or arising therefrom; rights to any goods represented
by any of the foregoing, including returned or repossessed goods; reserves and
credit balances held by such Person with respect to any such accounts receivable
or account debtors; guarantees or collateral for any of the foregoing; and
insurance policies or rights relating to any of the foregoing.
"Affiliate" means, in relation to any Person (in this definition called
"Affiliated Person"), any Person (i) which (directly or indirectly) controls or
is controlled by or is under common control with such Affiliated Person; or (ii)
which (directly or indirectly) owns or holds five percent (5%) or more of any
equity interest in any Borrower; or (iii) five percent (5%) or more of whose
voting stock or other equity interest is directly or indirectly owned or held by
such Borrower. For the purposes of this definition, the term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession (directly or indirectly) of the power to direct or to cause the
direction of the management or the policies of such Person, whether through the
ownership of shares of any class in the capital or any other voting securities
of such Person or by contract or otherwise.
"Agent" means Provident acting in the capacity as Agent for the Lenders
under the Loan Documents and includes (where the context so admits) any other
Person or Persons succeeding to the functions of Agent under such documents.
"Agent Deposit Account" has the meaning set forth in Section 2.3(d) hereof.
"Agent Disbursement Account" has the meaning set forth in Section 2.3(b)
hereof.
"Assignments of Option and Operating Agreements" means the (i) Assignment
of Option and Operating Agreement from Holdings, CCC Grand Avenue Cinema Corp.
and CCC Port Washington Cinema Corp. to Agent relating to a certain Agreement
among Holdings, CCC Grand Avenue Cinema Corp. and CCC Port Washington Cinema
Corp. and Cinema Grand Avenue, Inc. and Triplex Movies at Port Washington, Inc.
in connection with the operation of and option to purchase certain theaters
located in Long Island, New York and known as the Grand Avenue Theater and the
Post Washington
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Theater and (ii) the Assignment of Option and Operating Agreement from Holdings
and CCC Herricks Cinema Corp. to Agent relating to a certain Agreement among
Holdings and CCC Herricks Cinema Corp. and Cinema Herricks, Inc. in connection
with the operation of and option to purchase a certain theater located in Long
Island, New York and known as the Herricks Theater, each in the form of Exhibit
A attached hereto.
"Assignment of Patents" means the Assignment of Patents from a Borrower to
Agent in the form of Exhibit B hereto.
"Assignment of Trademarks" means the Assignment of Trademarks from a
Borrower to Agent in the form of Exhibit C hereto.
"Blocked Account Agreement" shall mean the Blocked Account Agreement
between a Borrower and Agent, acknowledged by each depository institution,
pursuant to which such financial institutions shall agree not to permit funds in
such bank accounts to be disbursed except to the Agent Disbursement Account, or
any other account maintained at or controlled by the Agent, in the form of
Exhibit D.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banking institutions are open for business in Cincinnati, Ohio.
"Capital Expenditure" means any amount paid or incurred in connection with
the purchase of real estate, plant, machinery, equipment or other similar
expenditure (including all renewals, improvements and replacements thereto, and
all obligations under any lease of any of the foregoing) which would be required
to be capitalized and shown on the Consolidated balance sheet of Holdings in
accordance with GAAP.
"Capital Lease" means any lease of Property which has been or is required
to be classified and accounted for as a capital lease obligation on a Borrower's
financial statements in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) or corporate stock, whether common or
preferred, including, without limitation, partnership interests.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a Capital Lease and, for the purpose of this Agreement, the amount
of such obligation at any date shall be the capitalized amount thereof at such
date, determined in accordance with GAAP.
"Cash Equivalents" means: (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within three (3) months from the date of acquisition thereof;
(ii) investments in certificates of deposit or bankers' acceptances maturing
within three (3) months from the date of acquisition issued by any Lender or any
other commercial bank organized under the laws of the United States or any state
thereof having capital surplus and undivided profits aggregating at least Two
Hundred Fifty Million Dollars ($250,000,000); (iii) investments in commercial
paper of any Lender or of any other Person which, at the time
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of issuance, have a rating of at least A-1 from Standard & Poor's Corporation or
at least P-1 from Moody's Investors Service, Inc. and maturing not more than six
(6) months from the date of acquisition thereof; (iv) obligations of the type
described in (i), (ii) or (iii) above purchased pursuant to a repurchase
agreement obligating the counterpart to repurchase such obligations not later
than thirty (30) days after the purchase thereof, secured by a fully perfected
security interest in any such obligation, and having a market value at the time
such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of the issuing bank; and (v) time deposits or eurodollar
time deposits maturing no more than thirty (30) days from the date of creation
with commercial banks having membership in the Federal Deposit Insurance
Corporation in amounts not exceeding the lesser of One Hundred Thousand Dollars
($100,000) or the maximum insurance applicable to the aggregate amount of such
Person's deposits in such institution.
"Cash Flow" means, for any period, the following, each calculated for such
period, without duplication: (i) EBITDA, less (ii) income and franchise taxes
actually paid by a Borrower (net of any refunds received) (including decreases
in deferred income taxes resulting from tax payments actually made), less (iii)
Capital Expenditures (to the extent actually made in cash by a Borrower and
excluding the non-current portion of Capital Expenditures which have been
financed) less (iv) the gross amount capitalized for long term assets (net of
cash received in respect of long term assets) and paid in cash.
"Cash Interest Expense" means the aggregate amount of all interest expense
of a Borrower on Indebtedness for Borrowed Money (net of interest income) paid
but not accrued.
"Casualty Loss" means any occurrence or event pursuant to which any asset
or property owned or used by a Borrower is (i) damaged or destroyed, or suffers
any other loss, or (ii) condemned, confiscated or otherwise taken, in whole or
in part, or the use thereof is otherwise diminished so as to render
impracticable or unreasonable the use of such asset or property for the purposes
to which such asset or property were used immediately prior to such
condemnation, confiscation or taking, by exercise of the powers of condemnation
or eminent domain or otherwise, and in either case the amount of the damage,
destruction, loss or diminution in value is in excess of One Hundred Thousand
Dollars ($100,000).
"Change in Control" means the occurrence of any one of the following
events: (i) any Person (including a Person's Affiliates and associates) or group
(as that term is understood under Section 13(d) of the Exchange Act and the
rules and regulations thereunder), other than Seller Group, Midmark, CMNY,
Management Shareholders and Affiliates thereof (the "Control Group") or a group
controlled by the Control Group, has become the beneficial owner of a percentage
(based on voting power, in the event different classes of stock shall have
different voting powers) of the voting stock of Holdings equal to at least ten
percent (10%), (ii) there shall be consummated any consolidation or merger of a
Borrower or Holdings pursuant to which the Borrower's or Holding's capital stock
(or other capital stock) would be converted into cash, securities or other
property, other than a merger or consolidation of such Borrower or Holdings in
which the holders of such capital stock (or such other capital stock)
immediately prior to
<PAGE>
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the merger have the same proportionate ownership, directly or indirectly, of
capital stock of the surviving corporation immediately after the merger as they
had of such Borrower's or Holding's capital stock immediately prior to such
merger or other than a merger of any Borrower, other than Holdings, into
Holdings, (iv) all or substantially all of Holding's or a Borrower's assets
shall be sold, leased, conveyed or otherwise disposed of as an entirety or
substantially as an entirety to any Person (including an Affiliate or associate
of such Borrower or Holdings) in one or a series of transactions, or (v) A. Dale
Mayo shall cease to perform his duties as a senior executive manager of
Holdings.
"Chattel Paper" means any "chattel paper" as such term is defined in
Section 9-105(1)(b) of the UCC, now owned or hereafter acquired.
"Closing Date" means the day on which the initial Loans are made pursuant
to this Agreement.
"CMNY" means any or all of CMNY Capital II, L.P., CMCO, Inc. or Robert G.
Davidoff.
"Code" means the United States Internal Revenue Code of 1986, as amended
from time to time, or any successor federal tax code, and any reference to any
statutory provision shall be deemed to be a reference to any successor provision
or provisions.
"Collateral" means all Accounts, Inventory, Equipment, General Intangibles,
fixtures, goods, motor vehicles, leasehold improvements, Documents, Instruments,
Chattel Paper, Intellectual Property, inventory subject to leases and rights
under lease agreements for the leasing of inventory, money, deposit accounts,
rights to draw on letters of credit, permits, licenses and the cash or noncash
Proceeds (including insurance or other rights to receive payment with respect
thereto) of any of the foregoing and all accessions and additions to and
replacements of the foregoing, and all books and records (including, without
limitation, customer lists, credit files, computer programs, printouts and other
computer materials and records of Borrower) pertaining to any of the foregoing
or any of the Premises (herein, together with the real property, buildings and
fixtures described in the Mortgages, and all other property and rights assigned
by a Borrower to Agent, on behalf of the Lenders, to secure Borrowers'
obligations under the Loan Documents).
"Compliance Certificate" means a certificate, substantially in the form of
attached Exhibit E, pursuant to which Borrowers shall certify their compliance
with the covenants of this Agreement.
"Computation Date" means the last day of each March, June, September and
December.
"Consolidated" means, with respect to any accounting matter or amount, such
matter or amount computed on a consolidated basis for Holdings and each
Borrower, as the case may be, and any Subsidiaries in accordance with GAAP.
"Contingent Obligation" means any direct or indirect liability, contingent
or otherwise, with respect to any Indebtedness, lease, dividend, letter of
credit, banker's acceptance or other obligation of another Person if the primary
purpose or intent thereof
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in incurring the Contingent Obligation is to provide assurance to the obligee of
such obligation of another Person that such obligation of another Person will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof. Contingent Obligations shall include,
without limitation, (i) the direct or indirect guaranty, endorsement (otherwise
than for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another Person; (ii) any liability for the obligations of another Person
through any agreement (contingent or otherwise) (A) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), (B) to maintain
the solvency of any balance sheet item, level of income or financial condition
of another, or (C) to make take-or-pay, pay-or-play or similar payments if
required regardless of nonperformance by any other party or parties to an
agreement, if in the case of any agreement described under subclauses (A), (B)
or (C) of this sentence the primary purpose or intent thereof is as described in
the preceding sentence. The dollar amount of any Contingent Obligation shall be
equal to the lesser of the dollar amount of the obligation or portion of the
obligation so guaranteed or otherwise supported.
"Credit Commitment" means, in relation to any particular Lender, the sum of
(i) the maximum amount with respect to the Revolving Credit Loan to be loaned by
such Lender to Borrowers as set forth in Schedule 1 hereof and (ii) the amount
with respect to the Term Loans to be loaned by such Lender to Borrowers as set
forth in Schedule 1 hereof.
"Current Assets" and "Current Liabilities" mean at any time, all assets or
liabilities, respectively, that, in accordance with GAAP should be classified as
current assets or current liabilities, respectively, on a Borrower's balance
sheet.
"Default" means any event or occurrence which, with the giving of notice or
the passage of time, or both, would constitute an Event of Default.
"Default Interest Rate" means an annual rate of interest which shall (to
the extent permitted by applicable law) at all times be equal to two percent
(2%) above the applicable Interest Rate for a Loan.
"Documents" mean any "documents," as such term is defined in Section
9-105(1)(f) of the UCC, now owned or existing or hereafter arising or acquired.
"Draw Date" means in relation to any Revolving Credit Loan, the day on
which such Loan is made or to be made to Borrowers pursuant to this Agreement.
"EBITDA" for any period shall mean, without duplication, (i) Net Income;
plus (ii) for such period any Interest Expense deducted in the determination of
Net Income; plus (iii) any income and franchise taxes paid in cash and included
in the determination of Net Income; plus (iv) amortization and depreciation and
other non-cash charges deducted in determining Net Income for such period; plus
(v) extraordinary losses, losses on sales
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of assets (other than sales of inventory in the ordinary course of business) and
unrealized gains from changes in currency; minus (vi) the sum for such period of
interest income, extraordinary gains, gains from sales of assets (other than
sales of inventory in the ordinary course of business) and unrealized losses
from changes in currency.
"Employee Benefit Plan" means an "employee benefit plan" as defined in
Section 3(3) of ERISA.
"Environmental Indemnity Agreement" means the Environmental Indemnity
Agreement among Agent and Borrowers relating to the Premises, substantially in
the form of attached Exhibit F.
"Environmental Laws" means individually or collectively any local, state or
federal law, statute, rule, regulation, order, ordinance, common law, permit or
license term or condition, or state superlien or environmental clean-up or
disclosure statutes pertaining to the environment or to environmental
contamination, regulation, management, control, treatment, storage, disposal,
containment, removal, clean-up, reporting, or disclosure, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), as now or hereafter amended (including, but not limited
to, the Superfund Amendments and Reauthorization Act ("SARA")); the Resource
Conservation and Recovery Act ("RCRA"), as now or hereafter amended (including,
but not limited to, the Hazardous and Solid Waste Amendments of 1984); the Toxic
Substances Control Act ("TSCA"), as now or hereafter amended; the Clean Water
Act, as now or hereafter amended; the Safe Drinking Water Act, as now or
hereafter amended; or the Clean Air Act, as now or hereafter amended.
"Equipment" means any "equipment," as such term is defined in Section
9-109(2) of the UCC, now owned or hereafter acquired and shall include, without
limitation, any and all additions, substitutions, and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts
and accessories installed thereon or affixed thereto.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock or that are measured by the value of Capital
Stock (but excluding any debt security that is convertible into, or exchangeable
for Capital Stock).
"Equity Transaction" means (i) the acquisition by Holdings of the assets of
the Seller Group, (ii) the contribution of at least Two Million Dollars
($2,000,000) by the Seller Group into Holdings and (iii) the additional cash
equity contribution to Holdings by Midmark of at least One Million Five Hundred
Thousand Dollars ($1,500,000), each occurring on or prior to the Closing date.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
regulations issued thereunder, as amended from time to time and any successor
statute.
"ERISA Affiliate" means, in relation to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which that Person
is a member and which is considered under common control within the meaning of
the regulations promulgated under Section 414 of the Code.
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"ERISA Liabilities" means the aggregate of all unfunded vested benefits
under any employee pension benefit plan, within the meaning of Section 3(2) of
ERISA, of a Borrower or any ERISA Affiliate of a Borrower under any Plan covered
by ERISA that is not a Multiemployer Plan and all potential withdrawal
liabilities of any thereof under all Multiemployer Plans.
"Event of Default" means any event or condition described in Section 9.1 of
this Agreement.
"Excess Cash Flow" shall mean for any fiscal year of Holdings, the excess
of (a) EBITDA over (b) the sum, without duplication, of (i) Fixed Charges, (ii)
the aggregate amount actually paid by Holdings on a Consolidated basis in cash
during such fiscal year on account of Capital Expenditures, (iii) changes in
working capital (calculated as Current Assets minus Current Liabilities as at
the end of such fiscal year), (iv) the amount of taxes actually paid in cash by
Holdings on a Consolidated basis for such fiscal year during such fiscal year or
within a normal payment period thereof.
"Extraordinary Disposition" means, with respect to a Borrower, the sale,
lease, transfer or other disposition of assets, other than assets transferred or
disposed in the ordinary course of business, whether by way of the sale of
assets or the sale of stock or other rights in which a Borrower has any
ownership interest, and whether in one transaction or a series of related or
unrelated transactions.
"Fixed Charges" means, for any period, the following, each calculated for
such period, without duplication: (i) Interest Expense paid or accrued, minus
(ii) interest income earned or accrued by a Borrower as determined in accordance
with GAAP, plus (iii) scheduled payments of principal with respect to all
Indebtedness for Borrowed Money of a Borrower including the principal component
of any cash payments made with respect to any Capital Lease Obligation.
"General Intangibles" means any "general intangibles" as such term is
defined in Section 9-106 of the UCC, now owned or hereafter acquired and, in any
event, shall include, without limitation, all right, title and interest now in
existence or hereafter arising in or to all customer lists, trademarks, patents,
rights in intellectual property, trade names, copyrights, trade secrets,
proprietary or confidential information, inventions and technical information,
procedures, designs, knowledge, know-how, software, data bases, data, processes,
models, drawings, materials, and records now owned or hereafter acquired, and
any and all goodwill and rights of indemnification.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United Sates of America in effect from
time to time, consistently applied.
"Guaranteed Pension Plan" means any pension plan maintained by a Borrower
or an ERISA Affiliate of a Borrower, or to which a Borrower or an ERISA
Affiliate contributes, some or all of the benefits, under which benefits are
guaranteed by the United States Pension Benefit Guaranty Corporation ("PBGC").
<PAGE>
-15-
"Hazardous Substances" means any and all hazardous and toxic substances,
wastes or materials, any pollutants, contaminants, or dangerous materials
(including, but not limited to, polychlorinated biphenyls, friable asbestos,
volatile and semi-volatile organic compounds, oils, petroleum products and
fractions, and any materials which include hazardous constituents or become
hazardous, toxic, or dangerous when their composition or state is changed), or
any other similar substances or materials which are included under or regulated
by any Environmental Law.
"Head Office" means, in relation to the Agent, the head office of The
Provident Bank located at One East Fourth Street, Cincinnati, Ohio 45202 or such
office designated in writing to Borrowers and Lenders by The Provident Bank or
any successor Agent.
"Indebtedness" means, in relation to any Person, at any particular time,
all of the obligations of such Person which, in accordance with GAAP, would be
classified as indebtedness upon a balance sheet including any footnote thereto
of such Person prepared at such time, and in any event shall include, without
limitation, and without duplication:
(i) all indebtedness of such Person arising or incurred under or in
respect of (A) any guaranties (whether direct or indirect) by such Person
of the indebtedness, obligations or liabilities of any other Person, or (B)
any endorsement by such Person of any of the indebtedness, obligations or
liabilities of any other Person (otherwise than as an endorser of
negotiable instruments received in the ordinary course of business and
presented to commercial banks for collection of deposit), or (C) the
discount by such Person, with recourse to such Person, of any of the
indebtedness, obligations or liabilities of any other Person;
(ii) all indebtedness of such Person arising or incurred under or in
respect of any agreement, contingent or otherwise made by such Person (A)
to purchase any indebtedness of any other Person or to advance or supply
funds to the payment or purchase of any indebtedness of any other Person,
or (B) to purchase, sell or lease (as lessee or lessor) Property, products,
materials or supplies or to purchase or sell transportation or services,
primarily for the purpose of enabling any other Person to make payment of
any indebtedness of such other Person or to assure the owner of such other
Person's indebtedness against loss, regardless of the delivery or
non-delivery of the Property, products, materials or supplies or the
furnishing or non-furnishing of the transportation or services, or (C) to
make any loan, advance, capital contribution or other investment in any
other Person for the purpose of assuring a minimum equity, asset base,
working capital or other balance sheet condition for or as at any date, or
to provide funds for the payment of any liability, dividend or stock
liquidation payment, or otherwise to supply funds to or in any manner
invest in any other Person;
(iii) all indebtedness, obligations and liabilities secured by or
arising under or in respect of any Lien, upon or in Property owned by such
<PAGE>
-16-
Person, even though such Person has not assumed or become liable for the
payment of such indebtedness, obligations and liabilities;
(iv) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to Property acquired by such
Person, even though the rights and remedies of the seller or lender (or
lessor) under such agreement in the event of default are limited to
repossession or sale of such Property; and
(v) all indebtedness arising or incurred under or in respect of any
Contingent Obligation.
"Indebtedness for Borrowed Money" means at any particular time, all
Indebtedness (i) in respect of any money borrowed; (ii) under or in respect of
any Contingent Obligation (whether direct or indirect) of any money borrowed;
(iii) evidenced by any loan or credit agreement, promissory note, debenture,
bond, guaranty or other similar written obligation to pay money; or (iv) Capital
Lease Obligations.
"Instruments" mean any "instrument," as such term is defined in Section
9-105(1)(i) of the UCC, now owned or hereafter acquired.
"Intellectual Property" shall mean all Patents and all Trademarks, together
with (a) all inventions, processes, production methods, proprietary information,
know-how and trade secrets; (b) all licenses or user or other agreements granted
to any obligor with respect to any of the foregoing, in each case whether now or
thereafter owned or used including, without limitation, the licenses or other
agreements with respect to the Trademarks, in Schedule 5.8 hereto; (c) all
information, customer lists, identification of suppliers, data, plans,
blueprints, specifications, designs, drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals, materials standards, processing
standards, performance standards, catalogs, computer and automatic machinery
software and programs; (d) all field repair data, sales data and other
information relating to sales or service of products now or hereafter
manufactured; (e) all accounting information and all media on which or in which
any information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such information,
knowledge, records or data; (f) all licenses, consents, permits, variances,
certifications and approvals of governmental agencies now or hereafter held by a
Borrower; and (g) all causes of action, claims and warranties now or hereafter
owned or acquired by a Borrower in respect of any of the items listed above.
"Interest Expense" means, for any period, the total amount of all charges
for the use of funds (whether characterized as interest or otherwise) payable
during such period with respect to all Indebtedness for Borrowed Money of a
Borrower for such period, including the amortization of debt discounts and the
amortization of all fees payable in connection with the incurrence of such
Indebtedness.
"Interest Rate" means the rate of interest per annum equal to two percent
(2.0%) in excess of the Prime Rate.
<PAGE>
-17-
"Inventory" means, with respect to any Person, such Person's inventory,
including without limitation: (i) all raw materials, work in process, parts,
components, assemblies, supplies and materials used or consumed in such Person's
business, wherever located and whether in the possession of such Person or any
other Person; (ii) all goods, wares and merchandise, finished or unfinished,
held for sale or lease or leased or furnished or to be furnished under contracts
of service, wherever located and whether in the possession of such Person or any
other Person; and (iii) all goods returned to or repossessed by such Person.
"Investment" means all investments in any other Person by stock purchase,
capital contribution, loan, advance, guaranty of any Indebtedness or creation or
assumption of any other liability in respect of any Indebtedness of such other
Person (including, without limitation, any liability of any kind described in
clause (i) or (ii) of the definition of the term "Indebtedness" set forth in
this Section ), or the transfer or sale of Property (otherwise than in the
ordinary course of the business) to any other Person for less than payment in
full in cash of the transfer or sale price or the fair value thereof (whichever
of such price or value is higher).
"Leasehold Mortgages" the Leasehold Mortgages granted from time to time by
a Borrower to Agent to secure the Loans in the form of Exhibit G and as they may
be amended or supplemented from time to time.
"Legal Requirements" means all applicable laws, rules, regulations,
ordinances, judgments, orders, decrees, injunctions, arbitral awards, permits,
licenses, authorizations, directions and requirements of all governments,
departments, commissions, boards, courts, authorities, agencies, and officials
and officers thereof, that are now or at any time in the future in effect.
"Lenders" mean collectively each of the banks or lending institutions set
forth on Schedule 1 hereto and their respective successors and assigns; and
"Lender" means any one of the Lenders.
"Lesser Transaction" means the purchase by a Borrower from Kisco Cinema,
Inc. and Bedford Cinema, Inc. of certain assets owned and utilized in connection
with the operation of multiple screen movie theaters at Mt. Kisco, New York and
Bedford, New York for an aggregate amount not to exceed One Million Five Hundred
Thousand and 00/100 Dollars ($1,500,000.00).
"Liabilities" means all indebtedness, obligations and other liabilities of
a Borrower whether matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, joint or several, secured or unsecured arising
by contract, operation of law or otherwise, classified as liabilities in
accordance with GAAP on a balance sheet of a Borrower.
"Licenses and Permits" means all licenses, permits, registrations and
recordings thereof and all applications incorporated into for such licenses,
permits and registrations now owned or hereafter acquired by a Borrower and
required from time to time for the business operations of a Borrower.
<PAGE>
-18-
"Lien" means any lien, mortgage, pledge, security interest, charge or other
encumbrance of any kind including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest.
"Litigation" has the meaning set forth in Section 5.10 hereof.
"Loan Documents" mean this Agreement, the Notes, the Warrant Agreement, the
Stockholders Agreement, the Security Documents, the Subordination Agreement and
any other agreement, instrument, certificate or document executed in connection
with or pursuant to this Agreement whether concurrently herewith or subsequent
hereto.
"Loans" mean, collectively, the Revolving Credit Loan and each of the Term
Loans, each singly a "Loan" made or to be made to Borrowers by the Lenders
pursuant to this Agreement.
"Loan Year" means each period of twelve (12) consecutive months, commencing
on the Closing Date and on each anniversary thereof.
"Long-Term Lease" means any lease of real or personal property having an
original term, including any period which the lease may be renewed or extended,
at the option of the lessee, of more than three (3) years.
"Management Shareholders" means A. Dale Mayo.
"Material Adverse Effect" means any event which will, or is reasonably
likely to, have a material adverse effect upon the Collateral or upon the
financial condition, operations, assets or prospects in the aggregate of the
Borrowers.
"Material Lease" means any lease under which a Borrower shall lease (as
lessee) or acquire the right to possess and/or use any Real Estate or other
Property or any other similar agreement (whether written or oral) pursuant to
which a Borrower pays an annual lease payment or rental payment equal to or
greater than Twenty Thousand Dollars ($20,000) or which otherwise is material to
the operation of the business of Borrower.
"Maximum Credit Liability" for any Borrower, other than Holdings, shall
mean, as of any date of determination thereof, the sum of (i) with respect to
each Loan the proceeds of which are used to make or the issuance of which
constitutes a Valuable Transfer to such Borrower, the amount of such Loan plus
(ii) with respect to each Loan the proceeds of which are not used to make or the
issuance of which does not constitute a Valuable Transfer to such Borrower, the
lesser of (A) the outstanding amount of such Loan as of such date or (B) the
greater of (I) ninety-five percent (95%) of the Subsidiary Net Worth at the time
of such Loan or (II) ninety-five percent (95%) of the Subsidiary Net Worth of
such Borrower at the earliest of (x) such date, (y) the date of the commencement
of a case under Title 11 of the United States Code (or any successor provision)
in which such Borrower is a debtor or (z) the date enforcement hereunder is
sought.
<PAGE>
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"Maximum Revolving Commitment" means Two Hundred Thousand Dollars
($200,000).
"Midmark" means Midmark Capital, L.P. a Delaware limited partnership whose
general partner is Midmark Associates, Inc., a New Jersey corporation.
"Mortgages" means the real estate mortgages or deeds of trust granted from
time to time by a Borrower to Agent to secure the Loans, substantially in the
form of Exhibit H, and as they may be amended or supplemented from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is maintained for employees of a Borrower, or any
ERISA Affiliate of a Borrower.
"Net Income" means, for any period, the aggregate of the net income (or net
loss) of a Borrower for such period, determined in accordance with GAAP, but
excluding, without duplication: (i) the income of any Person in which a Borrower
has an ownership interest (other than in another Borrower), unless received by
such Borrower in a cash distribution; (ii) any net after-tax gains or losses
attributable to dispositions of assets; (iii) the income of any Subsidiary of a
Borrower to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at that time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary; and (iv) any after-tax extraordinary non-cash gains or extraordinary
non-cash losses.
"Net Proceeds" means the aggregate proceeds paid in cash or Cash
Equivalents received by a Borrower in excess of One Hundred Thousand Dollars
($100,000) in respect of any Extraordinary Disposition, net of direct costs
relating to such Extraordinary Disposition (including without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred or existing as a result thereof, taxes paid or
payable as a result thereof (after taking into account any available tax credits
or deductions in any tax sharing arrangements), amounts required to be applied
in payment of Indebtedness secured by a Lien incurred in accordance with this
Agreement on the assets or assets that are subject of such Extraordinary
Disposition and which Indebtedness is required pursuant to the terms of the
instrument governing such Indebtedness or Lien or in order to obtain the
necessary consent to such sale to be repaid in connection with such
Extraordinary Disposition and any reserve for adjustment in respect of the sale
price of or other liability in respect of such asset or assets.
"Net Worth" means, at any date, Consolidated stockholders' equity
(including the par value or stated value of all outstanding capital stock,
additional paid-in capital and retained earnings) of Holdings determined in
accordance with GAAP, except that there shall be deducted therefrom any amount
of treasury stock reflected as an asset of Holdings or any Subsidiary and except
that any write down in the assets or equity occurring at year-end 1996 shall not
be taken into account.
"Notes" mean, collectively, the Revolving Credit Notes, the Term Loan A
Notes and the Term Loan B Notes, each of which are to be dated, executed and
delivered to
<PAGE>
-20-
Lenders by Borrowers on the Closing Date. "Note" shall mean any one of the
Notes, unless specifically identified.
"Obligations" means, collectively, all of the indebtedness, obligations,
covenants, promises, agreements, and liabilities existing on the date hereof or
arising from time to time hereafter, whether direct, indirect, absolute,
contingent, joint or several, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise, of
Borrowers to the Agent or any Lenders (i) in respect of the Loans made pursuant
to this Agreement; or (ii) under or in respect of any one or more of the Loan
Documents. Obligations shall also include all interest, charges and other fees
chargeable hereunder to Borrowers or due hereunder from Borrowers to Lenders
from time to time and all costs and expenses referred to in Section 11.5 hereof.
"Participation Percentage" means, in relation to each Lender, the
percentage set forth with respect to such Lender on Schedule 1 with respect to
each Loan.
"Patents" shall mean all of the following in which a Borrower now holds or
hereafter acquires any interest: (i) all letters patent of the United States or
any country, all registrations and recordings thereof, and all applications for
letters patent of the United States or any other country, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof or any other country, and (ii) all reissues,
continuations, continuations-in-part or extensions thereof.
"Permitted First Liens" means those Liens identified in Section 8.9(a),
8.9(d), and those Liens identified on Schedule 8.9(g).
"Permitted Liens" means those Liens and encumbrances permitted hereunder
pursuant to Section 8.9(g).
"Person" shall include an individual, a company, a corporation, an
association, a partnership, a joint venture, an unincorporated trade or business
enterprise, a trust, an estate, or other legal entity or a government (national,
regional or local), court, arbitrator or any agency, instrumentality or official
of the foregoing.
"Pledge Agreement" means a stock pledge agreement or agreements
substantially in the form of Exhibit I.
"Pledged Stock" means all of the Capital Stock of each Subsidiary of
Holdings whether now existing or hereafter formed or acquired.
"Premises" means collectively, all real property and leasehold interests
now or hereafter acquired by a Borrower, including, without limitation, all the
Premises as defined in the Mortgages and the Leasehold Mortgages.
"Prime Rate" means the rate of interest announced from time to time by
Agent as its prime rate at its Head Office, whether or not Agent shall at times
lend to other borrowers at lower rates of interest, or, if there is no such
prime rate, then such other rate as may be substituted by Agent for its Prime
Rate.
<PAGE>
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"Proceeds" means "proceeds," as such term is defined in Section 9-306(1) of
the UCC and, in any event, shall include, without limitation, (i) any and all
proceeds of any insurance, indemnity, warranty, or guaranty payable from time to
time with respect to any of the Collateral, and (ii) any and all payments (in
any form whatsoever) made or due and payable from time to time in connection
with any requisition, confiscation, condemnation, seizure, or forfeiture of all
or any part of the Collateral by any governmental body, authority, bureau, or
agency (or any Person acting under color of governmental authority).
"Projections" means Holding's forecasted Consolidated and consolidating:
(a) balance sheets, (b) profit and loss statements, and (c) cash flow
statements, all prepared on a division by division and Subsidiary by Subsidiary
basis and otherwise consistent with Holding's historical financial statements,
together with, if requested by Agent, appropriate supporting details and
statements of underlying assumptions.
"Property" means all types of real, personal, tangible, intangible or mixed
property whether owned or leased by Borrower.
"Pro Rata Share" means, in relation to any particular item, the share of
any Lender in such item, which shall be in the same proportion which the
aggregate amount of all of the obligations owing to such Lender with respect to
such item at such time shall bear to the aggregate amount of all of the
obligations owing to all of the Lenders with respect to such item at such time
net of any and all charges or fees due and payable to Agent under the Loan
Documents.
"Real Estate" means all real property owned or leased by a Borrower and all
real property hereafter acquired or leased by a Borrower, together with all
fixtures, rights of way, privileges, liberties, tenements, hereditaments, and
appurtenances belonging or in any way appertaining thereto, all easements now or
hereafter benefiting such real property and all royalties and rights
appertaining to the use and enjoyment of such real property, together with all
of the buildings, structures, and other improvements thereto.
"Reference Period" means, with respect to a particular Computation Date,
the period of twelve (12) calendar months ending on such Computation Date except
that with respect to any Computation Date prior to June 30, 1997, the applicable
reference period shall be the period from and including the calendar quarter in
which falls the Closing Date through such Computation Date.
"Requisite Lenders" means at such times as there are any Loans outstanding,
the Lenders whose aggregate Pro Rata Shares of the outstanding Loans are greater
than or equal to sixty-six and two-thirds percent (66 2/3%) of the aggregate
amount of the outstanding Loans, and at all other times, the Lenders whose
aggregate Credit Commitments are greater than or equal to sixty-six and
two-thirds percent (66 2/3%) of the aggregate Credit Commitments of all the
Lenders.
"Restricted Payment" means: (a) any dividend or other distribution, direct
or indirect, on account of any shares of any class of stock of Holdings or any
of its Subsidiaries now or hereafter outstanding, except a dividend payable
solely in shares of
<PAGE>
-22-
that class of stock to the holders of that class; (b) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock of Holdings or any of its Subsidiaries now or hereafter outstanding; (c)
any payment or prepayment of principal of, premium, if any, or interest on,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any subordinated indebtedness; and (d) any
payment made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of Holdings or
any of its Subsidiaries now or hereafter outstanding.
"Revolving Credit Loan" means all Loans outstanding from time to time made
pursuant to Sections 2.2(a) and 2.3 hereof and any amounts added to the
principal balance of the Revolving Credit Loan pursuant to this Agreement.
"Revolving Credit Notes" means, collectively, with respect to the Revolving
Credit Loan the promissory notes of Borrower, in the face amounts of the
Revolving Credit Commitment of the respective Lenders in or substantially in the
form of Exhibit J-1, annexed hereto. "Revolving Credit Note" shall mean any one
of the Revolving Credit Notes.
"SEC" means the Securities and Exchange Commission or any successor agency.
"Securities" means any stock, shares, voting trust certificates, bonds,
debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities" or any certificates of interest, shares or participation
in temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Security Documents" shall mean, collectively, this Agreement, the
Leasehold Mortgages, the Mortgages, the Environmental Indemnity Agreement, the
Blocked Account Agreements, the Assignments of Option and Operating Agreements,
the Pledge Agreements, the Assignments of Trademarks, the Assignments of Patents
and each other agreement, assignment or instrument creating or purporting to
create a lien in favor of Agent for the ratable benefit of the Lenders.
"Seller Group" means the Township of Washington Theater, Inc., Allwood
Clifton Cinema, Inc., New City Cinema, Inc. and Emerson Cinema, Inc. and all of
the shareholders of the foregoing.
"Stockholders Agreement" means the Stockholder's Agreement dated as of May
29, 1996 among Agent, Holdings, A. Dale Mayo, Brett E. Marks, CMNY Capital II,
L.P., Michael C. Rush, MidMark Capital II, L.P. and Emerson Theater, Inc.
"Subordinated Debt" means those 8% Subordinated Promissory Notes in the
aggregate principal amount of Five Hundred Thousand Dollars ($500,000.00) each
dated either August 31, 1995 or October 11, 1995 issued by Holdings in favor of
CMNY, and all related documents, instruments and agreements.
<PAGE>
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"Subordination Agreement" means the Subordination Agreement executed
contemporaneously herewith by CMNY, Holdings and Agent substantially in the form
of attached Exhibit K relating to the subordination of the Subordinated Debt to
the Obligations.
"Subsidiary" means, as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of any Borrower (including each Borrower).
"Subsidiary Net Worth" of any Borrower, other than Holdings, shall mean, as
of any date of determination thereof, the excess of (i) the amount of the
"present fair saleable value" of the assets of such Borrower as of the date of
such determination, over (ii) the amount of all "liabilities of such Borrower,
contingent or otherwise," as of the date of such determination, as such quoted
terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors. In determining the
Subsidiary Net Worth of any Borrower for purposes of calculating the Maximum
Credit Liability, the liabilities of such Borrower to be used in such
determination pursuant to clause (ii) of the preceding sentence shall in any
event include the liabilities of such Borrower hereunder and under the other
Loan Documents in respect of all Loans other than the Loans in respect of which
such calculation is being made.
"Termination Date" means the earlier of (i) July 1, 2001; (ii) the date
upon which the entire principal of the Notes shall become due pursuant to the
provisions hereof (whether as a result of acceleration by Agent or the Requisite
Lenders or otherwise); or (iii) the date upon which the Credit Commitments
terminate pursuant to Section 9.2 hereof.
"Termination Event" means (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, but not including any such
event for which the 30 day notice requirement has been waived by applicable PBGC
regulation; or (ii) the withdrawal of a Borrower or an ERISA Affiliate of a
Borrower from a Guaranteed Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; or (iii) the
filing of a notice of intent to terminate a Guaranteed Pension Plan or the
treatment of a Guaranteed Pension Plan amendment as a termination under Section
4041 of ERISA; or (iv) the institution of proceedings to terminate a Guaranteed
Pension Plan by the Pension Benefit Guaranty Corporation; or (v) the withdrawal
or partial withdrawal of a Borrower or an ERISA Affiliate of a Borrower from a
Multiemployer Plan; or (vi) any other event or condition which might reasonably
be expected to constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Guaranteed Pension Plan.
"Term Loan A" means the loan made pursuant to Section 2.2(b) hereof.
<PAGE>
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"Term Loan A Note" means, with respect to the Term Loan A, the promissory
note of Borrowers, in the face amount of each Lender's Participation Percentage
of the Term Loan A in or substantially in the form of Exhibit J-2, annexed
hereto.
"Term Loan B" means the loan made pursuant to Section 2.2(C) hereof.
"Term Loan B Notes" means, collectively, with respect to the Term Loan B,
the promissory notes of Borrowers, in the face amounts of each Lender's
Participation Percentage of the Term Loan B in or substantially in the form of
Exhibit J-3, annexed hereto. "Term Loan B Note" shall mean any one of the Term
Loan B Notes.
"Term Loans" means the Term Loan A and the Term Loan B.
"Trademarks" shall mean all of the following in which a Borrower now holds
or hereafter acquires any interest: (i) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof or any other country, and (ii) all
reissues, extensions or renewals thereof.
"UCC" means the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of Ohio; provided, however, that in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection,
or priority of Lender's security interest in any of the Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of Ohio, the term "UCC" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection, or priority and for purposes of definitions
related to such provisions.
"UCC Financing Statements" mean the UCC financing statements naming the
Borrower, as debtor, and Agent, for the ratable benefit of Lenders, as creditor,
which UCC financing statements describe all or some portion of the Collateral
and which together perfect Agent's security interest in the Collateral, which
security interests can be perfected by the filing of such financing statement.
"Valuable Transfers" shall mean, in respect of any Borrower, (i) all loans,
advances or capital contributions made to or for the benefit of such Borrower
with proceeds of Loans, (ii) all debt securities or other obligations of such
Borrower acquired by such Borrower or retired by such Borrower with proceeds of
Loans, (iii) the fair market value of all property acquired with proceeds of
Loans, and transferred, absolutely and not as collateral, to such Borrower, and
(iv) all equity securities of such Borrower acquired by such Borrower with
proceeds of Loans.
"Warrant Agreement" means the Warrant Agreement between Provident and
Holdings dated the date hereof pursuant to which Holdings will issue to
Provident a warrant for Capital Stock of Holdings.
<PAGE>
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"Working Capital" means the difference between (i) Current Assets,
excluding cash, Cash Equivalents, prepaid taxes and any amounts due from
Affiliates, except for Midmark, the Seller Group and CMNY, and (ii) Current
Liabilities, excluding the current portion of any long term Indebtedness for
Borrowed Money, accrued taxes and any amounts due to Affiliates, except for
Midmark and the Seller Group and CMNY.
ARTICLE II.
THE LOANS
Section 2.1. Commitments. Each Lender, severally and not jointly, agrees,
upon the terms and subject to the conditions contained in this Agreement, to
make the Revolving Credit Loans to Borrowers from time to time prior to the
Termination Date for such Loans, and the Term Loan A on the Closing Date in a
principal amount equal to such Lender's Participation Percentage of the
aggregate principal amount of such Loan requested by Borrowers on each occasion
and to make the Term Loan B upon satisfaction of the conditions contained in
Section 4.2 of this Agreement.
Section 2.2. Making the Loans.
(a) Revolving Credit Loan. Each Lender will, subject to all of the
applicable terms and conditions of this Agreement, make an amount equal to
its Participation Percentage in each Revolving Credit Loan available to
Borrowers at such times and in such amount as shall be requested by
Borrowers in compliance with Section 2.3, and Borrowers may borrow on a
revolving basis from Lenders on the Closing Date and from time to time
thereafter, sums not to exceed the Maximum Revolving Commitment. Borrowers
may borrow, repay and reborrow hereunder on and after the date hereof until
the Termination Date, subject to the terms, provisions and limitations set
forth herein. Amounts repaid hereunder after the Termination Date may not
be reborrowed. The Revolving Credit Loan shall become immediately due and
payable upon payment or prepayment in full of the Term Notes, and in the
case where payment is made in connection with the prepayment of the Term
Loans, a Prepayment Fee (as hereinafter defined) shall be payable in
accordance with the terms of Section 2.6(k) hereof.
(b) Term Loan A. Subject to the terms and conditions of this Agreement
and in reliance upon the representation and warranties of Borrowers herein
set forth, each Lender severally agrees to lend to Borrowers on the Closing
Date its Participation Percentage of the Term Loan A. The aggregate amount
of the Term Loan A shall be Three Million Five Hundred Thousand Dollars
($3,500,000). The Term Loan shall be funded in one drawing on the Closing
Date. Amounts borrowed under this subsection and repaid or prepaid may not
be reborrowed.
(c) Term Loan B. Subject to the terms and conditions of this Agreement
and in reliance upon the representation and warranties of each Borrower
herein set forth, each Lender severally agrees to lend to Borrowers on the
Closing Date its Participation Percentage of the Term Loan B. The aggregate
amount of the Term Loan B shall not exceed Eight Hundred Thousand Dollars
($800,000). The Term Loan B shall be
<PAGE>
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funded in one or more drawings of not less than One Hundred Thousand
Dollars ($100,000) each upon request of Borrowers on such date or dates as
Borrowers satisfy the conditions set forth in Section 4.2 and provided that
at the time of such borrowing and taking into account the pro forma effect
of such borrowing, Borrowers' ratio of Loans to EBITDA minus Capital
Expenditures shall not exceed 2.7 to 1.0. Amounts borrowed under this
subsection 2.2(c) and repaid or prepaid may not be reborrowed.
Section 2.3. Draws, Advances and Settlement of Payments and Advances.
(a) On the Closing Date, and upon satisfaction of the conditions set
forth in Section 4.1, Lenders shall make available to Borrowers the Term
Loan A and shall advance the aggregate amount of the Term Loan A to
Borrowers on such date through wire transfer.
(b) All advances or disbursements of the Revolving Credit Loan and
Term Loan B proceeds shall be effectuated at Borrowers' request either
through wire transfer or by receipt by Agent of a check drawn on a central
disbursement account (the "Agent Disbursement Account") of Borrowers
maintained with Agent. Any request for advance by wire transfer may be
transmitted to Agent at its Head Office via facsimile provided Borrowers
immediately notify Agent by telephone of such transmission. All such
requests for wire transfer advances shall be made to and received by Agent
not later than 10:00 a.m. Cincinnati, Ohio time on the Draw Date specified
on such request and each such check or wire transfer request shall be
deemed to be a request for an advance on the Revolving Credit Loan on the
date when received and processed by Agent. Borrowers hereby designate the
President, Treasurer or Chief Financial Officer of Holdings (or any other
officer authorized by Borrowers and designated as such to Agent) acting
individually or jointly to make all requests for draws and advances.
(c) The Agent shall promptly notify each Lender of its Participation
Percentage of each requested Revolving Credit Loan and Term Loan B and the
date of such borrowing. On the borrowing date specified in such notice,
each Lender shall make its share of the borrowing available at the Head
Office of the Agent for deposit to such account as the Agent shall
designate, no later than 1:00 p.m. Cincinnati time in Federal or other
immediately available funds. Upon receipt of the funds to be made available
by Lenders to fund any Revolving Credit Loan or Term Loan B hereunder, the
Agent shall disburse such funds by depositing them into the Agent
Disbursement Account.
(d) Each bank or other financial institution, other than Provident,
with which a Borrower maintains an account for the deposit of funds shall
execute a Blocked Account Agreement pursuant to which such bank or other
financial institution shall agree to direct all funds to an account at
Agent's Head Office (the "Agent Deposit Account"). All deposits to the
Agent Deposit Account shall be the property of Agent for the benefit of
Lenders and shall not be commingled with Borrower's other funds or be
deposited in any bank account of Borrower, or used in any manner except to
pay the Obligations. Agent shall, at the close of business on each Business
Day, automatically debit the Agent Deposit Account and apply the proceeds
against the Loans and other Obligations pursuant to the provisions of
Section 2.7(b). So long as no Event of Default shall have occurred and be
continuing, if funds remain in the Agent Deposit Account following the
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application provided for in the preceding sentence, the balance will be
promptly transferred to the Agent Disbursement Account. The crediting of
items deposited in the Agent Deposit Account to the reduction of the Loans
shall be conditioned upon final payment of the item and if any item is not
so paid, the amount of any credit given for it may be charged to the Loans
or to any other deposit account of Borrower, whether or not the item is
returned.
Section 2.4. The Notes. The absolute and unconditional obligation of
Borrowers to repay to each Lender its respective Pro Rata Share of the principal
of each Loan and the interest thereon shall be evidenced by a separate Revolving
Credit Note, Term Loan A Note and Term Loan B Note, for each Lender in the
amount of its respective Credit Commitment for each Loan dated as of the Closing
Date. All payments under the Notes shall be made to Agent at its Head Office,
for the account of Lenders, and Agent shall allocate all payments on each Loan
received from Borrowers among all Lenders in accordance with each Lender's Pro
Rata Share of such Loan in accordance with Section 2.7(b).
Section 2.5. Interest Payable on the Loans.
(a) Determination of Interest Rate. Agent shall determine the Interest
Rate in effect from time to time in accordance with the terms of this
Agreement. Any change in the Interest Rate shall, for all purposes of this
Agreement and any of the other Loan Documents, become effective on the
effective date of such change as announced by Agent in accordance with
Agent's customary practices.
(b) Monthly Installments. Borrowers shall pay to Agent, for the
account of Lenders in accordance with their respective Pro Rata Share of
such Loan, monthly in arrears on the first Business Day of each month
beginning with the month following the month in which the Closing Date
falls, interest on the outstanding principal amount of the Loans at the
annual rate equal to the Interest Rate applicable to each such Loan.
(c) Interest on Overdue Payments; Default Interest Rate. Upon the
occurrence and during the continuance of any Event of Default, or if the
Agent exercises its rights hereunder to accelerate any of the Notes
pursuant to Section 9.2(b), the outstanding principal and all accrued and
unpaid interest, as well as any other Obligations due Lenders or Agent
hereunder or under any Loan Document, shall bear interest at the Default
Interest Rate, from the date on which such amount shall have first become
due and payable to Lenders or Agent or the date on which such Event of
Default shall have occurred, to the date on which such amount shall be paid
to Lenders or Agent (whether before or after judgment) or such Event of
Default shall have been otherwise waived or cured. Interest will continue
to accrue until the Obligations in respect of the payment are discharged
(whether before or after judgment).
Section 2.6. Repayments and Prepayments of Principal.
(a) Payments on the Term Loan A. Borrowers shall pay to Agent, for the
account of Lenders in accordance with their respective Pro Rata Share on
Term Loan
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A, monthly in arrears on the first Business Day of each month beginning
with the month following the month in which the Closing Date falls,
interest on the outstanding principal amount of the Term Loan A at the
annual rate equal to the Interest Rate applicable thereto. Borrowers shall
pay to Agent, and Borrowers hereby authorize Agent to charge the respective
accounts of Borrowers maintained with Agent, beginning on October 1, 1996
and on each January 1, April 1, July 1, and October 1, thereafter,
quarterly installments of principal in the amounts set forth below (or such
lesser principal amount of the Term Loan A as shall then be outstanding),
plus accrued interest thereon at the Interest Rate applicable to the Term
Loan A; provided that in any event the last installment of principal on the
Term Loan A shall be due and payable on the Termination Date (if not
earlier prepaid) and shall be in an amount sufficient to pay in full the
entire unpaid principal amount of the Term Loan A.
================================================================================
PAYMENT DATE PRINCIPAL INSTALLMENT
- --------------------------------------------------------------------------------
October 1, 1996 $125,000
- --------------------------------------------------------------------------------
January 1, 1997 $125,000
- --------------------------------------------------------------------------------
April 1, 1997 $125,000
- --------------------------------------------------------------------------------
July 1, 1997 $125,000
- --------------------------------------------------------------------------------
October 1, 1997 $150,000
- --------------------------------------------------------------------------------
January 1, 1998 $150,000
- --------------------------------------------------------------------------------
April 1, 1998 $150,000
- --------------------------------------------------------------------------------
July 1, 1998 $150,000
- --------------------------------------------------------------------------------
October 1, 1998 $175,000
- --------------------------------------------------------------------------------
January 1, 1999 $175,000
- --------------------------------------------------------------------------------
April 1, 1999 $175,000
- --------------------------------------------------------------------------------
July 1, 1999 $175,000
- --------------------------------------------------------------------------------
October 1, 1999 $200,000
- --------------------------------------------------------------------------------
January 1, 2000 $200,000
- --------------------------------------------------------------------------------
April 1, 2000 $200,000
- --------------------------------------------------------------------------------
July 1, 2000 $200,000
- --------------------------------------------------------------------------------
October 1, 2000 $225,000
- --------------------------------------------------------------------------------
January 1, 2001 $225,000
- --------------------------------------------------------------------------------
April 1, 2001 $225,000
- --------------------------------------------------------------------------------
July 1, 2001 $225,000
================================================================================
<PAGE>
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(b) Payments on the Term Loan B. The terms of Payments and
amortization of the Term Loan B shall be determined by agreement of
Borrowers and Agent at the time such Loan shall be made.
(c) Repayments on the Revolving Credit Loan. Borrowers shall have the
right to repay the principal of the Revolving Credit Loan in full or in
part at any time and from time to time without any penalty or premium,
unless such payment is made in connection with the prepayment of the Term
Loans under conditions described in Sections 2.2(a) and 2.6(k) and the
termination of the Lenders' Commitments hereunder.
(d) Revolving Credit Loan Overadvance. If at any time the aggregate
amount of the Revolving Credit Loan outstanding to Borrowers exceeds the
Maximum Revolving Commitment, Borrowers shall be obligated to immediately
prepay the amount that exceeds the Maximum Revolving Commitment.
(e) Prepayments from Extraordinary Dispositions. Immediately upon
receipt by a Borrower of Net Proceeds, resulting from an Extraordinary
Disposition other than the issuance of Equity Interests, Borrowers shall
prepay the Loans in an amount equal to the total Net Proceeds then subject
to this subsection in accordance with subsection 2.6(j). Notwithstanding
the foregoing, in the event that a Borrower (1) has an accrued tax
liability with respect to such an Extraordinary Disposition or (2)
reasonably expects the proceeds of such Extraordinary Disposition to be
reinvested within six (6) months of the receipt thereof in productive
assets of a kind then used or useable in the business of Holdings and its
Subsidiaries, or in the case of insurance and condemnation proceeds,
utilized within six (6) months of the receipt thereof (or such longer
period as the Agent may agree to, such agreement not to be unreasonably
withheld if the Borrower has timely begun and is diligently pursuing the
rebuilding or repair in question but reasonably expects that such
rebuilding or repair will not be completed within such six (6) month
period) to repair the loss or damage to or otherwise rebuild the assets in
respect of which the proceeds were paid, then Borrowers shall deliver such
proceeds or portion thereof to Agent to be held by Agent in a cash
collateral account. Upon Borrowers' request, Agent and Lenders shall
release such proceeds to Borrowers for payment of the accrued tax liability
or for reinvestment, repair or rebuilding. In the event such Borrower (1)
is not required to pay all or any portion of the accrued tax liability or
(2) fails to reinvest such proceeds or utilize them for repair or
rebuilding within six (6) months of the receipt thereof (or such longer
period that may be agreed to pursuant to this subsection 2.6(j)), Borrowers
authorize and direct Agent and Lenders to apply such amount as a prepayment
of the Loans to be applied in accordance with subsection 2.6(j).
(f) Prepayments for Excess Cash Flow. Within ninety (90) days after
the end of each Fiscal Year of Holdings beginning with the Fiscal Year
ending December 31, 1996, Borrowers shall prepay the Loans in an amount
equal to twenty-five percent (25%) of Excess Cash Flow for such prior
Fiscal Year calculated on the basis of the audited financial statements for
such Fiscal Year delivered to Lender pursuant to subsection 6.1(c). All
such prepayments of the Term Loans from Excess Cash Flow shall be applied
in accordance with subsection 2.6(j). Concurrently with the making of any
such payment, Borrowers shall deliver to Agent a certificate of Holding's
chief executive
<PAGE>
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officer or chief financial officer demonstrating its calculation of the
amount required to be paid.
(g) Prepayment from Equity Offerings. In the event that any Borrower
issues Equity Interests or debt securities, no later than the third
Business Day following the date of receipt of the proceeds from any sale of
such Equity Interests (other than: proceeds of the issuance of a Borrower's
Capital Stock received A) on or before the Closing Date (including funds
received on or prior to the Closing Date under the Equity Transaction) and
B) received after the Closing Date in connection with the Lesser
Transaction, provided such proceeds do not exceed $750,000; proceeds, if
any, from the issuance of a Borrower's Capital Stock to members of the
management of a Borrower or its Subsidiaries or officers, directors or
employees of any of them; proceeds from the issuance of Equity Interests to
a Borrower or any Subsidiary of a Borrower by any Person that was a
Subsidiary of a Borrower immediately prior to such issuance; proceeds
constituting equity contributions to any Subsidiary of a Borrower by a
Borrower or any of its Subsidiaries; (v) proceeds from the issuance of
Equity Interests pursuant to options, rights or warrants issued by a
Borrower that are outstanding as of the date of this Agreement or that are
or may be obligated to be issued under agreements that are outstanding as
of the date of this Agreement; and (vi) the Loans contemplated hereby),
Borrowers shall prepay the Loans in an amount equal to the lesser of (1)
the amount of such proceeds, net of underwriting discounts and commissions
and other reasonable costs associated therewith or (2) the amount of the
Obligations then outstanding. Prepayments made under this subsection 2.6(g)
shall be applied to the Loans in accordance with subsection 2.6(j).
(h) Prepayment from Key Man Insurance. In the event that Holdings or
any other Borrower receives proceeds from payment of the key man life
insurance maintained pursuant to Section 6.3, Borrowers shall prepay the
Loans in an amount equal to the lesser of such insurance proceeds or the
amount of the Obligations then outstanding. Prepayments made under this
subsection 2.6(j) shall be applied to the Loans in accordance with
subsection 2.6(j).
(i) Maturity. Subject to the terms and conditions of this Agreement,
Borrowers will be entitled to reborrow all or any part of the principal of
the Revolving Credit Notes repaid or prepaid prior to the Termination Date.
The Credit Commitments shall terminate and all of the indebtedness
evidenced by the Revolving Credit Notes and the Term Loan B Notes shall, if
not sooner paid, be in any event absolutely and unconditionally due and
payable in full by Borrower on July 1, 2001, the date of the final maturity
of such Notes. The Term Loan A Notes shall, if not sooner paid, be in any
event absolutely and unconditionally due and payable in full by Borrowers
on July 1, 2001, the date of the final maturity of such Notes.
(j) Application of Proceeds. With respect to mandatory prepayments
described in paragraphs 2.6(f) through 2.6(h) above, such prepayments shall
first be applied in the inverse order of maturity to the payment of the
remaining installments on the Term Loan B, and at any time after the Term
Loan B shall have been repaid in full, such prepayments shall be applied in
the inverse order of maturity to the payment of the
<PAGE>
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remaining installments on the Term Loan A, and thereafter such payments
shall be applied in repayment of the Revolving Credit Loan.
(k) Prepayment Fees. If Borrowers voluntarily prepay the Term Loans in
full prior to the third anniversary of the Closing Date, the Revolving
Credit Loan shall, in accordance with Section 2.2(a) become due and payable
in full, and Borrowers shall pay to Agent, for the ratable benefit of
Lenders, as liquidated damages and compensation for the costs of being
prepared to make funds available to Borrowers under this Agreement, and not
as a penalty, an amount determined by multiplying (x) the amount of the
Credit Commitment times (y) three percent (3%) upon prepayment during the
first Loan Year; two percent (2%) upon prepayment during the second Loan
Year; and one percent (1%) upon prepayment during the third Loan Year (the
"Prepayment Fee"). Borrowers shall also pay a Prepayment Fee in connection
with any partial prepayment of any Term Loan; provided, however, that if
such prepayment, either in full or in part, occurs as a result of any event
described in paragraphs 2.6(e), 2.6(f), or 2.6(h) above, no such Prepayment
Fee shall be required.
Section 2.7. Payments and Computations.
(a) Time and Place of Payments. Notwithstanding anything in this
Agreement or any of the other Loan Documents to the contrary, each payment
payable by Borrowers to the Agent or any Lender under this Agreement or any
of the other Loan Documents other than payments pursuant to Section 2.3(d)
made as a result of the application of funds in the Agent Deposit Account,
shall be made directly to the Agent, at Agent's Head Office, not later than
12:00 noon Eastern Standard or Eastern Daylight Time, as applicable in
Cincinnati, Ohio, on the due date of each such payment in immediately
available and freely transferrable funds. The Agent will promptly cause to
be distributed to each Lender in immediately available and freely
transferrable funds such Lender's Pro Rata Share of each such payment
received by the Agent. In order to cause timely payment to be made to Agent
of all Obligations as and when due, Borrowers hereby authorize and direct
Agent, at Agent's option to debit the Agent's Disbursement Account (by
increasing the principal balance of the Revolving Credit Loan) when such
Obligations become due.
(b) Application of Funds. Notwithstanding anything herein to the
contrary, the funds received by Agent with respect to the Obligations shall
be applied as follows:
(i) No Default. If the Notes have not been accelerated pursuant
to Section 9.2(b) and if no Default or Event of Default hereunder or
under the Notes or any of the other Loan Documents shall have occurred
and be continuing at the time Agent receives such funds, in the
following manner: first, to the payment of all fees, charges, and
other sums (with exception of principal and interest) due and payable
to Agent or Lenders under the Notes, this Agreement or the other Loan
Documents at such time; second, to the payment of all of the interest
which shall be due and payable on the principal of the Notes at the
time of such payment in accordance with each Lender's Pro Rata Share;
third, to the payment of
<PAGE>
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such amount of principal of the Term Loan B Notes that is then due in
accordance with each Lender's Pro Rata Share; fourth, to the payment
of such amount of principal of the Term Loan A Notes that is then due
in accordance with each Lender's Pro Rata Share; fifth, to the payment
of principal of the Revolving Credit Loan Notes in accordance with
each Lender's Pro Rata Share; and sixth, to Borrowers.
(ii) Default. If the Notes have been accelerated pursuant to
Section 9.2(b), or if a Default or Event of Default hereunder shall
have occurred and be continuing hereunder or under the Notes or any of
the other Loan Documents at the time Agent receives such funds, in the
following manner: first, to the payment or reimbursement of Lenders
and Agent for all costs, expenses, disbursements and losses which
shall have been incurred or sustained by Lenders or Agent in or
incidental to the collection of the Obligations owed by Borrowers
hereunder or the exercise, protection, or enforcement by Lenders and
Agent of all or any of the rights, remedies, powers and privileges of
Lenders and Agent under this Agreement, the Notes, or any of the other
Loan Documents and in and towards the provision of adequate indemnity
to the Agent and any of the Lenders against all taxes or Liens which
by law shall have, or may have priority over the rights of the Agent
or Lenders in and to such funds and second, to the payment of all of
the Obligations in accordance with Section 2.7(b)(i) above.
(c) Payments on Business Days. If any sum would (but for the
provisions of this paragraph (c)) become due and payable to Agent or any
Lender by Borrowers under any of the Loan Documents on any day which is not
a Business Day, then such sum shall become due and payable on the Business
Day next succeeding the day on which such sum would otherwise have become
due and payable hereunder or thereunder, and interest payable to Agent or
any Lender under this Agreement or any of the other Loan Documents shall
continue to accrue and shall be adjusted by the Agent accordingly.
(d) Computation of Interest. All computations of interest payable
under this Agreement, the Notes, or any of the other Loan Documents shall
be computed by Agent on the basis of the actual principal amount
outstanding on each day during the payment period and shall be calculated
on the basis of the actual number of days elapsed during such period for
which interest is being charged, predicated on a year consisting of three
hundred and sixty (360) days. The daily interest charge shall be one
three-hundred-sixtieth (1/360th) of the annual interest amount. Each
determination of any interest rate by Agent pursuant to this Agreement, any
Note, or any of the other Loan Documents shall be conclusive and binding on
Borrowers in the absence of manifest error. Absent manifest error, a
certificate or statement signed by an authorized officer of Agent shall be
conclusive evidence of the amount of the Obligations due and unpaid as of
the date of such certificate or statement.
Section 2.8. Payments to be Free of Deductions. Each payment payable by
Borrowers to Agent or any Lender under this Agreement, any Note, or any of the
other
<PAGE>
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Loan Documents shall be made in accordance with Section 2.7 hereof, without
set-off or counterclaim and free and clear of and without any deduction of any
kind for any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any political subdivision or any taxing or other
authority therein, unless Borrowers are compelled by law to make any such
deduction or withholding. In the event that any such obligation to deduct or
withhold is imposed upon Borrowers with respect to any such payment payable by
Borrowers to Agent or any Lender, (a) Borrowers shall be permitted to make the
deduction or withholding required by law in respect of the said payment, and (b)
there shall become and be absolutely due and payable by Borrowers to Agent or
such Lender on the date on which the said payment shall become due and payable
and Borrowers hereby promise to pay to Agent or such Lender on such date, such
additional amount as shall be necessary to enable Agent or such Lender to
receive the same net amount which Agent or such Lender would have received on
such due date had no such obligation been imposed by law. Anything in this
Section 2.8 to the contrary notwithstanding, the foregoing provisions of this
Section 2.8 shall not apply in the case of any deductions or withholdings made
in respect of taxes charged upon or by reference to the overall net income,
profits or gains of Agent or any Lender. Borrowers shall have no obligation to
make any payment pursuant to this Section 2.8 with respect to any Lender who is
not a party hereto on the Closing Date unless no such payments would be payable
to any such Lender on the date it becomes a party hereto and no such payments
could be reasonably expected to be payable to such Lender and if such Lender is
organized under the laws of a foreign jurisdiction, such jurisdiction is exempt
from United States withholding tax and such Lender has provided Borrowers with
an Internal Revenue Form 4224 or Form 1001 or other certificate of document
required under United States law to establish entitlement to such exemption.
Section 2.9. Use of Proceeds.
(a) Permitted Uses of Loan Proceeds. Each Borrower represents,
warrants and covenants to Agent and each Lender that all proceeds of the
Loans shall be used by Borrowers solely for the purpose of refinancing
existing debt, financing working capital, providing acquisition financing
and for general corporate purposes.
(b) Prohibited Uses. Each Borrower represents, warrants and covenants
to Agent and each Lender that no part of the proceeds of the Loans will be
used (directly or indirectly) so as to result in a violation under
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System or for any other purpose violative of any rule or regulation of such
Board.
Section 2.10. Additional Costs, Etc. If any Lender shall reasonably
determine that any future applicable law, rule or regulation, or any change in
any present law or in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital, as a
consequence of its obligations hereunder, to a level below that
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which such Lender could have achieved but for such adoption, change or
compliance by any amount deemed by such Lender to be material and is not
otherwise reflected in the interest and other charges payable by Borrowers
hereunder, then Borrowers shall pay to such Lender upon demand such amount or
amounts, in addition to the amounts payable under the other provisions of this
Agreement, or the Notes, as will compensate such Lender for such reduction.
Determinations by any Lender of the additional amount or amounts required to
compensate such Lender in respect of the foregoing shall be conclusive in the
absence of manifest error. In determining such amount or amounts, Lender may use
any reasonable averaging and attribution methods.
Section 2.11. Agent and Lender Statements. A statement signed by an officer
of any Lender (as the case may be) setting forth any additional amount required
to be paid by Borrowers to Agent or such Lender under Sections 2.8 and 2.10
hereof, and the computations made by Agent or such Lender to determine such
additional amount or amounts, shall be submitted by Agent or such Lender to
Borrowers in connection with each demand made at any time by Agent (and copies
thereof delivered to each other Lender) or such Lender under either of such
Sections. A claim by Agent or any Lender for all or any part of any additional
amounts required to be paid by Borrowers under Sections 2.8 and 2.10 hereof may
be made before or after any payment to which such claim relates. Each such
statement shall, in the absence of manifest error, constitute conclusive
evidence of the additional amount required to be paid to Agent or such Lender,
provided it sets out in reasonable detail the reasons for such notice and the
averaging and attribution methods used by Agent or such Lender to determine the
amounts set forth in such notice.
Section 2.12. Allocation of Liability.
(a) Notwithstanding anything herein to the contrary, each Borrower's
liability (other than Holdings') under the Notes shall be limited to the
Maximum Credit Liability for each Borrower as determined at the earlier of
the date of commencement of a case under Title 11 of the United States Code
(or any successor provision) in which such Borrower is a debtor or the date
enforcement is sought hereunder or under the Notes; provided, however, that
each Borrower shall be jointly and severally liable for all advances,
charges, costs and expenses, including reasonable attorneys' fees incurred
or paid by Agent or any Bank in exercising any right, power or remedy
conferred by this Agreement or any enforcement thereof, including without
limitation those additional costs, claims and damages set forth in Section
11.5.
(b) Each Borrower agrees that in the event of the dissolution or
insolvency of any Borrower, the inability of any Borrower to pay its debts
as they become due, an assignment by any Borrower for the benefit of its
creditors, or the institution of any bankruptcy or other proceeding by or
against any Borrower alleging that such Borrower is insolvent or unable to
pay its debts as they become due, and whether or not such event shall occur
at a time when the Obligations are not then due and payable, the other
Borrowers shall pay the Obligations promptly upon demand as if the
Obligations were then due and payable. Each Borrower agrees that upon the
filing by or against any other Borrower of any proceeding under any present
or future provision of the United States Bankruptcy Code, or any other
similar federal or state statute, other Borrowers
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shall have no right to contribution, indemnification, or any recourse
whatsoever against the bankrupt Borrower for any liability incurred by the
other Borrowers under the terms of the Loan Documents. Each Borrower agrees
that this provision shall continue to be effective or be reinstated, as the
case may be, if at any time any payment, or any part thereof, of principal,
interest or any other amount with respect to the Obligations is rescinded
or must otherwise be restored by Agent or the Banks upon the bankruptcy or
reorganization of any Borrower, any other Person or otherwise.
Each Borrower further agrees that, to the extent that any Borrower makes a
payment to Agent, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside or otherwise required to be repaid to another Borrower, its estate,
trustee, receiver or any other party, including without limitation, under
any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the obligation or part
thereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such
initial payment, reduction or satisfaction occurred.
ARTICLE III.
SECURITY AGREEMENT
Section 3.1. Security Interest. To secure the prompt repayment of the Notes
and the Obligations, Borrowers hereby grant, and hereby pledge and collaterally
assign, to Agent, on behalf of the Lenders, a lien and security interest in and
to all of each Borrower's personal property and fixtures, wherever located,
whether now or hereafter owned, existing or acquired or hereafter arising,
including, without limitation, the Collateral of each Borrower; further, each
Borrower has executed and delivered to Agent, on behalf of the Lenders,
certificates of title and the like as necessary from time to time to secure the
Obligations hereunder; and shall deliver to Agent, on behalf of the Lenders, to
the extent required herein or upon Agent's request in accordance with the terms
of this Agreement, all instruments, documents and chattel paper in which
Borrowers from time to time have an interest and such other documents as Agent
may request to perfect a security interest in the Collateral..
Section 3.2. Mortgages and Liens on Real Property. To secure further such
liabilities and obligations, each Borrower has granted or will grant to Agent,
on behalf of the Lenders, a first lien, subject to the Permitted First Liens,
upon all real property owned by such Borrower and a first lien, subject to the
Permitted First Liens, on all leasehold interests (with the exception of the
month-to-month leasehold estate held by CCC Chester Twin Cinema Corporation in
Morris County, New Jersey and a leasehold estate in the Manasquan Cinema located
in Monmouth County, New Jersey) of such Borrower, each of which are identified
on Schedule 3.1, and each such Borrower has executed or shall execute and
deliver to Agent, on behalf of the Lenders, the Mortgages and Leasehold
Mortgages and valid assignments of all other property rights (including, without
limitation, rights to receive rents and rights with respect to operating
agreements, options, judgments and claims) which now exist or which may exist or
arise hereafter from time to
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time including without limitation, the Assignments of Option and Operating
Agreements and any consents relating thereto reasonably required by Agent.
Borrowers represent that the Manasquan Cinema is currently being leased by
CCC Manasquan Cinema Corporation from Algonquin Arts Partnership pursuant to a
certain Lease dated October 5, 1995 (the "Original Manasquan Lease"), and that a
lease for an additional five (5) year term commencing on the expiration date of
the Original Manasquan Lease has been executed by such parties ("Additional
Manasquan Lease" and together with the Original Manasquan Lease, the "Manasquan
Lease"). Holdings represents to Lenders and Agent that its current intention is
to abandon the premises. If at any time Holdings determines not to cancel the
Additional Manasquan Lease, Holdings agrees to notify Agent and CCC Manasquan
Cinema Corporation shall promptly execute a Leasehold Mortgage in favor of Agent
relating to the leasehold estate created by the Manasquan Lease. Further, if
Holdings does not provide satisfactory evidence to Agent of the termination of
the Manasquan Lease prior to the commencement date of the Additional Manasquan
Lease, CCC Manasquan Cinema Corporation shall promptly execute a Leasehold
Mortgage in favor of Agent relating to the leasehold estate created by the
Additional Manasquan Lease. Borrowers covenant and agree that in connection with
such Leasehold Mortgage, they shall provide evidence of title and such other
documentation as Agent may require and Borrowers shall use their best efforts to
obtain a landlord consent and a subordination, attornment and nondisturbance
agreement from any fee simple mortgagee prior to such commencement date.
Section 3.3. Pledge of Stock. As additional collateral for the Loans to be
made hereunder, Holdings shall execute and deliver to Agent, for the ratable
benefit of the Lenders, a Pledge Agreement with respect to all Capital Stock of
all Subsidiaries now owned or hereafter acquired by Holdings.
Section 3.4. Financing Statements; Additional Documents. Borrowers shall
take all necessary action or as requested by Agent or any Lender to continue as
perfected the first lien (subject only to the Permitted First Liens) and
security interest in the Collateral of Lenders and Agent, except for such
Collateral in which a first lien can be perfected only by possession and such
possession is not required by Agent at such time. Such filings shall be in form
and substance required by Agent, and Borrowers shall pay all costs of recording
and filing the financing statements (and any continuation or termination
statements with respect thereto), the Mortgages, Leasehold Mortgages, the
Assignment of Patents, the Assignment of Trademarks, and any other documents,
titles, statements, assignments or the like reasonably required to create,
maintain, preserve or perfect the liens or security interests granted under the
Loan Documents, together with costs and expenses of any lien or UCC searches
required by Agent in connection with the making of the Loans. At Agent's
request, Borrowers shall execute and deliver to Agent, on behalf of the Lenders,
at any time and from time to time hereafter, all supplemental documentation that
Agent may reasonably request to perfect, maintain, preserve or continue the
security interest and liens granted Lenders and Agent hereby and under any of
the other Loan Documents, in form and substance acceptable to Agent, and pay the
costs of preparing and recording or filing of the same. Borrowers agree that a
carbon, photographic, or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement. Except as otherwise provided
in this Agreement,
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Borrowers, immediately on acquiring Real Estate, Inventory, or Accounts or
Proceeds thereof for which separate perfection is necessary or reasonably
considered desirable by Agent, shall deliver to Agent, on behalf of the Lenders,
any and all evidence of ownership of any such property and shall take all such
action as may be reasonably necessary to perfect Agent's security interest in
such Property, including without limitation, the execution and recording or
filing of additional Mortgages, Leasehold Mortgages and UCC financing
statements. Each Lender (by any of its officers, employees or agents, but only
upon authorization of an officer of such Lender) shall have the right, at any
time or times during Borrowers' usual business hours, to inspect the Collateral,
all records related thereto (and to make extracts from such records) and the
premises upon which any of the Collateral is located, to discuss Borrowers'
affairs and finances with any accountant, account debtor or creditor of any
Borrower and to verify the amount, quality, quantity, value and condition of, or
any other matter relating to, the Collateral. Borrowers shall perform all
reasonable acts and execute or cause to be executed all documents, including,
without limitation, the Assignments of Option and Operating Agreements, and the
Assignment of Patents and the Assignment of Trademarks for filing with the
United States Patent and Trademark Office, state offices and corresponding
foreign registries as Agent reasonably deems necessary or desirable, to
establish, perfect, record and maintain the security interest in the
Intellectual Property and the goodwill symbolized thereby (whether now existing
or hereafter acquired).
Section 3.5. Accounts; Chattel Paper; Lease Agreements. After the
occurrence of an Event of Default and during the continuance thereof, Agent
shall have the right at any time to notify any Person obligated to make payments
to a Borrower with respect to Accounts, Chattel Paper and lease agreements to
make such payments directly to Agent, on behalf of the Lenders, or directly into
the deposit accounts subject to a Blocked Account Agreement.
Section 3.6. Release of Collateral. Upon Borrowers' full performance of
their Obligations in respect of the Loans, including, without limitation,
payment in full of the Notes, and termination of Borrowers' right to borrow
under this Agreement, Agent and Lenders shall release their interest in all
Collateral. Upon any sale of Collateral permitted pursuant to Section 8.6, Agent
shall release its interest in the portion of the Collateral being sold, without
prejudice to the continuation of its lien on any other Collateral.
ARTICLE IV.
CONDITIONS PRECEDENT TO DISBURSEMENTS
Section 4.1. Conditions Precedent to Initial Closing. On or prior to the
Closing Date, each of the following conditions precedent shall have been
satisfied:
(a) Certified Copies of Charter Documents and Bylaws. Agent and each
Lender shall have received from each Borrower a copy, certified by the
Secretary or an Assistant Secretary of such Borrower to be true and
complete on and as of the Closing Date, of the charter or other
organization documents and by-laws of such Borrower as in effect on the
Closing Date (together with all, if any, amendments thereto); and the
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charter or other organization documents of each Borrower certified by the
applicable Secretary of State.
(b) Proof of Corporate Authority. Agent and each Lender shall have
received from each Borrower copies, certified by the Secretary or an
Assistant Secretary of such Borrower to be true and complete on and as of
the Closing Date, of records of all action taken by such Borrower to
authorize the execution and delivery of this Agreement and the other Loan
Documents and to which it is or is to become a party as contemplated or
required by this Agreement; its performance of all of its obligations under
each of such documents; and the making by such Borrower of the borrowings
contemplated hereby. Agent shall have received from the Delaware Secretary
of State a Certificate of Good Standing of recent date certifying the
existence and good standing of each Borrower under the laws of the State of
Delaware and its good standing in each state where each Borrower is
required to qualify to conduct business.
(c) Incumbency Certificate. Agent and each Lender shall have received
from each Borrower an incumbency certificate, dated as of the Closing Date,
signed by the Secretary or an Assistant Secretary of each Borrower and
giving the name and bearing a specimen signature of each individual who
shall be authorized to sign, in the name and on behalf of such Borrower,
each of the Loan Documents to which such Borrower is or is to become a
party on the Closing Date; and to give notices and to take other action on
behalf of such Borrower under the Loan Documents.
(d) Officers' Certificates. Agent and each Lender shall have received
from each Borrower a certificate dated as of the Closing Date, signed by a
duly authorized officer of such Borrower and certifying that each of the
representations and warranties made by and on behalf of such Borrower to
Agent and each Lender in this Agreement and in the other Loan Documents was
true and correct when made, and is true and correct on and as of the
Closing Date.
(e) Loan Documents, etc. Each of the Loan Documents shall have been
duly and properly authorized, executed and delivered by each Borrower and
shall be in full force and effect on and as of the Closing Date; executed
originals of each of the Notes shall have been delivered to each Lender in
accordance with their respective Credit Commitments, and executed originals
or (as the case may be) executed counterparts of each of the other Loan
Documents shall have been delivered to Agent and/or each Lender.
(f) Actions to Perfect Liens. Agent shall have received evidence in
form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including without limitation, the filing
of duly executed financing statements on Form UCC-1, necessary or, in the
opinion of Agent, desirable to perfect the Liens created by the Security
Documents shall have been completed.
(g) Insurance. Agent shall have received copies of certificates of
insurance executed by each insurer or its authorized agent evidencing the
insurance required to be maintained by each Borrower pursuant to Section
6.2(b), and a certificate of a nationally recognized insurance broker
reasonably satisfactory to Agent certifying
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that insurance complying with such Section has been obtained and is in full
force and effect.
(h) Mortgages and Title Evidence. Agent shall have received the
following documents, each of which shall be executed (and, where
appropriate, acknowledged) by Persons satisfactory to the Agent:
(i) the following Mortgages and Leasehold Mortgages, in each
case duly executed and delivered by the respective Borrowers
(and where appropriate by the trustee thereunder) in
recordable form (in such number of copies as the Agent shall
have requested), together with such Uniform Commercial Code
financing statements as may be needed in order to perfect
the security interests granted by each of the Mortgages and
Leasehold Mortgages in any fixtures and other property
therein described which may be subject to the Uniform
Commercial Code, in each case appropriately completed and
duly executed and in proper form for filing in all offices
in which required:
(A) Open-End Leasehold Mortgage executed by Clearview
Theatre Group, Inc. relating to a leasehold estate in
property located in Somerset County, New Jersey;
(B) Open-End Leasehold Mortgage executed by CCC Washington
Cinema Corp. relating to a leasehold estate in property
located in Bergen County, New Jersey;
(C) Open-End Leasehold Mortgage executed by CCC Allwood
Cinema Corp. relating to a leasehold estate in property
located in Passaic County, New Jersey;
(D) Open-End Leasehold Mortgage executed by CCC Emerson
Cinema Corp. relating to a leasehold estate in property
located in Bergen County, New Jersey; and
(E) Open-End Leasehold Mortgage executed by New City Cinema
Corp. relating to a leasehold estate in property
located in Rockland County, New York.
(ii) an Environmental Indemnity Agreement duly executed and
delivered by each of the Borrowers.
(iii) with respect to the Real Estate covered by the Leasehold
Mortgages identified in (i) above, title evidence
satisfactory to each Lender that each respective Borrower
has a good, marketable leasehold estate in the Real Estate
subject only to the Permitted First Liens.
(iv) with respect to the Leasehold Mortgages identified in (i)
above, consents of the respective landlords consenting to
the mortgaging of the respective Borrower's leasehold
estate.
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(v) with respect to the Leasehold Mortgages identified in (i)
(A) above, non-disturbance and attornment agreements
executed by each of the respective landlords and their
respective mortgage holders, each in form and substance
satisfactory to Agent.
Borrowers shall have paid to the Agent an amount equal to all title search
and exam fees, mortgage and mortgage recording taxes, intangibles taxes, stamp
taxes and other taxes payable in connection with the execution and delivery of
the Mortgages and Leasehold Mortgages and the obligations secured thereby and
the recording of the Mortgages and Leasehold Mortgages in the appropriate land
offices.
(i) Legality of Transactions. No change in applicable law shall have
occurred as a consequence of which it shall have become and continue to be
unlawful for Agent or any Lender to perform any of its agreements or
obligations under any of the Loan Documents to which it is a party on the
Closing Date; or for Borrower to perform any of its agreements or
obligations under any of the Loan Documents to which it is a party on the
Closing Date.
(j) Performance, Etc. Each Borrower shall have duly and properly
performed, complied with and observed each of its covenants, agreements and
obligations contained in each of the Loan Documents to which each Borrower
is a party or by which such Borrower is bound on the Closing Date. No event
shall have occurred on or prior to the Closing Date, and no condition shall
exist on the Closing Date, which constitutes a Default or an Event of
Default.
(k) Proceedings and Documents. All corporate, governmental and other
proceedings and consents in connection with the transactions contemplated
by this Agreement, each of the other Loan Documents and all instruments and
documents incidental thereto shall be in form and substance satisfactory to
Agent and Lenders, and Agent and each Lender shall have received all such
counterpart originals or certified or other copies of all such instruments
and documents as Agent and each Lender shall have requested.
(l) Compliance with Laws. The borrowings made under this Agreement are
and shall be in compliance with the requirements of all applicable laws,
regulations, rules and orders, including without limitation, the
Environmental Laws and the requirements imposed by the Board of Governors
of the Federal Reserve System under Regulations U, G and X, and by the SEC.
(m) Legal Opinion. Agent and Lenders shall have received a written
legal opinion or opinions, addressed to Agent and each Lender and dated as
of the Closing Date, from legal counsel for each Borrower, which shall be
substantially in the form of attached Exhibit L and which legal opinions
shall otherwise be acceptable to Agent and each Lender.
(n) Legal Fees. Borrowers shall have reimbursed Agent for all fees and
disbursements of legal counsel to Agent (in its capacity as Agent and a
Lender) which shall have been incurred by Agent through the Closing Date in
connection with the
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preparation, negotiation, review, execution and delivery of the Loan
Documents and the handling of any other matters incidental thereto.
(o) Payment of Closing Fee. Borrowers shall have paid to Agent the
closing fee separately agreed to between Provident and Borrowers.
(p) Post-Closing Availability. After giving effect to the consummation
of the transactions contemplated hereby and in the Equity Transaction the
sum of (I) Borrowers' cash on hand, and (ii) unborrowed amounts of the
Revolving Credit Loan and Term Loan B, shall be at least One Million Three
Hundred Thousand Dollars ($1,300,000) and Holdings shall have delivered to
Agent a certificate as of the Closing Date demonstrating such excess
availability.
(q) Equity Transaction. Borrowers shall have closed, or be prepared to
simultaneously close with the closing of the Loans, the Equity Transaction
on terms and conditions satisfactory to Agent and each Lender.
(r) Key Man Life Insurance. Holdings shall have secured and assigned
to Agent the key man life insurance policy required to be maintained
pursuant to Section 6.3 hereof.
(s) Lien Searches. Agent shall have received the results of a recent
search by a Person satisfactory to Agent, of the UCC, judgment and tax lien
filings which may have been filed with respect to personal property of
Borrowers or any of their Subsidiaries in the jurisdictions listed on
Schedule 5.21, and the results of such search shall be satisfactory to
Agent.
(t) Environmental Assessment. Agent and Lenders shall have received an
environmental survey and assessment by a firm of licensed engineers in form
and substance satisfactory to each, and the conditions disclosed in such
survey and assessment shall be satisfactory to Agent and Lenders.
(u) Changes; None Adverse. From the date of the Current Financial
Statements referred to in Section 5.5 of this Agreement to the Closing
Date, no changes shall have occurred in the assets, liabilities, financial
condition, business, operations or prospects of Borrowers which,
individually or in the aggregate, are materially adverse to Borrower.
(v) Financial Statements. Each Lender shall have received the
financial statements referred to in Section 5.5, certified by an officer of
Holdings and each Lender shall have been satisfied that such financial
statements accurately reflect the financial status and condition of
Borrowers in all material respects.
(w) Warrants. Holdings shall have issued to Provident warrants to
purchase the agreed upon percentage of the fully-diluted Equity Interests
of Holdings in form and substance satisfactory to Provident and
substantially in the form of attached Exhibit M.
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(x) Subordination Agreement. Agent shall have received the
Subordination Agreement, executed by Holdings and CMNY.
Section 4.2. Conditions Precedent to Subsequent Loans. The obligation of
the Lenders to make any Revolving Credit Loan or any disbursement of Term Loan B
shall be subject to the satisfaction, prior thereto or concurrently therewith,
of each of the following conditions precedent:
(a) Legality of Transactions. It shall not be unlawful for any Lender
or the Agent to perform any of its agreements or obligations under any of
the Loan Documents to which such Person is a party on the Draw Date of such
Loan or for any Borrower to perform any of its material agreements or
obligations under any of the Loan Documents.
(b) Representations and Warranties. Each of the representations and
warranties made by or on behalf of Borrowers to the Lenders or the Agent in
this Agreement or any other Loan Document shall be true and correct in all
material respects when made and shall, for all purposes of this Agreement,
be deemed to be repeated on and as of the date of Borrowers' request for
such Loan, as the case may be, and shall be true and correct in all
material respects as of each of such dates (unless specifically stated to
relate only to an earlier date, in which case such representation or
warranty shall be true and correct in all material respects as of such
earlier date), except, in each case, as affected by the consummation of the
Equity Transaction and the Lesser Transaction, each as contemplated by the
terms hereof, and the transactions contemplated by the Loan Documents.
(c) No Default. No event shall have occurred on or prior to such date
and be continuing on such date, and no condition shall exist on such date
which constitutes a Default or Event of Default.
(d) Maximum Credit. The making of such Revolving Credit Loan shall not
result in the sum of all outstanding Revolving Credit Loans exceeding the
Maximum Revolving Credit Commitment.
(e) Term Loan B. Advances under the Term Loan B shall be subject to
the discretion of Agent, and the proceeds thereof shall be used solely for
such purposes as Agent may from time to time approve and shall be repaid on
such terms and conditions as Agent and Borrowers shall agree at the time
such Term Loan B advances are made.
(f) Post Closing Requirements. Compliance with the Post Closing
Requirements set forth in Section 4.3 hereof.
Section 4.3. Post Closing Requirements. Certain closing conditions
originally established to be satisfied at Closing have not been satisfied.
Despite the absence of these closing requirements, Lenders and Agent have agreed
to proceed with Closing provided Borrowers agree to diligently pursue the
satisfaction of the following requirements within the time periods set forth
below:
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(a) Delivery to Agent of the Assignment of Life Insurance acknowledged
by Massachusetts Mutual Life Insurance Company and delivery to Agent of the
original life insurance policy No. 9-665-526, each within twenty-one (21)
days from the Closing Date.
(b) Delivery to Agent within twenty-one (21) days of the Closing Date,
a Non-Disturbance and Attornment Agreement, in form and substance
satisfactory to Agent, executed by landlord and its respective mortgagee
for the Allwood leasehold located in Passaic County, New Jersey.
(c) Delivery to Agent within twenty-one (21) days of the Closing Date
of the following Blocked Account Agreements:
(i) CCC Madison Triple Cinema Corp. and Chemical Bank New Jersey,
NA;
(ii) CCC Port Washington Cinema Corp. and Fleet Bank;
(iii) Clearview Theatre Group Inc. and Peaport-Gladstone Bank;
(iv) CCC Chester Twin Cinema Corp. and PNC Bank, NA;
(v) CCC Manasquan Cinema Group and Somerset Bank;
(vi) CCC Grand Avenue Cinema Group and Fleet Bank;
(vii) CCC Herricks Cinema Corp. and Fleet Bank;
(viii) CCC Washington Cinema Corp. and Midlantic National Bank North;
(ix) CCC Allwood Cinema Corp. and Midlantic National Bank;
(x) CCC Emerson Cinema Corp. and Midlantic National Bank North;
(xi) CCC New City Cinema Corp. and Bank of New York.
(d) Delivery to Agent within twenty-one (21) days of the Closing Date
a Consent Agreement executed by Cinema Grand Avenue, Inc. and Triplex
Movies at Port Washington, Inc. relating to the Assignment of Option and
Management Agreement for the Grand Avenue and Port Washington Cinemas;
(e) Delivery to Agent within ten (10) of the Closing Date evidence
satisfactory to Agent that the collateral assignments of the leases by the
Seller Group have been released as the same relates to the Emerson Cinema
and the New City Cinema;
(f) Delivery to Agent within twenty-one (21) days of the Closing Date
certified copies of each of the real property leases to which a Borrower is
a party, including without limitation, a copy of each lease which is the
subject of the Leasehold
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Mortgages, the Manasquan Lease and the leases which are assignable to a
Borrower upon exercise of the options under the Option and Operating
Agreements; and
(g) Delivery to Agent within twenty-one (21) days of the Closing Date
the general Borrower's counsel's opinion letter in form and substance as
conceptually agreed to between Agent's counsel and Borrower's counsel.
Further, Lenders and Agent have requested that Borrowers use their best
efforts to satisfy certain other post-closing matters. In this regard, Borrowers
covenant and agree to use its diligent and best efforts to secure the execution
of the following documents and deliver the same to Agent as soon as reasonably
possible, if at all:
(a) A Consent Agreement executed by Cinema Herricks, Inc. relating to
the Assignment of Option and Management Agreement for the Herricks Theater.
(b) Landlord consents to each of the Assignments of Option and
Management Agreements, in form and substance satisfactory to Agent, from
each of the respective landlords relating to the Herricks Theater, the
Grand Avenue Theater and the Port Washington Theater.
(c) A Landlord Consent to Leasehold Mortgage relating to the Madison
Theater leasehold estate located in Morris County. Upon receipt of this
document CCC Madison Triple Cinema Corp. agrees to promptly execute a
Leasehold Mortgage relating to such leasehold estate and deliver the same
to Agent.
(d) A Non-Disturbance and Attornment Agreement in form and substance
satisfactory to Agent, executed by landlord and its respective mortgagee
for the Washington Cinema at such time and in connection with the
landlord's refinancing thereof.
ARTICLE V.
GENERAL REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Agent and each Lender as follows:
Section 5.1. Existence, Etc.
(a) Each Borrower is duly organized, validly existing and in good
standing under the laws of the State of Delaware; and has full corporate
power and authority and full legal right to own or to hold under lease its
Property and to carry on its business. Each Borrower is qualified and
licensed in each jurisdiction wherein the character of the Property owned
or held under lease by it, or the nature of its business makes such
qualification necessary or advisable. Each Borrower is currently qualified
in good standing as a foreign corporation in each jurisdiction set forth on
Schedule 5.1(a).
(b) After giving effect to the Equity Transaction, the authorized
Capital Stock of each Borrower and each of their respective Subsidiaries is
as set forth on Schedule 5.1(b). All issued and outstanding shares of
Capital Stock of each Borrower
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and each of their respective Subsidiaries are duly authorized and validly
issued, fully paid and nonassessable and such shares were issued in
compliance with all applicable state and federal laws concerning the
issuance of securities. Except as set forth on Schedule 5.1(b) and except
for the Lien of the Pledge Agreements, there are no outstanding options,
rights or warrants issued by any Borrower for the acquisition of shares of
the Capital Stock of such Borrower, nor any outstanding securities or
obligations convertible into such shares, nor any agreements by such
Borrower to issue or sell such shares. Except as set forth on Schedule
5.1(b) after giving effect to the Equity Transaction, there are no options,
sale agreements, pledges (other than the Pledge Agreements in favor of the
Agent), proxies, voting trusts, powers of attorney or any other agreements
or instruments binding upon any of Borrowers' shareholders with respect to
beneficial or record ownership of or voting rights with respect to shares
of the Capital Stock of any Borrower.
(c) No Borrower has any Subsidiaries except as set forth on Schedule
5.1(c). All the Capital Stock of each Subsidiary are free and clear of all
Liens other than those in favor of Agent.
(d) Except for stock of Subsidiaries, no Borrower owns or holds of
record (whether directly or indirectly) any shares of any class in the
capital of any corporation, nor does any Borrower own or hold (whether
directly or indirectly) any legal and/or beneficial equity interest in any
partnership, business trust or joint venture or in any other unincorporated
trade or business enterprise.
Section 5.2. Authority, Etc.
(a) Each Borrower has adequate power and authority and has full legal
right to enter into this Agreement and each of the other Loan Documents,
and to perform, observe and comply with all of its agreements and
obligations under each of such documents, including, without limitation the
borrowings contemplated hereby.
(b) The execution and delivery by Borrower of each of the Loan
Documents, the performance by Borrowers of all of their agreements and
obligations under such documents, and the making by Borrowers of the
borrowings contemplated by this Agreement, have been duly authorized by all
necessary corporate action on the part of each Borrower and do not and will
not contravene any provision of such Borrower's charter documents or
by-laws (each as in effect from time to time); conflict with, or result in
a material breach of the terms, conditions or provisions of, or constitute
a default under, under any agreement, trust deed, indenture, mortgage or
other material instrument to which such Borrower is a party or by which
such Borrower or any other Property of such Borrower is bound or affected;
violate or contravene any provision of any law, rule or regulation
(including, without limitation, Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System) or any order, ruling or
interpretation thereunder or any decree, order or judgment of any court or
governmental or regulatory authority, bureau, agency or official (all as
from time to time in effect and applicable to such Borrower) in any manner
that, individually or in the aggregate (i) would have an adverse effect on
the ability of a Borrower to perform its obligations under any Loan
Document or any agreement to be entered into in connection with the Equity
Transaction
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to which it is a party or (ii) would have a Material Adverse Effect;
require any waivers, consents or approvals by any of the creditors or
trustees for creditors of any Borrower or any other Person; or (v) result
in the certain or imposition of any Lien on any of the property of any
Borrower, except for Liens arising under the Loan Documents.
(c) Other than filings required to perfect the security interests
granted hereunder, no approval, consent, order, authorization or license
by, or giving notice to, or taking any other action with respect to, any
governmental or regulatory authority or agency is required, under any
provision of any applicable law:
(i) for the execution and delivery by Borrowers of this
Agreement, each Note, and the other Loan Documents, for the
performance by Borrowers of any of the agreements and obligations
thereunder or for the making by Borrowers of the borrowing
contemplated by this Agreement or for the conduct by Borrowers of
their business; or
(ii) to ensure the continuing legality, validity, binding effect,
enforceability or admissibility in evidence of this Agreement, the
Notes and the other Loan Documents.
Section 5.3. Binding Effect of Documents, Etc. Each of the Loan Documents
which Borrowers have or is to have executed and delivered as contemplated and
required to be executed and delivered as of the Closing Date by this Agreement
has been so executed and delivered by Borrowers, and each such Loan Document is
or will be in full force and effect. The agreements and obligations of Borrowers
contained in each such Loan Document constitute or shall constitute legal, valid
and binding obligations of Borrowers, enforceable against Borrowers in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent transfer, preference and other
laws and equitable principles affecting the scope and enforcement of creditors'
rights generally, and are also limited by the Lenders' and Agent's implied
covenants of good faith, fair dealing and commercially reasonable conduct, and
by the effect of judicial discretion on the availability of remedies and
realization of benefits under and enforceability of the Loan Document in all
respects as written.
Section 5.4. No Events of Default, Etc.
(a) No event has occurred and is continuing, and no condition exists,
which constitutes a Default or an Event of Default.
(b) No default by any Borrower and no accrued right of rescission,
cancellation or termination on the part of any Borrower, exists under this
Agreement or any of the other Loan Documents.
Section 5.5. Financial Statements. The Consolidated and consolidating
balance sheets and other financial statements of Holdings and Seller Group each
dated December 31, 1995 previously delivered to Agent ("Current Financial
Statements") have been prepared in accordance with GAAP and subject in the case
of unaudited statements to changes resulting from year-end adjustments. The
balance sheets contained in the
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Current Financial Statements present fairly the financial condition of Borrowers
as of the dates thereof in accordance with GAAP. The statements of income
contained in the Current Financial Statements present fairly the results of
operations of Borrowers for the fiscal periods then ended in accordance with
GAAP. There are no material liabilities or obligations, secured or unsecured
(whether accrued, absolute or actual, contingent or otherwise), which were not
reflected in the audited balance sheets of Borrowers or that as at such date or
in the footnotes thereto, and which should, in accordance with GAAP, have been
reflected in such balance sheets.
Section 5.6. Changes; None Adverse. Except as set forth on Schedule 5.6
attached hereto as of the Closing Date, no changes have occurred in the assets,
liabilities or financial condition of Holdings or Seller Group from those
reflected in the Current Financial Statements, which, individually or in the
aggregate, have been adverse. As of the Closing Date, there has been no adverse
development in the business or in the operations or prospects of Holdings or
Seller Group since the date of the Current Financial Statements.
Section 5.7. Title to Assets; Material Leases. Each Borrower has good,
sufficient and legal title to, or leasehold interest in, all of its respective
Property and assets reflected in the Current Financial Statements. Each Borrower
enjoys peaceful and undisturbed possession of all of its respective Property
subject to Material Leases and all such Material Leases are valid and in full
force and effect. All Material Leases are set forth in Schedule 5.7.
Section 5.8. Intellectual Property.
(a) Schedule 5.8 hereto sets forth a complete and correct list of all
Patents and Trademarks owned by each Borrower on the date hereof which are
material to each Borrower's business or financial condition. Each Borrower
owns and possesses the right to use, and has done nothing to authorize or
enable any other Person to use, any Patent or Trademark listed in said
Schedule 5.8 and all registrations listed in said Schedule are valid and in
full force and effect. Each Borrower owns and possesses the right to use
the respective Patents and Trademarks.
(b) Schedule 5.8 hereto sets forth a complete and correct list of all
licenses and other user agreements included in the Intellectual Property on
the date hereof.
(c) (i) There is no violation by others of any right of any Borrower
with respect to any Patent or Trademark listed in Schedule 5.8 hereto; no
Borrower is infringing in any respect upon any Patent or Trademark of any
other Person; no proceedings have been instituted or are pending against
any Borrower or, to any Borrower's knowledge, threatened, and no claim
against any Borrower has been received by any Borrower, alleging any such
violation.
Section 5.9. Indebtedness for Borrowed Money. Except as set forth on
Schedule 5.9 and except for the Indebtedness incurred under this Agreement, no
Indebtedness of any Borrower is secured by or otherwise benefits from any Lien
on or
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with respect to the whole or any part of such Borrower's properties or assets,
present or future. There exists no default or event or condition which, with the
giving of notice or passage of time, or both, would constitute a default under
the provisions of any instrument evidencing such Indebtedness or of any
agreement relating thereto which would interfere with the priority of Agent's
lien on the Collateral.
Section 5.10. Litigation. Except as set forth on Schedule 5.10, there is no
pending or to any Borrower's knowledge threatened action, suit, proceeding or
investigation before any court, governmental or regulatory authority, agency,
commission or official, board of arbitration or arbitrator against a Borrower or
in which a Borrower is a participant ("Litigation"). There are no proceedings
pending or threatened against any Borrower which call into question the validity
or enforceability of any of the Loan Documents.
Section 5.11. No Materially Adverse Contracts. No Borrower is a party to or
bound by any forward purchase contract, futures contract, covenant not to
compete, unconditional purchase, take or pay or other contracts, agreements or
instruments (whether written or oral) which restricts its ability to conduct its
business or, either individually or in the aggregate has or could reasonably be
expected to have a Material Adverse Effect.
Section 5.12. Taxes and Tax Returns, Etc.
(a) Each Borrower and its Subsidiaries has timely filed (inclusive of
any permitted extensions) or had filed on its behalf with the appropriate
taxing authorities all material returns (including without limitation,
material information returns and other material information) in respect of
taxes required to be filed through the date hereof. The information filed
was complete and accurate in all material respects at the time of filing.
No Borrower nor any group of which a Borrower is or was the common parent
has requested any extension of time within which to file returns (including
without limitation information returns) in respect of any taxes other than
routine extensions of time for filing returns which have not involved the
payment of material taxes (other than taxes immaterial in amount) beyond
the due date thereof.
(b) All taxes and assessments in respect of periods beginning prior to
the date hereof have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as reflected in the most
recent financial statements of Borrowers. No Borrower nor any of its
Subsidiaries has any liability for taxes in excess of the amounts so paid
or reserves so established.
(c) No deficiencies for taxes have been claimed, proposed or assessed
by any taxing authority or other governmental authority against any
Borrower nor any of its Subsidiaries and no tax liens have been filed.
There are no pending or threatened audits, investigations or claims for or
relating to any liability in respect to taxes, and there are no matters
under discussion with any taxing authorities or other governmental
authorities with respect to taxes which are likely to result in an
additional liability for taxes. No extension of a statute of limitations
relating to taxes or assessments is in effect with respect to any Borrower.
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(d) No Borrower nor any of its Subsidiaries has any obligation under
any tax sharing agreement or agreement regarding payments in lieu of taxes.
Section 5.13. Contracts with Affiliates, Etc.
(a) Except as set forth on Schedule 5.13(a) and except as permitted by
Section 5.13(a) hereof, Borrower is not a party to or otherwise bound by
any written agreements, instruments or contracts (whether written or oral)
with any Affiliate.
(b) Except as set forth on Schedule 5.13(b), there is no Indebtedness
for Borrowed Money owing by Borrower to any Affiliate nor is there
Indebtedness for Borrowed Money owing by any Affiliate to Borrower.
Section 5.14. Employee Benefit Plans.
(a) Each Borrower and its ERISA Affiliates are in compliance in all
material respects with any applicable provisions of ERISA and the
regulations thereunder and of the Internal Revenue Code of 1986, as
amended, with respect to all Employee Benefit Plans.
(b) No Termination Event has occurred or is reasonably expected to
occur with respect to any Guaranteed Pension Plan.
(c) The actuarial present value of all benefit commitments under each
Guaranteed Pension Plan does not exceed the assets of that Plan.
(d) No Borrower nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any withdrawal liability under ERISA to
Multiemployer Plans.
As used in this Section, the terms "actuarial present value" and "benefit
commitments" shall have the meanings specified in Section 4001 of ERISA.
Section 5.15. Governmental Regulation. No Borrower is a "public utility
company", a "holding company" or a "subsidiary" or an "affiliate" of a "holding
company," as such terms are defined in the federal Public Utility Holding
Company Act of 1935, as amended. No Borrower is an "investment company" or a
company "controlled" by an "investment company," as such terms are defined in
the Federal Investment Company Act of 1940, as amended. No Borrower is subject
to regulation under the Public Utility Holding Company Act 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
to any federal or state statute or regulation limiting its ability to incur
Indebtedness for Borrowed Money.
Section 5.16. Securities Activities. No Borrower is engaged in the business
of extending credit for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulation G, T, U and X
of the Board of Governors of the Federal Reserve System.
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Section 5.17. Disclosure. Neither this Agreement, any other Loan Document,
nor any other document, certificate or written statement furnished to Agent or
any Lender by or on behalf of a Borrower for use in connection with the
transactions contemplated by this Agreement, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading as of the date of such document,
certificate or other statement. The assumptions upon which all projected
financial statements which have been delivered to Agent and each Lender are
based as stated therein and provide reasonable estimations of future
performance. There is no fact known to any Borrower which has or which could
reasonably be expected in the future to have a Material Adverse Effect.
Section 5.18. No Material Default. No Borrower is in default under any
material order, writ, judgment, injunction, decree, statute or governmental
rule, indenture, agreement, contract, lease or other instrument or contract
applicable to it, which default would have a Material Adverse Effect or
adversely effect a Borrower's performance of any covenants or conditions
respecting any of its Indebtedness, and no holder of any Indebtedness of
Borrower has given notice of any asserted default thereunder, and no liquidation
or dissolution of a Borrower and no receivership, insolvency, bankruptcy,
reorganization or other similar proceedings relative to a Borrower or its
Property is pending or is to Borrower's knowledge threatened.
Section 5.19. Environmental Conditions.
(a) Borrowers and their Affiliates have obtained all necessary
permits, licenses, variances, clearances and all other necessary approvals
(collectively the "EPA Permits") for use of the Real Estate and the
operation and conduct of its business from all applicable federal, state,
and local governmental authorities, utility companies or
development-related entities including, but not limited to, any and all
appropriate Federal or State environmental protection agencies and other
County or City departments, public water works and public utilities in
regard to the use of the Real Estate and the operation and conduct of its
business, and the handling, transporting, treating, storage, disposal,
discharge, or Release of Hazardous Substances, if any, into, on or from the
environment (including, but not limited to, any air, water, or soil).
Each issued EPA Permit is in full force and effect, has not expired or been
suspended, denied or revoked, and is not under challenge by any Person.
Each Borrower is in compliance with each issued EPA Permit.
(b) Neither any Borrower, the Real Estate, nor any other Property
owned or leased by a Borrower is subject to any material private or
governmental litigation, threatened litigation, Lien or judicial or
administrative notice, order or action relating to Hazardous Substances or
environmental problems, impairments or liabilities with respect to the Real
Estate or such other Property.
(c) There has been no "Release" (as defined in Section 101(22) of
CERCLA) into, on or from any Real Estate and no Hazardous Substances
(except "Household Waste" as that term is defined at 40 C.F.R. 261.4(b)(1)
(1990)) are located on or have been treated, stored, processed, disposed
of, handled, transported to or from,
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disposed of upon the Real Estate during Borrower's ownership or into, upon
or from the environment including, but not limited to, any air, water, or
soil. No Borrower has allowed any Hazardous Substance to exist or be
treated, stored, disposed, Released, located, discharged, possessed,
managed, processed, or otherwise handled on the Real Estate or in the
operation or conduct of its respective businesses in violation of
Environmental Laws, and complied with all Environmental Laws affecting the
Real Estate.
(d) Borrowers and their Affiliates do not transport, in any manner,
any Hazardous Substances except in the ordinary course of business in
compliance with Environmental laws.
(e) No Borrower has received written notice of any circumstances which
would result in any material obligation under any Environmental Law to
investigate or remediate any Hazardous Substances in, on or under the Real
Estate.
Section 5.20. Licenses and Permits. Other than Licenses and Permits, the
lack of which individually or in the aggregate would not have a Material Adverse
Effect, each Borrower owns or possesses all Licenses and Permits and rights with
respect thereto, necessary for the conduct of its business as presently
conducted and proposed to be conducted, without any known conflict with the
rights of others and, in each case, free of any Lien not permitted by Section
8.9 of this Agreement. All of the foregoing Licenses and Permits are in full
force and effect, and each Borrower is in compliance with the foregoing without
any known conflict with the valid rights of others. No event has occurred which
permits, or after notice or lapse of time or both would permit, the revocation
or termination of any such License or Permit, or affect the rights of any
Borrower thereunder, except where such revocation, termination or effect upon
Borrowers would not individually or in the aggregate have a Material Adverse
Effect.
Section 5.21. General Collateral Representation.
(a) Borrowers are the sole owners of and have good and marketable
title to the Collateral, free from all Liens, in favor of any Person other
than the Agent and except Permitted Liens, and has full right and power to
grant the Agent a security interest therein. All information furnished to
the Agent concerning the Collateral is and will be complete, accurate and
correct in all respects when furnished.
(b) No security agreement, UCC Financing Statement, equivalent
security or Lien instrument or continuation statement covering all or any
part of the Collateral is on file or of record in any public office, except
such as may have been filed by any Borrower in favor of Agent pursuant to
this Agreement, or in respect of the items of Collateral subject to the
Permitted First Liens.
(c) The provisions of this Agreement are sufficient to create in favor
of the Agent, as of the Closing Date, a valid and continuing lien on, and
first security interest in (subject to the Permitted First Liens), the
types of the Collateral hereunder in which a security interest may be
created under Article 9 of the UCC. UCC Financing Statements have been duly
executed on behalf of each Borrower and the description of
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such Collateral set forth therein is sufficient to perfect first priority
security interests (subject to the Bernardsville Lien) in such Collateral
in which a security interest may be perfected by the filing of UCC
Financing Statements. When such UCC Financing Statements are duly filed in
the filing offices listed on Schedule 5.21 hereto, and the requisite filing
fees are paid, such filings will be sufficient to perfect security
interests in such of the Collateral described in the UCC Financing
Statements as can be perfected by filing (other than Equipment affixed to
real property so as to become fixtures), which perfected security interests
will be prior to all other Liens (except the Bernardsville Lien) in favor
of others and rights of others, enforceable as such as against creditors of
and purchasers from each Borrower (other than purchasers of Inventory in
the ordinary course) and as against any owner of the Real Estate where any
of the Equipment is located and as against any purchaser of such Real
Estate and any present or future creditor obtaining a Lien on such real
property.
(d) Upon delivery to and possession by Agent of the Pledged Stock
pursuant to the terms of the Pledge Agreement, Agent shall possess a valid,
first priority security interest in such Pledged Stock in accordance with
Article 9 of the UCC; and
(e) No person now having possession or control of any of the
Collateral consisting of Inventory or Equipment has issued, in receipt
therefor, a negotiable bill of lading, warehouse receipt or other document
of title.
ARTICLE VI.
AFFIRMATIVE COVENANTS OF BORROWER
Each Borrower covenants with and warrants to Agent and each Lender that,
from and after the Closing Date and until all of the Obligations are paid and
satisfied in full except as otherwise expressly consented to in writing by the
Requisite Lenders (unless the context otherwise requires):
Section 6.1. Reports and Other Information.
(a) Borrowers shall provide to the Agent as soon as available, and in
any event within fifteen (15) Business Days after the close of each month
of each fiscal year of Holdings, balance sheets of Holdings as of the end
of such month and consolidated and consolidating statements of income and
statements of cash flow of Holdings and its divisions and Subsidiaries for
such month, certified by the chief financial officer, principal accounting
officer or chief executive officer of Holdings to the effect that such
financial statements, while not examined by independent public accountants,
reflect in his opinion and in the opinion of senior management of Holdings,
all adjustments necessary to present fairly the consolidated financial
position of Holdings as at the end of such month and the results of its
operations for the month then ended in conformity with GAAP (except for the
absence of footnotes) consistently applied, subject only to year-end and
audit adjustments, together with a certificate of such officer stating that
as of the date of such certificate that, to the best of his knowledge,
after reasonable inquiry, no event has occurred which constitutes an Event
of Default or would constitute an Event of Default with the giving of
notice or the lapse of time or both, or, if an Event
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of Default or such an event has occurred and is continuing, a statement as
to the nature thereof and the action which Borrowers have taken or proposes
to take with respect thereto, and further setting out in such detail as is
reasonably required by the Lenders Borrowers' compliance with the
requirements of Article and Sections 8.9 and 8.12 hereof. Notwithstanding
anything in this Section 6.1(a) to the contrary, Borrowers shall not be
obligated to deliver the monthly balance sheets and cash flow statements
for January and February until such time as the year-end adjustments have
been made and the annual audit has been completed. Together with the
delivery of such financial statements of Holdings, Borrowers will deliver
to the Agent a Compliance Certificate and statements of income and
attendance prepared on a theater by theater basis for such period, together
with a statement of Capital Expenditures (reasonably identified by theater
and project) and corporate overhead expenses for the period then ending for
which such reports are being delivered.
(b) Borrowers shall provide to the Agent as soon as available, and in
any event within fifteen (15) Business Days after the close of each quarter
of each fiscal year of Holdings, balance sheets of Holdings as of the end
of such quarter and consolidated and consolidating statements of income and
statements of cash flow of Holdings and its divisions and Subsidiaries for
such quarter and for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, certified by the chief
financial officer, principal accounting officer or chief executive officer
of Holdings to the effect that such financial statements, while not
examined by independent public accountants, reflect in his opinion and in
the opinion of senior management of Holdings, all adjustments necessary to
present fairly the financial position of Holdings (except for the absence
of footnotes) as at the end of such quarter and the results of its
operations for the quarter then ended in conformity with GAAP consistently
applied, subject only to year-end and audit adjustments, together with a
certificate of such officer stating that as of the date of such certificate
that, to the best of his knowledge, after reasonable inquiry, no event has
occurred which constitutes a Default or an Event of Default or would
constitute a Default or an Event of Default with the giving of notice or
the lapse of time or both, or, if a Default or an Event of Default or such
an event has occurred and is continuing, a statement as to the nature
thereof and the action which Borrowers have taken or proposes to take with
respect thereto, and further setting out in such detail as is reasonably
required by the Lenders Borrowers' compliance with the requirements of
Article and Sections 8.12 and hereof. Together with the delivery of such
financial statements of Holdings, Borrowers will deliver to the Agent a
Compliance Certificate and statements of income and attendance prepared on
a theater by theater basis for such period, together with a statement of
Capital Expenditures (reasonably identified by theater and project) and
corporate overhead expenses for the period then ending for which such
reports are being delivered.
(c) Borrowers shall provide to the Agent as soon as available and in
any event within ninety (90) calendar days after the end of each fiscal
year of Holdings a copy of the annual financial statements for such year
for Holdings, including therein a copy of the balance sheets of Holdings as
of the end of such fiscal year and consolidated and consolidating
statements of income and statements of cash flow and statements of
shareholders' equity of Holdings and its divisions and Subsidiaries,
certified without qualification by the Accountants, together with a
certificate of the chief financial officer,
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principal accounting officer or chief executive officer of Holdings stating
that, as of the date of such certificate, to the best of his knowledge and
after reasonable inquiry, no event has occurred which constitutes a Default
or an Event of Default or, if a Default or an Event of Default or such an
event has occurred and is continuing, a statement as to the nature thereof
and the action which Borrowers have taken or proposes to take with respect
thereto and further setting out in such detail as is reasonably required by
the Lenders Borrowers' compliance with the requirements of Article 7 and
Sections 8.9 and 8.12 hereof. Together with the delivery of such financial
statements of Holdings, Borrowers will deliver to the Agent a Compliance
Certificate and statements of income and attendance prepared on a theater
by theater basis for such period, together with a statement of Capital
Expenditures (reasonably identified by theater and project) and corporate
overhead expenses for the period then ending for which such reports are
being delivered.
(d) Together with each delivery of financial statements of Borrower
pursuant to paragraphs 6.1(a), 6.1(c), or, Borrowers will deliver a
management report: describing the operations and financial condition of
Holdings for the period then ended and the portion of the current fiscal
year then elapsed (or for the fiscal year then ended in the case of
year-end financials); setting forth in comparative form the corresponding
figures for the corresponding periods of the previous fiscal year and the
corresponding figures from the most recent Projections for the current
fiscal year delivered to the Agent pursuant to Section 6.1(e), and (3)
discussing the reasons for any significant variations. The information
above shall be presented in reasonable detail and shall be certified by the
chief financial officer or controller of Holdings to the effect that such
information fairly presents the results of operations and financial
condition of Holdings as at the dates and for the periods indicated.
(e) As soon as available and in any event not later than thirty (30)
days prior to the end of each fiscal year, Borrowers will deliver
Projections of Holdings for the forthcoming three (3) fiscal years, year by
year, and for the forthcoming fiscal year, month by month on a consolidated
and theater by theater basis.
(f) Borrowers shall provide to the Agent, promptly after sending or
filing thereof, copies of all reports and communications which each
Borrower sends to its securityholders, and copies of all reports and
registration statements which each Borrower files with the Securities and
Exchange Commission.
(g) Borrowers shall provide to the Agent as soon as possible, and in
any event within fifteen (15) days after a Borrower knows or has reason to
know that any Termination Event with respect to any Plan has occurred, a
statement of the chief financial officer or treasurer of each entity
comprising such Borrower describing such Termination Event and the action
which Borrowers propose to take with respect thereto.
(h) Borrowers shall provide to the Agent as soon as possible, and in
any event within five (5) days after the occurrence of a Default or an
Event of Default, continuing on the date of such statement, a statement of
the chief financial officer or treasurer of Holdings setting forth the
details of such Default or Event of Default, and the action which Borrowers
propose to take with respect thereto.
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(i) If (and on each occasion that) any of the following events shall
occur:
(i) any Loan Document shall at any time be terminated, canceled
or rescinded for any reason whatever; or
(ii) any action at law, suit in equity or other legal proceeding
shall at any time be commenced or threatened in writing by any person
(A) to terminate, cancel or rescind any Loan Document, or (B) to
enforce any other Person's performance or observance of or compliance
with any covenants, agreements or obligations under any Loan Document;
or
(iii) any Person which is a party to or otherwise bound by any
Loan Document shall fail or refuse to perform, comply with or observe
or shall otherwise breach any one or more of the material covenants,
agreements or obligations under such Loan Document;
then Borrowers will promptly (and, in any event, within five (5) Business Days)
after a Borrower shall have first become aware of the occurrence of any such
event, furnish to Agent written notice setting forth brief particulars thereof.
(j) Borrowers shall provide the Agent with the following additional
reports:
(i) as soon as available and in any event within a reasonable
time after the close of each fiscal year of Holdings copies of the
portions of any and all management letters from the Accountants, if
any, to the board of directors of Holdings or to any other entity
comprising Holdings regarding the various accounting practices and
control procedures used by Holdings;
(ii) promptly after a Borrower becomes aware of the commencement
thereof, notice of all actions, suits and proceedings before any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which may adversely affect a
Borrower and which are not fully covered by insurance without the
applicability of any co-insurance provisions or which have not been
bonded and in which either (A) the amount in controversy exceeds
Twenty Thousand Dollars ($20,000) for any single proceeding or Fifty
Thousand Dollars ($50,000) in the aggregate or (B) would cause a
Material Adverse Effect;
(iii) as soon as practicable after becoming aware of a claim by
any Person that a Borrower is in default under any agreement entered
into in connection with Indebtedness for Borrowed Money in excess of
Fifty Thousand Dollars ($50,000), notice of any such claim or default;
(iv) notice of any change in the conduct of the business or
financial condition of a Borrower promptly upon a Borrower becoming
aware of any such change which would have a Material Adverse Effect;
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(v) notice of any release of Hazardous Substances on the Real
Estate that is in material violation of Environmental Laws or would
require remediation pursuant to applicable federal or state law or of
any notification having been filed with regard to a release of
Hazardous Substances on or into Real Estate under the Federal
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601, et seq., or the Federal Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., or any other
applicable environmental law. Such notice shall indicate the steps
Borrowers have or will take to remediate all hazardous environmental
conditions if any such steps are required of it by applicable
Environmental Law and the estimated costs of such remediation; and
(vi) if (and on each occasion that) any event shall at any time
occur or any condition shall at any time develop which constitutes a
Default or an Event of Default, then, promptly (and, in any event,
within five (5) Business Days) after a Borrower shall have first
become aware of the occurrence or development of any such event or
condition, Holdings will furnish or cause to be furnished to Agent a
written notice specifying the nature and the date of the occurrence of
such event or (as the case may be), the nature and the period of
existence of such condition and what action Borrowers are taking or
proposes to take with respect thereto.
(k) Holdings shall also provide the Agent with such other information
relating to Holdings or any of its Subsidiaries (including, without
limitation, any Employee Benefit Plan) as the Agent may from time to time
reasonably request. To the extent the Agent is obligated to do so by
applicable law, rule or regulation, it may deliver to any regulatory body
having jurisdiction over it, copies of the reports and other information
provided by Borrower to the Agent pursuant to this Section 6.1.
(l) Holdings shall provide the Agent reasonable prior notice of each
meeting of its board of directors (and in any event not less than ten (10)
days prior to such meetings) and Agent shall attend any such meetings as it
may, in its discretion desire.
Section 6.2. Maintenance of Property; Authorization; Insurance.
(a) Each Borrower covenants to keep and maintain all of its Property
in good repair, working order and condition, reasonable wear and tear
excepted, and from time to time to make, or use all reasonable legal
remedies to cause to be made, all proper repairs, renewals or replacements,
betterments and improvements thereto so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times.
(b) At its own cost and expense, each Borrower shall obtain and
maintain during the term of this Agreement insurance against loss,
destruction or damage to its properties as Agent may require from time to
time to fully protect the Agent's and Lenders' interests in the Collateral,
insurance against public liability and third party property damage, with
such insurance companies, in such amounts and covering such risks as are at
all times satisfactory to Agent and naming Agent for the benefit of Lenders
<PAGE>
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as mortgagee, loss payee and additional insured as its interests may appear
and (iii) insurance as required by the terms of the Mortgages and Leasehold
Mortgages. Each Borrower agrees to deliver to Agent upon request insurance
certificates or policies evidencing compliance with the above requirements.
Each Borrower covenants, warrants and represents that it will not do any
act or voluntarily suffer or permit any act to be done whereby any
insurance required hereunder shall or may be suspended, impaired or
defeated. In the event that any item of Collateral shall be lost, destroyed
or irreparably damaged from any cause whatsoever during the term hereof,
Borrowers agree to proceed diligently and cooperate fully with Agent and
Lenders in the recovery of any and all proceeds of insurance applicable
thereto, and the carriers named therein are hereby directed by Borrowers to
make payment for such loss to Agent, on behalf of the Lenders, and not to
any Borrower and Lenders jointly. If any insurance losses are paid by
check, draft or other instrument payable to a Borrower and Agent and
Lenders jointly, Agent may endorse the name of such Borrower thereon and do
such other things as it may deem advisable to reduce the same to cash.
Subject to the terms of the Mortgages and Leasehold Mortgages and provided
Borrowers are not in Default in any of their Obligations under any of the
Loan Documents, all loss recoveries received by Agent and Lenders upon any
such insurance shall be paid by Agent and Lenders to Borrowers so long as
such proceeds promptly are reinvested in Borrowers' business. Should a
Borrower then be in default in any of its Obligations to Agent or Lenders
under any of the Loan Documents, such cash resources may be applied and
credited by Agent and Lenders to any obligation, subject to Section 2.7(b).
Each Borrower further covenants that it shall require that the insurer with
respect to each such insurance policy provide for thirty (30) days' advance
written notice to Agent of any cancellation or termination of, or other
change of any nature whatsoever in, the coverage provided under any such
policy.
Section 6.3. Key Man Life Insurance. Holdings shall obtain and maintain a
key man life insurance policy covering A. Dale Mayo in an amount not less than
$4,500,000 and Holdings shall maintain such insurance in full force and effect
until the Loans have been paid in full and all financing agreements among
Borrowers, Agent and the Lenders related thereto have been terminated. Holdings
shall assign such policy to the Agent for the benefit of itself and the Lenders
pursuant to an assignment in form and substance satisfactory to the Agent with
respect to such policy.
Section 6.4. Corporate Existence. Each Borrower shall preserve and maintain
its existence as a Delaware corporation and all of its rights, franchises and
privileges as a corporation.
Section 6.5. Inspection Rights. At any reasonable time, upon reasonable
notice, and from time to time Borrowers shall permit the Agent or any Lender, or
any of their agents, representatives or current or prospective participants in
the Loans, to inspect the Collateral, to examine and make copies of and
abstracts from the records and books of account of, to visit the properties of,
Borrowers and to discuss the affairs, finances and accounts of Borrowers with
any of their officers, employees, agents or the Accountants.
Section 6.6. Payment of Taxes and Claims. Each Borrower shall pay or cause
to be paid all taxes, assessments and other governmental charges imposed upon
its properties or assets or in respect of any of its franchises, business,
income or profits
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before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which by law have or might become due and
payable and which by law have or might become a lien or charge upon any of its
properties or assets, provided that (unless any material item of property would
be lost, forfeited or materially damaged as a result thereof) no such charge or
claim need be paid if the amount, applicability or validity thereof is currently
being contested in good faith and if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor.
Section 6.7. Compliance with Laws.
(a) Borrowers will comply with all material applicable federal, state
and local laws, rules, regulations and orders pertaining to the operation
of its business, paying before the same become delinquent all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or its properties, and paying all lawful claims which if
unpaid might become a Lien upon any of its properties, except to the extent
contested in good faith by proper proceedings which stay the imposition of
any penalty, fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves have been set aside for the payment
thereof.
(b) Borrowers will promptly notify each Lender in the event that any
Borrower receives any notice, claim or demand from any governmental agency
which alleges that a Borrower is in material violation of any of the terms
of, or has materially failed to comply with any applicable order issued
pursuant to any federal, state or local statute regulating its operation
and business, including, but not limited to, the Occupational Safety and
Health Act, the Federal Comprehensive Environmental Response, Compensation
and Liability Act, the Resource Conservation and Recovery Act and the
Federal Water Pollution Control Act.
Section 6.8. Notice of Other Events. Immediately upon a Borrower first
becoming aware of any of the following occurrences, Borrowers will furnish or
cause to be furnished to Agent written notice with full particulars of the
business failure, insolvency or bankruptcy of any Borrower; the rescission,
cancellation or termination, or the creation or adoption, of any material
agreement or contract to which any Borrower is a party; any labor dispute, any
attempt by any labor union or organization representatives to organize or
represent employees of any Borrower, or any unfair labor practices or
proceedings of the National Labor Relations Board with respect to any Borrower;
or any defaults or events of default under any material agreement of any
Borrower or any violations of any laws, regulations, rules or ordinances of any
governmental or regulatory body which individually or in the aggregate would
reasonably cause a Material Adverse Effect.
Section 6.9. Communication with Accountants. Each Borrower authorizes Agent
or any Lender to communicate directly with the Accountants and authorizes the
Accountants to disclose to Agent or such Lender any and all financial statements
and other information of any kind, including copies of any management letter or
the substance
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of any oral information or conversation that such Accountants may have with
respect to the business, financial condition and other affairs of Borrowers.
Section 6.10. Payment of Indebtedness. Borrowers will duly and punctually
pay or cause to be paid principal and interest on the Loans and all fees and
other amounts payable hereunder or under the Loan Documents in accordance with
the terms hereunder. Borrowers shall pay all other Indebtedness (whether
existing on the date hereof or arising at any time thereafter) punctually in
accordance with trade practices or within any applicable period of grace except
to the extent that any such obligation is contested in good faith by proper
proceedings or Borrowers have provided Agent evidence that any Lien resulting
from the non-payment thereof has been bonded or with respect to which adequate
reserves have been set aside for the payment thereof.
Section 6.11. Performance of Obligations Under Certain Documents. Borrowers
will duly and properly perform, observe and comply with all of its agreements,
covenants and obligations under this Agreement and each of the other Loan
Documents.
Section 6.12. Governmental Consents and Approvals.
(a) Borrowers will obtain or cause to be obtained all such approvals,
consents, orders, authorizations and licenses from, give all such notices
promptly to, register, enroll or file all such agreements, instruments or
documents promptly with, and promptly take all such other action with
respect to, any governmental or regulatory authority, agency or official,
or any central bank or other fiscal or monetary authority, agency or
official, as may be required from time to time under any provision of any
applicable law:
(i) for the performance by each Borrower of any of its agreements
or obligations under the Notes, this Agreement or any of the other
Loan Documents or for the payment by Borrowers to the Agent at its
Head Office of any sums which shall become due and payable by
Borrowers to Agent or any Lender thereunder;
(ii) to ensure the continuing legality, validity, binding effect
or enforceability of the Notes or any of the other Loan Documents or
of any of the agreements or obligations thereunder of Borrowers; or
(iii) to continue the proper operation of the business and
operations of Borrowers.
(b) Borrowers shall duly perform and comply with the terms and
conditions of all such approvals, consents, orders, authorizations and
Licenses and Permits from time to time granted to or made upon Borrowers.
Section 6.13. Employee Benefit Plans and Guaranteed Pension Plans. Each
Borrower will and will cause each of its ERISA Affiliates to comply with all
requirements imposed by ERISA and the Internal Revenue Code of 1986, as amended,
applicable from time to time to any of its Guaranteed Pension Plans or Employee
Benefit Plans, make full payment when due of all amounts which, under the
provisions of
<PAGE>
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Employee Benefit Plans or under applicable law, are required to be
paid as contributions thereto, not permit to exist any accumulated funding
deficiency, whether or not waived, file on a timely basis all reports, notices
and other filings required by any governmental agency with respect to any of its
Employee Benefit Plans, make any payments to Multiemployer Plans required to be
made under any agreement relating to such Multiemployer Plans, or under any law
pertaining thereto, not amend or otherwise alter any Guaranteed Pension Plan if
the effect would be to cause the actuarial present value of all benefit
commitments under each Guaranteed Pension Plan to be less than the current value
of the assets of such Guaranteed Pension Plan allocable to such benefit
commitments, furnish to all participants, beneficiaries and employees under any
of the Employee Benefit Plans, within the periods prescribed by law, all
reports, notices and other information to which they are entitled under
applicable law, and take no action which would cause any of the Employee Benefit
Plans to fail to meet any qualification requirement imposed by the Internal
Revenue Code of 1986, as amended. As used in this Section 6.13, the term
"accumulated funding deficiency" has the meaning specified in Section 302 of
ERISA and Section 412 of the Internal Revenue Code, and the terms "actuarial
present value", "benefit commitments" and "current value" have the meaning
specified in Section 4001 of ERISA.
Section 6.14. Further Assurances. Each Borrower will execute, acknowledge
and deliver and, in the case of third party consents or third party agreements,
diligently seek to obtain the execution, acknowledgement and delivery or
completion, any and all such further assurances and other agreements or
instruments, and take or cause to be taken all such other action, as shall be
reasonably requested by the Agent from time to time in order to give full effect
to any of the Loan Documents. Further, each Borrower shall execute, acknowledge
and deliver and shall, with diligent and best efforts, cause to be executed,
acknowledged and delivered and, in the case of third party consents, seek to
obtain the execution, acknowledgement and delivery or completion, any and all
documents or actions in connection with the Post Closing Requirements set forth
in Section 4.3 hereof.
Section 6.15. Interest Rate Risk Management. Borrowers shall purchase and
maintain in full force and effect during the term of this Agreement, effective
on or before thirty (30) days following the Closing Date, an interest rate swap,
interest rate cap, interest rate collar or similar arrangement designed to
protect Borrowers against the effect of fluctuations in the Interest Rate, such
arrangement and related agreements to be in form and substance reasonably
acceptable to Agent.
Section 6.16. Borrower's Depository Accounts. Borrowers shall concentrate
all of their bank and depository accounts with Agent, including without
limitation, all demand deposit, time deposit, concentration and zero balance
accounts except that Borrowers may maintain operating accounts with any local
financial institution, provided Borrowers shall use their best efforts to
maintain such accounts with one or more of the Lenders.
Section 6.17. Use of Proceeds. Borrowers shall use all Loan proceeds
disbursed only in accordance with the purposes set forth in Section 2.9 of this
Agreement.
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Section 6.18. Subsidiaries. Each Borrower shall pledge to the Agent for the
ratable benefit of the Lenders, the shares of Capital Stock of any Subsidiary
hereafter acquired or created. Further, each Borrower shall grant a Mortgage or
Leasehold Mortgage to Agent, for the ratable benefit of Lenders, on all Real
Estate hereafter acquired by any Borrower.
ARTICLE VII.
FINANCIAL COVENANTS
Section 7.1. Interest Coverage Ratio. Holdings shall not permit the ratio
of EBITDA to Cash Interest Expense for the Reference Period ending on each
Computation Date set forth below to be less than the amount set forth opposite
such Computation Date.
=================================================== ==========================
COMPUTATION DATE RATIO
=================================================== ==========================
June 30, 1996 2.0 to 1.00
- --------------------------------------------------- --------------------------
September 30, 1996 2.0 to 1.00
- --------------------------------------------------- --------------------------
December 31, 1996 2.0 to 1.00
- --------------------------------------------------- --------------------------
March 31, 1997 2.0 to 1.00
- --------------------------------------------------- --------------------------
June 30, 1997 2.0 to 1.00
- --------------------------------------------------- --------------------------
September 30, 1997 2.0 to 1.00
- --------------------------------------------------- --------------------------
December 31, 1997 thru July 1, 2001 2.5 to 1.00
=================================================== ==========================
Section 7.2. Debt Service Coverage. Holdings shall not permit its
Consolidated ratio of Cash Flow to Fixed Charges for the Reference Period ending
on each Computation Date set forth below to be less than 1.50 to 1.00 for each
Computation Date except for July 1, 2001 which ratio shall be not less than 1.25
to 1.00.
Section 7.3. Minimum Net Worth. Holdings shall not permit its Net Worth at
any time while the Loans are outstanding to be less than Four Million and 00/100
Dollars ($4,000,000.00).
Section 7.4. Debt to Cash Flow. As of the last day of each fiscal quarter
of Holdings, the ratio of Consolidated Indebtedness for Borrowed Money
outstanding as of such date to Consolidated Cash Flow for the twelve (12) months
ending on each Computation Date shall not exceed 3.0 to 1.0.
Section 7.5. Limitation on Capital Expenditures. Holdings shall not make or
incur any Capital Expenditures in the aggregate during any fiscal year in excess
of Three Hundred Thousand Dollars ($300,000.00).
If any Borrower enters into a Capital Lease with respect to fixed assets,
for purposes of calculating Capital Expenditures under this Section, the
aggregate amount of
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all payments due for the entire term of such Capital Lease (excluding, however,
the interest portion of capitalized lease payments or the interest portion of
any other permitted Indebtedness) shall be considered expended in full on the
date that such Borrower enters into such Capital Lease.
ARTICLE VIII.
NEGATIVE COVENANTS OF BORROWER
Each Borrower covenants with and warrants to Agent and each Lender that
from and after the Closing Date and until all of the Obligations are paid and
satisfied in full except as otherwise expressly consented to in writing by the
Requisite Lenders:
Section 8.1. Limitation on Nature of Business. No Borrower will at any time
make any material change in the nature of its business as carried on at the date
hereto or undertake, conduct or transact any business in a manner prohibited by
applicable law. No Borrower shall create, capitalize or acquire any Subsidiary
after the Closing Date without the prior written consent of Lender. Lender's
consent to the creation or capitalization of a Subsidiary shall be conditioned
upon such New Subsidiary executing (a) a Joinder Agreement in form and substance
satisfactory to Agent, wherein such New Subsidiary agrees to be bound by the
terms of this Credit Agreement, the Notes and the Loan Documents and (b) such
additional Security Documents as Agent shall require to grant Agent, for the
ratable benefit of Lenders, a first Lien on all of such New Subsidiaries
Property, subject only to the Permitted First Lien.
Section 8.2. Limitation on Fundamental Changes. No Borrower nor any of its
Subsidiaries shall at any time consolidate with or merge into or with any Person
or Persons or enter into or undertake any plan or agreement of consolidation or
merger with any Person, except that any Subsidiary may be merged with and into
Holdings or any other Borrower. No Borrower nor any of its subsidiaries shall
liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), or
convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, all or substantially all of such Borrower's or any such
Subsidiary's business or property whether now or hereafter acquired. No Borrower
nor any Subsidiary shall make or permit any amendment or modification to its
charter documents or by-laws.
Section 8.3. Restricted Payments. No Borrower will or will permit any of
its Subsidiaries to directly or indirectly declare, order, pay, make or set
apart any sum for any Restricted Payments except that:
(a) Subsidiaries may make Restricted Payments with respect to their
common stock to Holdings or to other Borrowers that are directly
wholly-owned by a Borrower, but only to the extent necessary to permit such
Borrower to pay the Obligations; and
(b) Holdings may purchase any Warrant or Capital Stock of Holdings
held by Provident on the terms and subject to the conditions set forth in
the Warrant Agreement and/or Stockholder's Agreement.
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(c) A Borrower may make interest payments to the holders of
Subordinated Debt but only to the extent set forth in and permitted by the
terms of the Subordination Agreement.
(d) Provided there is no Default or Event of Default under this
Agreement or any other Loan Documents, Holdings may make loans to its
Subsidiaries and the Subsidiaries may make distributions to Holdings but
only to facilitate their normal and customary operating and management
conditions and procedures and provided that all such Restricted Payments
are documented in accordance with standard and acceptable business
practices.
Section 8.4. Lease Obligations. Borrowers will not become obligated to pay
rent under any leases or other rental agreements (excluding Capital Leases and
real estate leases) under which the amount of the aggregate lease or other
payments for all such agreements or arrangements exceeds One Hundred Thousand
Dollars ($100,000.00) per screen for any 12 month period.
Section 8.5. Management Compensation. Neither Holdings nor any other
Borrower or Subsidiary shall pay or enter into an agreement to pay any
Management Shareholder yearly Compensation in excess of the amounts set forth in
the Employment Agreement dated as of May 29, 1996 between A. Dale Mayo and
Holdings (as such Employment Agreement is in effect on the Closing Date) and the
Managing and Monitoring Fee Agreement dated as of May 29, 1996 between Holdings
and MidMark (as such Managing and Monitoring Fee Agreement is in effect on the
Closing Date); provided, however, that upon a Default or Event of Default
hereunder or under any other Loan Document, no Borrower shall be permitted to
make any payments under the Managing and Monitoring Fee Agreement until such
time as such Default or Event of Default has either been waived by Agent or
cured by Borrowers. As used herein, "Compensation" shall mean all forms of
direct and indirect remuneration and include, without limitation, salaries,
commissions, bonuses, securities, property, insurance benefits, personal
benefits and contingent forms of remuneration.
Section 8.6. Limitation on Disposition of Assets.
(a) No Borrower or any of its Subsidiaries will sell, lease, transfer
or otherwise dispose of any of its property, business or assets ("Asset
Dispositions"), or grant any Person an option to acquire any such property,
business or assets except for:
(i) bona fide sales of Inventory to customers in the ordinary
course of business and dispositions of obsolete equipment not used or
useful in the business;
(ii) Asset Dispositions which satisfy the following conditions:
(A) Borrowers shall promptly notify Agent in writing of the
terms of such Asset Disposition, including within such notice the
assets sold and the consideration received;
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(B) the consideration received is at least equal to the fair
market value of such assets;
(C) if the consideration received is not solely in cash, all
non-cash consideration is pledged to the Agent pursuant to
documents satisfactory to the Agent so that the Agent has
received a first priority perfected security interest in such
non-cash consideration to secure the Obligations;
(D) the Net Proceeds of such Asset Disposition are applied
as required by subsection 2.6(e);
(E) after giving effect to the sale or other disposition of
the assets included within the Asset Disposition and the
repayment of Indebtedness with the proceeds thereof, Borrowers
are in compliance on a pro forma basis with the covenants set
forth in Article , recomputed for the most recently ended month
for which information is available and is in compliance with all
other terms and conditions contained in this Agreement; and
(F) no Default or Event of Default shall result from such
sale or other disposition.
(b) Except as permitted elsewhere in this Agreement and except for
agreements or contracts in existence as of the date of this Agreement and
disclosed to Lenders in the schedules hereto, no Borrower will and will not
permit any of its Subsidiaries directly or indirectly to sell, assign,
pledge or otherwise encumber or dispose of any shares of capital stock or
other equity securities in such Borrower or any such Subsidiary including
warrants, rights or options to acquire shares or other equity securities of
any of its Subsidiaries, except to Holdings or another Subsidiary of
Holdings.
Section 8.7. Limitation on Investments. No Borrower shall at any time make
any Investments of any kind whatever in any Person or Persons; excluding,
however from the operation of the foregoing provisions of this Section:
(a) Property to be used in the ordinary course of business of
Borrower;
(b) Assets arising from the sale of goods and services in the ordinary
course of business of Borrower;
(c) Investments in cash and Cash Equivalents.
(d) Investments in any wholly-owned Subsidiary as long as its Capital
Interest is pledged to the Agent and all of the assets of such Subsidiary
are pledged to Agent upon terms and conditions satisfactory to Agent;
(e) Investments in Holdings by any other Borrower.
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Section 8.8. Acquisition of Margin Securities. No Borrower shall own,
purchase or acquire (or enter into any contract to purchase or acquire) any
"margin security" as defined by any regulation of the Federal Reserve Board as
now in effect or as the same may hereafter be in effect unless, prior to any
such purchase or acquisition or entering into any such contract, Agent and each
Lender shall have received an opinion of counsel satisfactory to Agent and each
Lender to the effect that such purchase or acquisition will not cause this
Agreement or the Notes to be in violation of Regulation G, T, U, X or any other
regulation of the Federal Reserve Board then in effect.
Section 8.9. Limitation on Mortgages, Liens and Encumbrances. No Borrower
shall at any time create, assume, incur or permit to exist, any mortgage, Lien
or other encumbrance in respect of any of its Property, assets, income or
revenues of any character, whether heretofore or hereafter acquired by it;
excluding, however, from the operation of the foregoing provisions of this
Section (each a "Permitted Lien"):
(a) Any Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by Section 6.6 of this
Agreement;
(b) Any statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent;
(c) Any Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security;
(d) Any easements, rights-of-way, encroachments, leases, royalties,
restrictions and other similar title exceptions or encumbrances provided
such do not, in the aggregate, materially interfere with the ordinary
conduct of the business of any Borrower or materially reduce or impair the
value of the Real Estate so encumbered;
(e) Any interest or title of a lessor under any Material Lease listed
in Schedule 5.7 annexed to this Agreement;
(f) Liens granted to Agent for the benefit of Lenders;
(g) The additional existing mortgages, Liens and encumbrances of
Borrowers, listed and described, but only to the extent indicated, in
Schedule 8.9(g) annexed to this Agreement; and
(h) The Liens with respect to Indebtedness of Borrower under or in
respect to any conditional sales agreements, security agreements, equipment
leases in the nature of title retention agreements or security agreements
or other similar title retention agreements entered into by Borrowers on,
prior to or after the date of this Agreement in order to secure the payment
of the purchase price of any equipment purchased, leased or otherwise
acquired by any Borrower for use in the ordinary course of its business;
provided, however, that such Borrower is, by the terms of each of Sections
8.13 or 8.14 hereof, expressly permitted to enter into such agreement or
lease.
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Section 8.10. No Additional Negative Pledges. No Borrower will create or
otherwise cause or suffer to exist or become effective, directly or indirectly,
any prohibition or restriction (including any agreement to provide equal or
ratable security to any other Person in the event a Lien is granted to or for
the benefit of the Agent) on the creation or existence of any Lien upon the
assets of a Borrower; or any contractual obligation which may restrict or
inhibit the Agent's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof after the occurrence of an Event of Default.
Section 8.11. No Restrictions on Subsidiary Distributions to Borrowers.
Except as provided herein, Borrowers will not and will not permit any of their
Subsidiaries directly or indirectly to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to: pay dividends or make any other
distribution on any of such Subsidiary's Capital Stock owned by a Borrower or
any Subsidiary of a Borrower; subject to subordination provisions, pay any
indebtedness owed to a Borrower or any other Subsidiary; make loans or advances
to Borrower or any other Subsidiary; or transfer any of its property or assets
to a Borrower or any other Subsidiary.
Section 8.12. Limitation on Indebtedness. No Borrower shall at any time
create, incur or assume, or become or be liable (directly or indirectly) in
respect of, any Indebtedness for Borrowed Money, other than:
(a) indebtedness arising under this Agreement and the other Loan
Documents;
(b) Indebtedness described on Schedule 5.9;
(c) Indebtedness evidenced by the Subordinated Debt; and
(d) Indebtedness representing the refinancing of the Subordinated Debt
or any part thereof ("Refinanced Subordinated Debt") provided such
Refinanced Subordinated Debt is on terms that are in Agent's discretion, at
least as favorable to Borrowers, Agent and Lenders as the Subordinated Debt
to be redeemed or refinanced thereby, provided (a) that no covenant
contained in this Agreement or any other Loan Document would be violated on
the proposed issue date of the Refinanced Subordinated Debt after giving
effect to (I) the issuance of notes and or debentures in connection
therewith (II) the payment of all insurance costs, commissions, discounts,
redemption premiums, and other fees and charges associated therewith, (III)
the use of proceeds thereof and (IV) the redemption, repayment, or
retirement of all Indebtedness of the Borrowers to be redeemed, repaid, or
retired in connection therewith; and (B) Borrowers, Agent and the holders
of the Refinanced Subordinated Debt execute a subordination agreement upon
terms satisfactory to Agent.
Section 8.13. Limitation on Sales and Leasebacks. No Borrower shall at any
time, directly or indirectly, sell and thereafter lease back any of its
respective assets or Property.
Section 8.14. Transactions with Affiliates. No Borrower shall at any time
enter into or participate in any agreements or transactions of any kind with any
Affiliates
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of any Borrower, except agreements or transactions entered into in the ordinary
course of business upon fair and terms determined by Agent to be no less
favorable to Borrower than could be obtained in a comparable arms-length
transaction with an unaffiliated Person.
Section 8.15. No Additional Bank Accounts. Except as provided in Section
6.16, Borrowers shall not open, maintain or otherwise have any bank accounts.
ARTICLE IX.
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) Principal and Interest. Any principal shall not be paid when due,
or any interest or any other sum payable under this Agreement or the Notes
shall not be paid within three (3) days after the same is due and payable;
(b) Representation and Warranties. Any representation or warranty at
any time made by or on behalf of any Borrower in this Agreement, any Loan
Document or in any certificate, written report or statement furnished to
Agent or any Lender pursuant hereto or thereto shall prove to have been
untrue, incorrect or breached in any material respect on or as of the date
on which such representation or warranty was made or deemed to have been
made or repeated;
(c) Certain Covenants. Borrowers shall fail to comply with the
covenants set forth in Sections , , 6.8, or 6.17, Article or Article ;
(d) Other Covenants. Borrowers shall fail to perform, comply with or
observe or shall otherwise breach any other covenant or agreement contained
in this Agreement and such failure or breach shall continue for more than
fifteen (15) days after the earlier of the date on which any Borrower shall
have first become aware of such failure or breach or Agent or any Lender
shall have first notified Borrowers of such failure or breach;
(e) Loan Documents. The breach or a failure of Borrowers to perform,
comply with or observe any Loan Document or any other agreement, document,
instrument or certificate executed or delivered in connection with this
Agreement and if such failure shall continue for more than fifteen (15)
days after the earlier of the date on which a Borrower shall have first
become aware of such failure or breach or Agent or any Lender shall have
first notified Borrowers of such failure or breach, or any Loan Document
shall cease to be legal, valid, binding or enforceable in accordance with
the terms thereof;
(f) Litigation. Any action at law, suit in equity or other legal
proceeding to amend, cancel, revoke or rescind any Loan Document shall be
commenced by or on behalf of any Borrower or any other Person bound
thereby, or by any court or any other governmental or regulatory authority
or agency of competent jurisdiction; or
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any court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or shall issue a
judgment, order, decree or ruling to the effect that, any one or more of
the covenants, agreements or obligations of any Borrower under any one or
more of the Loan Documents are illegal, invalid or unenforceable in
accordance with the terms thereof;
(g) Default by Borrowers under other Agreements. Any default by any
Borrower or any event of default shall occur under any agreement,
instrument or contract relating to Indebtedness individually or in the
aggregate in excess of Fifty Thousand Dollars ($50,000) to which a Borrower
is at any time a party or by which any Borrower is at any time bound or
affected, or a Borrower shall fail to perform or observe any of its
agreements or covenants thereunder, and such default, event of default or
failure shall continue for such period of time as would permit, or as would
have permitted (assuming the giving of appropriate notice), holders of
Indebtedness of a Borrower to accelerate the maturity of all or any part of
such Indebtedness under any such document;
(h) Insolvency. Any action shall be taken by or on behalf of any
Borrower for the termination, winding up, liquidation or dissolution of a
Borrower; or any Borrower shall make an assignment for the benefit of
creditors, become insolvent or be unable to pay its debts as they mature;
or any Borrower shall file a petition in voluntary liquidation or
bankruptcy; or any Borrower shall file a petition or answer or consent
seeking the reorganization of a Borrower, or the readjustment of any of the
Indebtedness of a Borrower; or any Borrower shall commence any case or
proceeding under applicable insolvency or bankruptcy laws now or hereafter
existing; or any Borrower shall consent to the appointment of any receiver,
administrator, custodian, liquidator or trustee of all or any part of the
Property or assets of a Borrower; or any corporate action shall be taken by
any Borrower for the purpose of effecting any of the foregoing; or by order
or decree of any court of competent jurisdiction, any Borrower shall be
adjudicated as bankrupt or insolvent; or any petition for any proceedings
in bankruptcy or liquidation or for the reorganization or readjustment of
Indebtedness of a Borrower shall be filed, or any case or proceeding shall
be commenced, under any applicable bankruptcy or insolvency laws now or
hereafter existing, against any Borrower, or any receiver, administrator,
custodian, liquidator or trustee shall be appointed for any Borrower or for
all or any part of the Property of a Borrower and such case or proceeding
shall remain undismissed for a period of sixty (60) days, or any order for
relief shall be entered in a proceeding with respect to a Borrower under
the provisions of the United States Bankruptcy Code, as amended;
(i) Judgment. Any judgment, order or decree for the payment of money
in excess of Ten Thousand Dollars ($10,000) shall be rendered against any
Borrower, and such Borrower shall not discharge the same or provide for its
discharge in accordance with its terms, or procure a stay of execution
thereof, within Thirty (30) days after the date of the entry thereof;
(j) ERISA. Any Termination Event shall occur and as of the date
thereof or any subsequent date, the sum of the various liabilities of
Borrowers and their ERISA Affiliates (such liabilities to include, without
limitation, any liability to the Pension Benefit Guaranty Corporation (or
any successor thereto) or to any other party
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under Sections 4062, 4063, or 4064 of ERISA or any other provision of law
and to be calculated after giving effect to the tax consequences thereof)
resulting from or otherwise associated with such event exceeds Ten Thousand
Dollars ($10,000); or any Borrower of any of its ERISA Affiliates as an
employer under any Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plans and the plan sponsors of such
Multiemployer Plans shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability requiring a payment in an
amount exceeding Ten Thousand Dollars ($10,000);
(k) Change of Control. Any Change of Control shall occur;
(l) Material Adverse Change. Any event or occurrence which has a
Material Adverse Effect.
Section 9.2. Termination of Commitments and Acceleration of Obligations. If
any one or more of the Events of Default shall at any time occur:
(a) The Agent may, and upon the request of the Requisite Lenders,
shall, by giving notice to Borrowers, immediately terminate the Credit
Commitments of all of the Lenders in full and each Lender shall thereupon
be relieved of all of its obligations to make any Loans thereunder; except
that if there shall be an Event of Default under 9.1(h) hereof, the Credit
Commitments of all of the Lenders shall automatically terminate in full,
and each Lender shall thereupon be relieved of all of its obligations to
make any Loans hereunder.
(b) The Agent may, and upon the request of the Requisite Lenders,
shall, by giving notice to Borrowers (in this Agreement and in the other
Loan Documents called a "Notice of Acceleration"), declare all of the
Obligations, including the entire unpaid principal of the Notes, all of the
unpaid interest accrued thereon, and all other sums (if any) payable by
Borrowers under this Agreement, the Notes, or any of the other Loan
Documents, to be immediately due and payable; except that if there shall be
an Event of Default under Section 9.1(h), all of the Obligations, including
the entire unpaid balance of all of the Notes, all of the unpaid interest
accrued thereon and all other sums (if any) payable by Borrowers under this
Agreement, the Notes or any of the other Loan Documents shall automatically
and immediately be due and payable without notice to Borrowers. Thereupon,
all of such Obligations which are not already due and payable shall
forthwith become and be absolutely and unconditionally due and payable,
without any further notice or any other formalities of any kind, all of
which are hereby expressly and irrevocably waived.
Section 9.3. Remedies. From and after the occurrence of an Event of Default
which is continuing and which has not been waived by the Agent at the direction
of the Requisite Lenders, the Agent may, and upon the request of the Requisite
Lenders, shall:
(a) subject always to the provisions of Section 10.9 hereof, proceed
to protect and enforce all or any of its or the Lenders' rights, remedies,
powers and privileges under this Agreement, the Notes or any of the other
Loan Documents by action at law, suit in equity or other appropriate
proceedings, whether for specific performance
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of any covenant contained in this Agreement, any Note or any of the other
Loan Documents, or in aid of the exercise of any power granted to Agent
herein or therein. In the event the Agent shall fail or refuse to so
proceed, the Requisite Lenders shall be entitled to take such action as
they shall deem appropriate to enforce their rights hereunder and under the
other Loan Documents;
(b) remove from any premises where same may be located any and all
Inventory or any and all documents, instruments, files and records
(including the copying of any computer records), and any receptacles or
cabinets containing same, relating to the Accounts of each Borrower, or the
Agent may use (at the expense of Borrowers) such of the supplies or space
of Borrowers, at Borrowers' place or places of business or otherwise, as
may be necessary to properly administer and control the Accounts of
Borrowers or the handling of collections and realizations thereon;
(c) bring suit, in the name of any Borrower or the Lenders, and
generally shall have all other rights respecting said Accounts, including
without limitation the right to accelerate or extend the time of payment,
settle, compromise, release in whole or in part any amounts owing on any
such Accounts and issue credits in the name of any Borrower or the Lenders;
(d) sell, assign and deliver such Inventory and Accounts and any
returned, reclaimed or repossessed merchandise, with or without
advertisement, at public or private sale, for cash, on credit or otherwise,
at the Agent's sole discretion, and any Lender may bid-or become a
purchaser at any such sale, free from any right of redemption, which right
is hereby expressly waived by each Borrower;
(e) (i) notify the Account Debtor on any Account or chattel paper of
Lenders' security interest therein; demand that monies due or to become due
be paid directly to Agent for the account of Lenders; open any Borrower's
mail and collect any and all amounts due Borrowers from account debtors;
enforce payment of the accounts receivable or chattel paper by legal
proceedings or otherwise; exercise all of Borrowers' rights and remedies
with respect to the collection of the accounts receivable or chattel paper;
settle, adjust, compromise, modify, extend or renew the accounts receivable
or chattel paper; settle, adjust or compromise any legal proceedings
brought to collect the accounts receivable or chattel paper; to the extent
permitted by applicable law, sell or assign the accounts receivable or
chattel paper upon such terms, for such amounts and at such time or times
as Agent deems advisable; grant waivers or indulgences with respect to,
accept partial payments from, discharge, release, surrender, substitute any
customer security for, make compromise with or release, any other party
liable on, any account receivable or chattel paper; take control, in any
manner, of any item of payment or proceeds from any account debtor;
prepare, file, and sign any Borrower's name on any proof of claim in
Bankruptcy or similar document against any account debtor; prepare, file,
and sign a Borrower's name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the accounts
receivable or chattel paper; endorse the name of any Borrower upon any
chattel paper, document, instrument, invoice, freight bill, bill of lading
or similar document or agreement relating to the accounts receivable or
chattel paper or inventory; use any Borrower's stationery and sign any
Borrower's name to verifications of the accounts receivable or chattel
paper and notices thereof to account
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debtors; and use the information recorded on or contained in any data
processing equipment or computer hardware or software relating to the
accounts receivable, chattel paper, inventory, or proceeds thereof to which
any Borrower has access; and
(f) foreclose the security interests created pursuant to the Loan
Documents by any available judicial procedure, or take possession of any or
all of the Inventory and equipment of Borrowers without judicial process
and enter any premises where any such Inventory and equipment may be
located for the purpose of taking possession of or removing the same.
The Agent shall have the right, without notice of advertisement, to sell, lease,
or otherwise dispose of all or any part of the Inventory and Equipment of
Borrowers, whether in its then condition or after further preparation or
processing, in the name of any Borrower, or the Lenders, or in the name of such
other party as the Agent may designate, either at public or private sale or at
any broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such other terms and conditions as the
Agent in its sole discretion may deem advisable, and the Agent or any other
Lender shall have the right to purchase at any such sale. If any such Inventory
and Equipment shall require rebuilding, repairing, maintenance or preparation,
the Agent shall have the right, at its option, to do such of the aforesaid as is
necessary, for the purpose of putting such Inventory and Equipment in such
saleable form as the Agent shall deem appropriate. Each Borrower agrees, at the
request of the Agent, to assemble such Inventory and Equipment and to make it
available to the Agent at places which the Agent shall reasonably select,
whether at the premises of a Borrower or elsewhere, and to make available to the
Agent the premises and facilities of Borrowers for the purpose of the Agent's
taking possession of, removing or putting such Inventory and Equipment in
saleable form. However, if notice of intended disposition of any Collateral is
required by law, it is agreed that five (5) Business Days notice shall
constitute reasonable notification and full compliance with the law. The Agent
shall be entitled to use all intangibles and computer software programs and data
bases used by each Borrower in connection with its business or in connection
with the Collateral. The net cash proceeds resulting from the Agent's exercise
of any of the foregoing rights (after deducting all charges, costs and expenses
including reasonable attorneys' fees) shall be applied by the Agent to the
payment of the Obligations, whether due or to become due, in such order as the
Agent may elect. Each Borrower shall remain liable to the Lenders for any
deficiencies, and the Lenders in turn agree to remit to Borrowers or their
successors or assigns, any surplus resulting therefrom. The enumeration of the
foregoing rights is not intended to be exhaustive and the exercise of any right
shall not preclude the exercise of any other rights, all of which shall be
cumulative.
Section 9.4. No Implied Waiver; Rights Cumulative. No delay on the part of
the Agent or any Lender in exercising any right, remedy, power or privilege
under any of the Loan Documents or provided by statute or at law or in equity or
otherwise shall impair, prejudice or constitute a waiver of any such right,
remedy, power or privilege or be construed as a waiver of any Default or Event
of Default or as an acquiescence therein. No right, remedy, power or privilege
conferred on or reserved to Agent or any Lender under any of the Loan Documents
or otherwise is intended to be exclusive of any other right, remedy, power or
privilege. Each and every right, remedy, power and privilege
or privilege
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conferred on or reserved to Agent or any Lender under any of the Loan Documents
or otherwise shall be cumulative and in addition to each and every other right,
remedy, power so conferred on or reserved to Agent or any such Lender and may be
exercised at such time or times and in such order and manner as Agent or any
such Lender shall (in its sole and complete discretion) deem expedient.
Section 9.5. Set-Off; Pro Rata Sharing. Each Borrower hereby confirm to
Agent and each Lender the continuing and immediate rights of set-off of Agent
and each Lender with respect to all deposits, balances and other sums credited
by or due from Agent or such Lender or any of the offices or branches of Agent
or such Lender to each Borrower, which rights are in addition to any other
rights which Agent or such Lender may have under applicable law. If any
principal, interest or other sum payable by Borrowers to Agent or any Lender
under the Notes or any of the Loan Documents is not paid to Agent or such Lender
punctually when the same shall first become due and payable, or if any Event of
Default shall at any time occur, any deposits, balances or other sums credited
by or due from Agent or such Lender or any of the offices or branches of Agent
or any Lender to any Borrower, may, without any prior notice of any kind to
Borrowers, or compliance with any other conditions precedent now or hereafter
imposed by statute, rule or law or otherwise (all of which are hereby expressly
and irrevocably waived by each Borrower), be immediately set off, appropriated
and applied by Agent or such Lender toward the payment and satisfaction of the
Obligations (but not to any other obligations of Borrowers to Agent or such
Lender until all of the Obligations have been paid in full) in such order and
manner as Agent or such Lender (in its sole and complete discretion) may
determine, subject, however, to the provisions of Section 10.13.
ARTICLE X.
CONCERNING THE AGENT AND THE LENDERS
The Agent and the Lenders agree as follows:
Section 10.1. Appointment of the Agent. Each of the Lenders hereby appoints
Provident to serve as Agent, under this Agreement and the other Loan Documents,
and in such capacity, to administer this Agreement, and the other Loan
Documents.
Section 10.2. Authority. Each of the Lenders hereby irrevocably authorizes
the Agent to take such action on such Lender's behalf under this Agreement and
the other Loan Documents and to exercise such powers and to perform such duties
hereunder and thereunder as are delegated to or required of the Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto; and to take such action on such Lender's behalf as the Agent shall
consider necessary or advisable for the protection, collection or enforcement of
any of the Obligations. The Agent will promptly notify each of the Lenders as
soon as it becomes aware of any Default or Event of Default or any failure by
Borrowers to make any payment in respect of any of the Notes, provided, however,
that Agent shall not be deemed to have knowledge of any item until such time as
Agent's officers responsible for administration of the Loans shall receive
written notice thereof or have actual knowledge of such event. If any Lender
becomes aware of any Default or Event of Default by Borrowers, it shall promptly
notify Agent
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thereof provided, however, that Lenders shall not be deemed to have knowledge of
any item until such time as Lenders' officers responsible for administration of
the Loans shall receive written notice thereof or have actual knowledge of such
event.
Section 10.3. Acceptance of Appointment. The Agent hereby accepts its
appointment as Agent for each of the Lenders under this Agreement and the other
Loan Documents, but only on the terms set forth in this Agreement, including the
following:
(a) Agent makes no representation as to the value, validity or
enforceability of this Agreement or of any of the other Loan Documents or
as to the correctness of any statement contained in this Agreement or in
any of the other Loan Documents;
(b) Agent may exercise its powers and perform its duties under this
Agreement and the other Loan Documents either directly or through its
agents or attorneys;
(c) Agent shall be entitled to obtain from counsel selected by it with
reasonable care advice with respect to legal matters pertaining to this
Agreement, or any of the other Loan Documents and shall not be liable for
any action taken, omitted to be taken or suffered in good faith in
accordance with the advice of such counsel;
(d) Agent shall not be required to use its own funds in the
performance of any of its duties or in the exercise of any of its rights or
powers, and Agent shall not be obligated to take any action which, in its
reasonable judgment, would involve it in any expense or liability unless it
shall have been furnished security or indemnity in an amount and in form
and substance satisfactory to it; and
(e) Agent, in performing its duties and functions under this Agreement
and the other Loan Documents on behalf of the Lenders, will exercise the
same care which it normally exercises in making and handling loans in which
it alone is interested, but does not assume further responsibility.
Section 10.4. Collateral Matters.
(a) Release of Collateral. Lenders hereby irrevocably authorize Agent,
at its option and in its discretion, to release any Lien granted to or held
by Agent upon any property covered by the Security Documents upon
termination of the Credit Commitments and payment and satisfaction of all
Obligations; or constituting property being sold or disposed of if
Borrowers certify to Agent that the sale or disposition is made in
compliance with the provisions of this Agreement (and Agent may rely in
good faith conclusively on any such certificate, without further inquiry);
or constituting property leased to a Borrower under a lease which has
expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by such
Borrower to be, renewed or extended. Upon request by Agent at any time, any
Lender will confirm in writing Agent's authority to release particular
types or items of property covered by the Security Documents pursuant to
this subsection 10.4(a).
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(b) Confirmation of Authority; Execution of Releases. Without in any
manner limiting Agent's authority to act without any specific or further
authorization or consent by Requisite Lenders (as set forth in subsection
10.4(a)), each Lender agrees to confirm in writing, upon request by
Borrowers, the authority to release any property covered by the Security
Documents conferred upon Agent under clauses (i) through (iii) of
subsection 10.4(a). So long as no Event of Default is then continuing, upon
receipt by Agent of confirmation from the Requisite Lenders of its
authority to release any particular item or types of property covered by
the Security Documents, and upon at least five (5) Business Days prior
written request by Borrowers, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to
evidence the release of the Liens granted to Agent for the benefit of
Lenders herein or pursuant hereto upon such Collateral; provided, however,
that Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or
obligations of Borrowers, in respect of), all interests retained by
Borrowers, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the property covered by the
Security Documents.
(c) Absence of Duty. Agent shall have no obligation whatsoever to any
Lender or any other Person to assure that the property covered by the
Security Documents exists or is owned by Borrowers or is cared for,
protected or insured or has been encumbered or that the Liens granted to
Agent herein or pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or
under any duty of care, disclosure or fidelity, or to continue exercising,
any of the rights, authorities and powers granted or available to Agent in
this Section 10.4 or in any of the Loan Documents, it being understood and
agreed that in respect of the property covered by the Security Documents or
any act, omission or event related thereto, Agent may act in any manner it
may deem appropriate, it its discretion, given Agent's own interest in
property covered by the Security Documents as one of the Lenders and that
Agent shall have no duty or liability whatsoever to any of the other
Lenders for so acting; provided that Agent shall exercise the same care
which it would in dealing with loans for its own account.
Section 10.5. Agency for Perfection. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting Lenders' security interest in
assets which, in accordance with Article 9 of the Uniform Commercial Code in any
applicable jurisdiction, can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such Collateral, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor, shall deliver
such Collateral to Agent or in accordance with Agent's instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Security Document or to realize upon any collateral security for the
Loans, it being understood and agreed that such rights and remedies may be
exercised only by Agent.
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Section 10.6. Application of Moneys. All moneys realized by the Agent under
the Loan Documents shall be held by Agent to apply in accordance with Section
2.7(b) hereof.
Section 10.7. Reliance by the Agent. Agent shall be entitled to rely on any
notice, consent, certificate, affidavit, letter, telegram, telecopy, facsimile
or teletype message, statement, order, instrument or other document believed by
it to be genuine and correct and to have been signed or sent by the proper
person or persons. Agent shall deem and treat the payee of any Note as the
absolute owner thereof for all purposes hereof until such time as it receives
actual notice of an assignment permitted hereunder of such payee's interest,
together with the written agreement of the assignee in form and substance
satisfactory to Agent that such assignee is bound by this Agreement as a
"Lender" hereunder.
Section 10.8. Exculpatory Provisions. Neither Agent nor any of its
shareholders, directors, officers, employees or agents shall be liable in any
manner to any of the Lenders for any action taken, omitted to be taken or
suffered in good faith by it or them under any of the Loan Documents or in
connection therewith, or be responsible for the consequences of any oversight or
error of judgment, except for losses due to gross negligence or willful
misconduct of such Agent, shareholder, director, officer, employee or agent.
Without limiting the generality of the foregoing sentence of this Section 10.8,
under no circumstances shall the Agent be subject to any liability to any Lender
on account of any action taken or omitted to be taken by such Agent in
compliance with the direction of the Requisite Lenders or all of the Lenders, as
the case may be as provided for hereunder.
Agent shall not be responsible in any manner to any of the Lenders for the
due execution, effectiveness, genuineness, validity or enforceability,
perfection or recording of this Agreement, any of the Notes, any of the other
Loan Documents or for any certificate, report or other document used under or in
connection with this Agreement or any of the other Loan Documents, or for the
truth or accuracy of any recitals, statements, warranties or representations
contained herein or in any certificate, report or other document at any time
hereafter furnished or purporting to have been furnished to it by or on behalf
of a Borrower, or any other Person, or be under any obligation to any of the
Lenders to ascertain or inquire as to the performance or observance by
Borrowers, or any other Person of any of the covenants, agreements or conditions
set forth in this Agreement, the Notes or any of the other Loan Documents or as
to the use of any moneys lent hereunder or thereunder.
Agent shall not be obligated to take any action or refrain from taking any
action under any Loan Document that might, in its judgment, involve it in any
expense or liability until it shall have been indemnified to its satisfaction by
or received an agreement to indemnify from each Person which such Agent
reasonably believes may be an intended recipient of such distribution. If a
court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.
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Section 10.9. Action by the Agent. Except as otherwise expressly provided
under this Agreement or in any other of the Loan Documents, Agent will take such
action, assert such rights and pursue such remedies under this Agreement and the
other Loan Documents as the Requisite Lenders or all of the Lenders, as the case
may be as provided for hereunder shall direct. Except as otherwise expressly
provided in any of the Loan Documents, Agent will not (and will not be obligated
to) take any action, assert any rights or pursue any remedies under this
Agreement or any of the other Loan Documents in violation or contravention of
any express direction or instruction of the Requisite Lenders or all of the
Lenders, as the case may be as provided for hereunder. Agent may refuse (and
will not be obligated) to take any action, assert any rights or pursue any
remedies under this Agreement or any of the other Loan Documents without the
express written direction and instruction of the Requisite Lenders or all of the
Lenders, as the case may be as provided for hereunder. In the event Agent fails,
within a commercially reasonable time, to take such action, assert such rights,
or pursue such remedies as the Requisite Lenders or all of the Lenders, as the
case may be as provided for hereunder, direct, the Requisite Lenders or all of
the Lenders, as the case may be as provided for hereunder, shall have the right
to take such action, to assert such rights, or pursue such remedies on behalf of
all of the Lenders unless the terms hereof otherwise require the consent of all
the Lenders to the taking of such actions. All notices and other material
information required to be delivered by Borrowers to Agent hereunder shall be
delivered within a reasonable time (and in any event not more than five (5)
days) after Agent's receipt of same by Agent to each Lender. No Lender (other
than the Agent, acting in its capacity as Agent) shall be entitled to take any
enforcement action of any kind under any of the Loan Documents, except as
expressly provided in this Agreement. Action that may be taken by Requisite
Lenders or all of the Lenders, as the case may be as provided for hereunder may
be taken pursuant to a vote at a meeting (which may be held by telephone
conference call) of all of the Lenders, or pursuant to the written consent of
such Lenders.
Section 10.10. Amendments, Waivers and Consents. Any provision of this
Agreement, the Notes or the other Loan Documents may be amended or waived upon
the consent of the Requisite Lenders, and after such consent, Agent, on behalf
of the Lenders, may execute and deliver to Borrowers a written instrument
waiving or amending such provision; provided, however, that neither this
Agreement, the Notes, nor any of the other Loan Documents may be amended, waived
or a variation therefrom or forbearance with respect to such variation consented
to without the written consent of the Agent and all of Lenders which effect a
change in the Maximum Revolving Commitment; a change in any Lender's Credit
Commitment; a reduction in the interest rates or reduction of the principal set
forth in the Notes; the extension of the maturity date on the Notes; a change in
the payment schedule or scheduled date for the payment of or amount of any
interest or principal; any change in Article; a change in this paragraph, the
definition of Requisite Lender or any provision of this Agreement which requires
consent or action of all the Lenders for action thereunder; a change in the
obligations and liabilities of Agent; a change which increases the obligations
of any Lender; or a change in any fees or charges hereunder or in Sections 2.10
or 11.5 hereof.
Section 10.11. Indemnification. Each Lender agrees to indemnify Agent (to
the extent Agent is not promptly reimbursed by Borrower), in accordance with its
Participation Percentage from and against any and all liabilities, obligations,
losses,
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damages, penalties, interests, actions, judgments and suits of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
relating to or arising out of this Agreement or any of the other Loan Documents
or relating to any action taken or omitted by such Agent under this Agreement or
any of the other Loan Documents, provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, interest,
actions, judgments or suits resulting from Agent's own gross negligence or
willful misconduct.
Section 10.12. Reimbursement of the Agent. Each Lender further agrees to
reimburse Agent, in accordance with its Participation Percentage, for any
reasonable out-of-pocket costs or expenses incurred by Agent in connection with
its duties under this Agreement (including, but not limited to, reasonable fees
and disbursements of counsel, travel and living expenses away from home of
employees or agents of the Agent and compensation of agents or of experts
employed by the Agent to render services for the Lenders hereunder), but only to
the extent such fees, disbursements, expenses and compensation have not been
promptly reimbursed to the Agent by Borrowers. If any such sums are reimbursed
to the Agent by Borrowers after one or more of the Lenders have reimbursed the
Agent for such sums, the Agent will refund such sums ratably to the Lenders who
contributed such sums.
Section 10.13. Sharing of Funds Received. Each Lender and Agent agrees with
Agent and each of the other Lenders that if such Lender shall receive from any
Borrower or any other Person or Persons, whether by payment received otherwise
than in accordance with the terms of the Loan Documents, exercise of the right
of set-off, counterclaim, cross-claim, enforcement of any claim, or proceedings
against a Borrower or any other Person or Persons, proof of claim in bankruptcy,
reorganization, liquidation, receivership or other similar proceedings, or
otherwise, and shall retain and apply to the payment of any of the Obligations
owing to such Lender any amount in excess of its Pro Rata Share of the payments
received by all of the Lenders and the Agent in respect of all of the
Obligations, such Lender will promptly make such dispositions and arrangements
with the other Lenders and the Agent with respect to such excess, either by way
of distribution, pro tanto assignment of claim, subrogation or otherwise, as
shall result in each of the Lenders receiving in respect of the Obligations
owing to it, its Pro Rata Share of such payments.
Section 10.14. Dealing with Lenders. Agent may at all times deal solely
with the several Lenders for all purposes of this Agreement and the protection,
enforcement and collection of the Notes, including without limitation the
acceptance and reliance upon any certificate, consent or other document executed
on behalf of one or more of the Lenders and the division of payments pursuant to
Sections 2.5, 2.6, 2.7, 10.6, and 10.13 hereof. The Agent shall not have a
fiduciary relationship in respect of any Lender by reason of this Agreement. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action hereunder except any action specifically provided by
this Agreement to be taken by the Agent.
Section 10.15. Agent as Lender. Provident shall have, in its capacity as a
Lender under the Loan Documents, the same obligations and the same rights,
remedies,
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powers and privileges under this Agreement and the other Loan Documents as it
would have were it not also an Agent.
Section 10.16. Duties Not to be Increased. The duties and liabilities of
Agent under this Agreement and the other Loan Documents shall not be increased
or otherwise changed without its express prior written consent. The Agent shall
have no duty to provide information to the Lenders except as expressly set forth
herein.
Section 10.17. Lender Credit Decisions. Each Lender acknowledges that it
has, independently of and without reliance upon Agent or any of the other
Lenders, made its own credit analysis and decision to enter into this Agreement
and the other Loan Documents to which it is a party. Each Lender also
acknowledges that it will, independently of and without reliance upon Agent or
any of the other Lenders, continue to make its own credit decisions in taking or
not taking action under this Agreement or any of the other Loan Documents and in
determining the compliance or lack thereof by Borrower and any other Person with
any provision of any Loan Document or other document or agreement.
Section 10.18. Resignation of Agent. Provident and any successor Agent may
resign as such at any time by giving thirty (30) days' prior written notice of
resignation to each Lender and Borrowers, such resignation to be effective on
the date which is specified in such notice. Upon any such resignation by
Provident as Agent, or in the event the office of Agent shall thereafter become
vacant for any other reason, the Requisite Lenders shall appoint a successor
Agent, by an instrument in writing signed by such Lenders and delivered to such
successor Agent and Borrowers whereupon, such successor Agent shall succeed to
all of the rights and obligations of the retiring Agent as if originally named.
The retiring Agent shall duly assign, transfer and deliver to such successor
Agent all moneys at the time held by the retiring Agent hereunder after
deducting therefrom its expenses for which it is entitled to be reimbursed. Upon
such succession of any such successor Agent, the retiring Agent shall be
discharged from its duties and obligations hereunder, except for its gross
negligence or willful misconduct arising prior to its retirement or removal
hereunder. After any Agent's resignation, the provisions of this Section 10
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
Section 10.19. Assignment of Notes; Participation.
(a) Each Lender may, with concurrent notice to Agent, assign to one or
more banks or other financial institutions all or a portion of its rights
and obligations under this Credit Agreement and the Notes; provided that
for each such assignment, the parties thereto shall execute and deliver to
Agent an assignment and assumption agreement, in form and substance
acceptable to Agent, together with any Notes subject to such assignment,
and no such assignment shall reduce the assigning Lender's Credit
Commitment to less than Fifty-One Percent (51%) of such Lender's original
Credit Commitment without the consent of Agent, unless such assignment is
to a then-current holder of a Note, provided that the number of Lenders
holding rights hereunder shall not exceed five (5) at any one time. Upon
such execution and delivery of such assignment and assumption agreement to
Agent in form and substance satisfactory to Agent and the
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payment by the Assigning Lender to Agent of a processing and administration
fee of $3,500, from and after the date specified as the effective date in
such Agreement (the "Acceptance Date"), (x) the assignee thereunder shall
be a party hereto, and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such agreement, such assignee shall
have the rights and obligations of a Lender hereunder and (y) the assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such agreement, relinquish its rights
(other than any rights it may have pursuant to Section 11.5 which will
survive) and be released from the obligations so assigned under this
Agreement (and, in the case of an assignment covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(b) Each Lender may sell participations of up to forty-nine percent
(49%) of its rights and obligations under the Loan Documents to one or more
banks or other entities (including, without limitation, up to such portion
of its Credit Commitment, the Loans owing to it, and the Note held by it);
provided, however, that such Lenders' obligations under the Loan Documents
(including, without limitation, its Credit Commitment to Borrowers
hereunder) shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any such Note for all
purposes of the Loan Documents, the participating banks or other entities
shall be entitled to the cost protection provisions of Sections 2.10 and
2.11 hereof, but a participant shall not be entitled to receive pursuant to
such provisions an amount larger than its share of the amount to which the
Lender granting such participation would have been entitled, Borrowers, the
Agent and the other Lenders shall continue to deal solely and directly with
such selling Lender in connection with such Lender's rights and obligations
under the Loan Documents, and no such transfer shall include the transfer
of any of such Lender's rights to grant consents or waivers or approve
amendments or modifications to the Loan Documents except with respect to
those items requiring the action of or consent by all of the Lenders or
affecting the rights and obligations of Agent. It is understood and agreed
that each Lender may share any and all information received by it from or
on behalf of any Borrower pursuant to this Agreement or any of the other
Loan Documents with any participant or prospective participant of such
Lender.
ARTICLE XI.
PROVISIONS OF GENERAL APPLICATION
Section 11.1. Term of Agreement. This Agreement shall continue in full
force and effect and the duties, covenants, and liabilities of Borrowers
hereunder and all the terms, conditions, and provisions hereof relating thereto
shall continue to be fully operative until all Obligations to Agent and each
Lender have been satisfied in full.
Section 11.2. Notices.
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(a) All notices and other communications pursuant to this Agreement
shall be in writing, either delivered in hand or sent by first-class mail,
postage prepaid, or sent by telex, telecopier, facsimile transmission or
telegraph, addressed as follows:
(i) If to Borrowers, at:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, New Jersey 07940
Attn: A. Dale Mayo, President
Fax Number: (201) 377-4303
with copies to:
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
New York, New York 10020
Attn: Warren H. Colodner, Esq.
Fax Number: (212) 536-3901
(ii) If to Agent, at:
The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45202
Attn: Christopher B. Gribble
Fax Number: (513) 579-2858
with a copy to:
Keating, Muething & Klekamp
1800 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attn: J. David Rosenberg, Esq.
Fax Number: (513) 579-6457
(iii) If to a Lender, at such address set forth on
Schedule 1; or to such other addresses or by
way of such telex and other numbers as any
party hereto shall have designated in a
written notice to the other parties hereto.
(b) Except as otherwise expressly provided herein, any notice or other
communication pursuant to this Agreement or any other Loan Document shall
be deemed to have been duly given or made and to have become effective when
delivered in hand to the party to which it is directed, or, if sent by
first-class mail, postage prepaid, or by telex, telecopier, facsimile
transmission or telegraph, and properly addressed in accordance with
Section 11.2(a), (i) when received by the addressee; or if sent by first
class mail, postage
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prepaid, on the third (3rd) Business Day following the day of the dispatch
thereof, whichever of (i) or (ii) shall be the earlier.
Section 11.3. Survival of Representations. All representations and
warranties made by or on behalf of any Borrower in this Agreement, or any of the
other Loan Documents shall be deemed to have been relied upon by Agent and each
Lender notwithstanding any investigation made by Agent or any Lender and shall
survive the making of each of the Loans.
Section 11.4. Amendments. Each of the Loan Documents may be modified,
amended or supplemented in any respect whatever, only with the prior written
consent or approval of Agent and the Requisite Lenders or all of the Lenders (as
the case may be) and each other Person (other than a Lender) which is a party to
such Loan Document, all in accordance with the terms of Section hereof.
Section 11.5. Costs, Expenses, Taxes and Indemnification.
(a) Each Borrower absolutely and unconditionally agrees to pay to the
Agent, for the respective pro rata account of the Agent and each Lender,
upon demand by Agent or any Lender at any time and as often as the occasion
therefor may require, whether or not all or any of the transactions
contemplated by any of the Loan Documents are ultimately consummated all
reasonable out-of-pocket costs and expenses which shall at any time be
incurred or sustained by Agent or any of its directors, officers, employees
or agents as a consequence of, on account of, in relation to or any way in
connection with the preparation, negotiation, execution and delivery of the
Loan Documents and the perfection and continuation of the rights of the
Lenders and Agent in connection with the Loans, as well as the preparation,
negotiation, execution, or delivery or in connection with the amendment or
modification of any of the Loan Documents or as a consequence of, on
account of, in relation to or any way in connection with the granting by
Agent or any of the Lenders of any consents, approvals or waivers under any
of the Loan Documents including, but not limited to, reasonable attorneys'
fees and disbursements; and all reasonable out-of-pocket costs and expenses
which shall be incurred or sustained by Agent or any of the Lenders or any
of their directors, officers, employees or agents as a consequence of, on
account of, in relation to or any way in connection with the exercise,
protection or enforcement (whether or not suit is instituted) any of its
rights, remedies, powers or privileges under any of the Loan Documents or
in connection with any litigation, proceeding or dispute in any respect
related to any of the relationships under, or any of the Loan Documents
(including, but not limited to, all of the reasonable fees and
disbursements of consultants, legal advisers, accountants, experts and
agents for Agent or any of the Lenders, the reasonable travel and living
expenses away from home of employees, consultants, experts or agents of
Agent or any of the Lenders, and the reasonable fees of agents, consultants
and experts not in the full-time employ of Agent or any of the Lenders for
services rendered on behalf of Agent or any of the Lenders).
(b) Each Borrower shall absolutely and unconditionally indemnify and
hold harmless Agent and each Lender against any and all claims, demands,
suits, actions, causes of action, damages, losses, settlement payments,
obligations, costs, expenses and all other liabilities whatsoever except
for claims arising out of or related to the gross
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negligence or wilful misconduct of Agent or any Lender which shall at any
time or times be incurred or sustained by Agent or any Lender or by any of
their shareholders, directors, officers, employees, subsidiaries,
Affiliates or agents on account of, or in relation to, or in any way in
connection with, any of the arrangements or transactions contemplated by,
associated with or ancillary to this Agreement or any of the other Loan
Documents, whether or not all or any of the transactions contemplated by,
associated with or ancillary to this Agreement, or any of such Loan
Documents are ultimately consummated.
(c) Each Borrower hereby covenants and agrees that any sums expended
by Agent or any Lender which Agent or any Lender is entitled to be
reimbursed for pursuant to this Section 11.5, shall be immediately due and
payable upon demand by Agent or any Lender, and shall bear interest at the
Default Interest Rate applicable to Term Loan B from the date Agent or any
such Lender incurred such expense until the date such payment is made in
full to Agent or such Lender.
Section 11.6. Language. All notices, applications, certificates, reports,
financial statements and other financial information, correspondence and all
other communications from Borrowers to Agent or any Lender pursuant to this
Agreement or any of the other Loan Documents shall be in the English language or
shall be accompanied by an English translation thereof completely satisfactory
to Agent or such Lender.
Section 11.7. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors in title and assigns; provided, however, that no Borrower may assign
or delegate any of its rights or obligations hereunder to any Person or Persons
without the express prior written consent of the Agent and all of the Lenders;
and no Lender may assign or delegate its rights or obligation hereunder to any
Person or Persons except in accordance with Section 10.19 hereof.
Section 11.8. Governing Law; Jurisdiction and Venue. The undersigned agree
that inasmuch as this Agreement, the Notes and the Loan Documents are to be
executed by Borrowers and accepted by Agent and Lenders in Cincinnati, Ohio and
the funds to be disbursed under the Loans are to be disbursed in Ohio, this
instrument and the rights and obligations of all parties hereunder shall be
governed by and construed under the substantive laws of the State of Ohio,
without reference to the conflict of laws principles of such state.
The Agent, each Lender and each Borrower hereby designate all courts of
record sitting in Cincinnati, Ohio, both state and federal, as forums where any
action, suit or proceeding in respect of or arising out of this Agreement, the
Notes, Loan Documents, or the transactions contemplated by this Agreement may be
prosecuted as to all parties, their successors and assigns, and by the foregoing
designations the Agent, each Lender, and Borrower consents to the jurisdiction
and venue of such courts. EACH BORROWER WAIVES ANY AND ALL PERSONAL RIGHTS UNDER
THE LAWS OF ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN THE STATE OF OHIO
FOR THE PURPOSES OF LITIGATION TO ENFORCE SUCH OBLIGATIONS OF
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BORROWERS. In the event such litigation is commenced, each Borrower agrees that
service of process may be made and personal jurisdiction over Borrowers obtained
by service of a copy of the summons, complaint and other pleadings required to
commence such litigation upon Borrowers' appointed Agent for Service of Process
in the State of Ohio, which the undersigned hereof designates to be: CT
Corporation Systems, Cincinnati, Ohio. Each Borrower recognizes and agrees that
the agency has been created for the benefit of Borrowers, and Agent and each
Lender and agree that this agency shall not be revoked, withdrawn, or modified
without the consent of the Agent.
Section 11.9. WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED INDUCEMENT
FOR THE LENDERS TO EXTEND CREDIT TO BORROWERS, AND AFTER HAVING THE OPPORTUNITY
TO CONSULT COUNSEL, EACH BORROWER HEREBY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY
JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR ARISING IN ANY
WAY FROM THE OBLIGATIONS.
Section 11.10. Waivers. Each Borrower waives notice of nonpayment, demand,
notice of demand, presentment, protest and notice of protest with respect to the
Obligations, or notice of acceptance hereof, notice of the Loans made, credit
extended, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
Section 11.11. Interpretation and Proof of Loan Documents. Whenever
possible, the provisions of each Loan Document will be construed in such a
manner as to be consistent with this Agreement and each other Loan Document. If
any of the provisions of any Loan Document are inconsistent with this Agreement,
such provisions of this Agreement will supersede such provisions of such Loan
Document. This Agreement, the Loan Documents and all documents relating hereto,
including, without limitation, consents, waivers and modifications which may
hereafter be executed, documents received by the Agent or any Lender at the
closing or otherwise, and financial statements, certificates and other
information previously or hereafter furnished to the Agent or any Lender, may be
reproduced by the Agent or such Lender by an photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process and the
Agent or such Lender may destroy any original document so reproduced. Each
Borrower agrees and stipulates that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by the Agent of such Lender in the regular course of
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 11.12. Integration of Schedules and Exhibits. The Exhibits and
Schedules annexed to this Agreement are an integral part of this Agreement and
are incorporated herein by reference.
Section 11.13. Headings. The headings of the Articles, Sections and
paragraphs of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be a part of this Agreement.
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Section 11.14. Counterparts. This Agreement may be executed in any number
of counterparts, but all of such counterparts shall together constitute but one
agreement. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one counterpart hereof signed by each of the
parties hereto.
Section 11.15. Severability. Any provision of this Agreement which is
prohibited and unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.16. One General Obligation. All Loans and advances by Lenders to
Borrowers under this Agreement constitute one loan, and all Obligations of
Borrowers to Agent and the Lenders under this Agreement constitute one general
obligation. It is expressly understood and agreed that all of the rights of
Agent and each Lender contained in this Agreement shall likewise apply insofar
as applicable to any modification of or supplement to this Agreement.
[The rest of this page intentionally left blank. Signature pages to follow.]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by or on behalf of each of the parties as of the day and in the year first above
written in Cincinnati, Ohio.
SIGNED IN THE PRESENCE OF: BORROWERS:
CLEARVIEW CINEMA GROUP, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
CCC MADISON TRIPLE CINEMA CORP.
By: _____________________________
Name: ___________________________
Title: __________________________
CCC CHESTER TWIN CINEMA CORPORATION
By: _____________________________
Name: ___________________________
Title: __________________________
<PAGE>
CCC MANASQUAN CINEMA CORPORATION
By: _____________________________
Name: ___________________________
Title: __________________________
CLEARVIEW THEATRE GROUP, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
CCC HERRICKS CINEMA CORP.
By: _____________________________
Name: ___________________________
Title: __________________________
CCC PORT WASHINGTON CINEMA CORP.
By: _____________________________
Name: ___________________________
Title: __________________________
<PAGE>
CCC GRAND AVENUE CINEMA CORP.
By: _____________________________
Name: ___________________________
Title: __________________________
CCC WASHINGTON CINEMA CORP.
By: _____________________________
Name: ___________________________
Title: __________________________
CCC ALLWOOD CINEMA CORP.
By: _____________________________
Name: ___________________________
Title: __________________________
CCC EMERSON CINEMA CORP.
By: _____________________________
<PAGE>
Name: ___________________________
Title: __________________________
CCC NEW CITY CINEMA CORP.
By: _____________________________
Name: ___________________________
Title: __________________________
343-349 SPRINGFIELD AVENUE CORP.
By: _____________________________
Name: ___________________________
Title: __________________________
THE LENDERS:
THE PROVIDENT BANK
By: _____________________________
Name: ___________________________
Christopher B. Gribble
<PAGE>
Title:
Assistant Vice President
AGENT:
THE PROVIDENT BANK, as Agent
By: _____________________________
Name: ___________________________
Christopher B. Gribble
Title:
Assistant Vice President
<PAGE>
SCHEDULES
ANNEX I
1 Lenders
3.1 Mortgaged Property and Leasehold Interests
5.1(a) Jurisdictions where qualified to do business
5.1(b) Capital Stock
5.1(c) Subsidiaries
5.2 Authority
8.5 Management Compensation
5.6 Material Adverse Changes
5.7 Material Leases of Property
5.8 Intellectual Property
5.9 Indebtedness for Borrowed Money
5.10 Litigation
5.13(a) Contracts with Affiliates
5.13(b) Indebtedness for Borrowed Money Owing to or by Affiliates
5.21 UCC Filing Offices
8.9(g) Liens
[Schedules are not included herewith, but will be provided by the Company upon
request.]
<PAGE>
EXHIBITS
Exhibit A Form of Assignment of Option and Operating Agreements
Exhibit B Form of Assignment of Patents
Exhibit C Form of Assignment of Trademarks
Exhibit D Form of Blocked Account Agreement
Exhibit E Form of Compliance Certificate
Exhibit F Form of Environmental Indemnity Agreement
Exhibit G Form of Leasehold Mortgage
Exhibit H Form of Mortgage
Exhibit I Form of Pledge Agreement
Exhibit J-1 Form of Revolving Promissory Note
Exhibit J-2 Form of Term Loan A Promissory Note
Exhibit J-3 Form of Term Loan B Promissory Note
Exhibit K Subordination Agreement
Exhibit L Form of Borrower's Counsel Opinion Letter
Exhibit M Form of Warrant
[Exhibits are not included herewith, but will be provided by the Company upon
request.]
Exhibit 10.11
JOINDER AGREEMENT
THIS JOINDER AGREEMENT is dated as of July ___, 1996, by CCC BEDFORD CINEMA
CORP., a Delaware corporation ("CCC Bedford") and CCC KISCO CINEMA CORP., a
Delaware corporation ("CCC Kisco" and together with CCC Bedford the "New
Subsidiaries" and individually a "New Subsidiary").
WHEREAS, pursuant to Section 8.1 of the Credit Agreement dated May 29, 1996
(the "Credit Agreement") by and among CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation, CCC MADISON TRIPLE CINEMA CORP., a New Jersey corporation, CCC
CHESTER TWIN CINEMA CORPORATION, a New Jersey Corporation, CCC MANASQUAN CINEMA
CORPORATION, a New Jersey corporation, CLEARVIEW THEATRE GROUP, INC., a New
Jersey corporation, CCC HERRICKS CINEMA CORP., a Delaware corporation, CCC PORT
WASHINGTON CINEMA CORP., a Delaware corporation, CCC GRAND AVENUE CINEMA CORP.,
a Delaware corporation, CCC WASHINGTON CINEMA CORP., a Delaware corporation, CCC
ALLWOOD CINEMA CORP., a Delaware corporation, CCC EMERSON CINEMA CORP., a
Delaware corporation, CCC NEW CITY CINEMA CORP., a Delaware corporation and
343-349 SPRINGFIELD AVENUE CORP., a New Jersey corporation (hereinafter,
together with their successors in title and assigns called "Borrowers" and each
of which is a "Borrower"), THE PROVIDENT BANK, as Agent, an Ohio banking
corporation (the "Agent"), and the various lenders set forth on Schedule 1
thereto (the "Lenders"), each New Subsidiary, must execute and deliver a Joinder
Agreement and such other documents as Agent shall reasonably require to obligate
such New Subsidiaries under the Credit Agreement and other Loan Documents and to
cause such New Subsidiaries to grant Agent a security interest and lien in all
of their respective Property.
NOW, THEREFORE, as an inducement to Lenders to provide credit to New
Subsidiaries and to continue to extend credit to Borrowers, each New Subsidiary
hereby covenants and agrees as follows:
I. All capitalized terms used herein shall have the meanings assigned to them
in the Credit Agreement unless the context hereof requires otherwise.
I. New Subsidiaries hereby enter into this Joinder Agreement in order to
comply with Sections 6.14 and 8.1 of the Credit Agreement.
I. Each New Subsidiary hereby adopts the Credit Agreement, a copy of which is
attached hereto as Exhibit A, agrees to be bound by all of the terms,
<PAGE>
conditions and provisions thereof and of each of the Notes as if it was an
original party thereto, including without limitation the affirmative and
negative covenants in Articles 6 and 7 of the Credit Agreement, assumes all of
the duties and obligations of a Borrower to the Credit Agreement, and reconfirms
the representations and warranties set forth in Article 5 of the Credit
Agreement on and as of the date hereof as if fully set forth herein.
I. Each New Subsidiary shall be considered, and deemed to be, for all
purposes, a "Borrower" under the Credit Agreement and a maker on the Notes as if
each New Subsidiary had signed the Notes at the time originally issued under the
Credit Agreement and hereby, jointly and severally, promises to pay or prepay
when due all principal and interest on the Notes whether at stated maturity or
otherwise and to pay or perform all of the Obligations of a Borrower under the
Credit Agreement in accordance with their respective terms, and each New
Subsidiary further agrees to execute and deliver to the Lenders the Notes, upon
the request of the Lenders, and if the Notes are reissued, amended or restated
for any reason after the date hereof to execute and deliver such reissued,
amended or restated Notes; provided, however, that the liability of each New
Subsidiary shall not exceed the liability limitation applicable to New
Subsidiary in accordance with Section 2.12 of the Credit Agreement.
I. To secure the prompt repayment of the Notes and the Obligations, each New
Subsidiary hereby grants, pledges and collaterally assigns to Agent, on behalf
of the Lenders, a lien and security interest in and to all of each New
Subsidiaries respective personal property and fixtures, wherever located,
whether now or hereafter owned, existing or acquired or hereafter arising,
including, without limitation, the Collateral of each new subsidiary. Each New
Subsidiary shall execute UCC Financing Statements and such other security
documents as reasonably required by Agent to perfect the first Lien (subject
only to the Permitted First Liens) and security interest in the Collateral.
I. Each New Subsidiary shall be considered and deemed to be, for all purposes
a Borrower and Indemnitee under the Environmental Indemnity Agreement dated May
29, 1996 and agrees to be bound by the terms thereby as the same relates to any
Property.
I. To secure further such liabilities and obligations, each New Subsidiary
shall grant to Agent, on behalf of the Lenders, a first Lien, subject to the
Permitted First Liens, upon all real property owned by such New Subsidiary and a
first Lien, subject to Permitted First Liens, on all leasehold interests of such
New Subsidiary, each of which are identified on Schedule 3.1 attached hereto,
and each such New Subsidiary shall execute and deliver to Agent, on behalf of
the Lenders, the Leasehold Mortgages, Mortgages and valid assignments of all
other Property rights which now exist or arise hereafter from time to time.
<PAGE>
I. No Default or Event of Default under the Credit Agreement or the Notes has
occurred and is continuing.
I. This Joinder Agreement shall be governed by the laws of the State of Ohio
and shall be binding upon each New Subsidiary and their respective successors
and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Joinder Agreement on
the date first above written.
CCC BEDFORD CINEMA, CORP.
By:__________________________
Name:_______________________
Title:________________________
CCC KISCO CINEMA CORP.
By:_________________________
Name:_______________________
Title:________________________
[Schedules and Exhibits are not included herewith, but will be provided by the
Company upon request.]
Exhibit 10.12
JOINDER AGREEMENT AND
FIRST AMENDMENT TO
CREDIT AGREEMENT
BY AND AMONG
CLEARVIEW CINEMA GROUP, ET AL.
AND
THE PROVIDENT BANK,
Agent and Lender
dated as of
December 13, 1996
<PAGE>
JOINDER AGREEMENT
AND
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT ("First Amendment") dated as of
December 13, 1996 by and among CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation (hereinafter, together with its successors in title and assigns
called "Holdings"), CCC MADISON TRIPLE CINEMA CORP., a New Jersey corporation,
CCC CHESTER TWIN CINEMA CORPORATION, a New Jersey corporation, CCC MANASQUAN
CINEMA CORPORATION, a New Jersey corporation, CLEARVIEW THEATRE GROUP, INC., a
New Jersey corporation, CCC HERRICKS CINEMA CORP., a Delaware corporation, CCC
PORT WASHINGTON CINEMA CORP., a Delaware corporation, CCC GRAND AVENUE CINEMA
CORP., a Delaware corporation, CCC WASHINGTON CINEMA CORP., a Delaware
corporation, CCC ALLWOOD CINEMA CORP., a Delaware corporation, CCC EMERSON
CINEMA CORP., a Delaware corporation, CCC NEW CITY CINEMA CORP., a Delaware
corporation, and 343-349 SPRINGFIELD AVENUE CORP., a New Jersey corporation,
(hereinafter collectively the Original Borrowers), and CCC BEDFORD CINEMA CORP.,
a Delaware corporation ("CCC Bedford") and CCC KISCO CINEMA CORP., a Delaware
corporation ("CCC Kisco"), CCC CLOSTER CINEMA CORP., a Delaware corporation,
("CCC Closter"), CCC BERGENFIELD CINEMA CORP., a Delaware corporation, ("CCC
Bergenfield"), CCC TENAFLY CINEMA CORP., a Delaware corporation, ("CCC Tenafly")
and CCC B.C. REALTY CORP., a Delaware corporation, (CCC Realty") (hereinafter,
together with their successors in title and assigns collectively called
"Borrowers" and each of which is a "Borrower") (CCC Closter, CCC Bergenfield,
CCC Tenafly, and CCC Realty collectively called the "New Subsidiaries") and THE
PROVIDENT BANK, an Ohio banking corporation ("Agent") and various Lenders as set
forth in the Credit Agreement.
PRELIMINARY STATEMENT
WHEREAS, Original Borrowers, Agent and Lenders have entered into a Credit
Agreement dated as of May 29, 1996 (the "Credit Agreement"); and
WHEREAS, CCC Bedford and CCC Kisco were joined as borrowers to the Credit
Agreement by that certain Joinder Agreement dated as of July 18, 1996,
WHEREAS, Holdings desires to enter into the Bergen County Transaction (as
hereinafter defined), in connection with which Borrowers have requested
additional loans from the Lenders to finance a portion of the purchase price
related to the Bergen County Transaction and to provide additional financing to
support said acquisition and capital expenditures; and
<PAGE>
WHEREAS, in connection with the Bergen County Transaction, Holdings wishes
to create and capitalize the New Subsidiaries; and
WHEREAS, pursuant to Section 8.1 of the Credit Agreement, each New
Subsidiary, must execute and deliver a Joinder Agreement and such other
documents as Agent shall reasonably require to obligate such New Subsidiaries
under the Credit Agreement and other Loan Documents and to cause such New
Subsidiaries to grant Agent a security interest and lien in all of their
respective Property; and
WHEREAS, Agent and Lenders have agreed to make such additional loans on the
terms and conditions set forth herein; and
WHEREAS, Agent and Lenders desire to consent to the formation of the New
Subsidiaries and the Bergen County Transaction;
WHEREAS, Borrowers, Agent and Lenders now wish to amend the Credit
Agreement in accordance with the terms and provisions hereof;
NOW, THEREFORE, the parties hereto agree to supplement and amend the Credit
Agreement upon such terms and conditions as follows:
1. Capitalized Terms. All capitalized terms used herein shall have the
meanings assigned to them in the Credit Agreement unless the context hereof
requires otherwise. Any definitions as capitalized terms set forth herein shall
be deemed incorporated into the Credit Agreement as amended by this First
Amendment.
2. Schedules and Exhibits: The following schedules relative to the New
Subsidiaries are addendums to the respective Schedule to the Credit Agreement:
(a) Schedule 3.1 Mortgaged Property and Leasehold Interests
(b) Schedule 5.1(a) Jurisdictions where qualified to do business
(c) Schedule 5.1(b) Capital Stock
(d) Schedule 5.1(c) Subsidiaries
(e) Schedule 5.2 Authority
(f) Schedule 5.6 Material Adverse Changes
(g) Schedule 5.7 Material Leases of Property
(h) Schedule 5.8 Intellectual Property
(i) Schedule 5.9 Indebtedness for Borrowed Money
(j) Schedule 5.10 Litigation
(k) Schedule 5.13(a) Contracts with Affiliates
(l) Schedule 5.13(b) Indebtedness for Borrowed Money Owing to or by
Affiliates
(m) Schedule 5.21-A UCC Filing Offices
(n) Schedule 8.9(g) Liens
3. Definitions. (a) The following definitions contained in Section 1.2 of
the Credit Agreement are hereby amended in their entirety to read as follows:
<PAGE>
"Loan Documents" mean this Agreement, the Notes, the Letter of Credit,
the Warrant Agreement, the Stockholders Agreement, the Security Documents,
the Subordination Agreement and any other agreement, instrument,
certificate or document executed in connection with or pursuant to this
Credit Agreement, as amended whether concurrently herewith or subsequent
hereto, and as they may hereafter from time to time be amended, modified,
supplemented, restated, and/or renewed."
"Notes" mean, collectively, the Revolving Credit Notes, the Term Loan
A Notes and the Term Loan B Notes. "Note" shall mean any one of the Notes,
unless specifically identified.
"Maximum Revolving Commitment" means Three Hundred Thousand Dollars
($300,000).
"Subordinated Debt" means those 8% Subordinated Promissory Notes in
the aggregate principal amount of Five Hundred Thousand Dollars
($500,000.00) each dated either August 31, 1995 or October 11, 1995 issued
by Holdings in favor of CMNY, and all related documents, instruments and
agreements, and those Subordinated Promissory Notes in the aggregate
principal amount of Six Hundred Thousand Dollars ($600,000.00) each dated
December 13, 1996 issued by Holdings in favor of CMNY, and all related
documents, instruments and agreements.
"Subordination Agreement" means the Amended and Restated Subordination
Agreements dated as of December 13, 1996 among CMNY, Holdings, and Agent
substantially in the form of attached Exhibit K relating to the
subordination of the Subordinated Debt to the Obligations.
"Termination Date" means the earlier of (i) December 31, 2001; (ii)
the date upon which the entire principal of all the Notes shall become due
pursuant to the provisions hereof (whether as a result of acceleration by
Agent or the Requisite Lenders or otherwise); or (iii) the date upon which
the Credit Commitments terminate pursuant to Section 9.2 hereof.
(b) Section 1.2 of the Credit Agreement is hereby amended to add the
following definitions to read in their entirety as follows:
"Agreement" or "Credit Agreement" means this Credit Agreement and any
extensions, riders, supplements, scheduled, amendments, or modifications to
or in connection with this Credit Agreement."
"Bergen County Transaction" means the acquisition by Holdings of the
assets of the Bergen County Seller Group occurring on or prior to the First
Amendment Closing Date.
<PAGE>
"Bergen County Seller" means Magic Cinemas L.L.C.
"Bergen County Transaction Property" means the real and personal
property acquired by Borrowers relative to the Bergen County Transaction.
"First Amendment Closing Date" means the day on which the Loans
relative to the First Amendment are made pursuant to this Agreement.
"Issuing Bank" means Provident or such other Lender as shall issue any
Letter of Credit hereunder.
"Letter of Credit Fee" means the fee charged by the Lender for the
issuance of a Letter of Credit pursuant to Section hereof.
"Letters of Credit" means the letters of credit issued by Lender at
any time pursuant to Section hereof.
"Reimbursement Obligations" means any amounts owing by Borrower to the
Lender on account of draws or disbursements under or with respect to the
Letters of Credit.
"Seller Subordinated Note" means the Subordinated Promissory Note in
the aggregate principal amount of Six Hundred Thousand Dollars
($600,000.00) dated as of December 13, 1996 issued by Holdings in favor of
the Bergen County Seller, and all related documents, instruments and
agreements.
"Seller Subordination Agreement" the Subordination Agreements dated as
of December 13, 1996 among the Bergen County Seller, Holdings, and Agent
relating to the subordination of the Seller Subordinated Debt to the
Obligations.
"Senior Indebtedness for Borrowed Money" means the aggregate amount of
Indebtedness outstanding under the Credit Agreement and any other
indebtedness the payment of which has not been expressly subordinated to
the Loans hereunder.
4. Making the Loans. Section 2.2(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:
(d) Term Loan A. Subject to the terms and conditions of this Agreement
and in reliance upon the representation and warranties of Borrowers herein
set forth, each Lender severally agrees to lend to Borrowers its
Participation Percentage of the Term Loan A. The aggregate amount of the
Term Loan A shall be Four Million Three Hundred Thousand Dollars
($4,300,000).
<PAGE>
Amounts borrowed under Subsection 2.2(b) and repaid or prepaid may not be
reborrowed.
5. Making the Loans. Section 2.2(c) of the Credit Agreement is hereby
amended in is entirety to read as follows:
(e) Term Loan B. Subject to the terms and conditions of this Agreement
and in reliance upon the representation and warranties of each Borrower
herein set forth, each Lender severally agrees to lend to Borrowers its
Participation Percentage of the Term Loan B. The aggregate amount of the
Term Loan B shall not exceed Four Million Three Hundred Thousand Dollars
($4,300,000). Amounts borrowed under Subsection 2.2(c) and repaid or
prepaid may not be reborrowed.
6. Draws, Advances and Settlement of Payments and Advances. Section 2.3(c)
of the Credit Agreement is hereby amended to in its entirety to read as follows:
(c) The Agent shall promptly notify each Lender of its Participation
Percentage of each requested Revolving Credit Loan and the date of such
borrowing. On the borrowing date specified in such notice, each Lender
shall make its share of the borrowing available at the Head Office of the
Agent for deposit to such account as the Agent shall designate, no later
than 1:00 p.m. Cincinnati time in Federal or other immediately available
funds. Upon receipt of the funds to be made available by Lenders to fund
any Revolving Credit Loan hereunder, the Agent shall disburse such funds by
depositing them into the Agent Disbursement Account.
7. The Notes. Section 2.4 of the Credit Agreement is hereby amended to in
its entirety to read as follows:
Section 2.4 The Notes. The absolute and unconditional obligation of
Borrowers to repay to each Lender its respective Pro Rata Share of the
principal of each Loan and the interest thereon shall be evidenced by a
separate Revolving Credit Note, Term Loan A Note and Term Loan B Note for
each Lender in the amount of its respective Credit Commitment for each
Loan. All payments under the Notes shall be made to Agent at its Head
Office, for the account of Lenders, and Agent shall allocate all payments
on each Loan received from Borrowers among all Lenders in accordance with
each Lender's Pro Rata Share of such Loan in accordance with Section
2.7(b).
8. Repayments and Prepayments of Principal/Payments on the Term Loan A. The
"proviso" clause of the first paragraph Section 2.6(a) of the Credit Agreement
is hereby amended to in its entirety to read as follows:
"provided that in any event the last installment of principal on the
Term Loan A shall be due and payable on the earlier of July 1, 2001 or the
<PAGE>
Termination Date (if not earlier prepaid) and shall be in an amount
sufficient to pay in full the entire unpaid principal amount of the Term
Loan A."
9. Repayments and Prepayments of Principal/Payment on the Term Loans. (a)
Section 2.6(a) of the Credit Agreement is hereby amended in its entirety to read
as follows:
(a) Payments on the Term Loan A. Borrowers shall pay to Agent, for the
account of Lenders in accordance with their respective Pro Rata Share on
Term Loan A, monthly in arrears on the first Business Day of each month
beginning with the month following the month in which the Closing Date
falls, interest on the outstanding principal amount of the Term Loan A at
the annual rate equal to the Interest Rate applicable thereto. Borrowers
shall pay to Agent, and Borrowers hereby authorize Agent to charge the
respective accounts of Borrowers maintained with Agent, beginning on
October 1, 1996 and on each January 1, April 1, July 1, and October 1,
thereafter, quarterly installments of principal in the amounts set forth
below (or such lesser principal amount of the Term Loan A as shall then be
outstanding), plus accrued interest thereon at the Interest Rate applicable
to the Term Loan A; provided that in any event the last installment of
principal on the Term Loan A shall be due and payable on the Termination
Date (if not earlier prepaid) and shall be in an amount sufficient to pay
in full the entire unpaid principal amount of the Term Loan A.
================================================================================
PAYMENT DATE PRINCIPAL INSTALLMENT
- --------------------------------------------------------------------------------
October 1, 1996 $125,000.00
- --------------------------------------------------------------------------------
January 1, 1997 $153,560.00
- --------------------------------------------------------------------------------
April 1, 1997 $153,560.00
- --------------------------------------------------------------------------------
July 1, 1997 $153,560.00
- --------------------------------------------------------------------------------
October 1, 1997 $184,320.00
- --------------------------------------------------------------------------------
January 1, 1998 $184,320.00
- --------------------------------------------------------------------------------
April 1, 1998 $184,320.00
- --------------------------------------------------------------------------------
July 1, 1998 $184,320.00
- --------------------------------------------------------------------------------
October 1, 1998 $215,000.00
- --------------------------------------------------------------------------------
January 1, 1999 $215,000.00
- --------------------------------------------------------------------------------
April 1, 1999 $215,000.00
- --------------------------------------------------------------------------------
July 1, 1999 $215,000.00
- --------------------------------------------------------------------------------
October 1, 1999 $245,680.00
<PAGE>
- --------------------------------------------------------------------------------
January 1, 2000 $245,680.00
- --------------------------------------------------------------------------------
April 1, 2000 $245,680.00
- --------------------------------------------------------------------------------
July 1, 2000 $245,680.00
- --------------------------------------------------------------------------------
October 1, 2000 $276,440.00
- --------------------------------------------------------------------------------
January 1, 2001 $276,440.00
- --------------------------------------------------------------------------------
April 1, 2001 $276,440.00
- --------------------------------------------------------------------------------
July 1, 2001 $305,000.00
================================================================================
Section 2.6(b) of the Credit Agreement is hereby amended to in its
entirety to read as follows:
(b) Payments on the Term Loans.
(i) Payments on the Term Loan B. Borrowers shall pay to Agent,
for the account of Lenders in accordance with their respective Pro
Rata Share on Term Loan B, monthly in arrears on the first Business
Day of each month beginning with the month following the month in
which Term Loan B is disbursed, interest on the outstanding principal
amount of the Term Loan B at the annual rate equal to the Interest
Rate applicable thereto. Borrowers shall pay to Agent, and Borrowers
hereby authorize Agent to charge the respective accounts of Borrowers
maintained with Agent, beginning on July 1, 1997 and on each January
1, April 1, July 1, and October 1, thereafter, quarterly installments
of principal in the amounts set forth below (or such lesser principal
amount of the Term Loan B as shall then be outstanding), plus accrued
interest thereon at the Interest Rate applicable to the Term Loan B;
provided that in any event the last installment of principal on the
Term Loan B shall be due and payable on the Termination Date (if not
earlier prepaid) and shall be in an amount sufficient to pay in full
the entire unpaid principal amount of the Term Loan B.
================================================================================
PAYMENT DATE PRINCIPAL INSTALLMENT
- --------------------------------------------------------------------------------
July 1, 1997 $ 100,000.00
- --------------------------------------------------------------------------------
October 1, 1997 $ 100,000.00
- --------------------------------------------------------------------------------
January 1, 1998 $ 100,000.00
- --------------------------------------------------------------------------------
April 1, 1998 $ 150,000.00
- --------------------------------------------------------------------------------
July 1, 1998 $ 150,000.00
<PAGE>
- --------------------------------------------------------------------------------
October 1, 1998 $ 150,000.00
- --------------------------------------------------------------------------------
January 1, 1999 $ 150,000.00
- --------------------------------------------------------------------------------
April 1, 1999 $ 175,000.00
- --------------------------------------------------------------------------------
July 1, 1999 $ 175,000.00
- --------------------------------------------------------------------------------
October 1, 1999 $ 175,000.00
- --------------------------------------------------------------------------------
January 1, 2000 $ 175,000.00
- --------------------------------------------------------------------------------
April 1, 2000 $ 200,000.00
- --------------------------------------------------------------------------------
July 1, 2000 $ 200,000.00
- --------------------------------------------------------------------------------
October 1, 2000 $ 200,000.00
- --------------------------------------------------------------------------------
January 1, 2001 $ 200,000.00
- --------------------------------------------------------------------------------
April 1, 2001 $ 225,000.00
- --------------------------------------------------------------------------------
July 1, 2001 $ 225,000.00
- --------------------------------------------------------------------------------
October 1, 2001 $ 225,000.00
- --------------------------------------------------------------------------------
December 31, 2001 $1,225,000.00
================================================================================
10. Letters of Credit. Article 2 of the Credit Agreement is hereby amended
to add a new Section 2.12 to read as follows:
Section 2.12 Letters of Credit.
(a) Obligation to Issue Letters of Credit. Subject to the terms
and conditions of this Agreement, prior to the maturity of the Loans
(whether by acceleration or otherwise) and so long as no Default has
occurred and is continuing, Issuing Bank agrees to issue, in
accordance with Issuing Bank's usual and customary business practices,
one or more Letters of Credit at the request of Borrower, provided
that Issuing Bank shall not issue any Letter of Credit if: any order,
judgment or decree of any governmental authority or arbitrator shall
purport by its terms to enjoin or restrain Issuing Bank from issuing
such Letter of Credit or any rule, regulation or law applicable to
Issuing Bank or any request or directive from any governmental
authority with jurisdiction over Issuing Bank shall prohibit or
request that Issuing Bank refrain from the issuance of letters of
credit generally or such Letters of Credit in particular or shall
impose upon Issuing Bank with respect to such Letters of Credit any
restriction or reserve or capital requirement (for which Issuing Bank
is not otherwise compensated) not in effect on the date hereof, or any
unreimbursed loss, cost or expense which was not applicable, in effect
or known to Issuing Bank as of the date hereof in which Issuing Bank
in good faith deems material to it; or any of the conditions precedent
for the
<PAGE>
issuance of such Letter of Credit or other terms and provisions of
this Loan or any subsequent loans hereof are not satisfied.
(b) Expiration Date of Letters of Credit. The expiration date of
any Letter of Credit shall not be later the earlier of thirty (30)
days after the date of the issuance thereof.
(c) Letters of Credit Deemed to be Loans. All Letters of Credit
issued by Issuing Bank shall be issued in connection with this
Agreement and Borrower's obligation to pay any amount drawn under any
Letter of Credit shall constitute an Obligation hereunder and shall be
bound by and shall benefit from all the terms, provisions and
conditions hereunder, including without limitation, Issuing Bank's
rights to recover costs and expenses relating thereto as provided in
this Agreement and Issuing Bank's remedies upon the occurrence of an
Event of Default. Each Letter of Credit issued hereunder shall reduce
the amount of Loan proceeds available for disbursement under the Term
Loan B in an amount equal to the face amount of each such Letter of
Credit. No interest shall accrue on the amount of undisbursed Loan
proceeds representing the aggregate amount of the Letters of Credit
until such time as such Letters of Credit are drawn upon.
(d) Procedure for Issuance of Letters of Credit. Borrower shall
give Issuing Bank two (2) business days' prior written notice, or
telephonic or electronically transmitted notice confirmed promptly
thereafter in writing, of any requested issuance of a Letter of Credit
under this Agreement. Such notice shall specify the stated amount of
the Letter of Credit requested, the effective date (which day shall be
a business day) of issuance of such requested Letter of Credit, the
date on which such requested Letter of Credit is to expire (which date
shall be a business day and shall in no event be later than the third
anniversary of the Closing Date), the proposed beneficiaries of such
Letter of Credit, the conditions for draws under such Letter of
Credit, and any other information relevant thereto as Issuing Bank may
request. Unless there is a Default or Event of Default hereunder, or
unless the amount of the Letter of Credit exceeds the limitations set
forth by Section 2.12(f) hereof, then, subject to the terms and
conditions of this Agreement, Issuing Bank shall issue, on the
requested date, a Letter of Credit for the account of Borrower in
accordance with Issuing Bank's usual and customary business practices.
(e) Reimbursement Obligations. Borrower agrees that all
Reimbursement Obligations owing to Issuing Bank under or with respect
to each such Letter of Credit issued by Issuing Bank shall be deemed
to be a request for a draw or advance hereunder and shall be deemed to
have been disbursed to Borrower as a Loan under Term Loan B. Borrower
hereby promises to pay to Agent any and all Reimbursement Obligations
hereunder. Interest shall begin to accrue on the Reimbursement
Obligations on the day such Reimbursement Obligations are incurred by
Borrower as a result of disbursement under the Letter of Credit.
<PAGE>
(f) Amount of Letters of Credit. At no time shall the aggregate
amount of all of the issued and outstanding Letters of Credit exceed
the amount of Term Loan B.
(g) Fees. A fee in the amount of Four and One-Quarter Percent
(4.25%) per annum (computed on the basis of a 360-day year for the
days elapsed) of the daily average undrawn face amount of each of the
Letters of Credit shall be payable by Borrower ("Letter of Credit
Fee") together with a fronting fee in an amount equal to One-Quarter
Percent (1/4%) of the face amount of each of the Letters of Credit.
The Letter of Credit fee shall be paid in arrears on the last day of
each month and on the Termination Date or if such day is not a
Business Day on the next succeeding Business Day commencing on the
first such date following the issuance of any Letter of Credit.
(h) Letter of Credit Participations. By issuance of a Letter of
Credit and without any further action on the part of Issuing Bank or
Lenders in respect thereof, Issuing Bank hereby grants to each Lender,
and each Lender hereby agrees to acquire from Issuing Bank, a
participation in such Letter of Credit equal to such Lender's Pro Rata
Share of the face amount of such Letter of Credit, effective upon the
issuance of such Letter of Credit. In consideration and in furtherance
of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to Agent on behalf of Issuing Bank, such Lender's Pro
Rata Share of any Reimbursement Obligation. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to
this Section 2.12(h) in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance
whatsoever, including without limitation the occurrence and
continuance of a default or an event of default hereunder, and that
each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
11. Financial Covenants.
(a) Section 7.2 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 7.2 Debt Service Coverage. Holdings shall not permit its
Consolidated ratio of Cash Flow to Fixed Charges for the Reference Period
ending on each Computation Date set forth below to be less than 1.25 to
1.00 for each Computation Date.
(b) Section 7.4 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 7.4 Debt to EBITDA. As of the last day of each fiscal quarter
of Holdings, the ratio of Consolidated Indebtedness for Borrowed Money
outstanding as of such date to Consolidated EBITDA for the twelve (12)
months ending on each Computation Date shall not exceed 4.5 to 1.0;
provided, however, that calculations of EBITDA for Computation Dates prior
to December 31, 1997
<PAGE>
shall include therein actual, historical EBITDA for the theaters acquired
in the Bergen Transaction.
(c) Section 7.5 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 7.5 Senior Debt to EBITDA. As of the last day of each fiscal
quarter of Holdings, the ratio of Consolidated Senior Indebtedness for
Borrowed Money outstanding as of such date to Consolidated EBITDA for the
twelve (12) months ending on each Computation Date shall not exceed 3.7 to
1.0; provided, however, that calculations of EBITDA for Computation Dates
prior to December 31, 1997 shall include therein actual, historical EBITDA
for the theaters acquired in the Bergen Transaction.
(d) Article 7 of the Credit Agreement is hereby amended to add a new
Section 7.6 to read as follows:
Section 7.6 Limitation on Capital Expenditures. Holdings shall not
make or incur any Capital Expenditures in the aggregate during any fiscal
year in excess of Four Hundred Fifty Thousand Dollars ($450,000).
If any Borrower enters into a Capital Lease with respect to fixed
assets, for purposes of calculating Capital Expenditures under this
Section, the aggregate amount of all payments due for the entire term of
such Capital Lease (excluding, however, the interest portion of capitalized
lease payments or the interest portion of any other permitted Indebtedness)
shall be considered expended in full on the date that such Borrower enters
into such Capital Lease.
12. Joinder Agreement. Each New Subsidiary hereby covenants and agrees as
follows:
(a) New Subsidiaries hereby enter into this Joinder Agreement and First
Amendment to Credit Agreement in order to comply with Sections 6.14 and 8.1 of
the Credit Agreement.
(b) Each New Subsidiary hereby adopts the Credit Agreement, as amended, a
copy of which is attached hereto as Exhibit A, agrees to be bound by all of the
terms, conditions and provisions thereof and of each of the Notes as if it was
an original party thereto, including without limitation the affirmative and
negative covenants in Articles and of the Credit Agreement, assumes all of the
duties and obligations of a Borrower to the Credit Agreement, and reconfirms the
representations and warranties set forth in Article of the Credit Agreement on
and as of the date hereof as if fully set forth herein.
(c) Each New Subsidiary shall be considered, and deemed to be, for all
purposes, a "Borrower" under the Credit Agreement and a maker on the Notes as if
each
<PAGE>
New Subsidiary had signed the Notes at the time originally issued under the
Credit Agreement and hereby, jointly and severally, promises to pay or prepay
when due all principal and interest on the Notes whether at stated maturity or
otherwise and to pay or perform all of the Obligations of a Borrower under the
Credit Agreement in accordance with their respective terms, and each New
Subsidiary further agrees to execute and deliver to the Lenders the Notes, upon
the request of the Lenders, and if the Notes are reissued, amended or restated
for any reason after the date hereof to execute and deliver such reissued,
amended or restated Notes; provided, however, that the liability of each New
Subsidiary shall not exceed the liability limitation applicable to New
Subsidiary in accordance with Section 2.12 of the Credit Agreement.
(d) To secure the prompt repayment of the Notes and the Obligations, each
New Subsidiary hereby grants, pledges and collaterally assigns to Agent, on
behalf of the Lenders, a lien and security interest in and to all of each New
Subsidiary's respective personal property and fixtures, wherever located,
whether now or hereafter owned, existing or acquired or hereafter arising,
including, without limitation, the Collateral of each new subsidiary. Each New
Subsidiary shall execute UCC Financing Statements and such other security
documents as reasonably required by Agent to perfect the first Lien (subject
only to the Permitted First Liens) and security interest in the Collateral.
(e) Each New Subsidiary shall be considered and deemed to be, for all
purposes a Borrower and Indemnitee under the Environmental Indemnity Agreement
dated May 29, 1996 and agrees to be bound by the terms thereby as the same
relates to any Property.
(f) To secure further such liabilities and obligations, each New Subsidiary
shall grant to Agent, on behalf of the Lenders, a first Lien, subject to the
Permitted First Liens, upon all real property owned by such New Subsidiary and a
first Lien, subject to Permitted First Liens, on all leasehold interests of such
New Subsidiary, each of which are identified on Schedule 3.1 attached hereto,
and each such New Subsidiary shall execute and deliver to Agent, on behalf of
the Lenders, the Leasehold Mortgages, Mortgages and valid assignments of all
other Property rights which now exist or arise hereafter from time to time.
13. Reaffirmation of Covenants, Warranties and Representations. Each
Borrower hereby agrees and covenants that all representations and warranties in
the Credit Agreement, including without limitation all of those warranties and
representations set forth in Article , are true and accurate as of the date
hereof. Each Borrower further reaffirms all covenants in the Credit Agreement,
and reaffirm each of the affirmative covenants set forth in Article and negative
covenants set forth in Article and financial covenants set forth in Article
thereof, as if fully set forth herein, except to the extent modified by this
First Amendment.
14. Conditions Precedent to Closing of First Amendment. On or prior to the
closing of the First Amendment (hereinafter the "First Amendment Closing Date"),
each of the following conditions precedent shall have been satisfied:
<PAGE>
(a) Certified Copies of Charter Documents and Bylaws. Agent and each Lender
shall have received from each New Subsidiary a copy, certified by the Secretary
or an Assistant Secretary of such Borrower to be true and complete on and as of
the First Amendment Closing Date, of the charter or other organization documents
and by-laws of such New Subsidiary as in effect on the First Amendment Closing
Date (together with all, if any, amendments thereto); and the charter or other
organization documents of each New Subsidiary certified by the applicable
Secretary of State.
(b) Incumbency Certificate. Agent and each Lender shall have received from
each New Subsidiary an incumbency certificate, dated as of the First Amendment
Closing Date, signed by the Secretary or an Assistant Secretary of each New
Subsidiary and giving the name and bearing a specimen signature of each
individual who shall be authorized to sign, in the name and on behalf of such
New Subsidiary, each of the Loan Documents to which such New Subsidiary is or is
to become a party on the First Amendment Closing Date; and to give notices and
to take other action on behalf of such New Subsidiary under the Loan Documents
(c) Proof of Corporate Authority. Agent shall have received from each
Borrower copies, certified by a duly authorized officer to be true and complete
on and as of the First Amendment Closing Date, of records of all action taken by
Borrowers to authorize the execution and delivery of this First Amendment and
all other certificates, documents and instruments to which it is or is to become
a party as contemplated or required by this First Amendment, and its performance
of all of its obligations under each of such documents.
(d) Loan Documents, etc.. Each of the documents to be executed and
delivered at the First Amendment Closing and all other certificates, documents
and instruments to be executed in connection herewith shall have been duly and
properly authorized, executed and delivered by Borrowers and shall be in full
force and effect on and as of the First Amendment Closing Date.
(e) Actions to Perfect Liens. Agent shall have received evidence in form
and substance satisfactory to it that all filings, recordings, registrations and
other actions, including without limitation, the filing of duly executed
financing statements on Form UCC-1, necessary or, in the opinion of Agent,
desirable to perfect the Liens created by the Security Documents shall have been
completed.
(f) Insurance. Agent shall have received copies of certificates of
insurance executed by each insurer or its authorized agent evidencing the
insurance required to be maintained by each New Subsidiary pursuant to Section
6.2(b) of the Credit Agreement, and a certificate of a nationally recognized
insurance broker reasonably satisfactory to Agent certifying that insurance
complying with such Section has been obtained and is in full force and effect.
<PAGE>
(g) Mortgages and Title Evidence. Agent shall have received the following
documents, each of which shall be executed (and, where appropriate,
acknowledged) by Persons satisfactory to the Agent:
(i) the following Mortgages and Leasehold Mortgages, in each case duly
executed and delivered by the respective Borrowers (and where appropriate
by the trustee thereunder) in recordable form (in such number of copies as
the Agent shall have requested), together with such Uniform Commercial Code
financing statements as may be needed in order to perfect the security
interests granted by each of the Mortgages and Leasehold Mortgages in any
fixtures and other property therein described which may be subject to the
Uniform Commercial Code, in each case appropriately completed and duly
executed and in proper form for filing in all offices in which required:
(1) Open-End Mortgage and Security Agreement executed by CCC B.C.
Realty Corp., relating to a fee-Simple estate in property located
in the town of Bergenfield, Bergen County, New Jersey;
(2) Open-End Mortgage and Security Agreement executed by CCC B.C.
Realty Corp., relating to a fee-Simple estate in property located
in the town of Tenafly, Bergen County, New Jersey; and
(3) Open-End Leasehold Mortgage executed by CCC Closter Cinema Corp.
relating to a leasehold estate in property located in the town of
Closter, Bergen County, New Jersey.
(ii) with respect to the Real Estate covered by the Open-End Mortgage
and Security Agreements identified in (i)(1) and (i)(2) above, title
evidence satisfactory to each Lender that each respective Borrower has a
good, marketable fee-simple estate in the Real Estate subject only to the
Permitted First Liens.
(iii) with respect to the Real Estate covered by the Open-End
Leasehold Mortgages identified in (i)(3) above, title evidence satisfactory
to each Lender that each respective Borrower has a good, marketable
leasehold estate in the Real Estate subject only to the Permitted First
Liens.
(iv) with respect to the Open-End Leasehold Mortgage identified in
paragraph (i)(3) above, consents of the respective landlords consenting to
the mortgaging of the respective Borrower's leasehold estate.
(v) with respect to the Leasehold Mortgages identified in (i) (3)
above, non-disturbance and attornment agreement executed by the landlord
and their mortgage holder, each in form and substance satisfactory to
Agent.
<PAGE>
(vi) Borrowers shall have paid to the Agent an amount equal to all
title search and exam fees, mortgage and mortgage recording taxes,
intangibles taxes, stamp taxes and other taxes payable in connection with
the execution and delivery of the Mortgages and Leasehold Mortgages and the
obligations secured thereby and the recording of the Mortgages and
Leasehold Mortgages in the appropriate land offices.
(h) Legal Opinion. Agent and Lenders shall have received a written legal
opinion or opinions, addressed to Agent and each Lender and dated as of the
Closing Date, from legal counsel for each New Subsidiary, which shall be
substantially in the form of Exhibit L to the Credit Agreement and which legal
opinions shall otherwise be acceptable to Agent and each Lender.
(i) Legality of Transactions. No change in applicable law shall have
occurred as a consequence of which it shall have become and continue to be
unlawful for Agent and each Lender to perform any of its agreements or
obligations under any of the Loan Documents, or for Borrower to perform any of
its agreements or obligations under any of the Loan Documents.
(j) Performance, Etc. Except as set forth herein, Borrower shall have duly
and properly performed, complied with and observed each of its covenants,
agreements and obligations contained in each of the Loan Documents. Except as
set forth herein, no event shall have occurred on or prior to the First
Amendment Closing Date, and no condition shall exist on the First Amendment
Closing Date, which constitutes a Default or an Event of Default.
(k) Proceedings and Documents. All corporate, governmental and other
proceedings in connection with the transactions contemplated on the First
Amendment Closing Date, each of the other Loan Documents and all instruments and
documents incidental thereto shall be in form and substance reasonably
satisfactory to Provident.
(l) Changes; None Adverse. Since the date of the most recent balance sheets
of Borrower delivered to Provident, no changes shall have occurred in the
assets, liabilities, financial condition, business, operations or prospects of
Borrower which, individually or in the aggregate, are material to Borrower, and
Provident shall have completed such review of the status of all current and
pending legal issues as Agent shall deem necessary or appropriate.
(m) Bergen County Transaction. Borrowers shall have closed, or be prepared
to simultaneously close with the closing of the Loans, the Bergen County
Transaction on terms and conditions satisfactory to Agent and each Lender.
(n) Lien Searches. Agent shall have received the results of a recent search
by a Person satisfactory to Agent, of the UCC, judgment and tax lien filings
which may have been filed with respect to personal property of the Borrowers or
any of their
<PAGE>
Subsidiaries and each of the Bergen County Sellers in the jurisdictions listed
on Schedule 5.21-A, and the results of such search shall be satisfactory to
Agent.
(o) Environmental Assessment. Agent and Lenders shall have received an
environmental survey and assessment relative to the Bergen County Transaction
Property by a firm of licensed engineers in form and substance satisfactory to
each, and the conditions disclosed in such survey and assessment shall be
satisfactory to Agent and Lenders.
(p) Warrants. Holdings shall have issued to Provident warrants to purchase
the agreed upon percentage of the fully-diluted Equity Interests of Holdings in
form and substance satisfactory to Provident and substantially in the form of
Exhibit M to the Credit Agreement.
(q) Subordination Agreement. Agent shall have received the Subordination
Agreement and the Seller Subordination Agreement, each executed by the
respective parties thereto.
15. Miscellaneous. (a) Borrower shall reimburse Agent for all fees and
disbursements of legal counsel to Agent which shall have been incurred by Agent
in connection with the preparation, negotiation, review, execution and delivery
of this First Amendment and the handling of any other matters incidental hereto.
(b) All of the terms, conditions and provisions of the Agreement not herein
modified shall remain in full force and effect. In the event a term, condition
or provision of the Agreement conflicts with a term, condition or provision of
this First Amendment, the latter shall govern.
(c) This First Amendment shall be governed by and shall be construed and
interpreted in accordance with the laws of the State of Ohio.
(d) This First Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns.
(e) This First Amendment may be executed in several counterparts, each of
which shall constitute an original, but all which together shall constitute one
and the same agreement
[Remainder of page intentionally left blank. Signature pages follow.]
<PAGE>
IN WITNESS WHEREOF, this Joinder Agreement and First Amendment to Credit
Agreement has been duly executed and delivered by or on behalf of each of the
parties as of the day and in the year first above written.
SIGNED IN THE PRESENCE OF:
CLEARVIEW CINEMA GROUP, INC.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC MADISON TRIPLE CINEMA CORP.,
a New Jersey corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC CHESTER TWIN CINEMA
CORPORATION, a New Jersey corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC MANASQUAN CINEMA CORPORATION,
a New Jersey corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
<PAGE>
CLEARVIEW THEATRE GROUP, INC.,
a New Jersey corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC HERRICKS CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC PORT WASHINGTON CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC GRAND AVENUE CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
<PAGE>
CCC WASHINGTON CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC ALLWOOD CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC EMERSON CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC NEW CITY CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
343-349 SPRINGFIELD AVENUE CORP.,
a New Jersey corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC BEDFORD CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
<PAGE>
CCC KISCO CINEMA CORP.,
a Delaware corporation ("CCC Kisco"),
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC CLOSTER CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC BERGENFIELD CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC TENAFLY CINEMA CORP.,
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
CCC B.C. REALTY CORP.
a Delaware corporation
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
<PAGE>
THE PROVIDENT BANK, Agent
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
THE PROVIDENT BANK, Lender
________________________ By: _____________________________
Name: ___________________________
________________________ Title: __________________________
[Schedules are not included herewith, but will be provided by the Company upon
request.]
Exhibit 10.13
---------------------------------
SECOND AMENDMENT TO
CREDIT AGREEMENT
BY AND AMONG
CLEARVIEW CINEMA GROUP, ET AL.
AND
THE PROVIDENT BANK,
Agent and Lender
dated as of
March 27, 1997
---------------------------------
<PAGE>
- 2 -
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Second Amendment") dated as of
March 27, 1997 by and among CLEARVIEW CINEMA GROUP, INC., a Delaware corporation
(hereinafter, together with its successors in title and assigns called
"Holdings"), CCC MADISON TRIPLE CINEMA CORP., a New Jersey corporation, CCC
CHESTER TWIN CINEMA CORPORATION, a New Jersey corporation, CCC MANASQUAN CINEMA
CORPORATION, a New Jersey corporation, CLEARVIEW THEATRE GROUP, INC., a New
Jersey corporation, CCC HERRICKS CINEMA CORP., a Delaware corporation, CCC PORT
WASHINGTON CINEMA CORP., a Delaware corporation, CCC GRAND AVENUE CINEMA CORP.,
a Delaware corporation, CCC WASHINGTON CINEMA CORP., a Delaware corporation, CCC
ALLWOOD CINEMA CORP., a Delaware corporation, CCC EMERSON CINEMA CORP., a
Delaware corporation, CCC NEW CITY CINEMA CORP., a Delaware corporation, and CCC
SUMMIT CINEMA CORP. (formerly known as 343-349 SPRINGFIELD AVENUE CORP.), a New
Jersey corporation, (hereinafter collectively the Original Borrowers), and CCC
BEDFORD CINEMA CORP., a Delaware corporation ("CCC Bedford") and CCC KISCO
CINEMA CORP., a Delaware corporation ("CCC Kisco"), CCC CLOSTER CINEMA CORP., a
Delaware corporation, ("CCC Closter"), CCC BERGENFIELD CINEMA CORP., a Delaware
corporation, ("CCC Bergenfield"), CCC TENAFLY CINEMA CORP., a Delaware
corporation, ("CCC Tenafly") and CCC B.C. REALTY CORP., a Delaware corporation,
(CCC Realty"), (hereinafter, together with their successors in title and assigns
collectively called "Borrowers" and each of which is a "Borrower") and THE
PROVIDENT BANK, an Ohio banking corporation ("Agent") and various Lenders as set
forth in the Credit Agreement.
PRELIMINARY STATEMENT
WHEREAS, Original Borrowers, Agent and Lenders have entered into a Credit
Agreement dated as of May 29, 1996, as amended by a Joinder Agreement and First
Amendment ("First Amendment") dated as of December 13, 1996 (collectively the
"Credit Agreement"); and
WHEREAS, CCC Bedford and CCC Kisco were joined as borrowers to the Credit
Agreement by that certain Joinder Agreement dated as of July 18, 1996, and CCC
Closter, CCC Bergenfield, CCC Tenafly, and CCC Realty were joined as borrowers
by the First Amendment,
WHEREAS, Holdings desires to enter into the Summit Transaction and Chester
Twin Transaction (as hereinafter defined), in connection with which Borrowers
have requested additional loans of $1,250,000 from the Lenders to finance a
portion of the costs of improvements related to the Summit Transaction and to
provide additional financing to support said acquisition and capital
expenditures; and
WHEREAS, Lenders have agreed to make such additional loans on the terms and
conditions set forth herein; and
WHEREAS, Borrowers, Agent and Lenders now wish to amend the Credit
Agreement in accordance with the terms and provisions hereof;
<PAGE>
- 3 -
NOW, THEREFORE, the parties hereto agree to supplement and amend the Credit
Agreement upon such terms and conditions as follows:
1. Capitalized Terms. All capitalized terms used herein shall have the
meanings assigned to them in the Credit Agreement unless the context hereof
requires otherwise. Any definitions as capitalized terms set forth herein shall
be deemed incorporated into the Credit Agreement as amended by this Second
Amendment.
2. Schedules and Exhibits: The following schedules relative to the New
Subsidiaries are addendums to the respective Schedule to the Credit Agreement:
(a) Schedule 3.1 Mortgaged Property and Leasehold Interests
(b) Schedule 5.1(a) Jurisdictions where qualified to do business
(c) Schedule 5.1(b) Capital Stock
(d) Schedule 5.1(c) Subsidiaries
(e) Schedule 5.2 Authority
(f) Schedule 5.6 Material Adverse Changes
(g) Schedule 5.7 Material Leases of Property
(h) Schedule 5.8 Intellectual Property
(i) Schedule 5.9 Indebtedness for Borrowed Money
(j) Schedule 5.10 Litigation
(k) Schedule 5.13(a) Contracts with Affiliates
(l) Schedule 5.13(b) Indebtedness for Borrowed Money Owing to or by
Affiliates
(m) Schedule 5.21-A UCC Filing Offices
(n) Schedule 8.9(g) Liens
3. Definitions. Section 1.2 of the Credit Agreement is hereby amended to
add the following definitions to read in their entirety as follows:
"Chester Twin Cinema Transaction" means the revised and restated lease
about to be entered into between CCC Chester Twin Cinema Corporation, as
Tenant, and Ramco-Gershenson, Inc., as Landlord for property known as and
designated as Store B-001 in the Chester Springs Shopping Center located on
Route 206, Chester Borough, New Jersey for the expansion of two movie
auditoriums into six movie auditoriums.
"Summit Transaction" means the lease by and between 343 Springfield
Avenue, Summit, L.L.C., Landlord, and CCC Summit Cinema Corp., Tenant,
dated February 27, 1997 for part of premises commonly known as 343-349
Springfield Avenue, Summit, New Jersey.
"Summit Transaction Property" means the real and personal property
acquired by Borrowers relative to the Summit Transaction.
"Second Amendment Closing Date" means the day on which the Loans
relative to the Second Amendment are made pursuant to this Agreement.
<PAGE>
- 4 -
4. Making the Loans. Section 2.2(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:
(e) Term Loan B. Subject to the terms and conditions of this Agreement
and in reliance upon the representation and warranties of each Borrower
herein set forth, each Lender severally agrees to lend to Borrowers its
Participation Percentage of the Term Loan B. The aggregate amount of the
Term Loan B shall not exceed Five Million Five Hundred Fifty Thousand
Dollars ($5,550,000). Amounts borrowed under Subsection 2.2(c) and repaid
or prepaid may not be reborrowed. Four Million Three Hundred Thousand
Dollars ($4,300,000) of Term Loan B was made available to Borrowers prior
to the Second Amendment Closing Date. Lenders agree, subject to Section 4.2
of the Credit Agreement, to make available an additional Six Hundred
Twenty-Five Thousand Dollars ($625,000) on or prior to thirty (30) days
following the Second Amendment Closing Date and an additional Six Hundred
Twenty-Five Thousand Dollars ($625,000) on or prior to ninety (90) days
following the Second Amendment Closing Date. Each such additional amount
shall be made to Borrowers in one drawing.
5. Repayments and Prepayments of Principal/Payment on the Term Loans. The
Amortization Schedule set forth in Section 2.6(b) of the Credit Agreement is
hereby amended to in its entirety to read as follows:
- --------------------------------------------------------------------------------
PAYMENT DATE PRINCIPAL INSTALLMENT
- --------------------------------------------------------------------------------
July 1, 1997 $100,000.00
- --------------------------------------------------------------------------------
October 1, 1997 $144,500.00
- --------------------------------------------------------------------------------
January 1, 1998 $144,500.00
- --------------------------------------------------------------------------------
April 1, 1998 $194,500.00
- --------------------------------------------------------------------------------
July 1, 1998 $194,500.00
- --------------------------------------------------------------------------------
October 1, 1998 $203,750.00
- --------------------------------------------------------------------------------
January 1, 1999 $203,750.00
- --------------------------------------------------------------------------------
April 1, 1999 $228,750.00
- --------------------------------------------------------------------------------
July 1, 1999 $228,750.00
- --------------------------------------------------------------------------------
October 1, 1999 $237,500.00
- --------------------------------------------------------------------------------
January 1, 2000 $237,500.00
<PAGE>
- 5 -
- --------------------------------------------------------------------------------
April 1, 2000 $262,500.00
- --------------------------------------------------------------------------------
July 1, 2000 $262,500.00
- --------------------------------------------------------------------------------
October 1, 2000 $271,250.00
- --------------------------------------------------------------------------------
January 1, 2001 $271,250.00
- --------------------------------------------------------------------------------
April 1, 2001 $296,250.00
- --------------------------------------------------------------------------------
July 1, 2001 $296,250.00
- --------------------------------------------------------------------------------
October 1, 2001 $305,500.00
- --------------------------------------------------------------------------------
December 31, 2001 $1,305,500.00
- --------------------------------------------------------------------------------
April 1, 2002 $80,500.00
- --------------------------------------------------------------------------------
July 1, 2002 $80,500.00
- --------------------------------------------------------------------------------
6. Reaffirmation of Covenants. Warranties and Representations. Each
Borrower hereby agrees and covenants that all representations and warranties in
the Credit Agreement, including without limitation all of those warranties and
representations set forth in Article 5, are true and accurate as of the date
hereof. Each Borrower further reaffirms all covenants in the Credit Agreement,
and reaffirm each of the affirmative covenants set forth in Article 6 and
financial covenants set forth in Article 7 and negative covenants set forth in
Article 8 thereof, as if fully set forth herein, except to the extent modified
by this Second Amendment.
7. Conditions Precedent to Closing of Second Amendment. On or prior to the
closing of the Second Amendment (hereinafter the "Second Amendment Closing
Date"), each of the following conditions precedent shall have been satisfied:
(a) Proof of Corporate Authority. Agent shall have received from each
Borrower copies, certified by a duly authorized officer to be true and
complete on and as of the Second Amendment Closing Date, of records of all
action taken by Borrowers to authorize (i) the execution and delivery of
this Second Amendment and all other certificates, documents and instruments
to which it is or is to become a party as contemplated or required by this
Second Amendment, and (ii) its performance of all of its obligations under
each of such documents.
(b) Loan Documents, etc.. Each of the documents to be executed and
delivered at the Second Amendment Closing and all other certificates,
documents and instruments to be executed in connection herewith shall have
been duly and properly authorized, executed and delivered by Borrowers and
shall be in full force and effect on and as of the Second Amendment Closing
Date.
(c) Actions to Perfect Liens. Agent shall have received evidence in
form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including
<PAGE>
- 6 -
without limitation, the filing of duly executed financing statements on
Form UCC-1, necessary or, in the opinion of Agent, desirable to perfect the
Liens created by the Security Documents shall have been completed.
(d) Insurance. Agent shall have received copies of certificates of
insurance executed by each insurer or its authorized agent evidencing the
insurance required to be maintained pursuant to Section 6.2(b) of the
Credit Agreement with respect to the Summit Transaction Property, and a
certificate of a nationally recognized insurance broker reasonably
satisfactory to Agent certifying that insurance complying with such Section
has been obtained and is in full force and effect.
(e) Leasehold Mortgages and Title Evidence. Agent shall have received
the following documents, each of which shall be executed (and, where
appropriate, acknowledged) by Persons satisfactory to the Agent:
(i) the following Leasehold Mortgages, in each case duly executed
and delivered by the respective Borrowers (and where appropriate by
the trustee thereunder) in recordable form (in such number of copies
as the Agent shall have requested), together with such Uniform
Commercial Code financing statements as may be needed in order to
perfect the security interests granted by each of the Leasehold
Mortgages in any fixtures and other property therein described which
may be subject to the Uniform Commercial Code, in each case
appropriately completed and duly executed and in proper form for
filing in all offices in which required:
(1) Open-End Leasehold Mortgage executed by CCC Summit
Cinema Corp. relating to a leasehold estate in property located
in the city of Summit, New Jersey.
(2) Open-End Leasehold Mortgage executed by CCC Chester Twin
Corporation relating to a leasehold estate in property located in
the Borrough of Chester, New Jersey.
(ii) with respect to the Leasehold Mortgage identified in
paragraph (i)(1) above, consents of the landlord consenting to the
mortgaging of the Borrower's leasehold estate (which consnet may be
contained in the lease of such property).
(iii) with respect to the Leasehold Mortgage identified in (i)
(1) above, non-disturbance and attornment agreement executed by the
landlord and their mortgage holder, each in form and substance
satisfactory to Agent.
(iv) with respect to the Leasehold Mortgage identified in
paragraph (i)(2) above, prior to the funding the second additional
amount of the Term Loan B pursuant to Section 2.2(b) of the Credit
Agreement, as revised by this Second Amendment, consents of the
landlord consenting to the mortgaging of the Borrower's leasehold
estate.
(v) with respect to the Leasehold Mortgages identified in (i)(2)
above, prior to the funding the second additional amount of the Term
Loan B pursuant to Section 2.2(b) of the Credit Agreement,
non-disturbance and attornment agreement executed by the landlord and
their mortgage holder, each in form and substance satisfactory to
Agent.
<PAGE>
- 7 -
(vi) Borrowers shall have paid to the Agent an amount equal to
all title search and exam fees, mortgage and mortgage recording taxes,
intangibles taxes, stamp taxes and other taxes payable in connection
with the execution and delivery of the Leasehold Mortgages and the
obligations secured thereby and the recording of the Leasehold
Mortgages in the appropriate land offices.
(f) Legality of Transactions. No change in applicable law shall have
occurred as a consequence of which it shall have become and continue to be
unlawful (i) for Agent and each Lender to perform any of its agreements or
obligations under any of the Loan Documents, or (ii) for Borrower to perform any
of its agreements or obligations under any of the Loan Documents.
(g) Performance, Etc. Except as set forth herein, Borrower shall have duly
and properly perforrned, complied with and observed each of its covenants,
agreements and obligations contained in each of the Loan Documents. Except as
set forth herein, no event shall have occurred on or prior to the Second
Amendment Closing Date, and no condition shall exist on the Second Amendment
Closing Date, which constitutes a Default or an Event of Default.
(h) Proceedings and Documents. All corporate, governmental and other
proceedings in connection with the transactions contemplated on the Second
Amendment Closing Date, each of the other Loan Documents and all instruments and
documents incidental thereto shall be in form and substance reasonably
satisfactory to Provident.
(i) Changes; None Adverse. Since the date of the most recent balance sheets
of Borrower delivered to Provident, no changes shall have occurred in the
assets, liabilities, financial condition, business, operations or prospects of
Borrower which, individually or in the aggregate, are material to Borrower, and
Provident shall have completed such review of the status of all current and pen
ding legal issues as Agent shall deem necessary or appropriate.
(j) Lien Searches. Agent shall have received the results of a recent search
by a Person satisfactory to Agent, of the UCC, judgment and tax lien filings
which may have been filed with respect to the Summit Transaction Property.
(k) Environmental Assessment. Agent and Lenders shall have received any
environmental survey and assessment received by Borrower relative to the Summit
Transaction Property.
8. Miscellaneous. (a) Borrower shall reimburse Agent for all fees and
disbursements of legal counsel to Agent which shall have been incurred by Agent
in connection with the preparation, negotiation, review, execution and delivery
of this Second Amendment and the handling of any other matters incidental
hereto.
(b) All of the terms, conditions and provisions of the Agreement not herein
modified shall remain in full force and effect. In the event a term, condition
or provision of the Agreement conflicts with a term, condition or provision of
this Second Amendment, the latter shall govern.
<PAGE>
- 8 -
(c) This Second Amendment shall be governed by and shall be construed and
interpreted in accordance with the laws of the State of Ohio.
(d) This Second Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns.
(e) This Second Amendment may be executed in several counterparts, each of
which shall constitute an original, but all which together shall constitute one
and the same agreement.
[Remainder of page intentionally left blank. Signature pages follow.]
<PAGE>
- 9 -
IN WITNESS WHEREOF, this Second Amendment to Credit Agreement has been duly
executed and delivered by or on behalf of each of the parties as of the day and
in the year first above written.
SIGNED IN THE PRESENCE OF:
CLEARVIEW CINEMA GROUP, INC.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
. CCC MADISON TRIPLE CINEMA CORP.,
a New Jersey corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC CHESTER TWIN CINEMA CORPORATION
a New Jersey corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
<PAGE>
- 10 -
CCC MANASQUAN CINEMA CORPORATION,
a New Jersey corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CLEARVIEW THEATRE GROUP, INC.,
a New Jersey corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC HERRICKS CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC PORT WASHINGTON CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
<PAGE>
- 11 -
CCC GRAND AVENUE CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC WASHINGTON CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC ALLWOOD CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC EMERSON CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
<PAGE>
- 12 -
CCC NEW CITY CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC SUMMIT CINEMA CORP.(formerly
known as 343-349 SPRINGFIELD
AVENUE CORP.), a New Jersey
corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC BEDFORD CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC KISCO CINEMA CORP., a
Delaware corporation ("CCC Kisco"),
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC CLOSTER CINEMA CORP.,
a Delaware corporation
<PAGE>
- 13 -
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC BERGENFIELD CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC TENAFLY CINEMA CORP.,
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
CCC B.C. REALTY CORP.
a Delaware corporation
_____________________________ By: _____________________________
Name: A. Dale Mayo
_____________________________ Title: President
THE PROVIDENT BANK, Agent
_____________________________ By: _____________________________
Name: Alan R. Henning
_____________________________ Title: Vice President
<PAGE>
- 14 -
THE PROVIDENT BANK, Lender
_____________________________ By: _____________________________
Name: Alan R. Henning
_____________________________ Title: Vice President
[Schedules are not included, but will be provided by the Company upon request.]
Exhibit 10.14
AMENDED AND RESTATED
PLEDGE AGREEMENT
THIS AMENDED AND RESTATED PLEDGE AGREEMENT ("Pledge Agreement") dated as of
July __, 1996 between CLEARVIEW CINEMA GROUP, INC., a Delaware corporation,
("Pledgor") and THE PROVIDENT BANK, Agent ("Secured Party").
WHEREAS, in connection with the Loans from Lenders to Borrowers, as
evidenced by the Credit Agreement, and to induce the Lenders to make the Loans
thereunder, Pledgor executed and delivered to Secured Party, as Agent for the
benefit of the Lenders, a certain Pledge Agreement dated as of May 29, 1996
wherein, Pledgor granted Secured Party a security interest in the Pledged Stock.
WHEREAS, pursuant to the terms of a Joinder Agreement dated as of July __,
1996, CCC Bedford Cinema Corp. and CCC Kisco Cinema Corp. (collectively the "New
Subsidiaries") became additional Borrowers under the Credit Agreement and a
portion of the Loan proceeds was disbursed to Borrowers for the acquisition of
certain assets now owned by the New Subsidiaries; and
WHEREAS, pursuant to Section 3.3 of the Credit Agreement, Pledgor is
obligated to execute and deliver to Secured Party, a Pledge Agreement pledging
all of its interest in any Subsidiaries now owned or hereafter acquired; and
WHEREAS, in order to comply with said Section 3.3 of the Credit Agreement,
Pledgor and Secured Party have agreed to execute this Amended and Restated
Pledge Agreement to include the stock of the New Subsidiaries as part of the
Pledged Stock.
NOW THEREFORE, in consideration of the Lenders extending the Loans to
Borrowers and continuing to extend credit to the Borrowers, the parties hereby
agree that the Pledge Agreement dated May 29, 1996 is hereby amended and
restated in its entirety as follows:
1. Defined Terms. As used in this Pledge Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and the plural forms of the term defined):
"Borrowers" means Clearview Cinema Group, Inc., CCC Madison Triple
Cinema Corp., CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema
Corporation, Clearview Theatre Group, Inc., CCC Herricks Cinema Corp., CCC
Port Washington Cinema Corp., CCC Grand Avenue Cinema Corp., CCC Washington
Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New
City
<PAGE>
- 2 -
Cinema Corp., 343-349 Springfield Avenue Corp., CCC Bedford Cinema Corp.
and CCC Kisco Cinema Corp.
"Certificates" mean any and all certificates or other documents or
instruments now or hereafter received or receivable by Pledgor and
representing Pledgor's interest in the Pledged Stock.
"Credit Agreement " means that certain Credit Agreement dated as of
May 29, 1996, together with that certain Joinder Agreement dated as of July
__, 1996, by and among Borrowers, Agent and Lenders, as the same may be
amended, modified or supplemented from time to time.
"Lenders" mean Provident, and various other lenders as set forth on
Schedule 1 to the Credit Agreement.
"Loans" mean the revolving loan and term loan facilities represented
and evidenced by the Credit Agreement.
"Pledged Stock" means the shares of the capital stock owned
beneficially and of record by Pledgor as set forth on attached Exhibit A,
together with all substitutions therefor, proceeds thereof and therefrom
and all cash dividends in respect thereof as well as all stock and other
securities or property which are issued pursuant to conversion, exercise of
rights, stock split, recapitalization, stock dividend or other corporate
act which are referable to the Pledged Stock (such stock or other
securities are hereinafter referred to as the "Additional Pledged
Securities") and all distributions, whether cash or otherwise, in the
nature of a partial or complete liquidation, dissolution or winding up
which are referable to the Pledged Stock (such distributions are
hereinafter referred to as "Liquidating Distributions").
"Provident" means The Provident Bank, an Ohio banking corporation.
All other capitalized terms used herein have the meanings assigned to them
in the Credit Agreement unless the context hereof otherwise requires.
2. Pledge and Grant of Security Interests. Pledgor hereby pledges, assigns,
hypothecates and transfers to Secured Party, its successors and assigns, all
Pledged Stock and hereby grants to and creates in favor of Secured Party first
priority liens and security interests in the Pledged Stock, as collateral
security for the due and punctual payment when due (whether at maturity by
acceleration or otherwise) in full of all amounts due under the Loans; the due
and punctual performance and observance by Pledgor and the other Borrowers of
their respective agreements, obligations, liabilities and duties under this
Pledge Agreement, the Credit Agreement and all other documents executed in
connection with the Loans (the "Loan Documents"); and all costs incurred by
Secured Party to obtain, perfect, preserve and enforce the liens and security
interests granted by this Pledge Agreement, to collect the Obligations Secured
Hereby (as hereinafter defined) and to maintain and preserve the Pledged Stock,
with such costs including but not limited
<PAGE>
- 3 -
to expenditures made by Secured Party for reasonable attorneys' fees and other
legal expenses and expenses of collection, possession and sale of the Pledged
Stock, together with interest on all such costs at the Default Interest Rate (as
defined in the Loan Documents) (the foregoing subsections (i), (ii) and (iii)
are collectively referred to herein as the "Obligations Secured Hereby").
3. Delivery of Pledged Stock. On the date of the execution of this Pledge
Agreement, Pledgor shall place the Pledged Stock in pledge by delivering the
Certificates to and depositing them with Secured Party or its designated agent.
Pledgor shall also deliver to Secured Party concurrently therewith undated
assignments separate from the Certificates duly executed in blank for each
Certificate representing shares of the Pledged Stock and all other applicable
and appropriate documents and assignments in form suitable to enable Secured
Party to effect the transfer of all or any portion of the Pledged Stock to the
extent hereinafter provided.
4. Delivery of Additional Pledged Securities and Liquidating Distributions;
Proceeds, Cash Dividends and Voting.
a. Except to the extent provided in the Credit Agreement, if Pledgor shall
hereafter become entitled to receive or shall receive any cash dividends, cash
proceeds, any Additional Pledged Securities, any Liquidating Distributions, or
any other cash or non-cash payments on account of the Pledged Stock, Pledgor
agrees to accept the same as Secured Party's agent and to hold the same in trust
on behalf of and for the benefit of Secured Party and agrees to promptly deliver
the same or any certificates therefor forthwith to Secured Party in the exact
form received, with the endorsement of Pledgor, when necessary, or appropriate
undated assignments separate from the Certificates, duly executed in blank, to
be held by Secured Party subject to the terms hereof.
b. Notwithstanding anything contained in this Pledge Agreement to the
contrary, Pledgor shall be entitled to exercise voting rights with respect to
the Pledged Stock, so long as there has not occurred any Default or Event of
Default under the terms of the Credit Agreement or any other Loan Documents.
5. Representations and Warranties of Pledgor. To induce Secured Party to
enter into this Pledge Agreement and to induce the Lenders to enter into the
Credit Agreement, and to induce Lenders to extend credit and continue to extend
credit to the Borrowers, Pledgor makes the following representations and
warranties to Secured Party:
a. Pledgor is the legal, record and beneficial owner of, and has good
and marketable title to, the Pledged Stock.
b. Pledgor holds the Pledged Stock free and clear of all liens,
charges, encumbrances, security interests and restrictions of every kind
and nature whatsoever except only the liens and security interests created
by this Pledge Agreement.
<PAGE>
- 4 -
c. Each security which is part of the Pledged Stock has been duly and
validly issued and is fully paid and nonassessable. The Pledged Stock
constitutes one hundred percent (100%) of the issued and outstanding common
stock of each of the respective corporations and there are no outstanding
subscriptions, options, warrants, calls, commitments or agreements to issue
any additional shares of stock of such companies or to purchase, redeem or
retire any outstanding shares of such Pledged Stock, nor are there
outstanding any securities or obligations which are convertible into or
exchangeable for any shares of capital stock of such companies.
d. This Pledge Agreement has been duly executed and delivered by
Pledgor and constitutes the legal, valid and binding obligation of Pledgor
enforceable against it in accordance with its terms.
e. No consent or approval of any governmental body, regulatory
authority or securities exchange is required to be obtained by Pledgor in
connection with the execution, delivery and performance of this Pledge
Agreement.
f. The execution, delivery and performance of this Pledge Agreement
will not violate any provision of any applicable law or regulation or of
any writ or decree of any court or governmental instrumentality or of any
indenture, contract, agreement or other undertaking to which Pledgor is a
party or which purports to be binding upon Pledgor or upon any of its
assets and will not result in the creation or imposition of any lien,
charge or encumbrance on or security interest in any of the assets of
Pledgor except as contemplated by this Pledge Agreement.
g. The pledge, assignment and delivery of the Pledged Stock pursuant
to this Pledge Agreement creates valid first liens and first security
interests in the Pledged Stock which are perfected and senior to any
pledge, lien, mortgage, hypothecation, security interest, charge, option or
encumbrance or to any agreement purporting to grant to any third party a
security interest in the property or assets of Pledgor which would include
the Pledged Stock.
6. Pledgor's Covenants.
a. Pledgor covenants and agrees that it will defend Secured Party's lien
and security interest in and to the Pledged Stock against the claims and demands
of all persons whosoever.
b. Subject to the terms and conditions of the Credit Agreement, Pledgor
covenants and agrees that it will not create, incur or permit to exist any
pledge, lien, mortgage, hypothecation, security interest, charge, option or any
other encumbrance with respect to any of the Pledged Stock, or any interest
therein, or any proceeds thereof, except for the lien and security interest
provided for or referred to in this Pledge Agreement.
<PAGE>
- 5 -
c. Pledgor covenants and agrees that it will not consent to the issuance of
any additional shares of capital stock of any class of those companies set forth
on Exhibit A unless such shares are pledged and the Certificates therefor
delivered to Secured Party simultaneously with the issuance thereof, together
with appropriate undated assignments separate from the Certificates duly
executed in blank.
7. Rights and Remedies upon Default. If any Event of Default under the
Credit Agreement or any of the Loan Documents shall occur and be continuing,
Secured Party may, subject to the terms of the Credit Agreement, by notice of
default given to Pledgor, declare the Obligations Secured Hereby to be forthwith
due and payable, whereupon such Obligations Secured Hereby shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived, anything contained herein
or in the Loan Documents to the contrary notwithstanding; and/or proceed to
protect and enforce its rights under this Pledge Agreement, the Credit Agreement
or the other Loan Documents by suit in equity, action at law or any other
appropriate proceeding and Secured Party shall have all of the rights and
remedies provided by applicable law, including, without limitation, the rights
and remedies of a secured party under the Uniform Commercial Code and, in
addition, thereto, Secured Party shall be entitled to register the Pledged Stock
in its name or in the name of its nominee and to exercise all voting and
corporate rights with respect to the Pledged Stock as it may determine, without
liability therefore except to account to Pledgor for property actually received
by it in respect of the Pledged Stock as a result thereof, but Secured Party
shall not have any duty to exercise any voting and corporate rights in respect
of the Pledged Stock and shall not be responsible or liable to Pledgor or any
other person for any failure to do so or delay in so doing.
Without limiting the generality of the foregoing, but subject to the terms
of the Credit Agreement, Secured Party shall have the right to sell the Pledged
Stock, or any part thereof, at public or private sale or at any broker's board
or on any securities exchange for cash, upon credit or for future delivery, and
at such price or prices as Secured Party may deem best, and Secured Party may
(except as otherwise provided by law) be the purchaser of any or all of the
Pledged Stock so sold and thereafter may hold the same, absolutely, free from
any right or claim of whatsoever kind. Secured Party is authorized, at any such
sale, if it deems it advisable so to do, to restrict the number of prospective
bidders or purchasers and/or further restrict such prospective bidders or
purchasers to persons who will represent and agree that they are purchasing for
their own account, for investment, and not with a view to the distribution or
resale of the Pledged Stock and may otherwise require that such sale be
conducted subject to restrictions as to such other matters as Secured Party may
deem necessary in order that such sale may be effected in such manner as to
comply with all applicable state and federal securities laws; upon any such sale
Secured Party shall have the right to deliver, assign and transfer to the
purchaser thereof the Pledged Stock so sold.
Each purchaser at any such sale shall hold the property sold, absolutely,
free from any claim or right of whatsoever kind, including any equity or right
of redemption, of Pledgor, who hereby specifically waives all rights of
redemption, stay or appraisal which it
<PAGE>
- 6 -
has or may have under any rule of law or statute now existing or hereafter
adopted. Secured Party shall give Pledgor not less than ten (10) days' written
notice of its intention to make any such public or private sale at broker's
board or on a securities exchange. Such notice, in case of public sale, shall
state the time and place fixed for such sale, and, in case of sale at broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Pledged Stock, or that portion
thereof so being sold, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within the
ordinary business hours and at such place or places as Secured Party may fix in
the notice of such sale. At any sale the Pledged Stock may be sold in one lot as
an entirety or in parts, as Secured Party may determine. Secured Party shall not
be obligated to make any sale pursuant to any such notice. Secured Party may,
without notice or publication, adjourn any sale, and such sale may be made at
any time or place to which the same may be so adjourned. In case of any sale of
all or any part of the Pledged Stock on credit or for future delivery, the
Pledged Stock so sold may be retained by Secured Party until the selling price
is paid by the purchaser thereof, but Secured Party shall not incur any
liability in case of the failure of such purchaser to take up and pay for the
Pledged Stock so sold and, in case of any such failure, such Pledged Stock may
again be sold upon like notice.
Secured Party, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to foreclose this
Pledge Agreement and sell the Pledged Stock, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction.
On any sale of the Pledged Stock, Secured Party is hereby authorized to
comply with any limitation or restriction in connection with such sale that it
may be advised by counsel is necessary in order to avoid any violation of
applicable law or in order to obtain any required approval of the purchaser or
purchasers by any governmental regulatory authority or officer or court.
Compliance with the foregoing procedures shall result in such sale or
disposition being considered or deemed to have been made in a commercially
reasonable manner.
In furtherance of the exercise by Secured Party of the rights and remedies
granted to it hereunder, Pledgor agrees that, upon request of Secured Party and
at the expense of Pledgor, it will use its best efforts to obtain all
governmental approvals necessary for or incidental to the exercise of remedies
by Secured Party with respect to the Pledged Stock or any part thereof.
Pledgor hereby acknowledges that, notwithstanding that a higher price might
be obtained for the Pledged Stock at a public sale than at a private sale or
sales, the making of a public sale of the Pledged Stock may be subject to
registration requirements and other legal restrictions compliance with which
could require such actions on the part of Pledgor, could entail such expenses
and could subject Secured Party and any underwriter through whom the Pledged
Stock may be sold and any controlling person of any thereof to such liabilities,
as would make the making of a public sale of the Pledged Stock impractical.
<PAGE>
- 7 -
Accordingly, Pledgor hereby agrees that private sales made by Secured Party in
accordance with the provisions of Section 7 hereof may be at prices and on other
terms less favorable to the seller than if the Pledged Stock were sold at public
sale, and that Secured Party shall not have any obligation to take any steps in
order to permit the Pledged Stock to be sold at a public sale complying with the
requirements of federal and state securities and similar laws, and that sale may
be at a private sale provided that such sale is made at arms length and in a
commercially reasonable manner.
8. Indemnification. Pledgor agrees to indemnify and hold harmless Secured
Party and the Lenders (to the full extent permitted by law) from and against any
and all claims, demands, losses, judgments and liabilities for penalties and
excise taxes of whatever nature, and to reimburse Secured Party and the Lenders
for all costs and expenses, including reasonable legal fees and disbursements,
growing out of or resulting from the Pledged Stock, this Pledge Agreement or the
administration and enforcement or exercise of any right or remedy granted to
Secured Party hereunder. In no event shall Secured Party or any Lender be liable
to Pledgor for any matter or thing in connection with this Pledge Agreement
other than to account for moneys actually received by it in accordance with the
terms hereof.
9. Distribution of Pledged Stock. Upon enforcement of this Pledge Agreement
following the occurrence of an Event of Default under the Credit Agreement or
any other Loan Documents, the proceeds of the Pledged Stock shall be applied as
received by Secured Party in the manner provided in the Credit Agreement.
10. Release of Pledged Stock. Upon full payment of the Loans and
satisfaction of all Obligations in connection therewith, Secured Party shall
take all action necessary to terminate the security interest in the Pledged
Stock.
11. Further Assurances. Pledgor agrees that at any time and from time to
time upon the request of Secured Party, Pledgor will execute and deliver such
further documents and do such further acts and things as Secured Party
reasonably requests in order to effect the purposes of this Pledge Agreement.
12. No Waiver; Cumulative Remedies. Secured Party shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by
Secured Party, and then only to the extent therein set forth. A waiver by
Secured Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Secured Party would otherwise
have on any future occasion. No failure to exercise or any delay in exercising
on the part of Secured Party any right, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights and
remedies provided by law.
<PAGE>
- 8 -
13. Severability of Provisions. The provisions of this Pledge Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part, then such invalidity or unenforceability
shall attach only to such clause or provision or part thereof and shall not in
any manner affect such clause or provision in any other jurisdiction or any
other clause or provision in this Pledge Agreement in any jurisdiction.
14. Amendments; Choice of Law; Binding Effect.
a. None of the terms or provisions of this Pledge Agreement may be altered,
modified or amended except by an instrument in writing, duly executed by each of
the parties hereto.
b. This Pledge Agreement shall be governed by and construed and interpreted
in accordance with the laws of the State of Ohio.
c. This Pledge Agreement shall be binding upon an inure to the benefit of
the parties hereto and their respective successors and assigns.
15. Address of Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing, and if addressed to
Pledgor, mailed or delivered at:
(i) If to Borrowers, at:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, New Jersey 07940
Attn: A. Dale Mayo, President
Fax Number: (201) 377-4303
with a copy to:
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
New York, New York 10020
Attn: Warren H. Colodner, Esq.
Fax Number: (212) 536-3901
and, if to Secured Party, mailed or delivered to it, addressed to it at:
The Provident Bank, Agent
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Christopher B. Gribble
<PAGE>
- 9 -
with a copy to:
Keating, Muething & Klekamp
One East Fourth Street
Cincinnati, Ohio 45202
Attention: J. David Rosenberg, Esq.
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other complying as to delivery with the terms of this
section. All notices, requests, demands and other communications provided for
hereunder shall be deemed given or delivered if in writing addressed as provided
above and if either actually delivered at said address; or in, the case of a
letter, three (3) Business Days shall have elapsed after the same shall have
been deposited in the United States mail, postage prepaid and registered or
certified.
16. Headings. The descriptive headings hereunder used are for convenience
only and shall not be deemed to limit or otherwise effect the construction of
any provision hereof.
17. Counterpart Execution. This Pledge Agreement may be executed in several
counterparts each of which shall constitute an original, but all of which
together shall constitute one and the same agreement.
[Remainder of page intentionally left blank. Signature page follows.]
<PAGE>
- 10 -
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement to be
duly executed and delivered as of the day and year first above written.
WITNESSES: PLEDGOR:
CLEARVIEW CINEMA GROUP, INC.
____________________________ By: _________________________
Name: _________________________
____________________________ Its: _________________________
SECURED PARTY:
THE PROVIDENT BANK, AGENT
____________________________ By: _________________________
Name: _________________________
____________________________ Its: _________________________
<PAGE>
- 11 -
EXHIBIT "A"
PLEDGED STOCK
PLEDGED SHARES CERTIFICATE NO. NO. SHARES
- --------------------------------------------------------------------------------
CCC Madison Triple Cinema Corp. 3 196
CCC Chester Twin Cinema Corporation 4 19.6
CCC Manasquan Cinema Corporation 2 10
Clearview Theatre Group, Inc. 2 1000
CCC Herricks Cinema Corp. 1 100
CCC Port Washington Cinema Corp. 1 100
CCC Grand Avenue Cinema Corp. 1 100
CCC Washington Cinema Corp. 1 100
CCC Allwood Cinema Corp. 1 100
CCC Emerson Cinema Corp. 1 100
CCC New City Cinema Corp. 1 100
343-349 Springfield Avenue Corp. 1 100
CCC Bedford Cinema Corp. 1 100
CCC Kisco Cinema Corp. 1 100
Exhibit 10.15
AMENDMENT NO. 1. TO PLEDGE AGREEMENT
THIS AMENDMENT NO. 1 TO PLEDGE AGREEMENT ("Amendment") dated as of December
13, 1996 between CLEARVIEW CINEMA GROUP, INC., a Delaware corporation,
("Pledgor") and THE PROVIDENT BANK, Agent ("Secured Party") amends a Pledge
Agreement dated as of May 29, 1996 between Pledgor and Secured Party.
This Amendment has been executed and delivered by Pledgor to Secured Party
as agent for the benefit of and on behalf of various lenders pursuant to the
terms of a certain Credit Agreement dated as of May 29, 1996 by and among
Pledgor and subsidiaries of Pledgor, as Borrowers (the "Borrowers"), The
Provident Bank, as "Agent," and the lenders listed on Schedule 1 thereto
(collectively the "Lenders"), as amended by the Joinder Agreement dated as of
July 18, 1996, as further amended by the Joinder Agreement and First Amendment
to Credit Agreement, dated as of December 13, 1996, as the same may be amended,
modified or supplemented from time to time (collectively, the "Credit
Agreement"). Pledgor will benefit from the Loans made to Borrowers under the
Credit Agreement. To induce the Lenders to enter into the Credit Agreement and
to induce the Lenders to make the Loans thereunder, Pledgor has agreed to grant
to Secured Party a security interest in the Pledged Stock. All capitalized terms
set forth above are hereinafter defined.
NOW, THEREFORE, in consideration of the Lenders extending the Loans to
Borrower, the parties hereby agree as follows:
1. Defined Terms. All capitalized terms used in this Amendment shall have
the meanings given to them in the Pledge Agreement (such meanings to be equally
applicable to both the singular and the plural forms of the term defined) unless
otherwise defined herein.
2. Schedule 1. Schedule 1 of the Pledge Agreement is hereby amended to read
in its entirety by Schedule 1 attached hereto and made a part hereof.
3. Pledge and Grant of Security Interests. Pledgor hereby pledges, assigns,
hypothecates and transfers to Secured Party, its successors and assigns, all
Pledged Stock and hereby grants to and creates in favor of Secured Party first
priority liens and security interests in the Pledged Stock, as collateral
security for (i) the due and punctual payment when due (whether at maturity by
acceleration or otherwise) in full of all amounts due under the Loans; (ii) the
due and punctual performance and observance by Pledgor and the other Borrowers
of their respective agreements, obligations, liabilities and duties under this
Pledge Agreement, the Credit Agreement and all other documents executed in
connection with the Loans (the "Loan Documents"); and (iii) all costs incurred
by Secured Party to obtain, perfect, preserve and enforce the liens and security
interests granted by this Pledge Agreement, to collect the Obligations Secured
Hereby (as hereinafter defined) and to maintain and preserve the Pledged Stock,
with such costs including but not limited to expenditures made by Secured Party
for reasonable attorneys' fees and other legal expenses and expenses of
collection, possession and sale of the Pledged Stock, together with interest on
all
<PAGE>
such costs at the Default Interest Rate (as defined in the Loan Documents) (the
foregoing subsections (i), (ii) and (iii) are collectively referred to herein as
the "Obligations Secured Hereby").
4. Miscellaneous. a. All of the terms, conditions and provisions of the
Pledge Agreement not herein modified shall remain in full force and effect. In
the event a term, condition or provision of the Pledge Agreement conflicts with
a term, condition or provision of this Amendment, the latter shall govern.
b. This Amendment shall be governed by and shall be construed and
interpreted in accordance with the laws of the State of Ohio.
c. This Amendment shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, successors and assigns.
d. This Amendment may be executed in several counterparts, each of which
shall constitute an original, but all which together shall constitute one and
the same agreement.
[Remainder of page intentionally left blank. Signature page follows.]
- 2 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 1 to
Pledge Agreement to be duly executed and delivered as of the day and year first
above written.
WITNESSES: PLEDGOR:
CLEARVIEW CINEMA GROUP, INC.
_____________________________ By: _______________________________
Name:_______________________________
_____________________________ Its: _______________________________
SECURED PARTY
THE PROVIDENT BANK, AGENT
_____________________________ By: _______________________________
Name:_______________________________
_____________________________ Its: _______________________________
- 3 -
<PAGE>
SCHEDULE TO PLEDGE AGREEMENT
IN EACH CASE BELOW 100% OF THE SHARES ARE OWNED OF RECORD BY CLEARVIEW CINEMA
GROUP, INC.
<TABLE>
<CAPTION>
=========================================================================================================================
ISSUER CERTIFICATE NO. NO. OF SHARES PERCENTAGE TOTAL OUTSTANDING
=========================================================================================================================
<S> <C> <C> <C> <C>
CCC Grand Avenue Cinema Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC Port Washington Cinema Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC Herricks Cinema Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC Madison Triple Cinema Corp. 3 196 100% 196
- -------------------------------------------------------------------------------------------------------------------------
CCC Manasquan Cinema Corp. 2 10 100% 10
- -------------------------------------------------------------------------------------------------------------------------
Clearview Theatre Group, Inc. 2 1,000 100% 1000
- -------------------------------------------------------------------------------------------------------------------------
CCC Chester Twin Cinema Corp. 4 19.6 100% 19.6
- -------------------------------------------------------------------------------------------------------------------------
343-349 Springfield Avenue Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC Emerson Cinema Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC Allwood Cinema Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC New City Cinema Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC Washington Cinema Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC Kisco Cinema Corp. 1 100 100% 100
- -------------------------------------------------------------------------------------------------------------------------
CCC Bedford Cinema Corp. 1 100 100% 100
=========================================================================================================================
</TABLE>
Exhibit 10.16
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT ("Agreement") is made as of this day of May,
1996 by and among THE PROVIDENT BANK, an Ohio banking corporation as Agent
("Agent"), CLEARVIEW CINEMA GROUP, INC., a Delaware corporation (the "Company")
and CMNY CAPITAL II, L.P., a Delaware limited partnership. CMCO, INC., a New
York corporation and ROBERT G. DAVIDOFF, an individual (collectively the
"Subordinated Noteholders").
W I T N E S S E T H:
WHEREAS, the Company, CCC MADISON TRIPLE CINEMA CORP., CCC CHESTER TWIN
CINEMA CORPORATION, CCC MANASQUAN CINEMA CORPORATION, CLEARVIEW THEATER GROUP,
INC., CCC HERRICKS CINEMA CORP., CCC PORT WASHINGTON CINEMA CORP., CCC GRAND
AVENUE CINEMA CORP., CCC WASHINGTON CINEMA CORP., CCC ALLWOOD CINEMA CORP., CCC
EMERSON CINEMA CORP, and CCC NEW CITY CINEMA CORP., each a Delaware corporation
(collectively the "Borrowers"), THE PROVIDENT BANK and certain lenders
(collectively the "Lenders") and the Agent have entered into a certain Credit
Agreement of even date herewith (the "Credit Agreement"), pursuant to which the
Lenders have agreed to make certain loans in an aggregate amount of Four Million
Five Hundred Thousand ($4,500,000) to the Borrowers (the "Loans");
WHEREAS, one of the conditions to the Lender's obligations to make the
Loans is the execution by the Subordinated Noteholders of this Agreement with
respect to the Subordinated Promissory Notes issued by the Company (the
"Company") in the aggregate principal amount of Five Hundred Thousand ($500,000)
in favor of the Subordinated Noteholders, copies of which are attached hereto as
Annex A (such notes, as the same may from time to time be transferred or
assigned, referred to as the "Subordinated Notes");
WHEREAS, in order to induce the Lenders to continue to extend credit and
make the Loans, and for an in consideration of such Loans, the Borrowers and
Subordinated Noteholders have agreed that the Subordinated Notes shall be
subordinated to the Obligations (as defined in the Credit Agreement) in the
manner and to the extent set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties agree as follows:
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2
ARTICLE 1
DEFINITIONS
In addition to other words and terms defined elsewhere in this Agreement,
capitalized terms used herein and not otherwise defined shall have the meanings
given in the Credit Agreement.
ARTICLE 2
SUBORDINATION
Section 2.1 Agreement to Subordinate. The Company and Subordinated
Noteholders, for themselves and their successors and assigns, hereby agree that
the payment of the indebtedness and other obligations evidenced by the
Subordinated Notes is subordinated to the Obligations and subject in right of
payment to the prior payment in full of the Obligations.
Each holder of the Subordinated Notes, whether upon original issue or upon
transfer or assignment, by accepting such Subordinated Note further agrees that
the Lenders have advanced funds and may from time to time advance additional
funds in reliance upon the subordination of the Subordinated Notes to the
Obligations and that the provisions of this Agreement are for the benefit of the
Lenders and the Agent.
Section 2.2 Endorsement on Instruments. The Subordinated Notes, and any
instrument issued by the Company in replacement, renewal, exchange for or
substitution thereof, or evidencing the transfer thereof, shall be endorsed with
a legend in the following form:
"The payment of this instrument, both principal and interest, and all other
indebtedness evidenced hereby, is subordinate, subject to, and made junior
in right of payment to the prior rights of The Provident Bank, Agent, its
successors and assigns, for the ratable benefit of The Provident Bank and
other lenders, in the manner and to the extent set forth in a certain
Subordination Agreement dated as of May _____, 1996, which Agreement is
incorporated herein by reference."
Section 2.3 Payment Upon Maturity, Liquidation, Dissolution or
Reorganization.
(a) Notwithstanding anything herein to the contrary, upon the maturity of
any Obligations by lapse of time, acceleration or otherwise, all such
Obligations shall first be paid in full, before any payment is made on account
of principal of or interest on the Subordinated Notes or to acquire or redeem
the Subordinated Notes.
(b) In the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company or
<PAGE>
3
its property, or any proceeding for the liquidation, dissolution or other
winding up of the Company, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings, or any assignment by the Company for the
benefit of creditors, or any other marshalling of the assets of the Company,
then and in any such event:
(i) all Obligations shall first be paid in full, or provision made for
such payment, together with, to the extent provided for by law, interest
thereon from the date such Obligations were due as provided in the Credit
Agreement, if payment in full is not received, before any payment or
distribution of any character, whether in cash, securities or other
property, shall be made on account of or applied on the Subordinated Notes;
(ii) any payment or distribution of any character, whether in cash,
securities or other property, which would otherwise (but for this clause)
be payable and deliverable in respect of the Subordinated Notes shall be
paid or delivered directly to the Agent, for the ratable benefit of the
Lenders, or the holders of such Subordinated Notes shall pay to the Agent,
for the ratable benefit of the Lenders, such amounts promptly upon receipt,
until all Obligations shall have been paid in full; and
(iii) all holders of the Subordinated Notes irrevocably authorize and
empower the Agent to demand, sue for, collect and receive all such payments
and distributions and to receipt therefor, and to file and prove all such
claims and take all such other actions in the name of the Agent or any
Lender as it may determine to be necessary or appropriate.
(c) The holders of the Subordinated Notes will not exercise or attempt to
exercise any right of setoff or counterclaim in respect of any obligations of
such holders to the Company against the obligations of the Company under such
securities if the effect thereof shall be to reduce the amount of any such
payment or distribution to which the Agent and Lenders would be entitled in the
absence of such setoff or counterclaim.
Section 2.4 Company Not to Make Payments with Respect to Subordinated Notes
in Certain Circumstances.
(a) No scheduled or unscheduled payments or prepayments of principal shall
be made under the Subordinated Notes until such time as the Obligations have
been paid in full. Subject to the limitations set forth in 2.4(c), Company shall
be permitted to make and Subordinated Note holders shall be permitted to receive
and retain the scheduled quarterly installments of interest provided for in the
Subordinated Notes.
(b) Except for the restrictions set forth in Section 2.5 hereof, nothing
contained in this Agreement shall limit the right of the holders of the
Subordinated Notes to take any action to accelerate its maturity; provided,
however, that any amounts received by such holders to any such action from any
source whatsoever will be received by them in trust for the Agent, for the
ratable benefit of the Lenders, and they will pay over such amounts to the Agent
until the payment of the entire principal of and premium, if any, and interest
on all the Obligations then owing to the Lenders and Agent.
<PAGE>
4
(c) Without limiting the effect of Section 2.4(b) with respect to any
default in payment on Obligations, if any Default or Event of Default shall
occur and be continuing with respect to any Obligations, the holders of the
Subordinated Notes shall not be entitled to receive any payment on account of
interest on the Subordinated Notes (including any such payment which would cause
such a default).
Section 2.5 Standstill. If any default shall occur and be continuing with
respect to the Subordinated Notes, the holders thereof may not elect to
accelerate the maturity thereof until they have first so notified the Agent in
writing and shall not take any of the following actions for a period of one
hundred eighty (180) days after the Agent's receipt of such notice:
(a) the commencement or continuation of any action or proceeding against
the Company, whether to reduce the claims of the holders to judgment or to
enforce the terms of the Subordinated Notes or otherwise;
(b) any act to obtain possession of property of the Company or to exercise
control over property of the Company; or
(c) any act to create, perfect or enforce any lien against property of the
Company.
Section 2.6 Subrogation. Upon the payment in full of all Obligations, the
holders of the Subordinated Notes shall be subrogated to the rights of the
Lenders and Agent to receive payments or distributions of assets of the Company
made on the Obligations until the Lenders and Agent shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the
Lenders or Agent of any cash, property or securities to which holders of the
Subordinated Notes would be entitled except for the provisions of this Article
2, and no payment over pursuant to the provisions of this Article 2 to the Agent
by the holders of the Subordinated Notes, shall, as between the Company, its
creditors other than the Lenders and Agent and the holders of the Subordinated
Notes, be deemed to be a payment by the Company to or on account of Obligations
owed to the Lenders and Agent, it being understood that the provisions of this
Article are solely for the purpose of defining the relative rights of the
Lenders and Agent, on the one hand, and the holders of the Subordinated Notes,
on the other hand.
If any payment or distribution to which the holders of the Subordinated
Notes would otherwise have been entitled but for the provisions of this Article
2 shall have been applied, pursuant to the provisions of this Article 2, to the
payment of Obligations, then and in such case, the holders of the Subordinated
Notes shall be entitled to receive from the Agent at the time outstanding any
payments or distributions received by the Agent in excess of the amount
sufficient to pay all Obligations in full.
Section 2.7 Relative Rights. This Article is intended solely to define the
relative rights of the holders of the Subordinated Notes, on the one hand, and
the Lenders and Agent, on the other hand. Nothing in this Article shall:
<PAGE>
5
(a) impair, as between the Company and the holders of the Subordinated
Notes, the obligation of the Company, which is absolute and unconditional, to
pay the principal of and interest on the Subordinated Notes in accordance with
its terms; or
(b) affect the relative rights of the holders of the Subordinated Notes and
creditors of the Company other than the Lenders and the Agent; or
(c) prevent any holder of the Subordinated Notes from exercising all its
available remedies hereunder or under applicable law upon an Event of Default,
subject to the rights of the Agent and Lenders under this Article 2 to receive
payments or distributions otherwise payable or distributable to holders of such
securities.
Upon any distribution of assets of the Company referred to in this Article
2, the holders of the Subordinated Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the liquidating trustee or agent or other person making any
distribution to the holders of such securities, for the purpose of ascertaining
the persons entitled to participate in such distribution, the Agent and Lenders
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 2.
Section 2.8 Subordination May Not Be Impaired By the Company. No right of
the Agent to enforce the subordination of the indebtedness evidenced by the
Subordinated Notes shall be impaired by any act or failure to act by the Company
or the Agent or by the failure by the Company to comply with this Agreement,
regardless of any knowledge which the Agent may have or be otherwise charged
with.
Section 2.9 Moneys Held in Trust for Agent. In the event that any holder of
the Subordinated Notes shall receive any payment or distribution with respect to
such Subordinated Notes from any source whatsoever which such holder is not at
the time entitled to receive under the provisions of this Article 2, such holder
will hold any amount so received in trust for the Agent and will pay over such
payment to the Agent for the ratable benefit of the Lenders, on account of the
principal of and premium, if any, and interest on such Obligations, until all
such Obligations are paid in full.
Payments of interest on the Subordinated Notes in accordance with the terms
thereof when none of the events prohibiting such payment described in section
2.3 or section 2.4 shall have occurred and be continuing may be retained by such
Subordinated Note holders.
Section 2.10 Grant of Security Interests. The Company shall not grant to
the holders of the Subordinated Notes any lien, mortgage, assignment or other
security interest, or enter into any transaction having the effect of securing
the repayment of the Subordinated Notes with any property owned or used by the
Company.
<PAGE>
6
ARTICLE 3
MISCELLANEOUS
Section 3.1 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement shall be effective unless in a written instrument executed by
the Agent and all parties affected by such amendment or waiver. Further, Company
and the holders of the Subordinated Note covered and agreed not to amend the
terms of any of the Subordinated Notes without the prior written consent of
Agent.
Section 3.2 No Wavier; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent, any right, remedy, power or
privilege hereunder, or under the Credit Agreement, shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, remedy,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in this Agreement and the Credit Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
Section 3.3 Notices. All notices, consents, requests and demands to or upon
the respective parties hereto shall be in writing and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or when deposited in the mail, postage prepaid, or, in the
case of telex, telegraphic or telecopy notice, when sent, addressed as follows:
If to the Agent:
The Provident Bank, Agent
One East Fourth Street
Cincinnati, Ohio 45202
Phone: (513) 579-2750
Telecopy: (513) 579-2858
Attn: Christopher B. Gribble
With a copy to:
Keating, Muething & Klekamp
1800 Provident Tower
Cincinnati, Ohio 45202
Phone: (513) 579-6400
Telecopy: (513) 579-6457
Attn: J. David Rosenberg, Esq.
<PAGE>
7
If to Company:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, New Jersey 07940
Attn: A. Dale Mayo, President
Telecopy: (201) 377-4303
With a copy to:
Kirkpatrick & Lockhart, LLP
1251 Avenue of the Americas
New York, New York 10028
Attn: Warren H. Colodner
Telecopy: (212) 536-3901
If to the Subordinated Noteholder:
CMNY Capital II, L.P.
135 East Fifth Street
New York, New York 10022
With a copy to:
___________________________
___________________________
___________________________
___________________________
___________________________
Notices of changes of address shall be given in the same manner.
Section 3.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
Section 3.5 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 3.6 No Fiduciary Duty of Agent to Subordinate Note Holders. Nothing
in this Agreement shall be construed to create or impose upon the Agent of
Lenders any fiduciary duty to the holders of the Subordinated Notes, or any
other implied obligation to act or refrain from acting with respect to
Subordinated Debt holders, the indebtedness evidencing the Obligations or any
collateral securing the Obligations in any manner contrary to what the Agent may
determine is in its own best interests.
<PAGE>
8
Section 3.7 Governing Law. This Agreement, including the validity hereof
and the rights and obligations of the parties hereunder, shall be governed by
and construed and enforced in accordance with the laws of the State of Ohio.
Section 3.8 Consent to Jurisdiction. The parties hereto absolutely and
irrevocably consent and submit to the jurisdiction of the Courts of the State of
Ohio and of any federal court located in the said state in connection with any
action or proceedings arising out of or relating to this Agreement. Each of the
parties hereto waives and shall not assert in any such action or proceeding, in
each case, to the fullest extent permitted by applicable law, any claim that (a)
such party is not personally subject to the jurisdiction of any such court, (b)
such party is immune from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise), (c) any such suit, action or proceeding is brought in an
inconvenience forum, (d) the venue of any such suit, action or proceeding is
improper, or (e) this Agreement may not be enforced in or by any such court. Any
action brought by any party (other than the Senior Lender) in connection with
this Agreement or the transactions contemplated hereby shall be brought in a
court of general jurisdiction sitting in Hamilton County, Ohio. Anything
hereinbefore to the contrary notwithstanding, the Agent may sue any other party
in the court of any other country, State of the United States or place where
such party or any of his or its property or assets may be found or in any other
appropriate jurisdictions.
Section 3.8 WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED INDUCEMENT
FOR THE LENDERS TO EXTEND CREDIT TO THE BORROWERS, AND AFTER HAVING THE
OPPORTUNITY TO CONSULT COUNSEL, EACH PARTY HEREBY EXPRESSLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR ARISING
IN ANY WAY FROM THE OBLIGATIONS.
[Remainder of page intentionally left blank. Signature page follows.]
<PAGE>
9
IN WITNESS WHEREOF, the undersigned have executed this Subordination
Agreement as of the date first above written.
THE PROVIDENT BANK
By: ________________________________
Name: ________________________________
Title: ________________________________
CLEARVIEW CINEMA GROUP, INC.
By: ________________________________
Name: ________________________________
Title: ________________________________
CMNY CAPITAL II, L.P.
By: ________________________________
Name: ________________________________
Title: ________________________________
CMCO, INC.
By: ________________________________
Name: ________________________________
Title: ________________________________
________________________________
ROBERT G. DAVIDOFF
<PAGE>
10
ANNEX A
Subordinated Promissory Notes
A-1 CMNY Capital II, L.P. $300,000 August 31, 1995
A-2 CMCO, Inc. 50,000 August 31, 1995
A-3 CMCO, Inc. 50,000 October 11, 1995
A-4 Robert G. Davidoff 50,000 August 31, 1995
A-5 Robert G. Davidoff 50,000 October 11, 1995
Exhibit 10.17
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE
SOLD, PLEDGED, ASSIGNED OR TRANSFERRED UNLESS REGISTERED
THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
SHALL BE AVAILABLE.
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE
SUBORDINATE TO ANY SENIOR INDEBTEDNESS ENTERED INTO BY THE
COMPANY AFTER THE DATE HEREOF, AND EACH HOLDER OF THIS NOTE
AGREES THAT THE INDEBTEDNESS EVIDENCED BY THIS NOTE SHALL BE
SUBORDINATE TO THE COMPANY'S SENIOR INDEBTEDNESS.
8% SUBORDINATED PROMISSORY NOTE
$300,000.00 New York, New York
August 31, 1995
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the
"Company"), hereby promises to pay to the order of CMNY CAPITAL II, L.P., a
Delaware limited partnership with its office at 135 East 57th Street, New York,
New York 10022 (the "Holder"), the principal amount of Three Hundred Thousand
Dollars ($300,000.00), together with interest calculated from the date hereof in
accordance with the provisions of this 8% Subordinated Promissory Note ("Note").
Payments on this Note are to be made at the Holder's address stated above, or
such other address as duly designated by the Holder, in lawful money of the
United States of America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof at an annual interest rate of eight percent
(8%) (based upon a 360-day year), payable quarterly on October 15, January 15,
April 15 and July 15 of each year (each of such quarterly interest payment dates
being referred to herein as an "Interest Payment Date") commencing October 15,
1995. In the event that an Interest Payment Date is not a business day, the
Company shall pay to the Holder the interest payment on the first business day
following the applicable Interest Payment Date.
<PAGE>
2. Payment of Principal. (a) Principal shall be payable on the Note in
one installment on August 31, 1997 (the "Initial Maturity Date"). On the Initial
Maturity Date, the Company shall have the option ("Conversion Option") of not
repaying the Note and instead converting the outstanding principal amount on the
Note into another note in such outstanding principal amount ("Converted Note")
payable to the Holder. The Converted Note shall bear interest on the outstanding
principal amount at the annual rate of eight percent (8%) and shall mature five
(5) years from the date of its issuance ("Maturity Date"). Interest and
principal shall be payable on the Converted Note in twenty (20) equal quarterly
installments.
(b) If the Company exercises the Conversion Option, upon its issuance
of the Converted Note to the Holder, it shall also issue to the Holder a
warrant, substantially in the for of Exhibit A hereto ("New Warrant"), to
purchase 75 shares of the common stock, $.01 par value per share of the Company
("Common Stock"), at an exercise price of $2,000 per share, subject to
adjustment as set forth in the New Warrant. The New Warrant shall be exercisable
for five years and shall be in addition to the Warrants (as defined in Section 4
herein) issued pursuant to Section 4 of this Note.
3. Prepayment of Note; Rights to Purchase Additional Securities. (a)
Prior to the Initial Maturity Date (or the Maturity Date for the Converted
Note), the Company may prepay, without penalty or premium, the outstanding
principal amount of this Note, or the Converted Note, provided that any accrued
and unpaid interest is paid when this Note, or the Converted Note, is prepaid.
If the Company prepays the entire outstanding principal amount of this Note (and
accrued and unpaid interest) on or prior to August 31, 1996, Warrant A (as
defined herein) shall be canceled and returned to the Company by the Holder.
(b) Prior to the Initial Maturity Date (or the Maturity Date for the
Converted Note), if the Company consummates any equity or subordinated debt
financing ("New Financing"), the Company shall have the option to require the
Holder to convert the Note (or Converted Note, as applicable) into debt and/or
equity securities ("New Securities") that are being issued in the New Financing,
provided that the Holder receives in exchange for its Note (or Converted Note,
as applicable) New Securities on the same terms and conditions as any other
holder of New Securities.
(c) (i) If at any time while either of the Warrants or the New
Warrants remain outstanding and Section 9.6 of the Original Investment Agreement
has not been terminated, the Company proposes to issue any of its equity
securities to any person (other than pursuant to a plan or arrangement approved
pursuant to Section 6.1 (a)(iv) of the Original Investment Agreement, or as
additional consideration to a financial institution that is not an Affiliate of
any Stockholder in connection with the making of a loan to the
<PAGE>
Company (or its subsidiaries), or pursuant to a New Financing), the Holder shall
have the right to purchase, upon the same terms, a proportionate quantity of
those securities (in the proportion that the number of shares of Common Stock
underlying the Warrants and the New Warrants, as applicable, bears to the total
number of shares of the Company's Common Stock then held by all stockholders);
for this purpose, shares of the Company's Common Stock issuable upon conversion
of securities then held by all stockholders or upon exercise of warrants
(including the Warrants and the New Warrants) then held by all stockholders
shall be deemed to be then held by stockholders. The provisions of this Section
3(c)(i) are not intended to be duplicative with the provisions of Section 9.6 of
the Original Investment Agreement.
(ii) If at any time prior to the date the indebtedness evidenced by
this Note has been paid in full the Company proposes to issue any subordinated
debt financing (other than pursuant to a New Financing), the Holder shall have
the right to participate in such issuance of debt, upon the same terms, in a
proportionate principal amount (in the proportion that the principal amount of
subordinated debt held by the Holder bears to the total principal amount of the
subordinated debt of the Company then held by all holders); provided, however,
that this right shall terminate if not exercised in connection with the first
financing to which this Section is applicable.
4. Warrants. Upon issuance of the Note to the Holder, the Company
shall also issue two (2) warrants ("Warrants") to the Holder, which Warrants
shall be designated "Warrant A" and "Warrant B" and shall be in substantially
the forms set forth in Exhibits B and C hereto. Each Warrant shall entitle the
Holder for a five-year period to purchase 37.50 shares of the Company's Common
Stock at an exercise price of $2,000 per share, subject to adjustment as set
forth in each Warrant.
5. Representations and Warranties. The Company represents and warrants
to the Holder (which representations and warranties shall be deemed material and
to have been relied upon by the Holder in its decision to purchase the Note)
that the representations and warranties made by the Company in Section 4 of the
Investment and Stockholders' Agreement dated December 21, 1994 ("Original
Investment Agreement") by and between Clearview Cinema Group, Inc., A. Dale
Mayo, Brett E. Marks and CMNY Capital II, L.P., are correct in all material
respects as of the date of this Note ("Issuance Date") with the same effect as
though made in and as of such Issuance Date, except for those matters disclosed
in Exhibit D hereto. The representations and warranties set forth in Section 4
of the Original Investment Agreement are incorporated herein by reference as if
fully set forth herein.
6. Covenants. The Company covenants to the Holder that it shall comply
with the covenants set forth in Section 6 of the
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<PAGE>
Original Investment Agreement as though such covenants were set forth herein.
The covenants set forth in Section 6 are incorporated herein by reference as if
fully set forth herein.
7. Financing Proceeds. The Company covenants that the proceeds from
the issuance of the Note are to be used for the purposes set forth on Exhibit E.
Any diversion or use of the proceeds other than as set forth on Exhibit E
without the prior written consent of the Holder shall constitute a covenant
violation ("Covenant Violation"). Upon any such Covenant Violation, the Company
shall immediately repay to the Holder the entire amount of the principal amount
of the Note, including any costs and expenses incurred by the Holder in
enforcing its rights in connection with such Covenant Violation. Nothing
contained in this Section shall be construed to restrict or limit in any way the
Holder's right to seek any remedy it deems advisable against the Company for any
damages, costs, expenses or losses it may sustain or to bring an action against
the Company in connection with such Covenant Violation. The Company will notify
the Holder orally and in writing immediately upon the occurrence of such
Covenant Violation.
8. Post-Closing Review and Inspection. No later than ninety (90) days
after the sale of the Note, the Holder may conduct a review of the offices,
properties, assets, operations and financial and other records of the Company to
ensure that the proceeds of the financing are being used for the purposes set
forth in this Agreement (the "Post-Closing Review and Inspection"). In
connection with its Post-Closing Review and Inspection, the Holder and its
designated representative or representatives shall have the right to visit and
inspect during normal business hours, any of the operations, offices,
properties, or assets of the Company, and inspect financial and other records,
and discuss the Company's affairs, finances and accounts with the Company's
officers, auditors and counsel. All expenses incurred by the Holder in
connection with its Post-Closing Review and Inspection shall be paid by the
Company.
9. Subordination. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder of this Note covenants and agrees,
that the indebtedness evidenced by this Note shall be subordinate and subject in
right of payment, to the prior payment of all Senior Indebtedness of the
Company, provided such subordination is reflected in a subordination agreement
by and among the Company, the Holder of this Note and the holder of the Senior
Indebtedness. The Holder of this Note agrees to enter into a subordination
agreement with the holder of the Senior Indebtedness.
(b) For purposes of this Section 9, "Senior Indebtedness" shall mean
the principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on and other amounts due on or in
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<PAGE>
connection with any indebtedness of the Company as defined in and arising under
any loan, credit, security or similar agreement with a bank, insurance company,
or other financial institution or affiliate created, incurred, assumed, or
guaranteed by the Company after the date of this Note, and, all renewals,
extensions, and refundings thereof, which by the terms of the instrument
creating or evidencing such indebtedness is expressly made senior to in right of
payment to, the payment of principal of and interest on the Note.
10. Default. Each of the following events shall constitute an "Event
of Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal
or any other sum under this Note, and such default shall remain uncured for a
five (5) business day period;
(b) the failure of the Company to observe or perform any covenant set
forth in this Note, the Warrants or Original Investment Agreement and such
default shall remain uncured for a twenty (20) business day period after notice
of such default from the Holder;
(c) the breach of any representation, warrant or covenant made by the
Company in this Note, the Warrants, or the Original Investment Agreement and
such default shall remain uncured for a twenty (20) business day period after
notice of such default form the Holder;
(d) the death, bankruptcy or insolvency of A. Dale Mayo;
(e) the Company shall cease operations or cease doing business as an
operator of movie theaters;
(f) A. Dale Mayo shall no longer serve as President of the Company or
shall not be a principal stockholder of the Company;
(g) the Company shall (1) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy or insolvency law of any jurisdiction, (2)
make an assignment for the benefit of its creditors, (3) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of its property, (4) be adjudicated
insolvent or be liquidated, or (5) take corporate action for the purpose of any
of the foregoing; or
(h) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Company, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or if an order for relief
shall
-5-
<PAGE>
be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidations of the
Company, or if any petition for any such relief shall be filed against the
Company and such petition shall not be dismissed within 60 days;
Upon the occurrence of any Event of Default, the unpaid principal amount of and
the accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
11. Counsel Fees. The Company shall reimburse the Holder for its
reasonable fees and disbursements charged by its outside legal counsel, Reid &
Priest LLP, in connection with the preparation, negotiation, execution and
delivery of this Note and the transactions thereunder, and all other documents
delivered in connection therewith, provided that the aggregate amount of such
reimbursement shall not exceed $7,500. The Company also agrees to pay all
reasonable legal expenses related to any modifications, waivers, consents,
amendments, or enforcement, relating to the Note and Warrants.
12. Small Business Administration ("SBA") Forms. The Company agrees to
cooperate with the Holder in connection with the Holder's preparation and filing
of the SBA Forms listed at Exhibit F hereto and shall furnish from time to time
to the Holder promptly upon reasonable request all information necessary to
enable the Holder to prepare and file the SBA Forms listed on Exhibit F hereto
and any other information reasonably requested or required by any governmental
agency asserting jurisdiction over the Holder.
13. Origination Points to Holder Upon Issuance of the Note. The
Company shall pay to the Holder origination points of two percent (2%) of the
original principal amount of this Note.
14. Miscellaneous.
(a) This Note shall be construed in accordance with and governed by
the laws of the State of New York (without regard to its conflict of laws
principles).
(b) The Company agrees to remain and continue bound hereby
notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of the Note or to protest it for non-payment, and hereby expressly
waives any and all presentment or demand for its payment and protest for time of
payment of it, or any part of it, or its non-payment or dishonor.
-6-
<PAGE>
(c) Payments made on this Note shall be applied first to accrued
interest, then to other amounts which may be due (other than principal), and
then to principal.
(d) Notwithstanding anything to the contrary contained in this Note,
no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
(e) Upon an Event of a Default with respect to this Note, interest
thereafter shall accrue and be payable at 16% per annum. In the event this Note
is placed for collection, the Company shall pay all collection costs, including
attorneys' fees, in addition to all other amounts due hereunder.
(f) No course of dealing between the Company and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any rights of a holder hereof, except to the extent expressly
waived in writing by the Holder.
(g) This Note may not be modified or discharged except by an
instrument in writing executed by the Company and the Holder.
(h) This Note shall be binding upon and inure to the successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its President.
CLEARVIEW CINEMA GROUP, INC.
By:____________________________
Name: A. Dale Mayo
Title: President
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<PAGE>
Exhibits to 8% Subordinated Promissory Note
-------------------------------------------
Exhibit Number Descriptions
- -------------- ------------
A Form of New Warrant
B Warrant A
C Warrant B
D Exceptions to Representations
and Warranties
E Description of Use of Financing
Proceeds
F Small Business Administration
Forms
[Exhibits are not included, but will be provided by the Company upon request.]
Exhibit 10.18
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED UNLESS REGISTERED THEREUNDER OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION SHALL BE AVAILABLE.
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE TO ANY
SENIOR INDEBTEDNESS ENTERED INTO BY THE COMPANY AFTER THE DATE HEREOF,
AND EACH HOLDER OF THIS NOTE AGREES THAT THE INDEBTEDNESS EVIDENCED BY
THIS NOTE SHALL BE SUBORDINATE TO THE COMPANY'S SENIOR INDEBTEDNESS.
8% SUBORDINATED PROMISSORY NOTE
-------------------------------
$50,000.00 New York, New York
August 31, 1995
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the
"Company"), hereby promises to pay to the order of CMCO, INC., a New York
corporation with its office at 135 East 57th Street, New York, New York 10022
(the "Holder"), the principal amount of Fifty Thousand Dollars ($50,000.00),
together with interest calculated from the date hereof in accordance with the
provisions of this 8% Subordinated Promissory Note ("Note"). Payments on this
Note are to be made at the Holder's address stated above, or such other address
as duly designated by the Holder, in lawful money of the United States of
America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof at an annual interest rate of eight percent
(8%) (based upon a 360-day year), payable quarterly on October 15, January 15,
April 15 and July 15 of each year (each of such quarterly interest payment dates
being referred to herein as an "Interest Payment Date") commencing October 15,
1995. In the event that an Interest Payment Date is not a business day, the
Company shall pay to the Holder the interest payment on the first business day
following the applicable Interest Payment Date.
2. Payment of Principal. (a) Principal shall be payable on the Note in
one installment on August 31, 1997 (the "Initial Maturity Date"). On the Initial
Maturity Date, the
<PAGE>
Company shall have the option ("Conversion Option") of not repaying the Note and
instead converting the outstanding principal amount on the Note into another
note in such outstanding principal amount ("Converted Note") payable to the
Holder. The Converted Note shall bear interest on the outstanding principal
amount at the annual rate of eight percent (8%) and shall mature five (5) years
from the date of its issuance ("Maturity Date"). Interest and principal shall be
payable on the Converted Note in twenty (20) equal quarterly installments.
(b) If the Company exercises the Conversion Option, upon its issuance
of the Converted Note to the Holder, it shall also issue to the Holder a
warrant, substantially in the for of Exhibit A hereto ("New Warrant"), to
purchase 75 shares of the common stock, $.01 par value per share of the Company
("Common Stock"), at an exercise price of $2,000 per share, subject to
adjustment as set forth in the New Warrant. The New Warrant shall be exercisable
for five years and shall be in addition to the Warrants (as defined in Section 4
herein) issued pursuant to Section 4 of this Note.
3. Prepayment of Note; Rights to Purchase Additional Securities. (a)
Prior to the Initial Maturity Date (or the Maturity Date for the Converted
Note), the Company may prepay, without penalty or premium, the outstanding
principal amount of this Note, or the Converted Note, provided that any accrued
and unpaid interest is paid when this Note, or the Converted Note, is prepaid.
If the Company prepays the entire outstanding principal amount of this Note (and
accrued and unpaid interest) on or prior to August 31, 1996, Warrant A (as
defined herein) shall be canceled and returned to the Company by the Holder.
(b) Prior to the Initial Maturity Date (or the Maturity Date for the
Converted Note), if the Company consummates any equity or subordinated debt
financing ("New Financing"), the Company shall have the option to require the
Holder to convert the Note (or Converted Note, as applicable) into debt and/or
equity securities ("New Securities") that are being issued in the New Financing,
provided that the Holder receives in exchange for its Note (or Converted Note,
as applicable) New Securities on the same terms and conditions as any other
holder of New Securities.
(c) (i) If at any time while either of the Warrants or the New
Warrants remain outstanding and Section 9.6 of the Original Investment Agreement
has not been terminated, the Company proposes to issue any of its equity
securities to any person (other than pursuant to a plan or arrangement approved
pursuant to Section 6.1 (a)(iv) of the Original Investment Agreement, or as
additional consideration to a financial institution that is not an Affiliate of
any Stockholder in connection with the making of a loan to the Company (or its
subsidiaries), or pursuant to a New
-2-
<PAGE>
Financing), the Holder shall have the right to purchase, upon the same terms, a
proportionate quantity of those securities (in the proportion that the number of
shares of Common Stock underlying the Warrants and the New Warrants, as
applicable bears to the total number of shares of the Company's Common Stock
then held by all stockholders); for this purpose, shares of the Company's Common
Stock issuable upon conversion of securities then held by all stockholders or
upon exercise of warrants then held by all stockholders shall be deemed to be
then held by stockholders. The provisions of this Section 3(c)(i) are not
intended to be duplicative with the provisions of Section 9.6 of the Original
Investment Agreement.
(ii) If at any time prior to the date the indebtedness evidenced by
this Note has been paid in full the Company proposes to issue any subordinated
debt financing (other than pursuant to a New Financing), the Holder shall have
the right to participate in such issuance of debt, upon the same terms, in a
proportionate principal amount (in the proportion that the principal amount of
subordinated debt held by the Holder bears to the total principal amount of the
subordinated debt of the Company then held by all holders); provided, however,
that this right shall terminate if not exercised in connection with the first
financing to which this Section is applicable.
4. Warrants. Upon issuance of the Note to the Holder, the Company
shall also issue two (2) warrants ("Warrants") to the Holder, which Warrants
shall be designated "Warrant A" and "Warrant B" and shall be in substantially
the forms set forth in Exhibits B and C hereto. Each Warrant shall entitle the
Holder for a five-year period to purchase 37.50 shares of the Company's Common
Stock at an exercise price of $2,000 per share, subject to adjustment as set
forth in each Warrant.
5. Representations and Warranties. The Company represents and warrants
to the Holder (which representations and warranties shall be deemed material and
to have been relied upon by the Holder in its decision to purchase the Note)
that the representations and warranties made by the Company in Section 4 of the
Investment and Stockholders' Agreement dated December 21, 1994 ("Original
Investment Agreement") by and between Clearview Cinema Group, Inc., A. Dale
Mayo, Brett E. Marks and CMNY Capital II, L.P., are correct in all material
respects as of the date of this Note ("Issuance Date") with the same effect as
though made in and as of such Issuance Date, except for those matters disclosed
in Exhibit D hereto. The representations and warranties set forth in Section 4
of the Original Investment Agreement are incorporated herein by reference as if
fully set forth herein.
6. Covenants. The Company covenants to the Holder
-3-
<PAGE>
that it shall comply with the covenants set forth in Section 6 of the Original
Investment Agreement as though such covenants were set forth herein. The
covenants set forth in Section 6 are incorporated herein by reference as if
fully set forth herein.
7. Financing Proceeds. The Company covenants that the proceeds from
the issuance of the Note are to be used for the purposes set forth on Exhibit E.
Any diversion or use of the proceeds other than as set forth on Exhibit E
without the prior written consent of the Holder shall constitute a covenant
violation ("Covenant Violation"). Upon any such Covenant Violation, the Company
shall immediately repay to the Holder the entire amount of the principal amount
of the Note, including any costs and expenses incurred by the Holder in
enforcing its rights in connection with such Covenant Violation. Nothing
contained in this Section shall be construed to restrict or limit in any way the
Holder's right to seek any remedy it deems advisable against the Company for any
damages, costs, expenses or losses it may sustain or to bring an action against
the Company in connection with such Covenant Violation. The Company will notify
the Holder orally and in writing immediately upon the occurrence of such
Covenant Violation.
8. Post-Closing Review and Inspection. No later than ninety (90) days
after the sale of the Note, the Holder may conduct a review of the offices,
properties, assets, operations and financial and other records of the Company to
ensure that the proceeds of the financing are being used for the purposes set
forth in this Agreement (the "Post-Closing Review and Inspection"). In
connection with its Post-Closing Review and Inspection, the Holder and its
designated representative or representatives shall have the right to visit and
inspect during normal business hours, any of the operations, offices,
properties, or assets of the Company, and inspect financial and other records,
and discuss the Company's affairs, finances and accounts with the Company's
officers, auditors and counsel. All expenses incurred by the Holder in
connection with its Post-Closing Review and Inspection shall be paid by the
Company.
9. Subordination. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder of this Note covenants and agrees,
that the indebtedness evidenced by this Note shall be subordinate and subject in
right of payment, to the prior payment of all Senior Indebtedness of the
Company, provided such subordination is reflected in a subordination agreement
by and among the Company, the Holder of this Note and the holder of the Senior
Indebtedness. The Holder of this Note agrees to enter into a subordination
agreement with the holder of the Senior Indebtedness.
(b) For purposes of this Section 9, "Senior
-4-
<PAGE>
Indebtedness" shall mean the principal of, premium, if any, and interest
(including any interest accruing after the filing of a petition in bankruptcy)
on and other amounts due on or in connection with any indebtedness of the
Company as defined in and arising under any loan, credit, security or similar
agreement with a bank, insurance company, or other financial institution or
affiliate created, incurred, assumed, or guaranteed by the Company after the
date of this Note, and, all renewals, extensions, and refundings thereof, which
by the terms of the instrument creating or evidencing such indebtedness is
expressly made senior to in right of payment to, the payment of principal of and
interest on the Note.
10. Default. Each of the following events shall constitute an "Event
of Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal
or any other sum under this Note, and such default shall remain uncured for a
five (5) business day period;
(b) the failure of the Company to observe or perform any covenant set
forth in this Note, the Warrants or Original Investment Agreement and such
default shall remain uncured for a twenty (20) business day period after notice
of such default from the Holder;
(c) the breach of any representation, warrant or covenant made by the
Company in this Note, the Warrants, or the Original Investment Agreement and
such default shall remain uncured for a twenty (20) business day period after
notice of such default form the Holder;
(d) the death, bankruptcy or insolvency of A. Dale Mayo;
(e) the Company shall cease operations or cease doing business as an
operator of movie theaters;
(f) A. Dale Mayo shall no longer serve as President of the Company or
shall not be a principal stockholder of the Company;
(g) the Company shall (1) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy or insolvency law of any jurisdiction, (2)
make an assignment for the benefit of its creditors, (3) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of its property, (4) be adjudicated
insolvent or be liquidated, or (5) take corporate action for the purpose of any
of the foregoing; or
-5-
<PAGE>
(h) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Company, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or if an order for relief
shall be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidations of the
Company, or if any petition for any such relief shall be filed against the
Company and such petition shall not be dismissed within 60 days;
Upon the occurrence of any Event of Default, the unpaid principal amount of and
the accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
11. Counsel Fees. The Company shall reimburse the Holder for its
reasonable fees and disbursements charged by its outside legal counsel, Reid &
Priest LLP, in connection with the preparation, negotiation, execution and
delivery of this Note and the transactions thereunder, and all other documents
delivered in connection therewith, provided that the aggregate amount of such
reimbursement shall not exceed $7,500. The Company also agrees to pay all
reasonable legal expenses related to any modifications, waivers, consents,
amendments, or enforcement, relating to the Note and Warrants.
12. Small Business Administration ("SBA") Forms. The Company agrees to
cooperate with the Holder in connection with the Holder's preparation and filing
of the SBA Forms listed at Exhibit F hereto and shall furnish from time to time
to the Holder promptly upon reasonable request all information necessary to
enable the Holder to prepare and file the SBA Forms listed on Exhibit F hereto
and any other information reasonably requested or required by any governmental
agency asserting jurisdiction over the Holder.
13. Origination Points to Holder Upon Issuance of the Note. The
Company shall pay to the Holder origination points of two percent (2%) of the
original principal amount of this Note.
14. Miscellaneous.
(a) This Note shall be construed in accordance with and governed by
the laws of the State of New York (without regard to its conflict of laws
principles).
(b) The Company agrees to remain and continue bound
-6-
<PAGE>
hereby notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of the Note or to protest it for non-payment, and hereby expressly
waives any and all presentment or demand for its payment and protest for time of
payment of it, or any part of it, or its non-payment or dishonor.
(c) Payments made on this Note shall be applied first to accrued
interest, then to other amounts which may be due (other than principal), and
then to principal.
(d) Notwithstanding anything to the contrary contained in this Note,
no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
(e) Upon an Event of a Default with respect to this Note, interest
thereafter shall accrue and be payable at 16% per annum. In the event this Note
is placed for collection, the Company shall pay all collection costs, including
attorneys' fees, in addition to all other amounts due hereunder.
(f) No course of dealing between the Company and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any rights of a holder hereof, except to the extent expressly
waived in writing by the Holder.
(g) This Note may not be modified or discharged except by an
instrument in writing executed by the Company and the Holder.
(h) This Note shall be binding upon and inure to the successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its President.
CLEARVIEW CINEMA GROUP, INC.
By:____________________________
Name: A. Dale Mayo
Title: President
-7-
<PAGE>
Correction and Addendum
This Correction and Addendum to the 8% Subordinated Promissory Note
dated August 31, 1995 (the "Note") in the original principal amount of $50,000
issued by Clearview Cinema Group, Inc. to the order of CMCO, Inc. is given to
correct certain typographical errors appearing in the Note relating to certain
warrants issued or to be issued to the Holder. Capitalized terms used in this
Correction and Addendum without definition shall have the meanings ascribed to
such terms in the Note.
The first sentence of Section 2(b) of the Note, which reads as
follows: "If the Company exercises the Conversion Option, upon its issuance of
the Converted Note to the Holder, it shall also issue to the Holder a warrant,
substantially in the for of Exhibit A hereto ("New Warrant"), to purchase 75
shares of the common stock, $.01 par value per share of the Company ("Common
Stock"), at an exercise price of $2,000 per share, subject to adjustment as set
forth in the New Warrant" is hereby corrected to read as follows: "If the
Company exercises the Conversion Option, upon its issuance of the Converted Note
to the Holder, it shall also issue to the Holder a warrant, substantially in the
form of Exhibit A hereto ("New Warrant"), to purchase 12.5 shares of the common
stock, $.01 par value per share of the Company ("Common Stock"), at an exercise
price of $2,000 per share, subject to adjustment as set forth in the New
Warrant".
The second sentence of Section 4 of the Note, which reads as follows:
"Each Warrant shall entitle the Holder for a five-year period to purchase 37.50
shares of the Company's Common Stock at an exercise price of $2,000 per share,
subject to adjustment as set forth in each Warrant" is hereby corrected to read
as follows: "Each Warrant shall entitle the Holder for a five-year period to
purchase 6.25 shares of the Company's Common Stock at an exercise price of
$2,000 per share, subject to adjustment as set forth in each Warrant."
[Remainder of Page Intentionally Left Blank]
-8-
<PAGE>
This Correction and Addendum shall be deemed to correct the
typographical errors identified herein as of the date of the Note. This
Correction and Addendum is given solely to correct the aforesaid typographical
errors and shall not be deemed to be a novation, restatement or renewal or
otherwise to affect the Note.
Clearview Cinema Group, Inc.
By: ________________________
Name:
Title:
Date: ______________________
Accepted and agreed:
CMCO, INC.
By: ________________________
Title: _____________________
Date: ______________________
-9-
<PAGE>
Exhibits to 8% Subordinated Promissory Note
Exhibit Number Descriptions
- -------------- ------------
A Form of New Warrant
B Warrant A
C Warrant B
D Exceptions to Representations
and Warranties
E Description of Use of Financing Proceeds
F Small Business Administration
Forms
[Exhibits are not included, but will be provided by the Company
upon request.]
-10-
Exhibit 10.19
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED UNLESS REGISTERED THEREUNDER OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION SHALL BE AVAILABLE.
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE TO ANY
SENIOR INDEBTEDNESS ENTERED INTO BY THE COMPANY AFTER THE DATE HEREOF,
AND EACH HOLDER OF THIS NOTE AGREES THAT THE INDEBTEDNESS EVIDENCED BY
THIS NOTE SHALL BE SUBORDINATE TO THE COMPANY'S SENIOR INDEBTEDNESS.
8% SUBORDINATED PROMISSORY NOTE
$50,000.00 New York, New York
August 31, 1995
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the
"Company"), hereby promises to pay to the order of ROBERT G. DAVIDOFF, an
individual with his office at 135 East 57th Street, New York, New York 10022
(the "Holder"), the principal amount of Fifty Thousand Dollars ($50,000.00),
together with interest calculated from the date hereof in accordance with the
provisions of this 8% Subordinated Promissory Note ("Note"). Payments on this
Note are to be made at the Holder's address stated above, or such other address
as duly designated by the Holder, in lawful money of the United States of
America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof at an annual interest rate of eight percent
(8%) (based upon a 360-day year), payable quarterly on October 15, January 15,
April 15 and July 15 of each year (each of such quarterly interest payment dates
being referred to herein as an "Interest Payment Date") commencing October 15,
1995. In the event that an Interest Payment Date is not a business day, the
Company shall pay to the Holder the interest payment on the first business day
following the applicable Interest Payment Date.
2. Payment of Principal. (a) Principal shall be payable on the Note in
one installment on August 31, 1997 (the "Initial Maturity Date"). On the Initial
Maturity Date, the Company shall have the option ("Conversion Option") of not
repaying the Note and instead converting the outstanding principal
<PAGE>
amount on the Note into another note in such outstanding principal amount
("Converted Note") payable to the Holder. The Converted Note shall bear interest
on the outstanding principal amount at the annual rate of eight percent (8%) and
shall mature five (5) years from the date of its issuance ("Maturity Date").
Interest and principal shall be payable on the Converted Note in twenty (20)
equal quarterly installments.
(b) If the Company exercises the Conversion Option, upon its issuance
of the Converted Note to the Holder, it shall also issue to the Holder a
warrant, substantially in the form of Exhibit A hereto ("New Warrant"), to
purchase 75 shares of the common stock, $.01 par value per share of the Company
("Common Stock"), at an exercise price of $2,000 per share, subject to
adjustment as set forth in the New Warrant. The New Warrant shall be exercisable
for five years and shall be in addition to the Warrants (as defined in Section 4
herein) issued pursuant to Section 4 of this Note.
3. Prepayment of Note; Rights to Purchase Additional Securities. (a)
Prior to the Initial Maturity Date (or the Maturity Date for the Converted
Note), the Company may prepay, without penalty or premium, the outstanding
principal amount of this Note, or the Converted Note, provided that any accrued
and unpaid interest is paid when this Note, or the Converted Note, is prepaid.
If the Company prepays the entire outstanding principal amount of this Note (and
accrued and unpaid interest) on or prior to August 31, 1996, Warrant A (as
defined herein) shall be canceled and returned to the Company by the Holder.
(b) Prior to the Initial Maturity Date (or the Maturity Date for the
Converted Note), if the Company consummates any equity or subordinated debt
financing ("New Financing"), the Company shall have the option to require the
Holder to convert the Note (or Converted Note, as applicable) into debt and/or
equity securities ("New Securities") that are being issued in the New Financing,
provided that the Holder receives in exchange for its Note (or Converted Note,
as applicable) New Securities on the same terms and conditions as any other
holder of New Securities.
(c) (i) If at any time while either of the Warrants or the New
Warrants remain outstanding and Section 9.6 of the Original Investment Agreement
has not been terminated, the Company proposes to issue any of its equity
securities to any person (other than pursuant to a plan or arrangement approved
pursuant to Section 6.1 (a)(iv) of the Original Investment Agreement, or as
additional consideration to a financial institution that is not an Affiliate of
any Stockholder in connection with the making of a loan to the Company (or its
subsidiaries), or pursuant to a New Financing), the Holder shall have the right
to purchase, upon the same terms, a proportionate quantity of those securities
(in the
-2-
<PAGE>
proportion that the number of shares of Common Stock underlying the Warrants and
the New Warrants, as applicable bears to the total number of shares of the
Company's Common Stock then held by all stockholders); for this purpose, shares
of the Company's Common Stock issuable upon conversion of securities then held
by all stockholders or upon exercise of warrants then held by all stockholders
shall be deemed to be then held by stockholders. The provisions of this Section
3(c)(i) are not intended to be duplicative with the provisions of Section 9.6 of
the Original Investment Agreement.
(ii) If at any time prior to the date the indebtedness evidenced by
this Note has been paid in full the Company proposes to issue any subordinated
debt financing (other than pursuant to a New Financing), the Holder shall have
the right to participate in such issuance of debt, upon the same terms, in a
proportionate principal amount (in the proportion that the principal amount of
subordinated debt held by the Holder bears to the total principal amount of the
subordinated debt of the Company then held by all holders); provided, however,
that this right shall terminate if not exercised in connection with the first
financing to which this Section is applicable.
4. Warrants. Upon issuance of the Note to the Holder, the Company
shall also issue two (2) warrants ("Warrants") to the Holder, which Warrants
shall be designated "Warrant A" and "Warrant B" and shall be in substantially
the forms set forth in Exhibits B and C hereto. Each Warrant shall entitle the
Holder for a five-year period to purchase 37.50 shares of the Company's Common
Stock at an exercise price of $2,000 per share, subject to adjustment as set
forth in each Warrant.
5. Representations and Warranties. The Company represents and warrants
to the Holder (which representations and warranties shall be deemed material and
to have been relied upon by the Holder in its decision to purchase the Note)
that the representations and warranties made by the Company in Section 4 of the
Investment and Stockholders' Agreement dated December 21, 1994 ("Original
Investment Agreement") by and between Clearview Cinema Group, Inc., A. Dale
Mayo, Brett E. Marks and CMNY Capital II, L.P., are correct in all material
respects as of the date of this Note ("Issuance Date") with the same effect as
though made in and as of such Issuance Date, except for those matters disclosed
in Exhibit D hereto. The representations and warranties set forth in Section 4
of the Original Investment Agreement are incorporated herein by reference as if
fully set forth herein.
6. Covenants. The Company covenants to the Holder that it shall comply
with the covenants set forth in Section 6 of the Original Investment Agreement
as though such covenants were set forth herein. The covenants set forth in
Section 6 are
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<PAGE>
incorporated herein by reference as if fully set forth herein.
7. Financing Proceeds. The Company covenants that the proceeds from
the issuance of the Note are to be used for the purposes set forth on Exhibit E.
Any diversion of use of the proceeds other than as set forth on Exhibit E
without the prior written consent of the Holder shall constitute a covenant
violation ("Covenant Violation"). Upon any such Covenant Violation, the Company
shall immediately repay to the Holder the entire amount of the principal amount
of the Note, including any costs and expenses incurred by the Holder in
enforcing its rights in connection with such Covenant Violation. Nothing
contained in this Section shall be construed to restrict or limit in any way the
Holder's right to seek any remedy it deems advisable against the Company for any
damages, costs, expenses or losses it may sustain or to bring an action against
the Company in connection with such Covenant Violation. The Company will notify
the Holder orally and in writing immediately upon the occurrence of such
Covenant Violation.
8. Post-Closing Review and Inspection. No later than ninety (90) days
after the sale of the Note, the Holder may conduct a review of the offices,
properties, assets, operations and financial and other records of the Company to
ensure that the proceeds of the financing are being used for the purposes set
forth in this Agreement (the "Post-Closing Review and Inspection"). In
connection with its Post-Closing Review and Inspection, the Holder and its
designated representative or representatives shall have the right to visit and
inspect during normal business hours, any of the operations, offices,
properties, or assets of the Company, and inspect financial and other records,
and discuss the Company's affairs, finances and accounts with the Company's
officers, auditors and counsel. All expenses incurred by the Holder in
connection with its Post-Closing Review and Inspection shall be paid by the
Company.
9. Subordination. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder of this Note covenants and agrees,
that the indebtedness evidenced by this Note shall be subordinate and subject in
right of payment, to the prior payment of all Senior Indebtedness of the
Company, provided such subordination is reflected in a subordination agreement
by and among the Company, the Holder of this Note and the holder of the Senior
Indebtedness. The Holder of this Note agrees to enter into a subordination
agreement with the holder of the Senior Indebtedness.
(b) For purposes of this Section 9, "Senior Indebtedness" shall mean
the principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on and other amounts due on or in
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<PAGE>
connection with any indebtedness of the Company as defined in and arising under
any loan, credit, security or similar agreement with a bank, insurance company,
or other financial institution or affiliate created, incurred, assumed, or
guaranteed by the Company after the date of this Note, and, all renewals,
extensions, and refundings thereof, which by the terms of the instrument
creating or evidencing such indebtedness is expressly made senior to in right of
payment to, the payment of principal of and interest on the Note.
10. Default. Each of the following events shall constitute an "Event
of Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal
or any other sum under this Note, and such default shall remain uncured for a
five (5) business day period;
(b) the failure of the Company to observe or perform any covenant set
forth in this Note, the Warrants or Original Investment Agreement and such
default shall remain uncured for a twenty (20) business day period after notice
of such default from the Holder;
(c) the breach of any representation, warranty or covenant made by the
Company in this Note, the Warrants, or the Original Investment Agreement and
such default shall remain uncured for a twenty (20) business day period after
notice of such default form the Holder;
(d) the death, bankruptcy or insolvency of A. Dale Mayo;
(e) the Company shall cease operations or cease doing business as an
operator of movie theaters;
(f) A. Dale Mayo shall no longer serve as President of the Company or
shall not be a principal stockholder of the Company;
(g) the Company shall (1) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy or insolvency law of any jurisdiction, (2)
make an assignment for the benefit of its creditors, (3) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of its property, (4) be adjudicated
insolvent or be liquidated, or (5) take corporate action for the purpose of any
of the foregoing; or
(h) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by
-5-
<PAGE>
the Company, a custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its property, or
if an order for relief shall be entered in any case or proceeding for
liquidation or reorganization or otherwise to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution, winding-up
or liquidations of the Company, or if any petition for any such relief shall be
filed against the Company and such petition shall not be dismissed within 60
days;
Upon the occurrence of any Event of Default, the unpaid principal amount of and
the accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
11. Counsel Fees. The Company shall reimburse the Holder for its
reasonable fees and disbursements charged by its outside legal counsel, Reid &
Priest LLP, in connection with the preparation, negotiation, execution and
delivery of this Note and the transactions thereunder, and all other documents
delivered in connection therewith, provided that the aggregate amount of such
reimbursement shall not exceed $5,000. The Company also agrees to pay all
reasonable legal expenses related to any modifications, waivers, consents,
amendments, or enforcement, relating to the Note and Warrants.
12. Small Business Administration ("SBA") Forms. The Company agrees to
cooperate with the Holder in connection with the Holder's preparation and filing
of the SBA Forms listed at Exhibit F hereto and shall furnish from time to time
to the Holder promptly upon reasonable request all information necessary to
enable the Holder to prepare and file the SBA Forms listed on Exhibit F hereto
and any other information reasonably requested or required by any governmental
agency asserting jurisdiction over the Holder.
13. Origination Points to Holder Upon Issuance of the
Note. The Company shall pay to the Holder origination points of
two percent (2%) of the original principal amount of this Note.
14. Miscellaneous.
(a) This Note shall be construed in accordance with and governed by
the laws of the State of New York (without regard to its conflict of laws
principles).
(b) The Company agrees to remain and continue bound hereby
notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of the Note or to protest it for
-6-
<PAGE>
non-payment, and hereby expressly waives any and all presentment or demand for
its payment and protest for time of payment of it, or any part of it, or its
non-payment or dishonor.
(c) Payments made on this Note shall be applied first to accrued
interest, then to other amounts which may be due (other than principal), and
then to principal.
(d) Notwithstanding anything to the contrary contained in this Note,
no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
(e) Upon an Event of a Default with respect to this Note, interest
thereafter shall accrue and be payable at 16% per annum. In the event this Note
is placed for collection, the Company shall pay all collection costs, including
attorneys' fees, in addition to all other amounts due hereunder.
(f) No course of dealing between the Company and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any rights of a holder hereof, except to the extent expressly
waived in writing by the Holder.
(g) This Note may not be modified or discharged except by an
instrument in writing executed by the Company and the Holder.
(h) This Note shall be binding upon and inure to the successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its President.
CLEARVIEW CINEMA GROUP, INC.
By:____________________________
Name: A. Dale Mayo
Title: President
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<PAGE>
Correction and Addendum
This Correction and Addendum to the 8% Subordinated Promissory Note
dated August 31, 1995 (the "Note") in the original principal amount of $50,000
issued by Clearview Cinema Group, Inc. to the order of Robert G. Davidoff is
given to correct certain typographical errors appearing in the Note relating to
certain warrants issued or to be issued to the holder. Capitalized terms used in
this Correction and Addendum without definition shall have the meanings ascribed
to such terms in the Note.
The first sentence of Section 2(b) of the Note, which reads as
follows: "If the Company exercises the Conversion Option, upon its issuance of
the Converted Note to the Holder, it shall also issue to the Holder a warrant,
substantially in the for of Exhibit A hereto ("New Warrant"), to purchase 75
shares of the common stock, $.01 par value per share of the Company ("Common
Stock"), at an exercise price of $2,000 per share, subject to adjustment as set
forth in the New Warrant" is hereby corrected to read as follows: "If the
Company exercises the Conversion Option, upon its issuance of the Converted Note
to the Holder, it shall also issue to the Holder a warrant, substantially in the
form of Exhibit A hereto ("New Warrant"), to purchase 12.5 shares of the common
stock, $.01 par value per share of the Company ("Common Stock"), at an exercise
price of $2,000 per share, subject to adjustment as set forth in the New
Warrant".
The second sentence of Section 4 of the Note, which reads as follows:
"Each Warrant shall entitle the Holder for a five-year period to purchase 37.50
shares of the Company's Common Stock at an exercise price of $2,000 per share,
subject to adjustment as set forth in each Warrant" is hereby corrected to read
as follows: "Each Warrant shall entitle the Holder for a five-year period to
purchase 6.25 shares of the Company's Common Stock at an exercise price of
$2,000 per share, subject to adjustment as set forth in each Warrant."
[Remainder of Page Intentionally Left Blank]
-8-
<PAGE>
This Correction and Addendum shall be deemed to correct the
typographical errors identified herein as of the date of the Note. This
Correction and Addendum is given solely to correct the aforesaid typographical
errors and shall not be deemed to be a novation, restatement or renewal or
otherwise to affect the Note.
Clearview Cinema Group, Inc.
By:____________________________
Name:
Title:
Date:__________________________
Accepted and agreed:
- -------------------------------
Robert G. Davidoff
Date:__________________________
-9-
<PAGE>
Correction and Addendum
This Correction and Addendum to the 8% Subordinated Promissory Note
dated August 31, 1995 (the "Note") in the original principal amount of $50,000
issued by Clearview Cinema Group, Inc. to the order of Robert G. Davidoff is
given to correct certain typographical errors appearing in the Note relating to
certain warrants issued or to be issued to the Holder. Capitalized terms used in
this Correction and Addendum without definition shall have the meanings ascribed
to such terms in the Note.
The first sentence of Section 2(b) of the Note, which reads as
follows: "If the Company exercises the Conversion Option, upon its issuance of
the Converted Note to the Holder, it shall also issue to the Holder a warrant,
substantially in the for of Exhibit A hereto ("New Warrant"), to purchase 75
shares of the common stock, $.01 par value per share of the Company ("Common
Stock"), at an exercise price of $2,000 per share, subject to adjustment as set
forth in the New Warrant" is hereby corrected to read as follows: "If the
Company exercises the Conversion Option, upon its issuance of the Converted Note
to the Holder, it shall also issue to the Holder a warrant, substantially in the
form of Exhibit A hereto ("New Warrant"), to purchase 12.5 shares of the common
stock, $.01 par value per share of the Company ("Common Stock"), at an exercise
price of $2,000 per share, subject to adjustment as set forth in the New
Warrant".
The second sentence of Section 4 of the Note, which reads as follows:
"Each Warrant shall entitle the Holder for a five-year period to purchase 37.50
shares of the Company's Common Stock at an exercise price of $2,000 per share,
subject to adjustment as set forth in each Warrant" is hereby corrected to read
as follows: "Each Warrant shall entitle the Holder for a five-year period to
purchase 6.25 shares of the Company's Common Stock at an exercise price of
$2,000 per share, subject to adjustment as set forth in each Warrant."
[Remainder of Page Intentionally Left Blank]
-10-
<PAGE>
This Correction and Addendum shall be deemed to correct the
typographical errors identified herein as of the date of the Note. This
Correction and Addendum is given solely to correct the aforesaid typographical
errors and shall not be deemed to be a novation, restatement or renewal or
otherwise to affect the Note.
Clearview Cinema Group, Inc.
By:__________________________
Name:
Title:
Date:________________________
Accepted and agreed:
- -------------------------
Robert G. Davidoff
Date:____________________
-11-
<PAGE>
Exhibits to 8% Subordinated Promissory Note
-------------------------------------------
Exhibit Number Descriptions
- -------------- ------------
A Form of New Warrant
B Warrant A
C Warrant B
D Exceptions to Representations
and Warranties
E Description of Use of Financing Proceeds
F Small Business Administration
Forms
[Exhibits are not included, but will be provided by the Company
upon request.]
Exhibit 10.20
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR TRANSFERRED UNLESS
REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION SHALL BE AVAILABLE.
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE
SUBORDINATE TO ANY SENIOR INDEBTEDNESS ENTERED INTO BY THE
COMPANY AFTER THE DATE HEREOF, AND EACH HOLDER OF THIS NOTE
AGREES THAT THE INDEBTEDNESS EVIDENCED BY THIS NOTE SHALL BE
SUBORDINATE TO THE COMPANY'S SENIOR INDEBTEDNESS.
8% SUBORDINATED PROMISSORY NOTE
$50,000.00 New York, New York
October 11, 1995
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the
"Company"), hereby promises to pay to the order of CMCO, INC., a New York
corporation with its office at 135 East 57th Street, New York, New York 10022
(the "Holder"), the principal amount of Fifty Thousand Dollars ($50,000.00),
together with interest calculated from the date hereof in accordance with the
provisions of this 8% Subordinated Promissory Note ("Note"). Payments on this
Note are to be made at the Holder's address stated above, or such other address
as duly designated by the Holder, in lawful money of the United States of
America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof at an annual interest rate of eight percent
(8%) (based upon a 360-day year), payable quarterly on October 15, January 15,
April 15 and July 15 of each year (each of such quarterly interest payment dates
being referred to herein as an "Interest Payment Date") commencing October 15,
1995. In the event that an Interest Payment Date is not a business day, the
Company shall pay to the Holder the interest payment on the first business day
following the applicable Interest Payment Date.
2. Payment of Principal. (a) Principal shall be payable on the Note in
one installment on October 11, 1997 (the
<PAGE>
"Initial Maturity Date"). On the Initial Maturity Date, the Company shall have
the option ("Conversion Option") of not repaying the Note and instead converting
the outstanding principal amount on the Note into another note in such
outstanding principal amount ("Converted Note") payable to the Holder. The
Converted Note shall bear interest on the outstanding principal amount at the
annual rate of eight percent (8%) and shall mature five (5) years from the date
of its issuance ("Maturity Date"). Interest and principal shall be payable on
the Converted Note in twenty (20) equal quarterly installments.
(b) If the Company exercises the Conversion Option, upon its issuance
of the Converted Note to the Holder, it shall also issue to the Holder a
warrant, substantially in the form of Exhibit A hereto ("New Warrant"), to
purchase 12.5 shares of the common stock, $.01 par value per share of the
Company ("Common Stock"), at an exercise price of $2,000 per share, subject to
adjustment as set forth in the New Warrant. The New Warrant shall be exercisable
for five years and shall be in addition to the Warrants (as defined in Section 4
herein) issued pursuant to Section 4 of this Note.
3. Prepayment of Note; Rights to Purchase Additional Securities. (a)
Prior to the Initial Maturity Date (or the Maturity Date for the Converted
Note), the Company may prepay, without penalty or premium, the outstanding
principal amount of this Note, or the Converted Note, provided that any accrued
and unpaid interest is paid when this Note, or the Converted Note, is prepaid.
If the Company prepays the entire outstanding principal amount of this Note (and
accrued and unpaid interest) on or prior to October 11, 1996, Warrant A (as
defined herein) shall be canceled and returned to the Company by the Holder.
(b) Prior to the Initial Maturity Date (or the Maturity Date for the
Converted Note), if the Company consummates any equity or subordinated debt
financing ("New Financing"), the Company shall have the option to require the
Holder to convert the Note (or Converted Note, as applicable) into debt and/or
equity securities ("New Securities") that are being issued in the New Financing,
provided that the Holder receives in exchange for its Note (or Converted Note,
as applicable) New Securities on the same terms and conditions as any other
holder of New Securities.
(c) (i) If at any time while either of the Warrants or the New
Warrants remain outstanding and Section 9.6 of the Original Investment Agreement
(as defined herein) has not been terminated, the Company proposes to issue any
of its equity securities to any person (other than pursuant to a plan or
arrangement approved pursuant to Section 6.1 (a)(iv) of the Original Investment
Agreement, or as additional consideration to a financial institution that is not
an Affiliate of any Stockholder in connection with the making of a loan to the
Company (or its subsidiaries), or pursuant to a New Financing), the Holder shall
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<PAGE>
have the right to purchase, upon the same terms, a proportionate quantity of
those securities (in the proportion that the number of shares of Common Stock
underlying the Warrants and the New Warrants, as applicable bears to the total
number of shares of the Company's Common Stock then held by all stockholders);
for this purpose, shares of the Company's Common Stock issuable upon conversion
of securities then held by all stockholders or upon exercise of warrants then
held by all stockholders shall be deemed to be then held by stockholders. The
provisions of this Section 3(c)(i) are not intended to be duplicative with the
provisions of Section 9.6 of the Original Investment Agreement or with the
provisions of Section 3 of the 8% Subordinated Promissory Note dated August 31,
1995 from the Company to Holder in the original principal amount of $50,000.
(ii) If at any time prior to the date the indebtedness evidenced by
this Note has been paid in full the Company proposes to issue any subordinated
debt financing (other than pursuant to a New Financing), the Holder shall have
the right to participate in such issuance of debt, upon the same terms, in a
proportionate principal amount (in the proportion that the principal amount of
subordinated debt held by the Holder bears to the total principal amount of the
subordinated debt of the Company then held by all holders); provided, however,
that this right shall terminate if not exercised in connection with the first
financing to which this Section is applicable. The provisions of this Section
3(c)(ii) are not intended to be duplicative with the provisions of Section 3 of
the 8% Subordinated Promissory Note dated August 31, 1995 from the Company to
Holder in the original principal amount of $50,000.
4. Warrants. Upon issuance of the Note to the Holder, the Company
shall also issue two (2) warrants ("Warrants") to the Holder, which Warrants
shall be designated "Warrant A" and "Warrant B" and shall be in substantially
the forms set forth in Exhibits B and C hereto. Each Warrant shall entitle the
Holder for a five-year period to purchase 6.25 shares of the Company's Common
Stock at an exercise price of $2,000 per share, subject to adjustment as set
forth in each Warrant.
5. Representations and Warranties. The Company represents and warrants
to the Holder (which representations and warranties shall be deemed material and
to have been relied upon by the Holder in its decision to purchase the Note)
that the representations and warranties made by the Company in Section 4 of the
Investment and Stockholders' Agreement dated December 21, 1994 ("Original
Investment Agreement") by and between Clearview Cinema Group, Inc., A. Dale
Mayo, Brett E. Marks and CMNY Capital II, L.P., are correct in all material
respects as of the date of this Note ("Issuance Date") with the same effect as
though made in and as of such Issuance Date, except for those matters disclosed
in Exhibit D hereto. The representations and warranties set forth in
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<PAGE>
Section 4 of the Original Investment Agreement are incorporated herein by
reference as if fully set forth herein.
6. Covenants. The Company covenants to the Holder that it shall comply
with the covenants set forth in Section 6 of the Original Investment Agreement
as though such covenants were set forth herein. The covenants set forth in
Section 6 are incorporated herein by reference as if fully set forth herein.
7. Subordination. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder of this Note covenants and agrees,
that the indebtedness evidenced by this Note shall be subordinate and subject in
right of payment, to the prior payment of all Senior Indebtedness of the
Company, provided such subordination is reflected in a subordination agreement
by and among the Company, the Holder of this Note and the holder of the Senior
Indebtedness. The Holder of this Note agrees to enter into a subordination
agreement with the holder of the Senior Indebtedness.
(b) For purposes of this Section 7, "Senior Indebtedness" shall mean
the principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on and other amounts due on or in
connection with any indebtedness of the Company as defined in and arising under
any loan, credit, security or similar agreement with a bank, insurance company,
or other financial institution or affiliate created, incurred, assumed, or
guaranteed by the Company after the date of this Note, and, all renewals,
extensions, and refundings thereof, which by the terms of the instrument
creating or evidencing such indebtedness is expressly made senior to in right of
payment to, the payment of principal of and interest on the Note.
8. Default. Each of the following events shall constitute an "Event of
Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal
or any other sum under this Note, and such default shall remain uncured for a
five (5) business day period;
(b) the failure of the Company to observe or perform any covenant set
forth in this Note, the Warrants or Original Investment Agreement and such
default shall remain uncured for a twenty (20) business day period after notice
of such default from the Holder;
(c) the breach of any representation, warranty or covenant made by the
Company in this Note, the Warrants, or the Original Investment Agreement and
such default shall remain uncured for a twenty (20) business day period after
notice of such default from the Holder;
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<PAGE>
(d) the death, bankruptcy or insolvency of A. Dale Mayo;
(e) the Company shall cease operations or cease doing business as an
operator of movie theaters;
(f) A. Dale Mayo shall no longer serve as President of the Company or
shall not be a principal stockholder of the Company;
(g) the Company shall (1) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy or insolvency law of any jurisdiction, (2)
make an assignment for the benefit of its creditors, (3) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of its property, (4) be adjudicated
insolvent or be liquidated, or (5) take corporate action for the purpose of any
of the foregoing; or
(h) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Company, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or if an order for relief
shall be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidations of the
Company, or if any petition for any such relief shall be filed against the
Company and such petition shall not be dismissed within 60 days;
Upon the occurrence of any Event of Default, the unpaid principal amount of and
the accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
9. Counsel Fees. The Company shall reimburse the Holder for its
reasonable fees and disbursements charged by its outside legal counsel, Reid &
Priest LLP, in connection with the preparation, negotiation, execution and
delivery of this Note and the transactions thereunder, and all other documents
delivered in connection therewith, provided that the aggregate amount of such
reimbursement shall not exceed $5,000. The Company also agrees to pay all
reasonable legal expenses related to any modifications, waivers, consents,
amendments, or enforcement, relating to the Note and Warrants.
10. Origination Points to Holder Upon Issuance of the Note. The
Company shall pay to the Holder origination points of two percent (2%) of the
original principal amount of this Note.
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<PAGE>
11. Miscellaneous.
(a) This Note shall be construed in accordance with and governed by
the laws of the State of New York (without regard to its conflict of laws
principles).
(b) The Company agrees to remain and continue bound hereby
notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of the Note or to protest it for non-payment, and hereby expressly
waives any and all presentment or demand for its payment and protest for time of
payment of it, or any part of it, or its non-payment or dishonor.
(c) Payments made on this Note shall be applied first to accrued
interest, then to other amounts which may be due (other than principal), and
then to principal.
(d) Notwithstanding anything to the contrary contained in this Note,
no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
(e) Upon an Event of a Default with respect to this Note, interest
thereafter shall accrue and be payable at 16% per annum. In the event this Note
is placed for collection, the Company shall pay all collection costs, including
attorneys' fees, in addition to all other amounts due hereunder.
(f) No course of dealing between the Company and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any rights of a holder hereof, except to the extent expressly
waived in writing by the Holder.
(g) This Note may not be modified or discharged except by an
instrument in writing executed by the Company and the Holder.
(h) This Note shall be binding upon and inure to the successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its President.
CLEARVIEW CINEMA GROUP, INC.
By:____________________________
Name: A. Dale Mayo
Title: President
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<PAGE>
Exhibits to 8% Subordinated Promissory Note
-------------------------------------------
Exhibit Number Descriptions
- -------------- ------------
A Form of New Warrant
B Warrant A
C Warrant B
D Exceptions to Representations
and Warranties
[Exhibits are not included, but will be provided by the Company upon request.]
Exhibit 10.21
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY
NOT BE SOLD, PLEDGED, ASSIGNED OR TRANSFERRED UNLESS
REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION SHALL BE AVAILABLE.
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE
SUBORDINATE TO ANY SENIOR INDEBTEDNESS ENTERED INTO BY THE
COMPANY AFTER THE DATE HEREOF, AND EACH HOLDER OF THIS NOTE
AGREES THAT THE INDEBTEDNESS EVIDENCED BY THIS NOTE SHALL BE
SUBORDINATE TO THE COMPANY'S SENIOR INDEBTEDNESS.
8% SUBORDINATED PROMISSORY NOTE
-------------------------------
$50,000.00 New York, New York
October 11, 1995
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the
"Company"), hereby promises to pay to the order of ROBERT G. DAVIDOFF, an
individual with his office at 135 East 57th Street, New York, New York 10022
(the "Holder"), the principal amount of Fifty Thousand Dollars ($50,000.00),
together with interest calculated from the date hereof in accordance with the
provisions of this 8% Subordinated Promissory Note ("Note"). Payments on this
Note are to be made at the Holder's address stated above, or such other address
as duly designated by the Holder, in lawful money of the United States of
America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof at an annual interest rate of eight percent
(8%) (based upon a 360-day year), payable quarterly on October 15, January 15,
April 15 and July 15 of each year (each of such quarterly interest payment dates
being referred to herein as an "Interest Payment Date") commencing October 15,
1995. In the event that an Interest Payment Date is not a business day, the
Company shall pay to the Holder the interest payment on the first business day
following the applicable Interest Payment Date.
2. Payment of Principal. (a) Principal shall be payable on the Note in
one installment on October 11, 1997 (the "Initial Maturity Date"). On the
Initial Maturity Date, the
<PAGE>
Company shall have the option ("Conversion Option") of not repaying the Note and
instead converting the outstanding principal amount on the Note into another
note in such outstanding principal amount ("Converted Note") payable to the
Holder. The Converted Note shall bear interest on the outstanding principal
amount at the annual rate of eight percent (8%) and shall mature five (5) years
from the date of its issuance ("Maturity Date"). Interest and principal shall be
payable on the Converted Note in twenty (20) equal quarterly installments.
(b) If the Company exercises the Conversion Option, upon its issuance
of the Converted Note to the Holder, it shall also issue to the Holder a
warrant, substantially in the form of Exhibit A hereto ("New Warrant"), to
purchase 12.5 shares of the common stock, $.01 par value per share of the
Company ("Common Stock"), at an exercise price of $2,000 per share, subject to
adjustment as set forth in the New Warrant. The New Warrant shall be exercisable
for five years and shall be in addition to the Warrants (as defined in Section 4
herein) issued pursuant to Section 4 of this Note.
3. Prepayment of Note; Rights to Purchase Additional Securities. (a)
Prior to the Initial Maturity Date (or the Maturity Date for the Converted
Note), the Company may prepay, without penalty or premium, the outstanding
principal amount of this Note, or the Converted Note, provided that any accrued
and unpaid interest is paid when this Note, or the Converted Note, is prepaid.
If the Company prepays the entire outstanding principal amount of this Note (and
accrued and unpaid interest) on or prior to October 11, 1996, Warrant A (as
defined herein) shall be canceled and returned to the Company by the Holder.
(b) Prior to the Initial Maturity Date (or the Maturity Date for the
Converted Note), if the Company consummates any equity or subordinated debt
financing ("New Financing"), the Company shall have the option to require the
Holder to convert the Note (or Converted Note, as applicable) into debt and/or
equity securities ("New Securities") that are being issued in the New Financing,
provided that the Holder receives in exchange for its Note (or Converted Note,
as applicable) New Securities on the same terms and conditions as any other
holder of New Securities.
(c) (i) If at any time while either of the Warrants or the New
Warrants remain outstanding and Section 9.6 of the Original Investment Agreement
(as defined herein) has not been terminated, the Company proposes to issue any
of its equity securities to any person (other than pursuant to a plan or
arrangement approved pursuant to Section 6.1 (a)(iv) of the Original Investment
Agreement, or as additional consideration to a financial institution that is not
an Affiliate of any Stockholder in connection with the making of a loan to the
Company (or its subsidiaries), or pursuant to a New Financing), the Holder shall
have the right to purchase, upon the same terms, a proportionate
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quantity of those securities (in the proportion that the number of shares of
Common Stock underlying the Warrants and the New Warrants, as applicable bears
to the total number of shares of the Company's Common Stock then held by all
stockholders); for this purpose, shares of the Company's Common Stock issuable
upon conversion of securities then held by all stockholders or upon exercise of
warrants then held by all stockholders shall be deemed to be then held by
stockholders. The provisions of this Section 3(c)(i) are not intended to be
duplicative with the provisions of Section 9.6 of the Original Investment
Agreement or with the provisions of Section 3 of the 8% Subordinated Promissory
Note dated August 31, 1995 from the Company to Holder in the original principal
amount of $50,000.
(ii) If at any time prior to the date the indebtedness evidenced by
this Note has been paid in full the Company proposes to issue any subordinated
debt financing (other than pursuant to a New Financing), the Holder shall have
the right to participate in such issuance of debt, upon the same terms, in a
proportionate principal amount (in the proportion that the principal amount of
subordinated debt held by the Holder bears to the total principal amount of the
subordinated debt of the Company then held by all holders); provided, however,
that this right shall terminate if not exercised in connection with the first
financing to which this Section is applicable. The provisions of this Section
3(c)(ii) are not intended to be duplicative with the provisions of Section 3 of
the 8% Subordinated Promissory Note dated August 31, 1995 from the Company to
Holder in the original principal amount of $50,000.
4. Warrants. Upon issuance of the Note to the Holder, the Company
shall also issue two (2) warrants ("Warrants") to the Holder, which Warrants
shall be designated "Warrant A" and "Warrant B" and shall be in substantially
the forms set forth in Exhibits B and C hereto. Each Warrant shall entitle the
Holder for a five-year period to purchase 6.25 shares of the Company's Common
Stock at an exercise price of $2,000 per share, subject to adjustment as set
forth in each Warrant.
5. Representations and Warranties. The Company represents and warrants
to the Holder (which representations and warranties shall be deemed material and
to have been relied upon by the Holder in its decision to purchase the Note)
that the representations and warranties made by the Company in Section 4 of the
Investment and Stockholders' Agreement dated December 21, 1994 ("Original
Investment Agreement") by and between Clearview Cinema Group, Inc., A. Dale
Mayo, Brett E. Marks and CMNY Capital II, L.P., are correct in all material
respects as of the date of this Note ("Issuance Date") with the same effect as
though made in and as of such Issuance Date, except for those matters disclosed
in Exhibit D hereto. The representations and warranties set forth in Section 4
of the Original Investment Agreement are incorporated herein by reference as if
fully set forth herein.
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<PAGE>
6. Covenants. The Company covenants to the Holder that it shall comply
with the covenants set forth in Section 6 of the Original Investment Agreement
as though such covenants were set forth herein. The covenants set forth in
Section 6 are incorporated herein by reference as if fully set forth herein.
7. Subordination. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder of this Note covenants and agrees,
that the indebtedness evidenced by this Note shall be subordinate and subject in
right of payment, to the prior payment of all Senior Indebtedness of the
Company, provided such subordination is reflected in a subordination agreement
by and among the Company, the Holder of this Note and the holder of the Senior
Indebtedness. The Holder of this Note agrees to enter into a subordination
agreement with the holder of the Senior Indebtedness.
(b) For purposes of this Section 7, "Senior Indebtedness" shall mean
the principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on and other amounts due on or in
connection with any indebtedness of the Company as defined in and arising under
any loan, credit, security or similar agreement with a bank, insurance company,
or other financial institution or affiliate created, incurred, assumed, or
guaranteed by the Company after the date of this Note, and, all renewals,
extensions, and refundings thereof, which by the terms of the instrument
creating or evidencing such indebtedness is expressly made senior to in right of
payment to, the payment of principal of and interest on the Note.
8. Default. Each of the following events shall Constitute an "Event of
Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal
or any other sum under this Note, and such default shall remain uncured for a
five (5) business day period;
(b) the failure of the Company to observe or perform any covenant set
forth in this Note, the Warrants or Original Investment Agreement and such
default shall remain uncured for a twenty (20) business day period after notice
of such default from the Holder;
(c) the breach of any representation, warranty or covenant made by the
Company in this Note, the Warrants, or the Original Investment Agreement and
such default shall remain uncured for a twenty (20) business day period after
notice of such default form the Holder;
(d) the death, bankruptcy or insolvency of A. Dale Mayo;
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<PAGE>
(e) the Company shall cease operations or cease doing business as an
operator of movie theaters;
(f) A. Dale Mayo shall no longer serve as President of the Company or
shall not be a principal stockholder of the Company;
(g) the Company shall (1) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy or insolvency law of any jurisdiction, (2)
make an assignment for the benefit of its creditors, (3) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of its property, (4) be adjudicated
insolvent or be liquidated, or (5) take corporate action for the purpose of any
of the foregoing; or
(h) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent by the Company, a custodian,
receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or if an order for relief
shall be entered in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidations of the
Company, or if any petition for any such relief shall be filed against the
Company and such petition shall not be dismissed within 60 days;
Upon the occurrence of any Event of Default, the unpaid principal amount of and
the accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
9. Counsel Fees. The Company shall reimburse the Holder for its
reasonable fees and disbursements charged by its outside legal counsel, Reid &
Priest LLP, in connection with the preparation, negotiation, execution and
delivery of this Note and the transactions thereunder, and all other documents
delivered in connection therewith, provided that the aggregate amount of such
reimbursement shall not exceed $5,000. The Company also agrees to pay all
reasonable legal expenses related to any modifications, waivers, consents,
amendments, or enforcement, relating to the Note and Warrants.
10. Origination Points to Holder Upon Issuance of the Note. The
Company shall pay to the Holder origination points of two percent (2%) of the
original principal amount of this Note.
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<PAGE>
11. Miscellaneous.
(a) This Note shall be construed in accordance with and governed by
the laws of the State of New York (without regard to its conflict of laws
principles).
(b) The Company agrees to remain and continue bound hereby
notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of the Note or to protest it for non-payment, and hereby expressly
waives any and all presentment or demand for its payment and protest for time of
payment of it, or any part of it, or its non-payment or dishonor.
(c) Payments made on this Note shall be applied first to accrued
interest, then to other amounts which may be due (other than principal), and
then to principal.
(d) Notwithstanding anything to the contrary contained in this Note,
no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
(e) Upon an Event of a Default with respect to this Note, interest
thereafter shall accrue and be payable at 16% per annum. In the event this Note
is placed for collection, the Company shall pay all collection costs, including
attorneys' fees, in addition to all other amounts due hereunder.
(f) No course of dealing between the Company and the Holder or any
delay on the part of the Holder in exercising any rights hereunder shall operate
as a waiver of any rights of a holder hereof, except to the extent expressly
waived in writing by the Holder.
(g) This Note may not be modified or discharged except by an
instrument in writing executed by the Company and the Holder.
(h) This Note shall be binding upon and inure to the successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its President.
CLEARVIEW CINEMA GROUP, INC.
By:____________________________
Name: A. Dale Mayo
Title: President
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<PAGE>
Exhibits to 8% Subordinated Promissory Note
-------------------------------------------
Exhibit Number Descriptions
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A Form of New Warrant
B Warrant A
C Warrant B
D Exceptions to Representations
and Warranties
[Exhibits are not included, but will be provided by the Company upon request.]
Exhibit 10.22
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED UNLESS REGISTERED THEREUNDER OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION SHALL BE AVAILABLE.
THE PAYMENT OF THIS INSTRUMENT, BOTH PRINCIPAL AND INTEREST AND ALL
OTHER INDEBTEDNESS EVIDENCED HEREBY IS SUBORDINATE, SUBJECT TO, AND
MADE JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR RIGHTS OF THE PROVIDENT
BANK, AGENT, ITS SUCCESSORS AND ASSIGNS, FOR THE RATABLE BENEFIT OF
THE PROVIDENT BANK AND OTHER LENDERS, IN THE MANNER AND TO THE EXTENT
SET FORTH IN A CERTAIN SUBORDINATION AGREEMENT DATED AS OF __________,
1996, WHICH AGREEMENT IS INCORPORATED HEREIN BY REFERENCE.
8% SUBORDINATED PROMISSORY NOTE
$300,000 New York, New York
December __, 1996
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware corporation
with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the "Company"),
hereby promises to pay to the order of CMCO, Inc., a New York corporation with
its office at 135 East 57th Street, New York, New York 10022 (the "Holder"), the
principal amount of Three Hundred Thousand Dollars ($300,000), together with
interest calculated from the date hereof in accordance with the provisions of
this 8% Subordinated Promissory Note ("Note"). Payments on this Note are to be
made at the Holder's address stated above, or such other address as duly
designated by the Holder, in lawful money of the United States of America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof at an annual interest rate of eight percent
(8%) (based upon a 360-day year), payable quarterly on October 15, January 15,
April 15 and July 15 of each year (each of such quarterly interest payment dates
being referred to herein as an "Interest Payment Date") commencing January 15,
1997; provided, however, that the payment to be made on January 15, 1997 shall
be based on the actual number of days
<PAGE>
elapsed from the date of this Note to January 15, 1997. In the event that an
Interest Payment Date is not a business day, the Company shall pay to the Holder
the interest payment on the first business day following the applicable Interest
Payment Date.
2. Payment of Principal. (a) Principal shall be payable on the Note in one
installment on the date that is the two-year anniversary of the date of this
Note (the "Initial Maturity Date"). On the Initial Maturity Date, the Company
shall have the option ("Conversion Option") of not repaying the Note and instead
converting the outstanding principal amount on the Note into another note in
such outstanding principal amount ("Converted Note") payable to the Holder. The
Converted Note shall bear interest on the outstanding principal amount at the
annual rate of eight percent (8%) and shall mature five (5) years from the date
of its issuance ("Maturity Date"). Interest and principal shall be payable on
the Converted Note in twenty (20) equal quarterly installments.
(b) If the Company exercise the Conversion Option, upon its issuance of the
Converted Note to the Holder, it shall also issue to the Holder a warrant,
substantially in the form of Exhibit A hereto ("New Warrant"), to purchase 37.5
shares of the common stock, $.01 par value per share of the Company ("Common
Stock"), at an exercise price of $4,000 per share, subject to adjustment as set
forth in the New Warrant. The New Warrant shall be exercisable for five years
and shall be in addition to the Warrants (as defined in Section 4 herein) issued
pursuant to Section 4 of this Note.
3. Prepayment of Note; Rights to Purchase Additional Securities. (a) Prior
to the Initial Maturity Date (or the Maturity Date for the Converted Note), the
Company may prepay, without penalty or premium, the outstanding principal amount
of this Note, or the Converted Note, provided that any accrued and unpaid
interest is paid when this Note, or the Converted Note, is prepaid. If the
Company prepays the entire outstanding principal amount of this Note (and
accrued and unpaid interest) on or prior to the date that is the one-year
anniversary of this Note, Warrant A (as defined herein) shall be canceled and
returned to the Company by the Holder.
(b) Prior to the Initial Maturity Date (or the Maturity Date for the
Converted Note), if the Company consummates any equity or subordinated debt
financing ("New Financing"), the Company shall have the option to require the
Holder to convert the Note (or Converted Note, as applicable) into debt and/or
equity securities ("New Securities") that are being issued in the New Financing,
provided that the Holder receives in exchange for its Note (or Converted Note,
as applicable) New Securities on the same terms and conditions as any other
holder of New Securities.
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<PAGE>
(c) (i) If at any time while either of the Warrants or the New Warrants
remain outstanding and Section 2.6 of the Stockholders and Registration Rights
Agreement among the Company and its stockholders (the "Stockholders Agreement")
has not been terminated, the Company proposes to issue any of its equity
securities to any person (other than pursuant to a plan or arrangement approved
pursuant to Section 6.1(a)(iv) of the Original Investment Agreement, or as
additional consideration to a financial institution that is not an Affiliate of
any Stockholder in connection with the making of a loan to the Company (or its
subsidiaries), or pursuant to a New Financing), the Holder shall have the right
to purchase, upon the same terms, a proportionate quantity of those securities
(in the proportion that the number of shares of Common Stock underlying the
Warrants and the New Warrants, as applicable, bears to the total number of
shares of the Company's Common Stock then held by all stockholders); for this
purpose, shares of the Company's Common Stock issuable upon conversion of
securities then held by all stockholders or upon exercise of warrants (including
the Warrants and the New Warrants) then held by all stockholders shall be deemed
to be then held by stockholders. The provisions of this Section 3(c)(i) are not
intended to be duplicative with the provisions of Section 9.6 of the Original
Investment Agreement (as defined in Section 5 hereof), the provisions of Section
3 of the 8% Subordinated Promissory Note dated August 31, 1995 from the Company
to the Holder in the amount of $50,000, the provisions of the 8% Subordinated
Promissory Note dated October 11, 1995 from the Company to the Holder in the
amount of $50,000, or the provisions of Section 2.6 of the Stockholders
Agreement.
(ii) If at any time prior to the date the indebtedness evidenced by this
Note has been paid in full the Company proposes to issue any subordinated debt
financing (other than pursuant to a New Financing), the Holder shall have the
right to participate in such issuance of debt, upon the same terms, in a
proportionate principal amount (in the proportion that the principal amount of
subordinated debt held by the Holder bears to the total principal amount of the
subordinated debt of the Company then held by all holders); provided, however,
that this right shall terminate if not exercised in connection with the first
financing to which this Section is applicable.
4. Warrants. (a) Upon issuance of the Note to the Holder, the Company shall
also issue two (2) warrants ("Warrants") to the Holder, which Warrants shall be
designated "Warrant A" and "Warrant B" and shall be in substantially the forms
set forth in Exhibits B and C hereto. Each Warrant shall entitle the Holder for
a five-year period to purchase 18.75 shares of the Company's Common Stock at an
exercise price of $4,000 per share, subject to adjustment as set forth in each
Warrant.
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<PAGE>
5. Representations and Warranties. The Company represents and warrants to
the Holder (which representations and warranties shall be deemed material and to
have been relied upon by the Holder in its decision to purchase the Note) that
the representations and warranties made by the Company in Section 4 of the
Investment and Stockholders' Agreement dated December 21, 1994, as amended,
("Original Investment Agreement") by and between Clearview Cinema Group, Inc.,
A. Dale Mayo, Brett E. Marks and CMNY Capital II, L.P., are correct in all
material respects as of the date of this Note ("Issuance Date") with the same
effect as though made in and as of such Issuance Date, except for those matters
disclosed in Exhibit D hereto. The representations and warranties set forth in
Section 4 of the Original Investment Agreement are incorporated herein by
reference as if fully set forth herein.
6. Covenants. The Company covenants to the Holder that it shall comply with
the covenants set forth in Section 6 of the Original Investment Agreement as
though such covenants were set forth herein. The covenants set forth in Section
6 are incorporated herein by reference as if fully set forth herein.
7. Subordination. (a) The Company, for itself, its successors and assigns,
covenants and agrees, and the Holder of this Note covenants and agrees, that the
indebtedness evidenced by this Note shall be subordinate and subject in right of
payment, to the prior payment of all Senior Indebtedness of the Company,
provided such subordination is reflected in a subordination agreement by and
among the Company, the Holder of this Note and the holder of the Senior
Indebtedness. The Holder of this Note agrees to enter into a subordination
agreement with the holder of the Senior Indebtedness.
(b) For purposes of this Section 7, "Senior Indebtedness" shall mean the
principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on and other amounts due on or in
connection with any indebtedness of the Company as defined in and arising under
any loan, credit, security or similar agreement with a bank, insurance company,
or other financial institution or affiliate created, incurred, assumed, or
guaranteed by the Company whether arising prior to, on or after the date of this
Note, and, all renewals, extensions, and refundings thereof, which by the terms
of the instrument creating or evidencing such indebtedness is expressly made
senior to in right of payment to, the payment of principal of and interest on
the Note.
(c) Holder acknowledges that the holder of Senior Indebtedness as of the
date of this Note is The Provident Bank. In the event that any other bank,
insurance company or commercial lending institution becomes or proposes to
become the holder of any Senior Indebtedness, then Holder shall return this Note
to the Company for the sole and limited purpose of having a new legend
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<PAGE>
placed on this Note identifying the holder or holders of such Senior
Indebtedness and shall further enter into a subordination agreement or
agreements with such holder or holders of Senior Indebtedness in form and
substance substantially similar to the Subordination Agreement referred to in
the legend of this Note.
(d) Holder further acknowledges that the indebtedness evidenced by this
Note shall be subordinate and subject in right of payment to the prior payment
of the Senior Subordinated Promissory Note dated as of December 13, 1996 issued
by the Company to Magic Cinemas L.L.C. in the orignal principal amount of
$600,000.
8. Default. Each of the following events shall constitute an "Event of
Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal or
any other sum under this Note, and such default shall remain uncured for a five
(5) business day period;
(b) the failure of the Company to observe or perform any covenant set forth
in this Note, the Warrants or Original Investment Agreement and such default
shall remain uncured for a twenty (20) business day period after notice of such
default from the Holder;
(c) the breach of any representation, warranty or covenant made by the
Company in this Note, the Warrants, or the Original Investment Agreement and
such default shall remain uncured for a twenty (20) business day period after
notice of such default form the Holder;
(d) the death, bankruptcy or insolvency of A. Dale Mayo;
(e) the Company shall cease operations or cease doing business as an
operator of movie theaters;
(f) A. Dale Mayo shall no longer serve as President of the Company or shall
not be a principal stockholder of the Company;
(g) the Company shall (1) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy or insolvency law of any jurisdiction, (2) make
an assignment for the benefit of its creditors, (3) consent to the appointment
of a custodian, receiver, trustee or other officer with similar powers of itself
or of any substantial part of its property, (4) be adjudicated insolvent or be
liquidated, or (5) take corporate action for the purpose of any of the
foregoing; or
(h) a court or governmental authority of competent jurisdiction shall enter
an order appointing, without consent by the Company, a custodian, receiver,
trustee or other officer with
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similar powers with respect to it or with respect to any substantial part of its
property, or if an order for relief shall be entered in any case or proceeding
for liquidation or reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidations of the Company, or if any petition for any such
relief shall be filed against the Company and such petition shall not be
dismissed within 60 days;
Upon the occurrence of any Event of Default the unpaid principal amount of and
the accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
9. Counsel Fees. The Company shall reimburse the Holder for its reasonable
fees and disbursements charged by its outside legal counsel, Reid & Priest LLP,
in connection with the preparation, negotiation, execution and delivery of this
Note and the transactions thereunder, and all other documents delivered in
connection therewith, provided that the aggregate amount of such reimbursement
shall not exceed $8,000. The Company also agrees to pay all reasonable legal
expenses related to any modifications, waivers, consents, amendments, or
enforcement, relating to the Note and Warrants.
10. Small Business Administration ("SBA") Forms. The Company agrees to
cooperate with the Holder in connection with the Holder's preparation and filing
of the SBA Forms listed at Exhibit E hereto and shall furnish from time to time
to the Holder promptly upon reasonable request all information necessary to
enable the Holder to prepare and file the SBA Forms listed on Exhibit E hereto
and any other information reasonably requested or required by any governmental
agency asserting jurisdiction over the Holder.
11. Origination Points to Holder Upon Issuance of the Note. The Company
shall pay to the Holder origination points of two percent (2%) of the original
principal amount of this Note.
12. Miscellaneous.
(a) This Note shall be construed in accordance with and governed by the
laws of the State of New York (without regard to its conflict of laws
principles).
(b) The Company agrees to remain and continue bound hereby notwithstanding
any extension or extensions of time of payment, and notwithstanding any failure
or omission to make presentment or demand for payment of the Note or to protest
it for non-payment, and hereby expressly waives any and all presentment or
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<PAGE>
demand for its payment and protest for time of payment of it, or
any part of it, or its non-payment or dishonor.
(c) Payments made on this Note shall be applied first to accrued interest,
then to other amounts which may be due (other than principal), and then to
principal.
(d) Notwithstanding anything to the contrary contained in this Note, no
interest shall accrue or be payable hereunder that is in excess of the maximum
amount permitted under the applicable law relating to usury. Any interest that
is in excess of the maximum amount permitted under the applicable law relating
to usury shall be applied to reduce the outstanding principal balance hereof and
shall be deemed to represent a prepayment of principal hereunder.
(e) In the event of a default with respect to this Note, interest
thereafter shall accrue and be payable at 16% per annum. In the event this Note
is placed for collection, the Company shall pay all collection costs, including
attorneys' fees in addition to all other amounts due hereunder.
(f) No course of dealing between the Company and the Holder or any delay on
the part of the Holder in exercising any rights hereunder shall operate as a
waiver of any rights of a holder hereof, except to the extent expressly waived
in writing by the Holder.
(g) This Note may not be modified or discharged except by an instrument in
writing executed by the Company and the Holder.
(h) This Note shall be binding upon and inure to the successors and assigns
of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its
President.
CLEARVIEW CINEMA GROUP, INC.
By:___________________________
Name: A. Dale Mayo
Title: President
- 7 -
<PAGE>
Exhibits to 8% Subordinated Promissory Note
-------------------------------------------
Exhibit Number Descriptions
- -------------- ------------
A Form of New Warrant
B Warrant A
C Warrant B
D Exceptions to Representations
and Warranties
E Small Business Administration
Forms
[Exhibits are not included, but will be provided by the Company upon request.]
Exhibit 10.23
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED UNLESS REGISTERED THEREUNDER OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION SHALL BE AVAILABLE.
THE PAYMENT OF THIS INSTRUMENT, BOTH PRINCIPAL AND INTEREST AND ALL OTHER
INDEBTEDNESS EVIDENCED HEREBY IS SUBORDINATE, SUBJECT TO, AND MADE JUNIOR
IN RIGHT OF PAYMENT TO THE PRIOR RIGHTS OF THE PROVIDENT BANK, AGENT, ITS
SUCCESSORS AND ASSIGNS, FOR THE RATABLE BENEFIT OF THE PROVIDENT BANK AND
OTHER LENDERS, IN THE MANNER AND TO THE EXTENT SET FORTH IN A CERTAIN
SUBORDINATION AGREEMENT DATED AS OF __________, 1996, WHICH AGREEMENT IS
INCORPORATED HEREIN BY REFERENCE.
8% SUBORDINATED PROMISSORY NOTE
$300,000 New York, New York
December __, 1996
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware corporation
with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the "Company"),
hereby promises to pay to the order of Robert G. Davidoff, an individual with
his office at 135 East 57th Street, New York, New York 10022 (the "Holder"), the
principal amount of Three Hundred Thousand Dollars ($300,000), together with
interest calculated from the date hereof in accordance with the provisions of
this 8% Subordinated Promissory Note ("Note"). Payments on this Note are to be
made at the Holder's address stated above, or such other address as duly
designated by the Holder, in lawful money of the United States of America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof at an annual interest rate of eight percent
(8%) (based upon a 360-day year), payable quarterly on October 15, January 15,
April 15 and July 15 of each year (each of such quarterly interest payment dates
being referred to herein as an "Interest Payment Date") commencing January 15,
1997; provided, however, that the payment to be made on January 15, 1997 shall
be based on the actual number of days elapsed from the date of this Note to
January 15, 1997. In the event that an Interest Payment Date is not a business
day, the
<PAGE>
Company shall pay to the Holder the interest payment on the first business day
following the applicable Interest Payment Date.
2. Payment of Principal. (a) Principal shall be payable on the Note in one
installment on the date that is the two-year anniversary of the date of this
Note (the "Initial Maturity Date"). On the Initial Maturity Date, the Company
shall have the option ("Conversion Option") of not repaying the Note and instead
converting the outstanding principal amount on the Note into another note in
such outstanding principal amount ("Converted Note") payable to the Holder. The
Converted Note shall bear interest on the outstanding principal amount at the
annual rate of eight percent (8%) and shall mature five (5) years from the date
of its issuance ("Maturity Date"). Interest and principal shall be payable on
the Converted Note in twenty (20) equal quarterly installments.
(b) If the Company exercise the Conversion Option, upon its issuance of the
Converted Note to the Holder, it shall also issue to the Holder a warrant,
substantially in the form of Exhibit A hereto ("New Warrant"), to purchase 37.5
shares of the common stock, $.01 par value per share of the Company ("Common
Stock"), at an exercise price of $4,000 per share, subject to adjustment as set
forth in the New Warrant. The New Warrant shall be exercisable for five years
and shall be in addition to the Warrants (as defined in Section 4 herein) issued
pursuant to Section 4 of this Note.
3. Prepayment of Note; Rights to Purchase Additional Securities. (a) Prior
to the Initial Maturity Date (or the Maturity Date for the Converted Note), the
Company may prepay, without penalty or premium, the outstanding principal amount
of this Note, or the Converted Note, provided that any accrued and unpaid
interest is paid when this Note, or the Converted Note, is prepaid. If the
Company prepays the entire outstanding principal amount of this Note (and
accrued and unpaid interest) on or prior to the date that is the one-year
anniversary of this Note, Warrant A (as defined herein) shall be canceled and
returned to the Company by the Holder.
(b) Prior to the Initial Maturity Date (or the Maturity Date for the
Converted Note), if the Company consummates any equity or subordinated debt
financing ("New Financing"), the Company shall have the option to require the
Holder to convert the Note (or Converted Note, as applicable) into debt and/or
equity securities ("New Securities") that are being issued in the New Financing,
provided that the Holder receives in exchange for its Note (or Converted Note,
as applicable) New Securities on the same terms and conditions as any other
holder of New Securities.
(c) (i) If at any time while either of the Warrants or the New Warrants
remain outstanding and Section 2.6 of the
- 2 -
<PAGE>
Stockholders and Registration Rights Agreement among the Company and its
stockholders (the "Stockholders Agreement") has not been terminated, the Company
proposes to issue any of its equity securities to any person (other than
pursuant to a plan or arrangement approved pursuant to Section 6.1(a)(iv) of the
Original Investment Agreement, or as additional consideration to a financial
institution that is not an Affiliate of any Stockholder in connection with the
making of a loan to the Company (or its subsidiaries), or pursuant to a New
Financing), the Holder shall have the right to purchase, upon the same terms, a
proportionate quantity of those securities (in the proportion that the number of
shares of Common Stock underlying the Warrants and the New Warrants, as
applicable, bears to the total number of shares of the Company's Common Stock
then held by all stockholders); for this purpose, shares of the Company's Common
Stock issuable upon conversion of securities then held by all stockholders or
upon exercise of warrants (including the Warrants and the New Warrants) then
held by all stockholders shall be deemed to be then held by stockholders. The
provisions of this Section 3(c)(i) are not intended to be duplicative with the
provisions of Section 9.6 of the Original Investment Agreement (as defined in
Section 5 hereof), the provisions of Section 3 of the 8% Subordinated Promissory
Note dated August 31, 1995 from the Company to the Holder in the amount of
$50,000, the provisions of the 8% Subordinated Promissory Note dated October 11,
1995 from the Company to the Holder in the amount of $50,000, or the provisions
of Section 2.6 of the Stockholders Agreement.
(ii) If at any time prior to the date the indebtedness evidenced by this
Note has been paid in full the Company proposes to issue any subordinated debt
financing (other than pursuant to a New Financing), the Holder shall have the
right to participate in such issuance of debt, upon the same terms, in a
proportionate principal amount (in the proportion that the principal amount of
subordinated debt held by the Holder bears to the total principal amount of the
subordinated debt of the Company then held by all holders); provided, however,
that this right shall terminate if not exercised in connection with the first
financing to which this Section is applicable.
4. Warrants. (a) Upon issuance of the Note to the Holder, the Company shall
also issue two (2) warrants ("Warrants") to the Holder, which Warrants shall be
designated "Warrant A" and "Warrant B" and shall be in substantially the forms
set forth in Exhibits B and C hereto. Each Warrant shall entitle the Holder for
a five-year period to purchase 18.75 shares of the Company's Common Stock at an
exercise price of $4,000 per share, subject to adjustment as set forth in each
Warrant.
5. Representations and Warranties. The Company represents and warrants to
the Holder (which representations and warranties shall be deemed material and to
have been relied upon by
- 3 -
<PAGE>
the Holder in its decision to purchase the Note) that the representations and
warranties made by the Company in Section 4 of the Investment and Stockholders'
Agreement dated December 21, 1994, as amended, ("Original Investment Agreement")
by and between Clearview Cinema Group, Inc., A. Dale Mayo, Brett E. Marks and
CMNY Capital II, L.P., are correct in all material respects as of the date of
this Note ("Issuance Date") with the same effect as though made in and as of
such Issuance Date, except for those matters disclosed in Exhibit D hereto. The
representations and warranties set forth in Section 4 of the Original Investment
Agreement are incorporated herein by reference as if fully set forth herein.
6. Covenants. The Company covenants to the Holder that it shall comply with
the covenants set forth in Section 6 of the Original Investment Agreement as
though such covenants were set forth herein. The covenants set forth in Section
6 are incorporated herein by reference as if fully set forth herein.
7. Subordination. (a) The Company, for itself, its successors and assigns,
covenants and agrees, and the Holder of this Note covenants and agrees, that the
indebtedness evidenced by this Note shall be subordinate and subject in right of
payment, to the prior payment of all Senior Indebtedness of the Company,
provided such subordination is reflected in a subordination agreement by and
among the Company, the Holder of this Note and the holder of the Senior
Indebtedness. The Holder of this Note agrees to enter into a subordination
agreement with the holder of the Senior Indebtedness.
(b) For purposes of this Section 7, "Senior Indebtedness" shall mean the
principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on and other amounts due on or in
connection with any indebtedness of the Company as defined in and arising under
any loan, credit, security or similar agreement with a bank, insurance company,
or other financial institution or affiliate created, incurred, assumed, or
guaranteed by the Company whether arising prior to, on or after the date of this
Note, and, all renewals, extensions, and refundings thereof, which by the terms
of the instrument creating or evidencing such indebtedness is expressly made
senior to in right of payment to, the payment of principal of and interest on
the Note.
(c) Holder acknowledges that the holder of Senior Indebtedness as of the
date of this Note is The Provident Bank. In the event that any other bank,
insurance company or commercial lending institution becomes or proposes to
become the holder of any Senior Indebtedness, then Holder shall return this Note
to the Company for the sole and limited purpose of having a new legend placed on
this Note identifying the holder or holders of such Senior Indebtedness and
shall further enter into a subordination agreement or agreements with such
holder or holders of Senior
- 4 -
<PAGE>
Indebtedness in form and substance substantially similar to the Subordination
Agreement referred to in the legend of this Note.
(d) Holder further acknowledges that the indebtedness evidenced by this
Note shall be subordinate and subject in right of payment to the prior payment
of the Senior Subordinated Promissory Note dated as of December 13, 1996 issued
by the Company to Magic Cinemas L.L.C. in the orignal principal amount of
$600,000.
8. Default. Each of the following events shall constitute an "Event of
Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal or
any other sum under this Note, and such default shall remain uncured for a five
(5) business day period;
(b) the failure of the Company to observe or perform any covenant set forth
in this Note, the Warrants or Original Investment Agreement and such default
shall remain uncured for a twenty (20) business day period after notice of such
default from the Holder;
(c) the breach of any representation, warranty or covenant made by the
Company in this Note, the Warrants, or the Original Investment Agreement and
such default shall remain uncured for a twenty (20) business day period after
notice of such default form the Holder;
(d) the death, bankruptcy or insolvency of A. Dale Mayo;
(e) the Company shall cease operations or cease doing business as an
operator of movie theaters;
(f) A. Dale Mayo shall no longer serve as President of the Company or shall
not be a principal stockholder of the Company;
(g) the Company shall (1) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy or insolvency law of any jurisdiction, (2) make
an assignment for the benefit of its creditors, (3) consent to the appointment
of a custodian, receiver, trustee or other officer with similar powers of itself
or of any substantial part of its property, (4) be adjudicated insolvent or be
liquidated, or (5) take corporate action for the purpose of any of the
foregoing; or
(h) a court or governmental authority of competent jurisdiction shall enter
an order appointing, without consent by the Company, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall be
entered in any case or proceeding for liquidation or
- 5 -
<PAGE>
reorganization or otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or liquidations
of the Company, or if any petition for any such relief shall be filed against
the Company and such petition shall not be dismissed within 60 days;
Upon the occurrence of any Event of Default the unpaid principal amount of and
the accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
9. Counsel Fees. The Company shall reimburse the Holder for its reasonable
fees and disbursements charged by its outside legal counsel, Reid & Priest LLP,
in connection with the preparation, negotiation, execution and delivery of this
Note and the transactions thereunder, and all other documents delivered in
connection therewith, provided that the aggregate amount of such reimbursement
shall not exceed $8,000. The Company also agrees to pay all reasonable legal
expenses related to any modifications, waivers, consents, amendments, or
enforcement, relating to the Note and Warrants.
10. Small Business Administration ("SBA") Forms. The Company agrees to
cooperate with the Holder in connection with the Holder's preparation and filing
of the SBA Forms listed at Exhibit E hereto and shall furnish from time to time
to the Holder promptly upon reasonable request all information necessary to
enable the Holder to prepare and file the SBA Forms listed on Exhibit E hereto
and any other information reasonably requested or required by any governmental
agency asserting jurisdiction over the Holder.
11. Origination Points to Holder Upon Issuance of the Note. The Company
shall pay to the Holder origination points of two percent (2%) of the original
principal amount of this Note.
12. Miscellaneous.
(a) This Note shall be construed in accordance with and governed by the
laws of the State of New York (without regard to its conflict of laws
principles).
(b) The Company agrees to remain and continue bound hereby notwithstanding
any extension or extensions of time of payment, and notwithstanding any failure
or omission to make presentment or demand for payment of the Note or to protest
it for non-payment, and hereby expressly waives any and all presentment or
demand for its payment and protest for time of payment of it, or any part of it,
or its non-payment or dishonor.
- 6 -
<PAGE>
(c) Payments made on this Note shall be applied first to accrued interest,
then to other amounts which may be due (other than principal), and then to
principal.
(d) Notwithstanding anything to the contrary contained in this Note, no
interest shall accrue or be payable hereunder that is in excess of the maximum
amount permitted under the applicable law relating to usury. Any interest that
is in excess of the maximum amount permitted under the applicable law relating
to usury shall be applied to reduce the outstanding principal balance hereof and
shall be deemed to represent a prepayment of principal hereunder.
(e) In the event of a default with respect to this Note, interest
thereafter shall accrue and be payable at 16% per annum. In the event this Note
is placed for collection, the Company shall pay all collection costs, including
attorneys' fees in addition to all other amounts due hereunder.
(f) No course of dealing between the Company and the Holder or any delay on
the part of the Holder in exercising any rights hereunder shall operate as a
waiver of any rights of a holder hereof, except to the extent expressly waived
in writing by the Holder.
(g) This Note may not be modified or discharged except by an instrument in
writing executed by the Company and the Holder.
(h) This Note shall be binding upon and inure to the successors and assigns
of the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its
President.
CLEARVIEW CINEMA GROUP, INC.
By:____________________________
Name: A. Dale Mayo
Title: President
- 7 -
<PAGE>
Exhibits to 8% Subordinated Promissory Note
Exhibit Number Descriptions
- -------------- ------------
A Form of New Warrant
B Warrant A
C Warrant B
D Exceptions to Representations
and Warranties
E Small Business Administration
Forms
[Exhibits are not included, but will be provided by the Company upon request.]
Exhibit 10.24
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED UNLESS REGISTERED THEREUNDER OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION SHALL BE AVAILABLE.
THE PAYMENT OF THIS INSTRUMENT, BOTH PRINCIPAL AND INTEREST AND ALL
OTHER INDEBTEDNESS EVIDENCED HEREBY IS SUBORDINATE, SUBJECT TO, AND
MADE JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR RIGHTS OF THE PROVIDENT
BANK, AGENT, ITS SUCCESSORS AND ASSIGNS, FOR THE RATABLE BENEFIT OF
THE PROVIDENT BANK AND OTHER LENDERS, IN THE MANNER AND TO THE EXTENT
SET FORTH IN A CERTAIN SUBORDINATION AGREEMENT DATED AS OF DECEMBER
13, 1996, WHICH AGREEMENT IS INCORPORATED HEREIN BY REFERENCE.
SENIOR SUBORDINATED PROMISSORY NOTE
$600,000.00 Roseland, New Jersey
December 13, 1996
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware corporation
with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the "Company"),
hereby promises to pay to the order of Magic Cinemas, L.L.C., a New Jersey
limited liability company with its office at 513 West Mount Pleasant Avenue,
Livingston, NJ 07039 (the "Holder"), the principal amount of Six Hundred
Thousand ($600,000) Dollars, together with interest calculated from the date
hereof in accordance with the provisions of this Senior Subordinated Promissory
Note (this "Note"). Payments on this Note are to be made at the Holder's address
stated above, or such other address as duly designated by the Holder, in lawful
money of the United States of America.
1. Payment of Interest; Rate. This Note shall bear interest on the
outstanding principal amount hereof (i) on or before December 13, 1997 at an
annual rate of twelve percent (12%); (ii) after December 13, 1997 and on or
before December 13, 1998 at an annual rate of fourteen percent (14%); (iii)
after December 13, 1998 and on or before December 13, 1999 at an annual rate of
sixteen percent (16%); and (iv) after December 13, 1999 at an annual rate of
eighteen percent (18%). Interest hereunder shall be based upon a 360-day year
and shall be payable monthly in arrears on the 15th day of each month of each
year (each of such monthly interest payment dates being referred to herein as an
"Interest Payment Date") commencing January 15, 1997. In the event that an
Interest Payment Date is not a business day, the Company shall pay to the Holder
the interest payment on the first business day following the applicable Interest
Payment Date. From and after an Event of Default (defined below) not waived in
writing by the Holder, interest will accrue on the unpaid principal amount of
this Note until the date payment is made in full at the annual rate equal to the
then prevailing interest rate under this Note as set forth in this Section 1
plus 4% (the "Default Rate").
-1-
<PAGE>
2. Payment of Principal. All outstanding principal and all accrued but
unpaid interest shall be paid in full on the earlier of (i) December 13, 2001
and (ii) the date of closing of an initial public offering of debt or equity
securities by the Company or any parent or subsidiary of the Company ("Maturity
Date").
3. Prepayment of Note. The Company may prepay, without penalty or premium,
the outstanding principal amount of this Note in whole or in part at any time
and from time to time.
4. Subordination. (a) The Company, for itself, its successors and assigns,
covenants and agrees, and the Holder covenants and agrees, that the indebtedness
evidenced by this Note shall be subordinate and subject in right of payment, to
the prior payment in full of all Senior Indebtedness of the Company to the
extent provided in a subordination agreement by and among the Company, the
Holder and the holder of the Senior Indebtedness.
(b) For purposes of this Section 4, "Senior Indebtedness" shall mean the
principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on and other amounts due on or in
connection with any indebtedness of the Company as defined in and arising under
any loan, credit, security or similar agreement with The Provident Bank or any
bank, insurance company, or other commercial financial institution which
refinances the indebtedness held by The Provident Bank, in any case whether
arising prior to, on or after the date of issuance of this Note, and all
renewals, extensions, and refundings thereof.
(c) Holder acknowledges that the holder of Senior Indebtedness as of the
date of this Note is The Provident Bank. In the event that the Company from time
to time refinances the Senior Indebtedness with any other bank, insurance
company or commercial lending institution such that such successor then replaces
The Provident Bank as the holder of Senior Indebtedness, then Holder shall enter
into a subordination agreement with such holder of Senior Indebtedness in form
and substance identical to the Subordination Agreement (other than the identity
of the Senior Indebtedness and the holder thereof) and Holder shall make a
notation to such effect on the legend of this Note.
5. Junior Indebtedness. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder covenants and agrees, that the
indebtedness evidenced by this Note shall be senior to all Junior Indebtedness,
and all Junior Indebtedness shall be subject in right of payment, to the prior
payment in full of this Note. Notwithstanding the foregoing, in the event that
there is no Event of Default hereunder at the time any interest or principal
under the Junior Indebtedness is due, the Company may make payments of such
interest, but not principal, of Junior Indebtedness so long as such payment
would not cause an Event of Default hereunder.
(b) For purposes of this Section 5, "Junior Indebtedness" shall mean the
principal of, premium, if any, and interest (including any interest accruing
after the filing of a petition in bankruptcy) on that certain 8% Subordinated
Promissory Note of the Company to Robert G. Davidoff, an individual with his
office at 135 E. 57th Street, New York, NY 10022 dated December 13, 1996 in the
principal amount of $300,000 and that certain 8% Senior Subordinated Note of the
Company to CMCO, Inc., a New York corporation with its office at 135 E. 57th
Street, New York, NY 10022 dated December 13, 1996 in the principal amount of
$300,000, and all renewals, extensions and refundings of each such Subordinated
Promissory Note and any other indebtedness of the Company that is by its terms
subject in right of payment and subordinate to the prior payment in full of this
Note. The Company represents and warrants to Holder that the Subordinated
Promissory Notes identified in this clause (b) by their terms are subject in
right of payment and subordinate to the prior payment in full of this Note.
-2-
<PAGE>
6. Affirmative Covenants. The Company covenants and agrees that so long as
any amounts due and owing under this Note are unpaid, the Company shall:
(a) Preserve and maintain its corporate existence and good standing in the
state of its incorporation, and qualify and remain qualified, to do business as
a foreign corporation in each jurisdiction in which such qualification is
required.
(b) Continue to engage in a business of the same general type as conducted
by it or its subsidiaries on the date of this Agreement;
(c) Furnish to the Holder as soon as delivered to any other creditor, but
in no event later than one hundred twenty (120) days after the end of each
fiscal year, the Company's consolidated audited financial statements that the
Company delivers to such other creditor.
7. Negative Covenants. The Company covenants and agrees that so long as any
amounts due and owing under this Note are unpaid, (i) the Company shall not
directly or indirectly declare, pay or make any dividends or distribution (other
than stock dividends or distributions) on or purchase, redeem, or otherwise
acquire, any share of any class of its capital stock, and (ii) the Company shall
not, nor shall it permit its subsidiaries to, (A) issue or incur any
indebtedness for borrowed money, (B) incur any deferred purchase price
obligations (other than purchase money debt for equipment in the ordinary
course), or (C) guarantee any debts or obligations identified in clauses (A) or
(B). The restriction contained in clause (ii) above shall not apply to Junior
Indebtedness or Senior Indebtedness.
8. Default. Each of the following events shall constitute an "Event of
Default" under this Note:
(a) the failure of the Company to pay when due any interest, principal or
any other sum under this Note, and such default shall remain uncured for a five
(5) business day period;
(b) the Company shall (i) file, or consent by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy or insolvency law of any jurisdiction, (ii)
make an assignment for the benefit of its creditors, (iii) consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of its property, (iv) be adjudicated
insolvent or be liquidated, or (v) take corporate action for the purpose of any
of the foregoing;
(c) a court or governmental authority of competent jurisdiction shall enter
an order appointing, without consent by the Company, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or if an order for relief shall be
entered in any case or proceeding for liquidation or reorganization or otherwise
to take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidations of the Company, or if any
petition for any such relief shall be filed against the Company and such
petition shall not be dismissed within 60 days.
(d) The Company or any subsidiary of the Company fails to pay when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) or within any applicable grace or cure period any amount in respect
of any indebtedness of the Company (other than the indebtedness represented by
this Note) or any subsidiary of the
-3-
<PAGE>
Company, as the case may be, in excess of $75,000 including without limitation,
the Senior Indebtedness but not including the Junior Indebtedness or any
indebtedness to any Affiliate of the Company.
(e) The dissolution, liquidation or winding-up of the Company's affairs;
(f) A judgment shall be entered against the Company or any of its
subsidiaries in an amount in excess of $75,000 and the judgment is not paid in
full and discharged, or stayed and bonded, within sixty (60) days after being
entered, unless the amount of the judgment is fully covered by insurance,
subject to applicable deductibles (so long as they are customary or usual).
(g) The merger or consolidation of the Company, except where the
shareholders of the Company (prior to the merger or consolidation) own a
majority of the issued and outstanding shares of the surviving corporation;
(h) The sale of all or substantially all of the assets or outstanding
capital stock of the Company in one or a series of related transactions;
(i) The material breach of the covenants set forth in Section 6 of this
Note and any breach of the covenant contained in Section 7 of this Note; or
(j) The payment of principal on the Junior Indebtedness. Upon the
occurrence of any Event of Default the unpaid principal amount of and the
accrued interest on this Note shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by the Company.
9. Asset Purchase Agreement. This Note has been issued pursuant to that
certain Asset Purchase Agreement (the "Purchase Agreement") dated the date
hereof among the Company, the Holder and the Company's three wholly owned
Delaware subsidiaries, CCC Tenafly Cinema Corp., CCC Bergenfield Cinema Corp.
and CCC Closter Cinema Corp., with respect to which another wholly owned
subsidiary of the Company, CCC B.C. Realty Corp., a Delaware corporation, is an
intended third party beneficiary (collectively, the "Subsidiaries"). All
obligations of Makers under this Note are without setoff or recoupment under the
Purchase Agreement.
10. Miscellaneous. (a) This Note shall be construed in accordance with and
governed by the laws of the State of New Jersey (without regard to its conflict
of laws principles).
(b) The Company agrees to remain and continue bound hereby notwithstanding
any extension or extensions of time of payment, and notwithstanding any failure
or omission to make presentment or demand for payment of this Note or to protest
it for non-payment, and hereby expressly waives any and all presentment or
demand for its payment and protest for time of payment of it, or any part of it,
or its non-payment or dishonor.
(c) The Company shall pay all costs and expenses, including reasonable
attorneys' fees, incurred by the Holder in effecting collection of all amounts
due under this Note upon an Event of Default, whether or not a lawsuit is
instituted or prosecuted to judgment. All such costs and expenses shall be added
to the principal amount due under this Note, shall be payable to the Holder on
demand, and until paid in full shall bear interest at the interest rate
-4-
<PAGE>
provided in Section 1 hereof.
(d) Payments made on this Note shall be applied first to collection costs
and expenses hereof, next to accrued interest, then to other amounts which may
be due (other than principal), and then to principal.
(e) Failure or delay of the Holder to enforce any provisions of this Note
shall not be deemed a waiver of any such provision, nor shall the Holder be
estopped from enforcing any such provision at a later time. Any waiver of any
provision of this Note must be in writing. Acceptance of any payments shall not
waive or affect any prior demand or acceleration of the obligations under this
Note. Each and every right and remedy granted to the Holder under this Note or
allowed to it by law shall be cumulative and not exclusive and each may be
exercised by the Holder from time to time and as often as may be necessary.
(f) In any action or proceeding brought by the Holder to collect any amount
due under this Note or otherwise arising out of or in connection with this Note,
the Company waives any right to request or require trial by jury.
(g) Notwithstanding anything to the contrary contained in this Note, no
interest shall accrue or be payable hereunder that is in excess of the maximum
amount permitted under the applicable law relating to usury. Any interest that
is in excess of the maximum amount permitted under the applicable law relating
to usury shall be applied to reduce the outstanding principal balance hereof and
shall be deemed to represent a prepayment of principal hereunder.
(h) Any lawsuit or similar action arising out of or based upon this Note,
shall be brought only in the state or federal courts of the State of New Jersey.
In the event of a lawsuit, the parties consent to personal jurisdiction and
venue in any such state or federal court and waive any defense based upon
improper jurisdiction. Delivery of any process by any of the methods which
notices may be given under the Purchase Agreement shall constitute lawful and
valid service of process.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its
President as of the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By:____________________________
Name: A. Dale Mayo
Title: President
By:____________________________
Name: Brett E. Marks
Title: Assistant Secretary
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Exhibit 10.25
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated
the 29th day of May, 1996, by and among MidMark Capital, L.P., a Delaware
limited partnership ("Buyer"), Clearview Cinema Group, Inc., a Delaware
corporation (the "Corporation"), and A. Dale Mayo (the "Stockholder").
W I T N E S S E T H:
SECTION 1. Issuance and Sale of Preferred Stock and Warrant. Upon the
terms and subject to all of the conditions set forth herein, the Corporation
agrees to issue and sell to Buyer, and Buyer agrees to purchase from the
Corporation on May 29, 1996 (the "Closing Date"):
(a) Six-Hundred and Eighty-Four (684) shares of Class A
Convertible Preferred Stock, par value $.01 per share (the "Preferred
Stock"), of the Corporation, having the designations, rights and
preferences set forth in the Certificate of Incorporation of the
Corporation, as previously amended by the filing with the Secretary of
State of the State of Delaware of a Certificate of Amendment in the
form of Exhibit A attached hereto; and
(b) a warrant (the "Warrant") in the form of Exhibit B attached
hereto, to purchase an aggregate of Two Hundred and Twenty-Eight (228)
shares of Preferred Stock and/or up to that number of shares of common
stock, par value $.01 per share ("Common Stock"), of the Corporation
into which Two Hundred and Twenty-Eight (228) shares of Preferred
Stock may be converted.
(c) To the extent that all or any of the warrants to purchase 125
shares of capital stock of the Corporation which are issuable in the
event that loans in the aggregate amount of $500,000 to the
Corporation are extended beyond their due dates, as such warrants are
referenced on Schedule 3(a), are actually issued, or different and/or
additional warrants are issued as a result of any further extensions
of such loan, then, with respect to each such issuance, Buyer shall be
issued (i) additional shares of Preferred Stock equal to 23.31% of the
sum of the shares purchasable pursuant to such warrants and such
additional shares, and (ii) additional Warrants, each in the form of
Exhibit B hereto, to purchase an aggregate number of shares of
Preferred Stock and/or up to that number of shares of Common Stock
into which such shares may be converted,
<PAGE>
equal to 7.77% of the sum of the shares purchasable pursuant to such
warrants and such additional shares.
SECTION 2. Consideration for Preferred Stock and Warrant. In full
consideration for the issuance and sale of the Preferred Stock and the Warrant
by the Corporation to Buyer provided for herein, on the Closing Date Buyer shall
deliver to the Corporation the sum of One Million, Seven Hundred and Fifty
Thousand Dollars ($1,750,000) in immediately available funds.
SECTION 3. Representations and Warranties of the Corporation and the
Stockholder. The Corporation represents and warrants that (and the Stockholder
represents and warrants, to the best of his knowledge, that):
(a) Organization; Capital Stock. The Corporation is a corporation
duly organized and existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
and contemplated to be conducted. The authorized capital stock of the
Corporation consists of 10,000 shares of Common Stock and 1,303 shares of
Preferred Stock. There are 1,020 shares of Common Stock issued and outstanding
which are the only shares of capital stock of the Corporation issued and
outstanding on the date hereof. All of the issued and outstanding Common Stock
of the Corporation is duly authorized, validly issued, fully paid and
non-assessable and is owned of record and, to the best knowledge of the
Corporation, beneficially by the persons, and in the amounts, set forth on
Schedule 3(a). All the issued and outstanding Common Stock of the Corporation
has been issued and sold in conformity with the requirements of the Securities
Act of 1933, as amended, and all other applicable federal and state laws
relating to the issuance and sale of securities which are applicable to the
Corporation or any holder of Common Stock. Except as set forth on Schedule 3(a),
the Stockholder owns 530 shares of Common Stock free and clear of any mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority, charge or other security interest
or preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any capital
lease having substantially the same economic effect as any of the foregoing, and
the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing) (each, a
"Lien"). Except as set forth on Schedule 3(a), there are no authorized,
outstanding or existing:
(i) proxies, voting trusts or other agreements or understandings with
respect to the voting of any capital stock of the Corporation;
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(ii) securities convertible into or exchangeable for
any capital stock of the Corporation;
(iii) options, warrants or other rights to purchase or subscribe for
any capital stock of the Corporation, or securities convertible into or
exchangeable for any capital stock of the Corporation;
(iv) preemptive rights or rights of first refusal of any holder of
capital stock, or agreements of any kind relating to the issuance of any capital
stock of the Corporation, any such convertible or exchangeable securities or any
such options, warrants or rights; or
(v) stockholders' or similar agreements with respect to the voting
and/or transfer of capital stock, or agreements of any kind that may obligate
the Corporation to issue or purchase any of its securities.
(b) Subsidiaries. Schedule 3(b) identifies each of the
Corporation's Subsidiaries (as hereinafter defined), its jurisdiction of
incorporation and the percentage of its voting stock owned by the Corporation
and, if applicable, the Stockholder and each other Subsidiary. The Corporation
(or, if applicable, the Stockholder or Subsidiary as the case may be) is the
record and beneficial owner of all of the shares of voting stock it purports to
own of each Subsidiary and, except as set forth on Schedule 3(b), such ownership
is free and clear in each case of any Lien. All such shares have been duly
issued and are fully paid and non-assessable. No Subsidiary has any common or
preferred stock authorized or outstanding other than as set forth on Schedule
3(b) and neither the Corporation nor any Subsidiary has made or entered into any
agreement or commitment to sell or issue any securities of any Subsidiary. Each
Subsidiary is a corporation duly organized and existing and in good standing
under the laws of its state of incorporation and has the corporate power to
carry on its business as it is now being or contemplated to be conducted. The
term "Subsidiary" means any corporation, limited liability company, partnership
or other entity of which more than fifty percent (50%) of the shares of stock,
or other ownership interests having ordinary voting power (including stock or
such other ownership interests having such voting power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, limited liability company, partnership or
other entity, are at the time owned, directly or indirectly, through one or more
intermediaries, or both, by the Corporation.
(c) Corporate Power, etc. The Corporation and each Subsidiary has
all requisite power and authority, and all
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<PAGE>
necessary licenses, permits, franchises and other governmental authorizations
necessary to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted, except where the failure to do so
would not have a material adverse effect on the business, assets, financial
conditions or results of operations of the Corporation and its Subsidiaries
taken as a whole.
(d) Due Authorization; No Conflict. This Agreement and each of
the Ancillary Documents (as that term is defined in Section 5(e) below) has been
duly authorized by all necessary corporate or stockholder action of the
Corporation. Neither this Agreement nor any of the transactions provided for
herein or in any Ancillary Document conflicts with or violates (i) any provision
of the Corporation's Certificate of Incorporation (as amended by the Certificate
of Amendment in the form of Exhibit A attached hereto) or By-laws, (ii) any
agreement by which the Corporation, any Subsidiary of the Corporation or the
Stockholder, or any of its or their respective properties, is bound in any
manner that, individually or in the aggregate, would have material adverse
effect on the business, assets, financial conditions or results of operations of
the Corporation and its Subsidiaries taken as a whole, (iii) any federal or
state law, rule or regulation or judicial order, or (iv) any local law, rule or
regulation in any manner that, individually or in the aggregate would have
material adverse effect on the business, assets, financial conditions or results
of operations of the Corporation and its Subsidiaries taken as a whole. This
Agreement is, and each Ancillary Document will be, when duly executed and
delivered, binding on the Corporation and the Stockholder (as the case may be),
and enforceable against the Corporation and/or against the Stockholder in
accordance with their respective terms except as may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent transfer, preference and other
laws and equitable principles affecting the scope and enforcement to creditors'
rights generally, and are also limited by Buyer's implied covenants of good
faith, fair dealing and commercially reasonable conduct, and by the effects of
judicial discretion on the availability of remedies and realization of benefits
under and enforceability of this Agreement and the Ancillary Documents in all
respects as written.
(e) Preferred Stock; Warrant. The Preferred Stock and the Warrant
to be issued and sold pursuant to Section 1 hereof, and all Common Stock and
Preferred Stock to be issued upon conversion or exercise thereof, has been duly
authorized, and when issued and sold by Corporation will be fully paid and
non-assessable (assuming payment by the Buyer of the consideration set forth in
Section 2 hereof, or in the Warrant, as the case may be) and free and clear of
any Lien, claim or right of any other person. The Corporation has reserved for
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<PAGE>
issuance a sufficient number of shares of Common Stock and Preferred Stock as
may be required upon conversion of the Preferred Stock and exercise of the
Warrant to be issued and sold pursuant to Section 1 hereof.
(f) Financial Statements; Undisclosed Liabilities. (i) Each of
the Corporation and its Subsidiaries have, during all prior periods of their
respective existences, prepared annual financial statements in accordance with
generally accepted accounting principles ("GAAP"). The consolidated balance
sheets of the Corporation and its Subsidiaries as of December 31, 1994 and
December 31, 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal years then ended, all of
which have been certified by the Corporation's independent certified public
accountants, copies of which have been delivered to Buyer, have been prepared in
accordance with GAAP consistently applied, and present fairly the financial
position of the Corporation and its Subsidiaries as of such dates and the
results of their operations for such periods. The Corporation has also delivered
to Buyer copies of all audit or review comments and reports thereon or in
respect thereof which were received by the Corporation or any such Subsidiary
from its independent certified public accountants since the date of
incorporation of the Corporation. The Consolidated Balance Sheet of the
Corporation and Subsidiaries dated December 31, 1995 is herein called the
"Consolidated Balance Sheet," and December 31, 1995 is herein called the
"Balance Sheet Date."
(ii) Except as set forth on Schedule 3(f), as of the date hereof
the Corporation does not have any liability of any nature (matured or unmatured,
fixed contingent or otherwise) which is, individually or in the aggregate,
material to the Corporation and its Subsidiaries on a consolidated basis, and
was not reflected on the Consolidated Balance Sheet and which should, in
accordance with GAAP, have been reflected in such balance sheets or in the notes
thereto.
(g) Material Adverse Change. Except as set forth on Schedule
3(g), since the Balance Sheet Date there has not been any change in the
properties, business, prospects, results of operations or financial condition of
the Corporation or any of its Subsidiaries which, individually or in the
aggregate, has had or may reasonably be expected to have a material adverse
effect on the properties, business, prospects, results of operation or financial
condition of the Corporation and its Subsidiaries taken as a whole (excluding
the effect, if any, of economic, political and social conditions affecting the
motion picture theater industry generally).
(h) Litigation; No Default. Except as set forth
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<PAGE>
on Schedule 3(h), there are no claims, actions, suits, investigations or
proceedings pending against or affecting or, to the knowledge of the
Corporation, threatened against the Corporation, any of its Subsidiaries or any
of its or their respective officers or employees (in their capacities as such)
or its or their respective businesses, properties or assets, or the transactions
contemplated by this Agreement and the Ancillary Documents, by any person,
governmental body or agency or by any securities exchange or national securities
association, nor is there any basis known to the Corporation for any such
action, suit, investigation or proceeding, which is reasonably likely, if
adversely decided, to have a material adverse effect on the business, assets,
financial conditions or results of operations of the Corporation and its
Subsidiaries taken as a whole. There is not in existence any order, judgment or
decree of any court, governmental authority or agency or arbitration board or
tribunal enjoining the Corporation or any Subsidiary from taking, or requiring
the Corporation or any Subsidiary to take, action of any kind with respect to
the business of the Corporation or such Subsidiary. Neither the Corporation nor
any Subsidiary is in violation of any laws or governmental rules or regulations
except where such violation would not have a material adverse effect on the
business, assets, financial conditions or results of operations of the
Corporation and its Subsidiaries taken as a whole. Neither the Corporation nor
any of its Subsidiaries is in default under any contract or commitment to which
it is a party or by which its assets are bound, which default would have a
material adverse effect on the business, assets, financial conditions or results
of operations of the Corporation and its subsidiaries taken as a whole.
(i) Title to Assets. The Corporation and each Subsidiary has good
and marketable title to all the property reflected on the consolidated balance
sheet of the Corporation and Subsidiaries dated December 31, 1995 and which the
Corporation or any Subsidiary otherwise purports to own, free and clear of all
Liens, except as set forth on Schedule 3(i). Such assets, together with the
assets leased by the Corporation and Subsidiaries, are the only assets used by
the Corporation and its Subsidiaries in the conduct of their respective
businesses as presently conducted. The Corporation and its Subsidiaries enjoy
peaceful and undisturbed possession under all leases under which they are
operating, and all such leases are valid and subsisting and in full force and
effect.
(j) Trademarks, Copyrights and other Intellectual Properties.
Schedule 3(j) sets forth a correct and complete list of all Intellectual
Properties used, held for use, or (as set forth in writing in any document
delivered to the Buyer) presently proposed to be used in the conduct of the
business of the Corporation or its Subsidiaries. "Intellectual Properties"
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<PAGE>
shall mean each and all of the following items: all United States or foreign
patents, trademarks, trade names, servicemarks, and applications for any of the
foregoing, copyrights or other author's rights, proprietary rights and data,
ideas and know-how, whether or not patentable or registrable, and any goodwill
associated with any of the foregoing whether owned or otherwise controlled by
the person or entity using, holding for use or proposing to use any of the
foregoing or whether the rights to the use thereof have been licensed to or by
such person or entity. Except as disclosed in Schedule 3(j), (i) the Corporation
owns or possesses adequate licenses or other valid rights to use (without the
making of any payment to others or the obligation to grant rights to others in
exchange) all Intellectual Properties necessary to the conduct of its business
as presently being or (as set forth in writing in any document delivered to the
Buyer) proposed to be conducted and the consummation of the transactions
contemplated hereby will not alter or impair any of such rights; (ii) the
validity of such rights and the title thereto of the Corporation have not been
questioned or challenged in any matter, nor, to the knowledge of the
Corporation, is any such challenge threatened; (iii) the conduct of the business
of the Corporation and its Subsidiaries as is now conducted or (as set forth in
writing in any document delivered to the Buyer) proposed to be conducted does
not infringe or conflict with any Intellectual Properties of others; (iv) the
Corporation knows of no use by any other party of any Intellectual Property
owned by or licensed to the Corporation; and (v) no infringement by others of
any Intellectual Properties owned by or licensed by or to the Corporation is
known to the Corporation.
(k) Material Agreements. Schedule 3(k) contains a list of all of
the material agreements, leases, licenses or sublicenses, contracts or other
agreements, arrangements, understanding and commitments, whether written or oral
(each and all of the foregoing items being referred to as "Contracts"), to which
the Corporation and/or any Subsidiary is a party. Except as set forth in
Schedule 3(k) (which may refer to other specific schedules hereto), neither the
Corporation nor any Subsidiary is a party to any material Contract.
(l) Consents. Except as set forth on Schedule 3(l), no consent,
approval or authorization of, or filing, registration or qualification with, any
governmental authority or any other person on the part of the Corporation or any
Subsidiary is required in connection with the execution, delivery and
performance of this Agreement or any Ancillary Document, or the offer, issue,
sale or delivery of the Preferred Stock or the warrant, or the issuance and
delivery of Common Stock upon conversion or exercise thereof.
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<PAGE>
(m) Taxes. The Corporation has delivered to Buyer copies of all
federal and state income tax returns of the Corporation or any Subsidiary in
respect of years ending on or after December 31, 1994. All income, gross
receipts, ad valorem, sales, use, franchise, property employment and other tax
returns required to be filed by the Corporation or any Subsidiary in any
jurisdiction have in fact been filed and are true and correct, and all taxes,
assessments, fees and other governmental charges upon the Corporation or any
Subsidiary of the Corporation, or upon any of their respective properties,
income or franchises, which are due and payable have been paid. The Federal
income tax returns of the Corporation and its Subsidiaries have as yet not been
audited by the Internal Revenue Service. The provisions for taxes on the books
of the Corporation and each Subsidiary are adequate for all open years, and for
its current fiscal period. Neither the Corporation nor any Subsidiary has
granted or agreed to any extension of the period of limitations with respect to
any open tax year.
(n) Employee Matters; ERISA. Schedule 3(n) sets forth a true,
correct and complete list of (i) each pension, profit-sharing, retirement,
deferred compensation, bonus or other incentive plan, or other employee benefit
plan, program, agreement or arrangement to which the Corporation or any
Subsidiary is a party or by which it is bound, or to which it contributes or in
which its employees are entitled to participate (collectively "Employee Benefit
Plans"), and (ii) each employment agreement with any officer, director or
employee to which the Corporation or any Subsidiary is a party or by which it is
bound. The present value of all benefits vested under all Employee Benefit
Plans, does not, and will not on the Closing Date, exceed the value of the
assets of the plans allocable to such vested benefits. Neither the Corporation
nor any Subsidiary has taken or omitted to take any action the taking or
omission of which would be a "prohibited transaction" or "reportable event"
under ERISA, or would otherwise constitute a breach of the fiduciary duty of the
Corporation or any Subsidiary in respect of an employee benefit plan maintained
or administered by the Corporation or any Subsidiary. There is, in respect of
the Employee Benefit Plans, no accumulated funding deficiency (whether or not
waived) and the Corporation has not taken or omitted to take any action the
taking or omission of which could jeopardize the qualification of any Employee
Benefit Plan which is a "qualified" plan within the meaning of Section 401 of
the Internal Revenue Code of 1986, as amended. Neither the Corporation nor any
Subsidiary is a party to any "Multiemployer Plan" as that term is defined in
ERISA.
(o) Brokers and Finders. Except as set forth on Schedule 3(o),
neither the Corporation nor the Stockholder has incurred any obligation or
commitment to any person which could
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<PAGE>
give rise to a claim for any finder's, broker's or other middleman's commission
or compensation in respect of the transactions contemplated by this Agreement.
(p) Use of Proceeds. The proceeds to the Corporation from the
issuance and sale of the Preferred Stock and the Warrant shall be used by the
Corporation for a transaction involving the acquisition of movie theaters from
the Township of Washington Theater, Inc., Allwood Clifton Cinema, Inc., New City
Cinema, Inc. and Emerson Cinema, Inc.
(q) Intercompany Transactions. Schedule 3(q) sets forth all
contracts, transactions and other business arrangements between the Corporation
or any Subsidiary, on the one hand, and any stockholder, director or officer of
the Corporation or any Subsidiary, on the other hand, since January 1, 1991
(other than employment agreements and employee benefit plans involving officers
in their capacity as such). Except as set forth on Schedule 3(q), all such
contracts, transactions and other business arrangements were or are on an
arms-length basis, and have been or are on terms no less favorable to the
Corporation than would have been or could be obtained from unaffiliated third
parties.
(r) Disclosure. No representation or warranty by the Corporation
or Stockholder contained herein, nor any information, document, statement,
certificate or schedule furnished or to be furnished to Buyer in connection
herewith or with the transactions contemplated hereby, contains, or will on the
Closing Date contain, any untrue statement of a material fact or omits, or will
on the Closing Date omit, to state a material fact necessary to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading. (The parties hereby affirm their intention that the
foregoing sentence be interpreted in a manner consistent with Securities and
Exchange Commission Rule 10b-5, and disavow any intention to expand or limit the
applicability of Rule 10b-5 in this Section 3(r).) The written projections dated
December 12, 1995 prepared by Mahoney, Cohen & Co., CPAs, updating the earlier
projections referred to therein, which were furnished by the Corporation and/or
the Stockholder to Buyer were made in good faith. The Corporation has supplied
to Buyer all information and documents requested by Buyer in the document
request list dated February 9, 1996 previously furnished to the Corporation, a
copy of which is attached hereto as Exhibit C.
SECTION 4. Representations and Warranties of Buyer. Buyer represents
and warrants that:
(a) Organization; Corporate Power. Buyer is a limited partnership
duly organized and existing and in good
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<PAGE>
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
(b) Due Authorization. This Agreement has been duly authorized by
all necessary action of Buyer. Neither this Agreement nor any of the
transactions provided for herein violates any provision of Buyer's Certificate
of Limited Partnership or Limited Partnership Agreement or any agreement by
which Buyer or any of its properties is bound. This Agreement will, when duly
executed and delivered, be binding on Buyer, and enforceable against Buyer in
accordance with its terms.
(c) Consents. No consent, approval or authorization of, or
filing, registration or qualification with, any governmental authority or other
person on the part of the Buyer is required in connection with the execution,
delivery and performance of this Agreement or the purchase of the Preferred
Stock or the Warrant, or the conversion or exercise thereof.
(d) Accredited Investor Status. Buyer is an "accredited Investor"
as defined under Regulation D promulgated under the Securities Act of 1933, as
amended, and is acquiring the Preferred Stock and Warrant for its own account
for investment and not with view to, or for sale in connection with, any
distribution thereof. Buyer has no present intention of distributing or
reselling any of the Preferred Stock or Warrant.
(e) Experience of Buyer. Buyer has the experience and
sophistication necessary to evaluate the Corporation and the risks associated
with the terminations contemplated hereby and is able to sustain a loss of its
investment in the Corporation.
(f) No Reliance. In making its decisions to purchase the
Preferred Stock and Warrant, Buyer has not relied upon any representations or
warranties, express or implied, except for the representations and warranties
expressly set forth in this Agreement or in any certificate or instrument
delivered by or on behalf of the Corporation in writing in connection with the
transactions contemplated herein. To Buyer's knowledge, the Corporation has
provided the Buyer with such access to the books and records and personnel and
other representatives of the Corporation and the Subsidiaries and to such other
information as Buyer has requested in order to enable Buyer to make its
investment decision.
SECTION 5. Conditions Precedent to Obligations of Buyer. The
obligations of Buyer under this Agreement are subject to and conditioned upon
the satisfaction at or prior to the Closing of each of the following conditions:
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(a) Representations; Performance. The representations and
warranties of the Corporation and the Stockholder contained in this Agreement
and in the Ancillary Documents (i) shall be true and correct in all material
respects at and as of the date hereof, and (ii) shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date. The Corporation shall have duly performed
and complied with all agreements and conditions required by this Agreement and
each of the Ancillary Documents to be performed or complied with by it prior to
or on the Closing Date. The Corporation shall have delivered to the Buyer a
certificate, dated the Closing Date and signed by the President of the
Corporation to his knowledge to the foregoing effect and with respect to
incumbency of officers and such other matters as Buyer may reasonably request.
(b) Corporate Proceedings. All corporate and other proceedings of
the Corporation in connection with this Agreement and the Ancillary Documents
and the transactions contemplated hereby and thereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in substance and
form to the Buyer and its counsel, and the Buyer and its counsel shall have
received all such documents and instruments, or copies thereof, certified if
requested, as may be reasonably requested.
(c) Consents. All consents needed for the execution, delivery and
performance of this Agreement and each Ancillary Document shall have been
obtained.
(d) Opinion of Counsel. Buyer shall have received from
Kirkpatrick & Lockhart, LLP, counsel for the Corporation and the Stockholder, a
written opinion dated as of the Closing Date, addressed to Buyer, substantially
in the form set forth in Exhibit D.
(e) Ancillary Documents. Each of the following agreements,
instruments or documents (collectively the "Ancillary Documents") shall have
been executed and delivered, filed or adopted as the case may be and Buyer shall
have received fully executed or certified copies thereof;
(i) A copy, certified by the Secretary of State of the State
of Delaware, of the Certificate of Incorporation of the
Corporation as previously amended by the filing with the
Secretary of State of the State of Delaware of a Certificate of
Amendment in the form of Exhibit A attached hereto;
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(ii) The Warrant; and
(iii) Stockholders and Registration
Rights Agreement among the Corporation, the
Stockholder (in both his individual capacity
and in his capacity as trustee under any
voting trust), Brett A. Marks, CMNY Capital
II, L.P., Michael C. Rush, Buyer and Emerson
Theater, Inc. in the form of Exhibit E
attached hereto (the "Stockholders
Agreement");
(iv) Employment and Non-Competition Agreement between the
Corporation and the Stockholder in the form of Exhibit F attached
hereto (the "Employment and Non-Competition Agreement");
(v) Management and Monitoring Fee Agreement between the
Corporation and MidMark Associates, Inc. in the form of Exhibit G
attached hereto; and
(vi) a Size Status Declaration on Small Business
Administration ("SBA") Form 480, an Assurance of Compliance on
SBA Form 652, a Portfolio Financing Report on SBA Form 1031, and,
if deemed necessary by Buyer, a Control Certification.
(f) Legal Proceedings. There shall be no law, rule or regulation
and no order shall have been entered and not vacated by a court or
administrative agency of competent jurisdiction in any litigation, which (a)
enjoins, restrains, makes illegal or prohibits consummation of the transactions
contemplated hereby or by any Ancillary Document, (b) requires separation of a
significant portion of the assets or business of the Corporation or any
Subsidiary after the Closing or (c) restricts or interferes with, in any
material way, the operation of the Corporation or any Subsidiary or their
respective businesses or assets after the Closing, materially adversely affects
the financial condition, results of operations, properties, assets, business or
prospects of the Corporation or any Subsidiary; and there shall be no litigation
pending before a court or administrative agency of competent jurisdiction, or
threatened, seeking to do, or which, if successful, would have the effect of,
any of the foregoing.
(g) Payment of Buyer's Fees and Expenses. The fees and expenses
of the Buyer detailed in Section 14, including
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the 3% processing fee payable to the general partner of Buyer, shall have been
paid by the Corporation.
(h) Closing of Certain Acquisitions. There shall have occurred
prior to or there shall occur contemporaneously with the Closing a closing of
the transactions contemplated by the Asset Purchase Agreements, each dated the
date hereof, between the Corporation and/or certain of its wholly-owned
subsidiaries, on the one hand, and (i) Emerson Cinema, Inc., and (ii) Township
of Washington Theater, Inc., Allwood Clifton Cinema, Inc. and New City Cinema,
Inc.
(i) Key Man Life Insurance. The Corporation shall have obtained
and shall have in full force and effect a key man life insurance policy on the
life of A. Dale Mayo in an amount of at least $1,000,000, the proceeds of which
shall be payable directly to the Corporation, in addition to any policies
required by and/or held as collateral security by any lender to or stockholder
of the Corporation.
SECTION 6. Conditions Precedent to Obligations of Corporation. The
obligations of the Corporation to deliver the Preferred Stock and the Warrant on
the Closing Date are subject to and conditioned upon the satisfaction at or
prior to the Closing of each of the following conditions:
(a) Representations; Performance. The representations and
warranties of the Buyer contained in this Agreement and the Ancillary Documents
(i) shall be true and correct in all material respects at and as of the date
hereof and (ii) shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though made at and as of such time. The
Buyer shall have duly performed and complied with all agreements and conditions
required by this Agreement and the Ancillary Documents to be performed or
complied with by it prior to or on the Closing Date. The Buyer shall have
delivered to the Corporation a certificate, dated the Closing Date and signed by
its duly authorized officer to his knowledge, to the foregoing effect.
(b) Proceedings. All proceedings of the Buyer in connection with
this Agreement and the Ancillary Documents and the transactions contemplated
hereby and thereby, and all documents and instruments incident thereto, shall be
reasonably satisfactory in substance and form to the Corporation, and its
counsel, and the Corporation and its counsel shall have received all such
documents and instruments, or copies thereof, certified if requested, as may be
reasonably requested.
(c) Consents. All consents needed for the execution, delivery and
performance of this Agreement and each
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Ancillary Document shall have been obtained.
(d) Opinion of Counsel. The Corporation shall have received from
McCarter & English, counsel for Buyer, a written opinion dated as of the Closing
Date, addressed to the Corporation, substantially in the form set forth in
Exhibit H.
(e) Certain Ancillary Documents. The Corporation shall have
received a copy of the Stockholders Agreement executed by the Buyer.
SECTION 7. The Closing; Termination.
(a) The Closing shall be held at the offices of Kirkpatrick &
Lockhart, LLP, in New York City on the Closing Date or on such other date not
later than thirty days subsequent thereto as may be agreed upon by Buyer and the
Corporation. At the Closing, the parties hereto will execute and deliver all
documents and instruments necessary to effect the transfers provided for herein
and not theretofore effected and to evidence their respective compliance with
the provisions of this Agreement.
(b) Each of Buyer and the Corporation shall have the right, in
the event that the Closing shall not be held by October 31, 1996, and if such
failure to close shall be attributable to any cause or event other than a
failure by it to perform an action required to be performed by it pursuant to
this Agreement, to terminate this Agreement on written notice to the other.
SECTION 8. Covenants of the Corporation. The Corporation covenants and
agrees that:
(a) Affirmative Covenants.
(i) Conduct of Business. From the date hereof to the Closing Date,
except as expressly permitted or required by this Agreement or as otherwise
consented to by the Buyer in writing, the Corporation will (i) carry on its
business in the ordinary course, consistent with past practice, and use all
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep
available the services of its present officers and significant employees,
and preserve its relationship with customers, suppliers and others having
business dealings with it, to the end that its goodwill and going business
as it exists on the date hereof shall be in all material respects
unimpaired on and after the Closing Date, (ii) notify the Buyer of
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any governmental or third party complaint, investigation or hearing (or
written communication indicating that such a complaint, investigation or
hearing is or may be contemplated), and (iii) notify the Buyer if the
Corporation discovers that any representation by the Corporation set forth
in this Agreement was untrue when made or subsequently has become untrue.
(ii) Access. At all times prior to the Closing, the Corporation will
give the Buyer, the Buyer's accountants, counsel, consultants, employees
and agents, full access, during normal business hours and upon reasonable
notice, to all documents, records, work papers and information with respect
to all of the properties, assets, books, contracts, commitments, reports
and records relating to the Corporation as the Buyer shall from
time-to-time request. In addition, the Corporation will permit the Buyer,
the Buyer's accountants, counsel, consultants, employees and agents,
reasonable access to such personnel of the Corporation and its accountants
during normal business hours and upon reasonable notice as may be necessary
or useful to the Buyer in its review of the properties, assets and business
affairs of the Corporation and the above-mentioned documents, records and
information. The Corporation will keep the Buyer generally informed as to
the affairs of the Corporation. The Corporation will also cooperate with
Buyer, in all reasonable respects, to afford Buyer with reasonable access
to the customers, suppliers and other Persons with business relationships
of the Corporation.
(iii) Public Announcements. Prior to the Closing Date, the Corporation
shall not, and it shall not permit any officer, director, employee or agent
to, make any public announcement, other than announcements approved by the
Buyer and made by the Corporation to its own employees, officers, directors
or other personnel, in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of the Buyer.
(iv) Further Actions. (A) The Corporation agrees to use all reasonable
good faith efforts to take all actions and to do all things necessary,
proper or advisable to consummate the transactions contemplated hereby on
the Closing Date.
(B) The Corporation will, as promptly as practicable, file or supply,
or cause to be filed or
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supplied, all applications, notifications and information required to be
filed or supplied by the Corporation pursuant to applicable law in
connection with this Agreement, the Ancillary Documents, the issuance and
sale of the Preferred Stock and the Warrant pursuant to this Agreement and
the consummation of the other transactions contemplated hereby and thereby.
(C) The Corporation, as promptly as practicable, will use its best
efforts to obtain, or cause to be obtained, all consents (including,
without limitation, all consents, approvals, authorizations, waivers,
permits, grants, franchises, concessions agreements, licenses, exemptions
or orders of registration, certificates, declarations or filings with, or
reports or notices with or to any governmental authority and any consent
required under any contract) necessary to be obtained in order to
consummate the issuance and sale of the Preferred Stock and the Warrant
pursuant to this Agreement and the Ancillary Documents and the consummation
of the other transactions contemplated hereby and thereby.
(D) At all times prior to the Closing, the Corporation shall promptly
notify the Buyer in writing of any fact, condition, event or occurrence
that will or may result in the failure of any of the conditions contained
in Section 5 to be satisfied, promptly upon becoming aware of the same.
(v) Further Assurances. Following the Closing, the Corporation shall
from time-to-time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall
be necessary, or otherwise reasonably requested by the Buyer, to confirm
and assure the rights and obligations provided for in this Agreement and in
the Ancillary Documents and render effective the consummation of the
transactions contemplated hereby and thereby.
(vi) Books and Records; Financial Statements. The Corporation will at
all times keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries will be
made of its transactions in accordance with generally accepted accounting
principles.
(vii) Maintenance of Existence, etc. The Corporation will at all times
do or cause to be done,
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and will cause each of its officers and employees to do, all things
necessary to maintain, preserve and renew its corporate existence and the
corporate existence of its Subsidiaries and all necessary licenses,
permits, franchises and other governmental authorizations necessary to own
and operate its properties and carry on its business, and comply with, and
cause each Subsidiary to comply with, all laws applicable to the
Corporation or any Subsidiary.
(viii) Insurance. The Corporation will at all times provide or cause
to be provided for itself and its Subsidiaries, insurance against loss or
damage of the kinds customarily insured against by corporations similarly
situated, with reputable insurers, in such amounts, with such deductibles
and by such methods as shall be customary for corporations similarly
situated.
(ix) Payment of Taxes. The Corporation will at all times duly pay and
discharge, and cause each Subsidiary duly and promptly to pay and
discharge, as the same become due and payable, all taxes, assessments and
governmental and other charges, levies or claims levied or imposed;
provided, however, that nothing contained in this paragraph shall require
the Corporation or any such Subsidiary to pay or discharge, or cause to be
paid and discharged, any such tax, assessment, charge, levy or claim so
long as the Corporation or such Subsidiary in good faith shall contest the
validity thereof and shall set aside on its books adequate reserves with
respect thereto.
(b) Negative Covenants.
(i) Dividends. The Corporation will not, at any time prior to the
Closing Date (A) pay any dividends of any kind on any shares in its capital
of any class or series, (B) make any payments on account of the purchase or
other acquisition or redemption or other retirement of any shares in its
capital of any class or series or any warrants or options to purchase any
such shares, or (C) make any other distributions of any kind in respect of
any shares in its capital of any class or series or in respect of any
warrants or options.
(ii) Sale of Stock of Subsidiaries. At any time prior to the Closing
Date, the Corporation will not, and will not permit any Subsidiary to,
sell, assign, transfer or otherwise dispose of (except to the Corporation
or one or more wholly-owned Subsidiaries) any shares of capital stock of
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any class or series of any Subsidiary, or any other security of, or any
funded indebtedness owing to it by, any such Subsidiary.
(iii) Certain Actions. The Stockholder will cause the Corporation not
to, and the Corporation will not, at any time prior to the Closing Date,
(A) take any action or omit to take any action, which action or omission
would result in a breach of any of the representations and warranties of
the Corporation set forth in Section 3, or (B) except in connection with
the transactions related hereto which are to close simultaneously with the
Closing under this Agreement, incur any indebtedness, other than accounts
payable and other liabilities and obligations arising in the ordinary
course of the Corporation's business, consistent with past practice.
SECTION 8A. Buyer's Put Rights.
(a) Except in the event that there shall have previously occurred a
Qualifying Liquidity Event (as defined in the Corporation's Certificate of
Incorporation), on and after June 1, 2001, the Buyer may require the Corporation
to purchase all of the shares of Common Stock then owned by Buyer (including any
shares issued and/or issuable upon conversion of Preferred Stock and/or exercise
of the Warrant) for the Purchase Price (as hereinafter defined) ("Buyer's Put")
(provided, however, that if Buyer has previously had an opportunity to sell a
portion of such shares at a price equal to or greater than four hundred percent
(400%) of the then-applicable Conversion Price (as defined in the Corporation's
Certificate of Incorporation), then, at the request of the Corporation, Buyer
may execute a written waiver of its rights to exercise the Buyer's Put as to
such shares, such waiver not to be unreasonably withheld; and provided, further,
that following such waiver, such shares shall be freely transferable by the
Buyer, free of all rights of first refusal, rights of participation or other
rights of the Corporation and/or other stockholders set forth in the
Stockholders Agreement).
(b) The "Purchase Price" per share of Common Stock for purposes of the
Buyer's Put shall be equal to (x) the greater of (i) the Corporation's gross
revenues from all sources (net of applicable sales and use taxes), or (ii) six
(6) times the Corporation's combined income from its theater operations before
deduction of corporate overhead expenses (including, without limitation,
management and similar fees), interest and taxes; in each case, for the twelve
months immediately preceding the date of exercise, divided by (y) the number of
shares of Common Stock on the date of exercise issued and/or reserved for
issuance, as measured on a fully-diluted basis (i.e., assuming the exercise of
all warrants and options and the conversion of all convertible
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securities and counting as outstanding shares all outstanding phantom stock and
similar rights). The Purchase Price shall be determined by the Corporation's
then-regularly employed certified public accounting firm. In the event that the
Corporation has any additional classes of equity securities and/or rights to
purchase additional classes of equity securities outstanding on the date of
exercise, the above formula shall be appropriately adjusted by the certified
public accountants of the Corporation, acting in good faith, to take account of
the same.
(c) With respect to any exercise of Buyer's Put, at the option of the
Corporation, the aggregate Purchase Price may be paid in a lump sum or in no
greater than four (4) annual installments. The Corporation shall use its best
efforts to maximize the amount of cash which is payable to the Buyer upon
exercise of the Buyer's Put.
(i) If the Corporation elects to make any such payment in a lump sum, such
amount shall be payable in cash, within thirty (30) days of the date of any
exercise of Buyer's Put.
(ii) If the Corporation elects to make any such payment in installments, it
shall deliver to Buyer a Secured Promissory Note in a form mutually
acceptable to the Corporation and the Buyer, payable in no greater than
four (4) annual installments, with the first such installment due and
payable on the thirtieth (30th) day following the applicable date of any
exercise of Buyer's Put, and the second, third and fourth such installments
(to the extent applicable) due and payable one, two and three years after
such date, respectively. Interest shall accrue on any unpaid installments
at the "prime rate" published from time to time in the Wall Street Journal
plus six percent (6%) beginning on the date of exercise, and each
installment payment shall be accompanied by payment of all accrued and
unpaid interest up to and including the date of payment. Such note shall be
secured by the shares of Preferred Stock and/or Common Stock being
repurchased by the Corporation, and certificates representing such shares
shall be held by a mutually agreed upon escrow agent, with a pro rata
portion of such shares being released to the Corporation as and when
principal payments are made on the note. While such shares are being held
in escrow, the Buyer shall continue to be treated as the owner of such
shares for all purposes of this Agreement and any Ancillary Document
(including, but not limited to, for the purposes of exercising the rights
of a holder of Preferred Stock under the Corporation's Certificate of
Incorporation, and for the purposes of the Stockholders' Agreement and the
Management and Monitoring Fee Agreement.)
(iii) Notwithstanding the foregoing, all unpaid Purchase
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Price installments and all accrued and unpaid interest thereon shall become
immediately due and payable upon the occurrence of a Change in Control of
the Corporation (as hereinafter defined). For the purposes of this Section
8A, a Change in Control of the Corporation shall be deemed to have occurred
(A) if any person or affiliated group of persons (other than Stockholder
and/or any affiliate(s) thereof) becomes the beneficial owner of more than
50% of the combined voting securities of the Corporation or (B) upon the
sale of substantially all of the assets of the Corporation.
(d) If, on or prior to December 31, 1997, the Corporation shall
successfully close an initial public offering of Common Stock pursuant to a
registration statement under the Securities Act of 1933, as amended, the
Corporation shall thereafter have the right to terminate Buyer's rights under
this Section 8A by paying to Buyer a sum equal to the aggregate purchase price
paid to that date by Buyer for the shares of Preferred Stock and/or Common Stock
which it then holds.
SECTION 9. Survival; Indemnification.
(a) Survival. The warranties and representations of the parties hereto
shall be deemed to have been relied upon, notwithstanding any investigation made
by or on behalf of any party. Such warranties and representations shall survive
the Closing for a period of two (2) years from the Closing Date, except that the
representations and warranties contained in Section 3(m) shall survive until the
date upon which the time to assess any tax related to the operations of the
Corporation or any Subsidiary prior to the Closing ends, as such date may be
extended by consent of the Corporation and/or by operation of law.
(b) Indemnification by Corporation. The Corporation covenants and
agrees to defend, indemnify and hold harmless the Buyer, its officers,
directors, employees, agents and controlling persons (collectively, the "Buyer
Indemnitees") from and against, and pay or reimburse the Buyer Indemnitees for,
any and all claims, liabilities, obligations, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether absolute or otherwise and whether
or not resulting from third party claims), including, but not limited to,
out-of-pocket expenses and reasonable attorneys' and accountants' fees and
expenses incurred in the investigation or defense of any of the same that shall
result in the successful assertion of their respective rights hereunder
(collectively, "Losses"), resulting from or arising out of:
(i) any inaccuracy of any
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representation or warranty made by the Corporation herein or in any of
the Ancillary Documents or in connection herewith or therewith;
(ii) any failure of the Corporation to perform any covenant or
agreement hereunder or under any Ancillary Document or fulfill any
other obligation in respect hereof or of any Ancillary Document; and
(iii) any claim by any person for any finder's, broker's or other
middleman's commission or compensation in respect of the transactions
contemplated by this Agreement.
Notwithstanding the foregoing, the Corporation shall not be obligated to
indemnify any Buyer Indemnitee against any Losses until the aggregate amount of
Losses suffered by all Buyer Indemnitees hereunder exceeds $5,000, and then only
to the extent of such excess.
(c) Indemnification by Stockholder. The Stockholder covenants and
agrees to defend, indemnify and hold harmless the Buyer Indemnitees from and
against, and pay or reimburse the Buyer Indemnitees for, any and all Losses
resulting from or arising out of any inaccuracy of any representation or
warranty made by the Stockholder herein or in any of the Ancillary Documents.
(d) Indemnification by Buyer. The Buyer covenants and agrees to
defend, indemnify and hold harmless the Corporation, its officers, directors,
employees, agents and controlling persons (including the Stockholder)
(collectively, the "Corporation Indemnitees") from and against, and pay or
reimburse the Corporation Indemnitees for, any and all Losses resulting from or
arising out of:
(i) any inaccuracy of any representation or warranty made by the
Buyer herein or in any of the Ancillary Documents;
(ii) any failure of the Buyer to perform any covenant or
agreement hereunder or under any Ancillary Document or fulfill any
other obligation in respect hereof or of any Ancillary Document; and
(iii) any claim by any person for any finder's, broker's or other
middleman's commission or compensation in respect of the
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transactions contemplated by this Agreement.
Notwithstanding the foregoing, the Buyer shall not be obligated to indemnify any
Corporation Indemnitee against any Losses until the aggregate amount of Losses
suffered by all Corporation Indemnitees hereunder exceeds $5,000, and then only
to the extent of such excess.
SECTION 10. Entire Agreement; Amendments. This Agreement (and the
Schedules and Exhibits hereto, including, without limitation, the Ancillary
Documents) are intended by the parties as the final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein with
respect to the securities sold pursuant hereto. This Agreement and the Ancillary
Documents supersede all prior agreements and understandings between the parties
with respect to such subject matter hereof and thereof. No term, covenant,
agreement or condition of this Agreement may be amended, or compliance therewith
waived (either generally or in a particular instance and either retroactively or
prospectively), unless agreed to in writing by Buyer and the Corporation.
SECTION 11. Notices. All notices required or permitted hereunder shall
be in writing and shall be sufficiently given if: (a) hand delivered (in which
case the notice shall be effective upon delivery); (b) telecopied, provided that
in such case a copy of such notice shall be concurrently sent by registered or
certified mail, return receipt requested, postage prepaid (in which case the
notice shall be effective two days following dispatch); (c) delivered by Express
Mail, Federal Express or other nationally recognized overnight courier service
(in which case the notice shall be effective one business day following
dispatch); or (d) delivered or mailed by registered or certified mail, return
receipt requested, postage prepaid (in which case the notice shall be effective
three days following dispatch), to the parties at the following addresses and/or
telecopier numbers, or to such other address or number as a party shall specify
by written notice to the others in accordance with this Section 11.
If to the Corporation and/or the Stockholder:
Mr. A. Dale Mayo
President
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: 201-377-4303
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with a copy to:
Warren Colodner, Esq.
Kirkpatrick & Lockhart, LLP
1251 Avenue of the Americas
45th Floor
New York, NY 10020
Telecopier No.: 212-536-3901
If to Buyer:
MidMark Capital, L.P.
466 Southern Boulevard
Chatham, New Jersey 07928
Telecopier No.: 201-822-8911
with a copy to:
David F. Broderick, Esq.
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07101-0652
Telecopier No.: 201-624-7070
SECTION 12. Sections and Counterparts. The section headings contained
in this Agreement are for reference purposes only and shall not affect the
interpretation of this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same agreement.
SECTION 13. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware.
SECTION 14. Expenses. Whether or not the transaction contemplated
hereby shall be consummated, the Corporation shall pay all fees, costs and
expenses in connection with such transaction and in connection with any
amendments or waivers (whether or not the same become effective) under or in
respect hereof, including, without limitation, in the event that the Closing is
held, the reasonable fees and disbursements of the Buyer's counsel, accountants
and appraiser and a processing fee payable to MidMark Associates, Inc. in an
amount equal to 3% of
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all funds provided by the Buyer to the Corporation.
SECTION 15. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors, assigns, executors, administrators and personal
representatives. No party may assign its rights under this Agreement without the
written consent of the other parties except that Buyer may assign its rights and
delegate its obligations to any wholly-owned Subsidiary of Buyer.
SECTION 16. Remedies. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative of and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies by
Buyer or the Corporation shall not constitute a waiver of the right to pursue
other available remedies. The Stockholder and the Corporation acknowledge and
agree that any breach of this Agreement by such parties will result in
irreparable and continuing damage to the Buyer for which there will be no
adequate remedy at law. The Stockholder and the Corporation further acknowledge
and agree, accordingly, that the Buyer shall be entitled to injunctive relief,
specific performance and other equitable relief for such breach, or any
threatened breach, and that resort by the Buyer to any such equitable relief
shall not be deemed to waive or to limit in any respect any right or remedy
which the Buyer may have with respect to such breach or threatened breach.
SECTION 17. No Recourse to General Partner of Buyer. The Corporation
and the Stockholder agree that they shall have recourse only to the assets of
the Buyer with respect to any breach or claimed breach of this Agreement or any
Ancillary Document, and that MidMark Associates, Inc., the general partner of
the Buyer, shall have no liability with respect thereto.
SECTION 18. Definition of "Knowledge". As used herein, the "knowledge"
of any party means the actual knowledge of such party and/or its executive
officers after due inquiry.
SECTION 19. Confidentiality. In connection with the negotiation of
this Agreement, and the preparation for the consummation of the transactions
contemplated hereby, each party acknowledges that it will have access to
confidential information relating to the other party. Each party shall treat
such information as confidential, preserve the confidentiality thereof and not
duplicate or use such information, except (i) to lender, advisors, consultants
and affiliates (collectively, "Advisors") in connection with the transactions
contemplated hereby or
24
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(ii) as may be required by applicable law. In the event of the termination of
this Agreement for any reason whatsoever, each party shall return to the other
all documents, work papers and other material (including all copies thereof)
obtained in connection with the transactions contemplated hereby and shall use
all reasonable efforts including instruction its employees and others who have
had access to such information, to keep confidential and not to use any such
information, and shall use all reasonable efforts to cause its Advisors to
maintain the confidentiality thereof, unless such information is now or is
hereafter disclosed, through no act or omission of such party, in any manner
making it available to the general public.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
CLEARVIEW CINEMA GROUP, INC.
By:__________________________
Name: A. Dale Mayo
Title: President
MIDMARK CAPITAL, L.P.
By: MidMark Associates, Inc.
General Partner
By:___________________________
Name: Denis Newman
Title: President
The Stockholder:
------------------------------
A. Dale Mayo
[Schedules are not included herewith, but will be provided by
the Company upon request.]
26
Exhibit 10.26
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated
the 2nd day of July, 1996, by and among MidMark Capital, L.P., a Delaware
limited partnership ("Buyer"), Clearview Cinema Group, Inc., a Delaware
corporation (the "Corporation"), and A. Dale Mayo (the "Stockholder").
W I T N E S S E T H:
SECTION 1. Issuance and Sale of Preferred Stock and Warrant. Upon the
terms and subject to all of the conditions set forth herein, the Corporation
agrees to issue and sell to Buyer, and Buyer agrees to purchase from the
Corporation on July 2, 1996 (the "Closing Date"):
(a) Ninety-five (95) shares of Class A Convertible Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the
Corporation, having the designations, rights and preferences set forth
in the Certificate of Incorporation of the Corporation, as previously
amended by the filing with the Secretary of State of the State of
Delaware of a Certificate of Amendment in the form of Exhibit A
attached hereto; and
(b) a warrant (the "Warrant") in the form of Exhibit B
attached hereto, to purchase an aggregate of Two Hundred and
Forty-Three (243) shares of Preferred Stock and/or up to that number
of shares of common stock, par value $.01 per share ("Common Stock"),
of the Corporation into which Two Hundred and Forty-Three (243) shares
of Preferred Stock may be converted.
(c) To the extent that all or any of the warrants to
purchase 125 shares of capital stock of the Corporation which are
issuable in the event that loans in the aggregate amount of $500,000
to the Corporation are extended beyond their due dates, as such
warrants are referenced on Schedule 3(a), are actually issued, or
different and/or additional warrants are issued as a result of any
further extensions of such loan, then, with respect to each such
issuance, Buyer shall be issued (i) additional shares of Preferred
Stock equal to 50% of the sum of the shares purchasable pursuant to
such warrants, and (ii) additional Warrants, each in the form of
Exhibit B hereto, to purchase an aggregate number of shares of
Preferred Stock and/or up to that number of shares of Common Stock
into which such shares may be converted, equal to 34.4% of the sum of
the
<PAGE>
shares purchasable pursuant to such warrants. (This Section 1(c)
shall supercede Section 1(c) of the Preferred Stock and Warrant
Purchase Agreement dated May 29, 1996 by and among the parties.)
SECTION 2. Consideration for Preferred Stock and Warrant. In full
consideration for the issuance and sale of the Preferred Stock and the Warrant
by the Corporation to Buyer provided for herein, on the Closing Date Buyer shall
deliver to the Corporation the sum of Seven Hundred and Fifty Thousand Dollars
($750,000) in immediately available funds.
SECTION 3. Representations and Warranties of the Corporation and the
Stockholder. The Corporation represents and warrants that (and the Stockholder
represents and warrants, to the best of his knowledge, that):
(a) Organization; Capital Stock. The Corporation is a
corporation duly organized and existing and in good standing under the laws of
the State of Delaware and has the corporate power to carry on its business as it
is now being and contemplated to be conducted. The authorized capital stock of
the Corporation consists of 10,000 shares of Common Stock and 1,303 shares of
Preferred Stock. There are 1,367 shares of Common Stock and 684 shares of
Preferred Stock issued and outstanding which are the only shares of capital
stock of the Corporation issued and outstanding on the date hereof. All of the
issued and outstanding Common Stock of the Corporation is duly authorized,
validly issued, fully paid and non-assessable and is owned of record and, to the
best knowledge of the Corporation, beneficially by the persons, and in the
amounts, set forth on Schedule 3(a). All the issued and outstanding Common Stock
of the Corporation has been issued and sold in conformity with the requirements
of the Securities Act of 1933, as amended, and all other applicable federal and
state laws relating to the issuance and sale of securities which are applicable
to the Corporation or any holder of Common Stock. Except as set forth on
Schedule 3(a), the Stockholder owns 530 shares of Common Stock free and clear of
any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority, charge or other
security interest or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any capital lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of any
of the foregoing) (each, a "Lien"). Except as set forth on Schedule 3(a), and
except as issued pursuant to or contemporaneously with the closing under the
Preferred Stock and Warrant Purchase Agreement dated May 29, 1996 by and among
the
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parties hereto, there are no authorized, outstanding or existing:
(i) proxies, voting trusts or other agreements or
understandings with respect to the voting of any capital stock of the
Corporation;
(ii) securities convertible into or exchangeable for any
capital stock of the Corporation;
(iii) options, warrants or other rights to purchase or
subscribe for any capital stock of the Corporation, or securities convertible
into or exchangeable for any capital stock of the Corporation;
(iv) preemptive rights or rights of first refusal of any
holder of capital stock, or agreements of any kind relating to the issuance of
any capital stock of the Corporation, any such convertible or exchangeable
securities or any such options, warrants or rights; or
(v) stockholders' or similar agreements with respect to the
voting and/or transfer of capital stock, or agreements of any kind that may
obligate the Corporation to issue or purchase any of its securities.
(b) Subsidiaries. Schedule 3(b) identifies each of the
Corporation's Subsidiaries (as hereinafter defined), its jurisdiction of
incorporation and the percentage of its voting stock owned by the Corporation
and, if applicable, the Stockholder and each other Subsidiary. The Corporation
(or, if applicable, the Stockholder or Subsidiary as the case may be) is the
record and beneficial owner of all of the shares of voting stock it purports to
own of each Subsidiary and, except as set forth on Schedule 3(b), such ownership
is free and clear in each case of any Lien. All such shares have been duly
issued and are fully paid and non-assessable. No Subsidiary has any common or
preferred stock authorized or outstanding other than as set forth on Schedule
3(b) and neither the Corporation nor any Subsidiary has made or entered into any
agreement or commitment to sell or issue any securities of any Subsidiary. Each
Subsidiary is a corporation duly organized and existing and in good standing
under the laws of its state of incorporation and has the corporate power to
carry on its business as it is now being or contemplated to be conducted. The
term "Subsidiary" means any corporation, limited liability company, partnership
or other entity of which more than fifty percent (50%) of the shares of stock,
or other ownership interests having ordinary voting power (including stock or
such other ownership interests having such voting power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, limited liability company, partnership or
other
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entity, are at the time owned, directly or indirectly, through one or more
intermediaries, or both, by the Corporation.
(c) Corporate Power, etc. The Corporation and each
Subsidiary has all requisite power and authority, and all necessary licenses,
permits, franchises and other governmental authorizations necessary to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, except where the failure to do so would not have a
material adverse effect on the business, assets, financial conditions or results
of operations of the Corporation and its Subsidiaries taken as a whole.
(d) Due Authorization; No Conflict. This Agreement and each
of the Ancillary Documents (as that term is defined in Section 5(e) below) has
been duly authorized by all necessary corporate or stockholder action of the
Corporation. Neither this Agreement nor any of the transactions provided for
herein or in any Ancillary Document conflicts with or violates (i) any provision
of the Corporation's Certificate of Incorporation (as amended by the Certificate
of Amendment in the form of Exhibit A attached hereto) or By-laws, (ii) any
agreement by which the Corporation, any Subsidiary of the Corporation or the
Stockholder, or any of its or their respective properties, is bound in any
manner that, individually or in the aggregate, would have material adverse
effect on the business, assets, financial conditions or results of operations of
the Corporation and its Subsidiaries taken as a whole, (iii) any federal or
state law, rule or regulation or judicial order, or (iv) any local law, rule or
regulation in any manner that, individually or in the aggregate would have
material adverse effect on the business, assets, financial conditions or results
of operations of the Corporation and its Subsidiaries taken as a whole. This
Agreement is, and each Ancillary Document will be, when duly executed and
delivered, binding on the Corporation and the Stockholder (as the case may be),
and enforceable against the Corporation and/or against the Stockholder in
accordance with their respective terms except as may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent transfer, preference and other
laws and equitable principles affecting the scope and enforcement to creditors'
rights generally, and are also limited by Buyer's implied covenants of good
faith, fair dealing and commercially reasonable conduct, and by the effects of
judicial discretion on the availability of remedies and realization of benefits
under and enforceability of this Agreement and the Ancillary Documents in all
respects as written.
(e) Preferred Stock; Warrant. The Preferred Stock and the
Warrant to be issued and sold pursuant to Section 1 hereof, and all Common Stock
and Preferred Stock to be issued upon conversion or exercise thereof, has been
duly authorized,
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and when issued and sold by Corporation will be fully paid and non-assessable
(assuming payment by the Buyer of the consideration set forth in Section 2
hereof, or in the Warrant, as the case may be) and free and clear of any Lien,
claim or right of any other person. The Corporation has reserved for issuance a
sufficient number of shares of Common Stock and Preferred Stock as may be
required upon conversion of the Preferred Stock and exercise of the Warrant to
be issued and sold pursuant to Section 1 hereof.
(f) Financial Statements; Undisclosed Liabilities. (i) Each
of the Corporation and its Subsidiaries have, during all prior periods of their
respective existences, prepared annual financial statements in accordance with
generally accepted accounting principles ("GAAP"). The consolidated balance
sheets of the Corporation and its Subsidiaries as of December 31, 1994 and
December 31, 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal years then ended, all of
which have been certified by the Corporation's independent certified public
accountants, copies of which have been delivered to Buyer, have been prepared in
accordance with GAAP consistently applied, and present fairly the financial
position of the Corporation and its Subsidiaries as of such dates and the
results of their operations for such periods. The Corporation has also delivered
to Buyer copies of all audit or review comments and reports thereon or in
respect thereof which were received by the Corporation or any such Subsidiary
from its independent certified public accountants since the date of
incorporation of the Corporation. The Consolidated Balance Sheet of the
Corporation and Subsidiaries dated December 31, 1995 is herein called the
"Consolidated Balance Sheet," and December 31, 1995 is herein called the
"Balance Sheet Date."
(ii) Except as set forth on Schedule 3(f), as of the date hereof
the Corporation does not have any liability of any nature (matured or unmatured,
fixed contingent or otherwise) which is, individually or in the aggregate,
material to the Corporation and its Subsidiaries on a consolidated basis, and
was not reflected on the Consolidated Balance Sheet and which should, in
accordance with GAAP, have been reflected in such balance sheets or in the notes
thereto.
(g) Material Adverse Change. Except as set forth on Schedule
3(g), since the Balance Sheet Date there has not been any change in the
properties, business, prospects, results of operations or financial condition of
the Corporation or any of its Subsidiaries which, individually or in the
aggregate, has had or may reasonably be expected to have a material adverse
effect on the properties, business, prospects, results of operation or financial
condition of the Corporation and its Subsidiaries taken
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as a whole (excluding the effect, if any, of economic, political and social
conditions affecting the motion picture theater industry generally).
(h) Litigation; No Default. Except as set forth on Schedule
3(h), there are no claims, actions, suits, investigations or proceedings pending
against or affecting or, to the knowledge of the Corporation, threatened against
the Corporation, any of its Subsidiaries or any of its or their respective
officers or employees (in their capacities as such) or its or their respective
businesses, properties or assets, or the transactions contemplated by this
Agreement and the Ancillary Documents, by any person, governmental body or
agency or by any securities exchange or national securities association, nor is
there any basis known to the Corporation for any such action, suit,
investigation or proceeding, which is reasonably likely, if adversely decided,
to have a material adverse effect on the business, assets, financial conditions
or results of operations of the Corporation and its Subsidiaries taken as a
whole. There is not in existence any order, judgment or decree of any court,
governmental authority or agency or arbitration board or tribunal enjoining the
Corporation or any Subsidiary from taking, or requiring the Corporation or any
Subsidiary to take, action of any kind with respect to the business of the
Corporation or such Subsidiary. Neither the Corporation nor any Subsidiary is in
violation of any laws or governmental rules or regulations except where such
violation would not have a material adverse effect on the business, assets,
financial conditions or results of operations of the Corporation and its
Subsidiaries taken as a whole. Neither the Corporation nor any of its
Subsidiaries is in default under any contract or commitment to which it is a
party or by which its assets are bound, which default would have a material
adverse effect on the business, assets, financial conditions or results of
operations of the Corporation and its subsidiaries taken as a whole.
(i) Title to Assets. The Corporation and each Subsidiary has
good and marketable title to all the property reflected on the consolidated
balance sheet of the Corporation and Subsidiaries dated December 31, 1995 and
which the Corporation or any Subsidiary otherwise purports to own, free and
clear of all Liens, except as set forth on Schedule 3(i). Such assets, together
with the assets leased by the Corporation and Subsidiaries, are the only assets
used by the Corporation and its Subsidiaries in the conduct of their respective
businesses as presently conducted. The Corporation and its Subsidiaries enjoy
peaceful and undisturbed possession under all leases under which they are
operating, and all such leases are valid and subsisting and in full force and
effect.
(j) Trademarks, Copyrights and other Intellectual
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Properties. Schedule 3(j) sets forth a correct and complete list of all
Intellectual Properties used, held for use, or (as set forth in writing in any
document delivered to the Buyer) presently proposed to be used in the conduct of
the business of the Corporation or its Subsidiaries. "Intellectual Properties"
shall mean each and all of the following items: all United States or foreign
patents, trademarks, trade names, servicemarks, and applications for any of the
foregoing, copyrights or other author's rights, proprietary rights and data,
ideas and know-how, whether or not patentable or registrable, and any goodwill
associated with any of the foregoing whether owned or otherwise controlled by
the person or entity using, holding for use or proposing to use any of the
foregoing or whether the rights to the use thereof have been licensed to or by
such person or entity. Except as disclosed in Schedule 3(j), (i) the Corporation
owns or possesses adequate licenses or other valid rights to use (without the
making of any payment to others or the obligation to grant rights to others in
exchange) all Intellectual Properties necessary to the conduct of its business
as presently being or (as set forth in writing in any document delivered to the
Buyer) proposed to be conducted and the consummation of the transactions
contemplated hereby will not alter or impair any of such rights; (ii) the
validity of such rights and the title thereto of the Corporation have not been
questioned or challenged in any matter, nor, to the knowledge of the
Corporation, is any such challenge threatened; (iii) the conduct of the business
of the Corporation and its Subsidiaries as is now conducted or (as set forth in
writing in any document delivered to the Buyer) proposed to be conducted does
not infringe or conflict with any Intellectual Properties of others; (iv) the
Corporation knows of no use by any other party of any Intellectual Property
owned by or licensed to the Corporation; and (v) no infringement by others of
any Intellectual Properties owned by or licensed by or to the Corporation is
known to the Corporation.
(k) Material Agreements. Schedule 3(k) contains a list of
all of the material agreements, leases, licenses or sublicenses, contracts or
other agreements, arrangements, understanding and commitments, whether written
or oral (each and all of the foregoing items being referred to as "Contracts"),
to which the Corporation and/or any Subsidiary is a party. Except as set forth
in Schedule 3(k) (which may refer to other specific schedules hereto), neither
the Corporation nor any Subsidiary is a party to any material Contract.
(l) Consents. Except as set forth on Schedule 3(l), no
consent, approval or authorization of, or filing, registration or qualification
with, any governmental authority or any other person on the part of the
Corporation or any Subsidiary is required in connection with the execution,
delivery and
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performance of this Agreement or any Ancillary Document, or the offer, issue,
sale or delivery of the Preferred Stock or the warrant, or the issuance and
delivery of Common Stock upon conversion or exercise thereof.
(m) Taxes. The Corporation has delivered to Buyer copies of
all federal and state income tax returns of the Corporation or any Subsidiary in
respect of years ending on or after December 31, 1994. All income, gross
receipts, ad valorem, sales, use, franchise, property employment and other tax
returns required to be filed by the Corporation or any Subsidiary in any
jurisdiction have in fact been filed and are true and correct, and all taxes,
assessments, fees and other governmental charges upon the Corporation or any
Subsidiary of the Corporation, or upon any of their respective properties,
income or franchises, which are due and payable have been paid. The Federal
income tax returns of the Corporation and its Subsidiaries have as yet not been
audited by the Internal Revenue Service. The provisions for taxes on the books
of the Corporation and each Subsidiary are adequate for all open years, and for
its current fiscal period. Neither the Corporation nor any Subsidiary has
granted or agreed to any extension of the period of limitations with respect to
any open tax year.
(n) Employee Matters; ERISA. Schedule 3(n) sets forth a
true, correct and complete list of (i) each pension, profit-sharing, retirement,
deferred compensation, bonus or other incentive plan, or other employee benefit
plan, program, agreement or arrangement to which the Corporation or any
Subsidiary is a party or by which it is bound, or to which it contributes or in
which its employees are entitled to participate (collectively "Employee Benefit
Plans"), and (ii) each employment agreement with any officer, director or
employee to which the Corporation or any Subsidiary is a party or by which it is
bound. The present value of all benefits vested under all Employee Benefit
Plans, does not, and will not on the Closing Date, exceed the value of the
assets of the plans allocable to such vested benefits. Neither the Corporation
nor any Subsidiary has taken or omitted to take any action the taking or
omission of which would be a "prohibited transaction" or "reportable event"
under ERISA, or would otherwise constitute a breach of the fiduciary duty of the
Corporation or any Subsidiary in respect of an employee benefit plan maintained
or administered by the Corporation or any Subsidiary. There is, in respect of
the Employee Benefit Plans, no accumulated funding deficiency (whether or not
waived) and the Corporation has not taken or omitted to take any action the
taking or omission of which could jeopardize the qualification of any Employee
Benefit Plan which is a "qualified" plan within the meaning of Section 401 of
the Internal Revenue Code of 1986, as amended. Neither the Corporation nor any
Subsidiary is a party to any "Multiemployer Plan"
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as that term is defined in ERISA.
(o) Brokers and Finders. Except as set forth on Schedule
3(o), neither the Corporation nor the Stockholder has incurred any obligation or
commitment to any person which could give rise to a claim for any finder's,
broker's or other middleman's commission or compensation in respect of the
transactions contemplated by this Agreement.
(p) Use of Proceeds. The proceeds to the
Corporation from the issuance and sale of the Preferred Stock
and the Warrant shall be used by the Corporation for a
transaction involving the acquisition of movie theaters from
Bedford Cinema Corp. and Kisco Cinema, Inc.
(q) Intercompany Transactions. Schedule 3(q) sets forth all
contracts, transactions and other business arrangements between the Corporation
or any Subsidiary, on the one hand, and any stockholder, director or officer of
the Corporation or any Subsidiary, on the other hand, since January 1, 1991
(other than employment agreements and employee benefit plans involving officers
in their capacity as such). Except as set forth on Schedule 3(q), all such
contracts, transactions and other business arrangements were or are on an
arms-length basis, and have been or are on terms no less favorable to the
Corporation than would have been or could be obtained from unaffiliated third
parties.
(r) Disclosure. No representation or warranty by the
Corporation or Stockholder contained herein, nor any information, document,
statement, certificate or schedule furnished or to be furnished to Buyer in
connection herewith or with the transactions contemplated hereby, contains, or
will on the Closing Date contain, any untrue statement of a material fact or
omits, or will on the Closing Date omit, to state a material fact necessary to
make the statements contained therein, in the light of the circumstances under
which they were made, not misleading. (The parties hereby affirm their intention
that the foregoing sentence be interpreted in a manner consistent with
Securities and Exchange Commission Rule 10b-5, and disavow any intention to
expand or limit the applicability of Rule 10b-5 in this Section 3(r).) The
written projections dated December 12, 1995 prepared by Mahoney, Cohen & Co.,
CPAs, updating the earlier projections referred to therein, which were furnished
by the Corporation and/or the Stockholder to Buyer were made in good faith. The
Corporation has supplied to Buyer all information and documents requested by
Buyer in the document request list dated February 9, 1996 previously furnished
to the Corporation, a copy of which is attached hereto as Exhibit C.
SECTION 4. Representations and Warranties of Buyer.
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Buyer represents and warrants that:
(a) Organization; Corporate Power. Buyer is a limited
partnership duly organized and existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
(b) Due Authorization. This Agreement has been duly
authorized by all necessary action of Buyer. Neither this Agreement nor any of
the transactions provided for herein violates any provision of Buyer's
Certificate of Limited Partnership or Limited Partnership Agreement or any
agreement by which Buyer or any of its properties is bound. This Agreement will,
when duly executed and delivered, be binding on Buyer, and enforceable against
Buyer in accordance with its terms.
(c) Consents. No consent, approval or authorization of, or
filing, registration or qualification with, any governmental authority or other
person on the part of the Buyer is required in connection with the execution,
delivery and performance of this Agreement or the purchase of the Preferred
Stock or the Warrant, or the conversion or exercise thereof.
(d) Accredited Investor Status. Buyer is an "accredited
Investor" as defined under Regulation D promulgated under the Securities Act of
1933, as amended, and is acquiring the Preferred Stock and Warrant for its own
account for investment and not with view to, or for sale in connection with, any
distribution thereof. Buyer has no present intention of distributing or
reselling any of the Preferred Stock or Warrant.
(e) Experience of Buyer. Buyer has the experience and
sophistication necessary to evaluate the Corporation and the risks associated
with the terminations contemplated hereby and is able to sustain a loss of its
investment in the Corporation.
(f) No Reliance. In making its decisions to purchase the
Preferred Stock and Warrant, Buyer has not relied upon any representations or
warranties, express or implied, except for the representations and warranties
expressly set forth in this Agreement or in any certificate or instrument
delivered by or on behalf of the Corporation in writing in connection with the
transactions contemplated herein. To Buyer's knowledge, the Corporation has
provided the Buyer with such access to the books and records and personnel and
other representatives of the Corporation and the Subsidiaries and to such other
information as Buyer has requested in order to enable Buyer to make its
investment decision.
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SECTION 5. Conditions Precedent to Obligations of Buyer. The
obligations of Buyer under this Agreement are subject to and conditioned upon
the satisfaction at or prior to the Closing of each of the following conditions:
(a) Representations; Performance. The representations and
warranties of the Corporation and the Stockholder contained in this Agreement
and in the Ancillary Documents (i) shall be true and correct in all material
respects at and as of the date hereof, and (ii) shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date. The Corporation shall have duly performed
and complied with all agreements and conditions required by this Agreement and
each of the Ancillary Documents to be performed or complied with by it prior to
or on the Closing Date. The Corporation shall have delivered to the Buyer a
certificate, dated the Closing Date and signed by the President of the
Corporation to his knowledge to the foregoing effect and with respect to
incumbency of officers and such other matters as Buyer may reasonably request.
(b) Corporate Proceedings. All corporate and other
proceedings of the Corporation in connection with this Agreement and the
Ancillary Documents and the transactions contemplated hereby and thereby, and
all documents and instruments incident thereto, shall be reasonably satisfactory
in substance and form to the Buyer and its counsel, and the Buyer and its
counsel shall have received all such documents and instruments, or copies
thereof, certified if requested, as may be reasonably requested.
(c) Consents. All consents needed for the execution,
delivery and performance of this Agreement and each Ancillary Document shall
have been obtained.
(d) Opinion of Counsel. Buyer shall have received from
Kirkpatrick & Lockhart, LLP, counsel for the Corporation and the Stockholder, a
written opinion dated as of the Closing Date, addressed to Buyer, substantially
in the form set forth in Exhibit D.
(e) Ancillary Documents. Each of the following agreements,
instruments or documents (collectively the "Ancillary Documents") shall have
been executed and delivered, filed or adopted as the case may be and Buyer shall
have received fully executed or certified copies thereof;
(i) A copy, certified by the Secretary of the Corporation,
of the Certificate of Incorporation of the Corporation as
previously amended by the filing with the
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Secretary of State of the State of Delaware of a Certificate of
Amendment in the form of Exhibit A attached hereto;
(ii) The Warrant; and
(iii) A Portfolio Financing Report on SBA Form 1031.
(f) Legal Proceedings. There shall be no law, rule or
regulation and no order shall have been entered and not vacated by a court or
administrative agency of competent jurisdiction in any litigation, which (a)
enjoins, restrains, makes illegal or prohibits consummation of the transactions
contemplated hereby or by any Ancillary Document, (b) requires separation of a
significant portion of the assets or business of the Corporation or any
Subsidiary after the Closing or (c) restricts or interferes with, in any
material way, the operation of the Corporation or any Subsidiary or their
respective businesses or assets after the Closing, materially adversely affects
the financial condition, results of operations, properties, assets, business or
prospects of the Corporation or any Subsidiary; and there shall be no litigation
pending before a court or administrative agency of competent jurisdiction, or
threatened, seeking to do, or which, if successful, would have the effect of,
any of the foregoing.
(g) Payment of Buyer's Fees and Expenses. The fees and
expenses of the Buyer detailed in Section 14, including the 3% processing fee
payable to the general partner of Buyer, shall have been paid by the
Corporation.
(h) Closing of Certain Acquisitions. There shall have
occurred prior to or there shall occur contemporaneously with the Closing a
closing of the transactions contemplated by the Asset Purchase Agreement, dated
the date hereof, between the Corporation and certain of its wholly-owned
subsidiaries, on the one hand, and Bedford Cinema Corp. and Kisco Cinema, Inc.,
on the other hand.
SECTION 6. Conditions Precedent to Obligations of Corporation. The
obligations of the Corporation to deliver the Preferred Stock and the Warrant on
the Closing Date are subject to and conditioned upon the satisfaction at or
prior to the Closing of each of the following conditions:
(a) Representations; Performance. The representations and
warranties of the Buyer contained in this Agreement and the Ancillary Documents
(i) shall be true and correct in all material respects at and as of the date
hereof and (ii) shall be true and correct in all material respects on and as
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of the Closing Date with the same effect as though made at and as of such time.
The Buyer shall have duly performed and complied with all agreements and
conditions required by this Agreement and the Ancillary Documents to be
performed or complied with by it prior to or on the Closing Date. The Buyer
shall have delivered to the Corporation a certificate, dated the Closing Date
and signed by its duly authorized officer to his knowledge, to the foregoing
effect.
(b) Proceedings. All proceedings of the Buyer in connection
with this Agreement and the Ancillary Documents and the transactions
contemplated hereby and thereby, and all documents and instruments incident
thereto, shall be reasonably satisfactory in substance and form to the
Corporation, and its counsel, and the Corporation and its counsel shall have
received all such documents and instruments, or copies thereof, certified if
requested, as may be reasonably requested.
(c) Consents. All consents needed for the execution,
delivery and performance of this Agreement and each Ancillary Document shall
have been obtained.
(d) Opinion of Counsel. The Corporation shall have received
from McCarter & English, counsel for Buyer, a written opinion dated as of the
Closing Date, addressed to the Corporation, substantially in the form set forth
in Exhibit H.
SECTION 7. The Closing; Termination.
(a) The Closing shall be held at the offices of Kirkpatrick
& Lockhart, LLP, in New York City on the Closing Date or on such other date not
later than thirty days subsequent thereto as may be agreed upon by Buyer and the
Corporation. At the Closing, the parties hereto will execute and deliver all
documents and instruments necessary to effect the transfers provided for herein
and not theretofore effected and to evidence their respective compliance with
the provisions of this Agreement.
(b) Each of Buyer and the Corporation shall have the right,
in the event that the Closing shall not be held by October 31, 1996, and if such
failure to close shall be attributable to any cause or event other than a
failure by it to perform an action required to be performed by it pursuant to
this Agreement, to terminate this Agreement on written notice to the other.
SECTION 8. Covenants of the Corporation. The Corporation covenants and
agrees that:
(a) Affirmative Covenants.
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(i) Conduct of Business. From the date hereof to the Closing Date,
except as expressly permitted or required by this Agreement or as
otherwise consented to by the Buyer in writing, the Corporation will (i)
carry on its business in the ordinary course, consistent with past
practice, and use all reasonable efforts to preserve intact its present
business organization, maintain its properties in good operating condition
and repair, keep available the services of its present officers and
significant employees, and preserve its relationship with customers,
suppliers and others having business dealings with it, to the end that its
goodwill and going business as it exists on the date hereof shall be in
all material respects unimpaired on and after the Closing Date, (ii)
notify the Buyer of any governmental or third party complaint,
investigation or hearing (or written communication indicating that such a
complaint, investigation or hearing is or may be contemplated), and (iii)
notify the Buyer if the Corporation discovers that any representation by
the Corporation set forth in this Agreement was untrue when made or
subsequently has become untrue.
(ii) Access. At all times prior to the Closing, the Corporation will
give the Buyer, the Buyer's accountants, counsel, consultants, employees
and agents, full access, during normal business hours and upon reasonable
notice, to all documents, records, work papers and information with
respect to all of the properties, assets, books, contracts, commitments,
reports and records relating to the Corporation as the Buyer shall from
time-to-time request. In addition, the Corporation will permit the Buyer,
the Buyer's accountants, counsel, consultants, employees and agents,
reasonable access to such personnel of the Corporation and its accountants
during normal business hours and upon reasonable notice as may be
necessary or useful to the Buyer in its review of the properties, assets
and business affairs of the Corporation and the above-mentioned documents,
records and information. The Corporation will keep the Buyer generally
informed as to the affairs of the Corporation. The Corporation will also
cooperate with Buyer, in all reasonable respects, to afford Buyer with
reasonable access to the customers, suppliers and other Persons with
business relationships of the Corporation.
(iii) Public Announcements. Prior to the Closing Date, the Corporation
shall not, and it shall not
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permit any officer, director, employee or agent to, make any public
announcement, other than announcements approved by the Buyer and made by
the Corporation to its own employees, officers, directors or other
personnel, in respect of this Agreement or the transactions contemplated
hereby without the prior written consent of the Buyer.
(iv) Further Actions. (A) The Corporation agrees to use all reasonable
good faith efforts to take all actions and to do all things necessary,
proper or advisable to consummate the transactions contemplated hereby on
the Closing Date.
(B) The Corporation will, as promptly as practicable, file or supply,
or cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by the Corporation pursuant to
applicable law in connection with this Agreement, the Ancillary Documents,
the issuance and sale of the Preferred Stock and the Warrant pursuant to
this Agreement and the consummation of the other transactions contemplated
hereby and thereby.
(C) The Corporation, as promptly as practicable, will use its best
efforts to obtain, or cause to be obtained, all consents (including,
without limitation, all consents, approvals, authorizations, waivers,
permits, grants, franchises, concessions agreements, licenses, exemptions
or orders of registration, certificates, declarations or filings with, or
reports or notices with or to any governmental authority and any consent
required under any contract) necessary to be obtained in order to
consummate the issuance and sale of the Preferred Stock and the Warrant
pursuant to this Agreement and the Ancillary Documents and the consummation
of the other transactions contemplated hereby and thereby.
(D) At all times prior to the Closing, the Corporation shall promptly
notify the Buyer in writing of any fact, condition, event or occurrence
that will or may result in the failure of any of the conditions contained
in Section 5 to be satisfied, promptly upon becoming aware of the same.
(v) Further Assurances. Following the Closing, the Corporation shall
from time-to-time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions
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as shall be necessary, or otherwise reasonably requested by the Buyer, to
confirm and assure the rights and obligations provided for in this
Agreement and in the Ancillary Documents and render effective the
consummation of the transactions contemplated hereby and thereby.
(vi) Books and Records; Financial Statements. The Corporation will at
all times keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries will
be made of its transactions in accordance with generally accepted
accounting principles.
(vii) Maintenance of Existence, etc. The Corporation will at all times
do or cause to be done, and will cause each of its officers and employees
to do, all things necessary to maintain, preserve and renew its corporate
existence and the corporate existence of its Subsidiaries and all
necessary licenses, permits, franchises and other governmental
authorizations necessary to own and operate its properties and carry on
its business, and comply with, and cause each Subsidiary to comply with,
all laws applicable to the Corporation or any Subsidiary.
(viii) Insurance. The Corporation will at all times provide or cause
to be provided for itself and its Subsidiaries, insurance against loss or
damage of the kinds customarily insured against by corporations similarly
situated, with reputable insurers, in such amounts, with such deductibles
and by such methods as shall be customary for corporations similarly
situated.
(ix) Payment of Taxes. The Corporation will at all times duly pay and
discharge, and cause each Subsidiary duly and promptly to pay and
discharge, as the same become due and payable, all taxes, assessments and
governmental and other charges, levies or claims levied or imposed;
provided, however, that nothing contained in this paragraph shall require
the Corporation or any such Subsidiary to pay or discharge, or cause to be
paid and discharged, any such tax, assessment, charge, levy or claim so
long as the Corporation or such Subsidiary in good faith shall contest the
validity thereof and shall set aside on its books adequate reserves with
respect thereto.
(b) Negative Covenants.
(i) Dividends. The Corporation will not, at any
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time prior to the Closing Date (A) pay any dividends of any kind on any
shares in its capital of any class or series, (B) make any payments on
account of the purchase or other acquisition or redemption or other
retirement of any shares in its capital of any class or series or any
warrants or options to purchase any such shares, or (C) make any other
distributions of any kind in respect of any shares in its capital of any
class or series or in respect of any warrants or options.
(ii) Sale of Stock of Subsidiaries. At any time prior to the Closing
Date, the Corporation will not, and will not permit any Subsidiary to,
sell, assign, transfer or otherwise dispose of (except to the Corporation
or one or more wholly-owned Subsidiaries) any shares of capital stock of
any class or series of any Subsidiary, or any other security of, or any
funded indebtedness owing to it by, any such Subsidiary.
(iii) Certain Actions. The Stockholder will cause the Corporation not
to, and the Corporation will not, at any time prior to the Closing Date,
(A) take any action or omit to take any action, which action or omission
would result in a breach of any of the representations and warranties of
the Corporation set forth in Section 3, or (B) except in connection with
the transactions related hereto which are to close simultaneously with the
Closing under this Agreement, incur any indebtedness, other than accounts
payable and other liabilities and obligations arising in the ordinary
course of the Corporation's business, consistent with past practice.
SECTION 8A. Buyer's Put Rights.
(a) Except in the event that there shall have previously occurred
a Qualifying Liquidity Event (as defined in the Corporation's Certificate of
Incorporation), on and after June 1, 2001, the Buyer may require the Corporation
to purchase all of the shares of Common Stock then owned by Buyer (including any
shares issued and/or issuable upon conversion of Preferred Stock and/or exercise
of the Warrant) for the Purchase Price (as hereinafter defined) ("Buyer's Put")
(provided, however, that if Buyer has previously had an opportunity to sell a
portion of such shares at a price equal to or greater than four hundred percent
(400%) of the then-applicable Conversion Price (as defined in the Corporation's
Certificate of Incorporation), then, at the request of the Corporation, Buyer
may execute a written waiver of its rights to exercise the Buyer's Put as to
such shares, such waiver not to be unreasonably withheld; and provided, further,
that following such waiver, such shares shall be freely transferable
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by the Buyer, free of all rights of first refusal, rights of participation or
other rights of the Corporation and/or other stockholders set forth in the
Stockholders Agreement).
(b) The "Purchase Price" per share of Common Stock for purposes
of the Buyer's Put shall be equal to (x) the greater of (i) the Corporation's
gross revenues from all sources (net of applicable sales and use taxes), or (ii)
six (6) times the Corporation's combined income from its theater operations
before deduction of corporate overhead expenses (including, without limitation,
management and similar fees), interest and taxes; in each case, for the twelve
months immediately preceding the date of exercise, divided by (y) the number of
shares of Common Stock on the date of exercise issued and/or reserved for
issuance, as measured on a fully-diluted basis (i.e., assuming the exercise of
all warrants and options and the conversion of all convertible securities and
counting as outstanding shares all outstanding phantom stock and similar
rights). The Purchase Price shall be determined by the Corporation's
then-regularly employed certified public accounting firm. In the event that the
Corporation has any additional classes of equity securities and/or rights to
purchase additional classes of equity securities outstanding on the date of
exercise, the above formula shall be appropriately adjusted by the certified
public accountants of the Corporation, acting in good faith, to take account of
the same.
(c) With respect to any exercise of Buyer's Put, at the option of
the Corporation, the aggregate Purchase Price may be paid in a lump sum or in no
greater than four (4) annual installments. The Corporation shall use its best
efforts to maximize the amount of cash which is payable to the Buyer upon
exercise of the Buyer's Put.
(i) If the Corporation elects to make any such payment in a lump sum, such
amount shall be payable in cash, within thirty (30) days of the date of any
exercise of Buyer's Put.
(ii) If the Corporation elects to make any such payment in installments, it
shall deliver to Buyer a Secured Promissory Note in a form mutually
acceptable to the Corporation and the Buyer, payable in no greater than
four (4) annual installments, with the first such installment due and
payable on the thirtieth (3Oth) day following the applicable date of any
exercise of Buyer's Put, and the second, third and fourth such installments
(to the extent applicable) due and payable one, two and three years after
such date, respectively. Interest shall accrue on any unpaid installments
at the "prime rate" published from time to time in the Wall Street Journal
plus six percent (6%) beginning on the date of exercise, and each
installment payment shall be accompanied by payment of all accrued and
unpaid interest
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up to and including the date of payment. Such note shall be secured by the
shares of Preferred Stock and/or Common Stock being repurchased by the
Corporation, and certificates representing such shares shall be held by a
mutually agreed upon escrow agent, with a pro rata portion of such shares
being released to the Corporation as and when principal payments are made
on the note. While such shares are being held in escrow, the Buyer shall
continue to be treated as the owner of such shares for all purposes of this
Agreement and any Ancillary Document (including, but not limited to, for
the purposes of exercising the rights of a holder of Preferred Stock under
the Corporation's Certificate of Incorporation, and for the purposes of the
Stockholders' Agreement and the Management and Monitoring Fee Agreement.)
(iii) Notwithstanding the foregoing, all unpaid Purchase Price installments
and all accrued and unpaid interest thereon shall become immediately due
and payable upon the occurrence of a Change in Control of the Corporation
(as hereinafter defined). For the purposes of this Section 8A, a Change in
Control of the Corporation shall be deemed to have occurred (A) if any
person or affiliated group of persons (other than Stockholder and/or any
affiliate(s) thereof) becomes the beneficial owner of more than 50% of the
combined voting securities of the Corporation or (B) upon the sale of
substantially all of the assets of the Corporation.
(d) If, on or prior to December 31, 1997, the Corporation shall
successfully close an initial public offering of Common Stock pursuant to a
registration statement under the Securities Act of 1933, as amended, the
Corporation shall thereafter have the right to terminate Buyer's rights under
this Section 8A by paying to Buyer a sum equal to the aggregate purchase price
paid to that date by Buyer for the shares of Preferred Stock and/or Common Stock
which it then holds.
SECTION 9. Survival; Indemnification.
(a) Survival. The warranties and representations of the parties
hereto shall be deemed to have been relied upon, notwithstanding any
investigation made by or on behalf of any party. Such warranties and
representations shall survive the Closing for a period of two (2) years from the
Closing Date, except that the representations and warranties contained in
Section 3(m) shall survive until the date upon which the time to assess any tax
related to the operations of the Corporation or any Subsidiary prior to the
Closing ends, as such date may be extended by consent of the Corporation and/or
by operation of law.
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<PAGE>
(b) Indemnification by Corporation. The Corporation covenants and
agrees to defend, indemnify and hold harmless the Buyer, its officers,
directors, employees, agents and controlling persons (collectively, the "Buyer
Indemnitees") from and against, and pay or reimburse the Buyer Indemnitees for,
any and all claims, liabilities, obligations, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether absolute or otherwise and whether
or not resulting from third party claims), including, but not limited to,
out-of-pocket expenses and reasonable attorneys' and accountants' fees and
expenses incurred in the investigation or defense of any of the same that shall
result in the successful assertion of their respective rights hereunder
(collectively, "Losses"), resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by the
Corporation herein or in any of the Ancillary Documents or in
connection herewith or therewith;
(ii) any failure of the Corporation to perform any covenant or
agreement hereunder or under any Ancillary Document or fulfill any
other obligation in respect hereof or of any Ancillary Document; and
(iii) any claim by any person for any finder's, broker's or other
middleman's commission or compensation in respect of the transactions
contemplated by this Agreement.
Notwithstanding the foregoing, the Corporation shall not be obligated to
indemnify any Buyer Indemnitee against any Losses until the aggregate amount of
Losses suffered by all Buyer Indemnitees hereunder exceeds $5,000, and then only
to the extent of such excess.
(c) Indemnification by Stockholder. The Stockholder covenants and
agrees to defend, indemnify and hold harmless the Buyer Indemnitees from and
against, and pay or reimburse the Buyer Indemnitees for, any and all Losses
resulting from or arising out of any inaccuracy of any representation or
warranty made by the Stockholder herein or in any of the Ancillary Documents.
(d) Indemnification by Buyer. The Buyer covenants and agrees to
defend, indemnify and hold harmless the Corporation, its officers, directors,
employees, agents and controlling persons (including the Stockholder)
(collectively, the "Corporation Indemnitees") from and against, and pay or
reimburse
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<PAGE>
the Corporation Indemnitees for, any and all Losses resulting from or arising
out of:
(i) any inaccuracy of any representation or warranty made by the
Buyer herein or in any of the Ancillary Documents;
(ii) any failure of the Buyer to perform any covenant or
agreement hereunder or under any Ancillary Document or fulfill any
other obligation in respect hereof or of any Ancillary Document; and
(iii) any claim by any person for any finder's, broker's or other
middleman's commission or compensation in respect of the transactions
contemplated by this Agreement.
Notwithstanding the foregoing, the Buyer shall not be obligated to indemnify any
Corporation Indemnitee against any Losses until the aggregate amount of Losses
suffered by all Corporation Indemnitees hereunder exceeds $5,000, and then only
to the extent of such excess.
SECTION 10. Entire Agreement; Amendments. This Agreement (and the
Schedules and Exhibits hereto, including, without limitation, the Ancillary
Documents) are intended by the parties as the final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein with
respect to the securities sold pursuant hereto. This Agreement and the Ancillary
Documents supersede all prior agreements and understandings between the parties
with respect to such subject matter hereof and thereof. No term, covenant,
agreement or condition of this Agreement may be amended, or compliance therewith
waived (either generally or in a particular instance and either retroactively or
prospectively), unless agreed to in writing by Buyer and the Corporation.
SECTION 11. Notices. All notices required or permitted hereunder shall
be in writing and shall be sufficiently given if: (a) hand delivered (in which
case the notice shall be effective upon delivery); (b) telecopied, provided that
in such case a copy of such notice shall be concurrently sent by registered or
certified mail, return receipt requested, postage prepaid (in which case the
notice shall be effective two days following dispatch); (c) delivered by Express
Mail, Federal Express or other nationally recognized overnight courier service
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<PAGE>
(in which case the notice shall be effective one business day following
dispatch); or (d) delivered or mailed by registered or certified mail, return
receipt requested, postage prepaid (in which case the notice shall be effective
three days following dispatch), to the parties at the following addresses and/or
telecopier numbers, or to such other address or number as a party shall specify
by written notice to the others in accordance with this Section 11.
If to the Corporation and/or the Stockholder:
Mr. A. Dale Mayo
President
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: 201-377-4303
with a copy to:
Warren Colodner, Esq.
Kirkpatrick & Lockhart, LLP
1251 Avenue of the Americas
45th Floor
New York, NY 10020
Telecopier No.: 212-536-3901
If to Buyer:
MidMark Capital, L.P.
466 Southern Boulevard
Chatham, New Jersey 07928
Telecopier No.: 201-822-8911
with a copy to:
David F. Broderick, Esq.
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07101-0652
Telecopier No.: 201-624-7070
SECTION 12. Sections and Counterparts. The section headings contained
in this Agreement are for reference purposes only and shall not affect the
interpretation of this Agreement.
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<PAGE>
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute the same
agreement.
SECTION 13. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware.
SECTION 14. Expenses. Whether or not the transaction contemplated
hereby shall be consummated, the Corporation shall pay all fees, costs and
expenses in connection with such transaction and in connection with any
amendments or waivers (whether or not the same become effective) under or in
respect hereof, including, without limitation, in the event that the Closing is
held, the reasonable fees and disbursements of the Buyer's counsel, accountants
and appraiser and a processing fee payable to MidMark Associates, Inc. in an
amount equal to 3% of all funds provided by the Buyer to the Corporation.
SECTION 15. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors, assigns, executors, administrators and personal
representatives. No party may assign its rights under this Agreement without the
written consent of the other parties except that Buyer may assign its rights and
delegate its obligations to any wholly-owned Subsidiary of Buyer.
SECTION 16. Remedies. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative of and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more remedies by
Buyer or the Corporation shall not constitute a waiver of the right to pursue
other available remedies. The Stockholder and the Corporation acknowledge and
agree that any breach of this Agreement by such parties will result in
irreparable and continuing damage to the Buyer for which there will be no
adequate remedy at law. The Stockholder and the Corporation further acknowledge
and agree, accordingly, that the Buyer shall be entitled to injunctive relief,
specific performance and other equitable relief for such breach, or any
threatened breach, and that resort by the Buyer to any such equitable relief
shall not be deemed to waive or to limit in any respect any right or remedy
which the Buyer may have with respect to such breach or threatened breach.
SECTION 17. No Recourse to General Partner of Buyer. The Corporation
and the Stockholder agree that they shall have recourse only to the assets of
the Buyer with respect to any breach or claimed breach of this Agreement or any
Ancillary
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<PAGE>
Document, and that MidMark Associates, Inc., the general partner of the Buyer,
shall have no liability with respect thereto.
SECTION 18. Definition of "Knowledge". As used herein, the "knowledge"
of any party means the actual knowledge of such party and/or its executive
officers after due inquiry.
SECTION 19. Confidentiality. In connection with the negotiation of
this Agreement, and the preparation for the consummation of the transactions
contemplated hereby, each party acknowledges that it will have access to
confidential information relating to the other party. Each party shall treat
such information as confidential, preserve the confidentiality thereof and not
duplicate or use such information, except (i) to lender, advisors, consultants
and affiliates (collectively, "Advisors") in connection with the transactions
contemplated hereby or (ii) as may be required by applicable law. In the event
of the termination of this Agreement for any reason whatsoever, each party shall
return to the other all documents, work papers and other material (including all
copies thereof) obtained in connection with the transactions contemplated hereby
and shall use all reasonable efforts including instruction its employees and
others who have had access to such information, to keep confidential and not to
use any such information, and shall use all reasonable efforts to cause its
Advisors to maintain the confidentiality thereof, unless such information is now
or is hereafter disclosed, through no act or omission of such party, in any
manner making it available to the general public.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
CLEARVIEW CINEMA GROUP, INC.
By:__________________________
Name: A. Dale Mayo
Title: President
MIDMARK CAPITAL, L.P.
By: MidMark Associates, Inc.
General Partner
By:___________________________
Name: Denis Newman
Title: President
The Stockholder:
------------------------------
A. Dale Mayo
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
CLEARVIEW CINEMA GROUP, INC.
By:__________________________
Name: A. Dale Mayo
Title: President
MIDMARK CAPITAL, L.P.
By: MidMark Associates, Inc.
General Partner
By:___________________________
Name: Denis Newman
Title: President
The Stockholder:
------------------------------
A. Dale Mayo
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
CLEARVIEW CINEMA GROUP, INC.
By:__________________________
Name: A. Dale Mayo
Title: President
MIDMARK CAPITAL, L.P.
By: MidMark Associates, Inc.
General Partner
By:___________________________
Name: Denis Newman
Title: President
The Stockholder:
------------------------------
A. Dale Mayo
[Schedules are not included herewith, but will be provided by
the Company upon request.]
-25-
Exhibit 10.27
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Agreement") is made and entered into as of May 29,
1996, by and between CLEARVIEW CINEMA GROUP, INC., a Delaware corporation (the
"Company"), and THE PROVIDENT BANK, an Ohio banking corporation ("Holder" and
sometimes referred to as the "Initial Holder").
WHEREAS, the Initial Holder, Company and various lenders and other
financial institutions as described therein are parties to a certain Credit
Agreement dated as of even date herewith, as the same may be amended or
supplemented from time to time (the "Credit Agreement"); and
WHEREAS, as a condition to the obligations of the Initial Holder under the
Credit Agreement, the Company is required to (a) enter into this Agreement, and
(b) issue Warrants (as defined below) to the Initial Holder to purchase certain
shares of Common Stock (as defined below) upon an exercise of said warrants at
the price and upon the terms and conditions specified herein and therein. The
Holder is entitled to receive on the date hereof two warrants to purchase 73
shares of the Common Stock in the aggregate (the "Initial Warrants") (said
Initial Warrants issued by the Company to the Initial Holder, its successors and
assigns including any Holder (as defined below), pursuant hereto or pursuant to
any of said warrants, whether upon transfer, exchange or replacement thereof or
otherwise, being hereinafter referred to collectively as the "Warrants", and
each individually as a "Warrant");
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the following
terms shall have the following respective meanings:
"Adjusted EBITDA Base" shall mean, for any period, the EBITDA Base for such
period adjusted to include the EBITDA Base attributable to (a) theaters acquired
by the Company or any of its subsidiaries during such period (including theaters
acquired as a result of the acquisition by the Company or any of its
subsidiaries of a subsidiary or subsidiaries during such period), and (b)
theaters constructed by the Company during such period to the extent
certificates of occupancy have been issued and such theaters are open for
business as of the last day of such period, as if such theaters were owned and
open for business throughout the entire period. For purposes of computing
Adjusted EBITDA Base, the EBITDA Base attributable to any theater constructed
(and opened) or acquired during such period (for the portion of such period
prior to the opening of such theater) shall be the EBITDA Base set forth in the
projections (for the first full year of the operation) of EBITDA Base for such
theater presented to the Board of Directors of the Company in connection with
its approval of the construction or acquisition of such theater.
<PAGE>
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"Applicable Holders" shall mean (i) in the case of a registration pursuant
to Section 6 hereof, those Holders signing a Request who desire to register and
sell some or all of their Warrant Stock pursuant to such Request, together with
any additional Holders who, not later than fifteen (15) days after receipt of
notice of a Request, elect in writing to Company to join in such Request, or
(ii) in the case of a registration pursuant to the Stockholders Agreement, those
Holders requesting inclusion of Warrant Stock in such registration and whose
Warrant Stock will be included in such registration.
"Appraised Value" shall mean the fair market value of the Company's Common
Stock as determined by an investment banking firm selected by the Holder and
reasonably acceptable to the Company; provided, however, that if the Holder and
the Company cannot agree on such investment banking firm, fair market value
shall be determined by averaging the fair market value of the Company as
determined by (a) an independent investment banking firm selected by the
Company, (b) an independent investment banking firm selected by the Holder, and
(c) an independent investment banking firm selected by the investment banking
firms selected by the Company and Holder. Each such appraisal shall be made at
the Company's expense.
"Capital Lease" means any lease of property which has been or is required
to be classified and accounted for as a capital lease obligation on the
Company's financial statements in accordance with GAAP.
"Capital Transaction" shall mean any of the following: (i) one or more
mergers, consolidations, liquidations of the Company, the liquidation of any
subsidiary of the Company that constitutes more than fifteen percent (15%) of
the assets of the Company or other similar corporate actions pursuant to which
the Company or the Holders of Warrant Stock receive cash, securities or other
property; (ii) at least a majority of the common equity of the Company or
capital stock of the Company possessing the voting power to elect a majority of
the directors is sold; and (iii) a registration statement with respect to the
common equity of the Company shall be filed under the Securities Act other than
as a consequence of an exercise of demand registration rights pursuant to the
Stockholders Agreement.
"Certificate of Applicable Holders" shall mean (i) in the case of a
registration pursuant to Section 6 hereof, a resolution signed by the Holders of
a majority of the Warrant Stock designated in a particular Request and certified
by an officer of the Holder, or (ii) in the case of a registration pursuant to
the Stockholders Agreement, a resolution signed by the Holders of a majority of
the Warrant Stock that will be or were included in such registration.
"Commission" shall mean the United States Securities and Exchange
Commission and any successor federal agency having similar powers.
"Common Stock" shall mean the common stock of the Company, par value $0.01
per share.
<PAGE>
-3-
"Company Documents" shall mean this Agreement and the Warrants, as any of
the same may be amended, modified, supplemented or restated from time to time.
"Convertible Securities" shall mean evidence of indebtedness, shares of
stock or other securities which are directly or indirectly convertible into or
exchangeable for, with or without payment of additional consideration, shares of
Stock, either immediately or upon the arrival of a specified date or the
happening of a specified event.
"EBITDA Base" means, for the trailing twelve (12) months of the Company as
determined by reference to the most recently available unaudited income
statement of the Company (or the audited financial statements in the case of
periods constituting a full fiscal year), prepared in accordance with GAAP for
the period ended as of the last day of the month ended immediately prior to the
date the Formula Value is being determined, the remainder of (a) all revenue of
the Company and its Subsidiaries during such period derived from theaters owned,
leased or operated by the Company and its Subsidiaries, including, without
limitation, ticket revenue, advertising revenue and revenue from concession
sales, minus (b) the direct "theater level" cash operating expenses incurred by
the Company and its Subsidiaries during such period in connection with the
ownership, leasing and operation of movie theaters owned, leased or operated by
the Company and its Subsidiaries during such period. As used herein, "theater
level" cash operating expenses shall expressly exclude, without limitation,
corporate overhead charges, executive officer compensation, general and
administrative expenses and other expenses not directly related to the
ownership, leasing or operation of individual movie theaters.
"Entity Value" shall mean the greatest of (a) the fair market value of the
Company or any successor thereto as established as of any Capital Transaction,
(b) the Formula Value, or (c) the Appraised Value.
"Exercise Price" of a share of Stock issuable upon the exercise of a
Warrant shall mean $0.01.
"Formula Value" shall mean the value of the Company as established by the
following formula: 6.5 x Adjusted EBITDA Base for the trailing twelve (12)
months as determined by reference to the unaudited income statement most
recently available of the Company (or the audited financial statements in the
case of months constituting the fiscal year), prepared in accordance with GAAP
(subject, in the case of interim financial statements, to normal year end
adjustments), for the period ended as of the last day of the month ending
immediately prior to the date the Formula Value is being determined, less funded
debt and preferred stock of the Company on any day of calculation, plus cash on
any day of calculation held by the Company.
"GAAP" shall mean generally accepted accounting principles in the United
States at the time in effect.
"Holder" and "Holders" shall mean the Initial Holder and its registered
successors and permitted assigns of the Warrants and of the Stock exchanged for
the Warrants pursuant to this Agreement.
<PAGE>
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"Indebtedness for Borrowed Money" means at any particular time, all
indebtedness (a) in respect of any money borrowed; (b) under or in respect of
any contingent obligation (whether direct or indirect) of any money borrowed;
(c) evidenced by any loan or credit agreement, promissory note, debenture, bond,
guaranty or other similar written obligation to pay money; or (d) under any
Capital Lease obligations.
"Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.
"Lien" means any lien, mortgage, pledge, security interest, charge or other
encumbrance of any kind including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest.
"Official Body" shall mean any governmental or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Outstanding Common Stock" shall mean the total number of outstanding
shares of Common Stock of the Company on a fully diluted basis, including,
without limitation, all shares which may be issued pursuant to all outstanding
Convertible Securities, the Warrants, warrants, Options or agreements of any
nature.
"Person" shall include an individual, a company, a corporation, an
association, a partnership, a joint venture, an unincorporated trade or business
enterprise, a trust, an estate, or other legal entity or a government (national,
regional or local), court, arbitrator or any agency, instrumentality or official
of the foregoing.
"Put Exercise Date" shall mean the earliest to occur of (a) April 30, 1999,
(b) the occurrence of an Event of Default under the Credit Agreement, (c) a
Public Offering, (d) prepayment in full of the Term Loans, or (e) the
consummation of any Capital Transaction.
"Put Price" shall have the meaning attributed to it in Section 5.2.
"Public Offering" shall mean any underwritten public offering of the Common
Stock.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering of the effectiveness of such registration
statement.
"Stock" shall mean (i) all classes and categories of the capital stock of
the Company whether then issued or issuable, including without limitation, any
shares of Common Stock and (ii) any shares of Common Stock issued or issuable
with respect to the Common Stock by way of
<PAGE>
-5-
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Stockholders Agreement" means the Stockholders and Registration Rights
Agreement dated dated as of May 29, 1996, entered into among the Company and the
other parties thereto.
"Warrant Stock" shall mean Common Stock issuable upon exercise of the
Warrant in accordance with its terms and any capital stock or other securities
into which or for which such Common Stock shall have been converted or exchanged
pursuant to any recapitalization, reorganization or merger of the Company.
2. WARRANT PURCHASE; ANTIDILUTION.
2.1 Warrant Purchase.
(a) Contemporaneously with the execution of this Agreement, the
Company shall issue to the Initial Holder the Initial Warrants in the forms
attached hereto as Exhibit A, evidencing the Initial Holder's right to
purchase seventy-three (73) shares of Common Stock (in the aggregate) at
the Exercise Price (as defined in the Warrant).
(b) On a fully diluted basis, the number of shares issuable pursuant
to (a) above shall be calculated as of the date of this Agreement taking
into account all authorized shares of Common Stock, all outstanding shares
of Common Stock, plus all shares of Common Stock which the Company is
obligated to issue at the time or in the future by any outstanding warrant,
option, convertible security or other agreement of any nature.
2.2 No Voting Rights. This Agreement shall not entitle any Holder to any
voting rights or other rights as a shareholder of the Company, and no dividend
or interest shall be payable or accrued in respect of the Warrant or this
Agreement or the interest represented hereby or the shares of Warrant Stock
which may be purchased hereunder until and unless, and except to the extent
that, a Holder has duly exercised its rights under any Warrant issued to such
Holder or its predecessor in interest and such Holder has been issued shares of
Warrant Stock. The Company shall thereupon treat such Holder (or its designee)
as the record owner of the shares of Warrant Stock obtained by such exercise for
voting and all other purposes.
2.3 Good Faith by Company. The Company will not, by amendment to its
Certificate of Incorporation or through any reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, issue or sale of securities
or other action, avoid or seek to avoid the observance or performance of any of
the terms of this Agreement, but will at all times in good faith carry out all
such terms and take all such action as may be necessary or appropriate to
protect the rights of the Holders hereunder.
2.4 Term. This Agreement shall terminate seven (7) years from the date
hereof.
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3. REPRESENTATIONS AND WARRANTIES OF HOLDERS; RESTRICTIONS ON
TRANSFERABILITY.
3.1 The Initial Holder hereby represents and warrants to the Company as set
forth in this Section 3.1 and each Holder other than the Initial Holder shall,
upon its acquisition of a Warrant, be deemed to represent and warrant to the
Company (severally and not jointly) as set forth in this Section 3.1. In
addition, the representations and warranties set forth in this Section 3.1 shall
be deemed to be remade by a Holder from time to time to the Company as of the
date a Warrant is exercised by such Holder.
(a) Authorization.
(i) Authorization and Compliance With Law. The execution and delivery
of this Agreement by the Holder, and any exercise or exchange of such
Holder's Warrant pursuant to the terms hereof or thereof, have been duly
authorized by all necessary action, corporate and otherwise, on the part of
the Holder. The entry into this Agreement by the Holder, the acquisition
and ownership of the Warrant issued to such Holder and the exercise or
exchange of such Warrant pursuant to the terms hereof and thereof do not
and will not violate any Law applicable to such Holder.
(ii) Approvals. No authorization, consent, approval, license or filing
with any third party or any Official Body is or will be necessary for the
valid execution, delivery or performance of this Agreement by the Holder,
the acquisition and ownership of the Warrant issued to the Holder or the
exercise or exchange of such Warrant pursuant to the terms hereof or
thereof.
(b) Investment Representations.
(i) No Distributive Intent; Restricted Securities. The Holder is
acquiring the Warrant issued to it and, if applicable, the Warrant Stock
(all of which shall be collectively referred to in this Section 3 as the
"Securities" and singly, by type, as a "Security") for its own account with
no present intention of reselling or otherwise distributing any such
Security or participating in a distribution of such Securities in violation
of the Securities Act, or any applicable state securities laws. The Holder
acknowledges that it has been advised and is aware that (A) the Company is
relying upon an exemption from registration under the Securities Act and
applicable state securities laws predicated upon such Holder's
representations and warranties contained in this Section 3.1 in connection
with the issuance of such Securities pursuant to this Agreement, and (B)
such Securities in the hands of the Holder will be "restricted securities"
within the meaning of Rule 144 promulgated by the Commission pursuant to
the Securities Act and, unless and until registered under the Securities
Act, will be subject to limitations on resale (including, among others,
limitations on the amount of securities that can be resold and the timing
and manner of resale) set forth in Rule 144 or in administrative
interpretations of the Securities Act by the Commission or in other rules
and regulations promulgated
<PAGE>
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thereunder by the Commission, in effect at the time of the proposed sale or
other disposition of the Securities.
(ii) Compliance with Law Upon Transfer. To the extent that the Holder
is entitled to transfer or pledge any of the Securities, the Holder will
not transfer or pledge any of such Securities in violation of the
Securities Act or any other applicable Laws, and in the event the Holder
pledges or transfers any of such Securities it will advise the pledgee or
transferee of the transfer restrictions imposed on such Securities.
(iii) No Commission. No outside parties have participated with respect
to the negotiation of this transaction on behalf of the Holder, and the
Holder shall indemnify and hold the Company harmless with respect to any
claim for any broker's or finder's fees or commissions with respect to the
transactions contemplated hereby by anyone found to have been acting on
behalf of the Holder with the Holder's consent.
(c) Execution and Binding Effect. This Agreement has been duly and
validly executed and delivered by such Holder and constitutes legal, valid
and binding obligations of such Holder, enforceable against such Holder in
accordance with its terms.
3.2 Restrictions on Transferability.
(a) Transfer of Stock; Registration Rights. The shares of stock
issuable upon the exercise of this Warrant shall be subject to the
Stockholders Agreement, including, but not limited to the restrictions upon
transfer contained therein. On or after May 29, 1998, the holder or holders
of the Warrant Stock together may request the registration of at least 51%
of the shares of Warrant STock pursuant to the terms and conditions set
forth in Section 3.2(a) of the Stockholders Agreement, provided, however,
that in no case may more than one such request be made. Any certificate for
such shares of Common Stock issued upon the exercise of this Warrant shall
bear an appropriate legend describing the foregoing restriction.
(b) Securities Law Transfer Restrictions. By taking and holding this
Warrant, the Holder (i) acknowledges that neither this Warrant nor any
shares of Common Stock issuable upon the exercise of this Warrant have been
registered under the Securities Act or any applicable state securities or
blue sky law (collectively, the "Acts"); and (ii) agrees not to sell,
transfer or otherwise dispose of this Warrant or any such shares of Common
Stock without such registration unless the sale, transfer or disposition
can be effected without such registration and in compliance with the Acts.
Any certificate for shares of Common Stock issued upon exercise of this
Warrant shall bear an appropriate legend describing the foregoing
restrictions.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
<PAGE>
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4.1 Representations and Warranties. The Company hereby acknowledges and
affirms each of the representations and warranties made by it in the Credit
Agreement as set forth in Article 5 thereof, which representations and
warranties are specifically incorporated herein by reference. The Company hereby
further represents and warrants to the Initial Holder and any other Holder of
any of the Warrants as set forth in this Section 4.1 that as of the date hereof:
(a) The Company has the requisite corporate power and authority to (i)
execute and deliver this Agreement and the Warrants, (ii) issue, sell and
deliver the Warrants and the Warrant Stock; and (iii) carry out and perform the
provisions of this Agreement and the Warrants.
(b) The (i) execution and delivery by the Company of this Agreement and the
Warrants, (ii) performance of all obligations of the Company hereunder and
thereunder, (iii) issuance, sale and delivery of the Warrants and (iv) issuance
and delivery of the Warrant Stock, have been duly authorized by all requisite
corporate action on the part of the Company, its officers, directors and
stockholders, and have not and will not violate any provision of applicable law,
any order of any court or other agency of government, the Certificate of
Incorporation of the Company, as amended or supplemented from time to time (the
"Charter"), or the By-Laws of the Company, as amended from time to time (the
"By-Laws"), or any provision of any indenture, agreement or other instrument to
which the Company, or any of its respective properties or assets is bound, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any Lien, upon any of the properties
or assets of the Company.
(c) The Warrant Stock, when issued, sold and delivered in accordance with
the terms of this Agreement for the consideration herein expressed, will be duly
and validly issued, fully paid and nonassessable shares of Common Stock, with no
personal liability attaching to the ownership thereof and will be free and clear
of all Liens imposed by or through the Company, except as set forth herein. The
Warrants, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration herein expressed, will be duly and validly
issued, free and clear of all Liens imposed by or through the Company, except as
herein provided. The Warrant Stock has been duly and validly reserved for
issuance. Neither the issuance, sale or delivery of the Warrants, nor the
issuance or delivery of the Warrant Stock is subject to any preemptive right of
stockholders of the Company or any subsidiary thereof or to any right of first
refusal or other right in favor of any person, except as herein provided.
(d) This Agreement and the Initial Warrants have been duly executed and
delivered by the Company and, assuming the execution and delivery of such
agreements by the Initial Holder, constitute the legal valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as their enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or other laws affecting the enforcement of creditors' rights
generally, or by general equitable principles.
(e) Subject to the accuracy of the representations and warranties of the
Initial Holder set forth in Section 3.1 hereof, no registration or filing with,
or consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be
<PAGE>
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necessary for (a) the valid execution, delivery and performance by the Company
of this Agreement and the Warrants, (b) the issuance, sale and delivery of the
Warrants, and (c) upon exercise thereof the issuance and delivery of the Warrant
Stock.
4.2 Board Observation Rights. The Company shall give the Holder notice of
each meeting of its board of directors and the Holder shall have the right to
attend any such meetings as it may, in its discretion, desire
5. PUT OF WARRANTS AND STOCK; RIGHT OF FIRST REFUSAL; BRING/COME ALONG
RIGHTS.
5.1 Put Rights. On or at any time after the Put Exercise Date, each Holder
shall have the right to "put" to the Company all or any part of its Warrant or
the Warrant Stock obtained or obtainable by the Holder through the exercise of
its Warrants subject to applicable law and any restriction set forth in the
Credit Agreement. The Company shall, within thirty (30) days following the later
of receipt of a written notice that the Holder intends to exercise its put
rights hereunder or the date the parties reach agreement on the Put Price (but
in no event later than ninety (90) days after the date of such notice), purchase
the Warrants (or portion thereof) or the Warrant Stock being sold by the Holder
for the Put Price calculated in accordance with Section 5.3 out of funds legally
available therefore, if any.
5.2 Call Rights. At any time after the first anniversary of the Put
Exercise Date, the Company shall have the right to "call" from the Holder all or
any part of its Warrant or the Warrant Stock obtained or obtainable by the
Holder through the exercise of its Warrant subject to applicable law. The Holder
shall, within thirty (30) days following the later of receipt of a written
notice that the Company intends to exercise its call rights hereunder on the
date the parties reach agreement on the Call Price (but in not event later than
ninety (90) days after the date of such notice), purchase the Warrants (or
portion thereof) or the warrant stock being sold by the Holder for the Call
Price (as hereinafter defined) calculated in accordance with Section 5.3 out of
funds legally available therefore, if any.
5.3 Put Price and Call Price. Upon exercise of the put rights set forth in
Section , the purchase price ("Put Price") and upon exercise of the call rights
set forth in Section 5.2, the purchase price (the "Call Price") (a) for each
share of Warrant Stock being put or called shall equal the Entity Value of the
Company as defined herein divided by the total number of shares of Outstanding
Common Stock, and (b) for each Warrant being put or called shall equal (x) the
price per share determined pursuant to clause (a) above multiplied by the number
of shares of Warrant Stock which such Warrant entitles the Holder thereof to
purchase, minus (y) the Purchase Price per share of Warrant Stock multiplied by
the number of shares of Warrant Stock which such Warrant entitles the Holder
thereof to purchase.
5.4 Default. If the Company shall, for any reason other than restrictions
under applicable law or under the Credit Agreement, fail to pay in full the Put
Price or Call Price (or any portion thereof) or the Warrant Stock being sold by
the Holder pursuant to Sections 5.1, 5.2 and 5.3 when such amount is due and
payable in accordance with such Section (the "Due Date"), the
<PAGE>
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Company shall pay to such Holder, on demand, in immediately available funds, an
amount equal to the sum of (i) the unpaid amount of the Put Price or Call Price
due to such Holder on the Due Date (the "Unpaid Portion") plus (ii) interest on
such Unpaid Portion from the Due Date, computed on a daily basis and on the
basis of a 360-day year, through the date upon which demand is made pursuant to
this Section (the "Demand Date"), at a rate per annum equal to Eighteen Percent
(18%) per annum.
Until such time as the Put Price or Call Price for each unrepurchased share
of Warrant Stock has been paid in full in cash, the Holder of such unrepurchased
Warrant Stock shall be entitled to retain legal and beneficial ownership of such
unrepurchased Stock and to exercise all rights with respect to such
unrepurchased Warrant Stock under this Agreement.
6. RULE 144.
At all times following completion by the Company of its Initial Public
Offering, the Company shall take such action as any holder of Warrant Stock may
reasonably request, all to the extent required from time to time to enable such
Holder to sell shares of its Warrant Stock without registration under the Act
pursuant to and in accordance with (x) Rule 144 under the Act, as such Rule may
be amended from time to time, or (y) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
7. AMENDMENTS AND WAIVERS.
This Agreement may be amended, and the Company may take any action herein
prohibited or omit to perform any act herein required to be performed by it,
only if Company shall have obtained the advance written consent of the Holders
holding Warrants exercisable for 51% or more of the Warrant Stock issuable upon
exercise of outstanding Warrants at such time.
8. NOTICES.
Notices and other communications under this Agreement shall be in writing
and shall be sent by registered mail, postage prepaid, addressed:
(a) to any Holder of Warrant Stock or Warrants at the address shown on
the Stock or Warrant transfer books of the Company unless such Holder has
advised the Company in writing of a different address as to which notices
shall be sent under this Agreement; and
(b) if to Company at Clearview Cinema Group, Inc., 7 Waverly Place,
Madison, New Jersey 07940, Attention: A. Dale Mayo or to such other address
as Company shall have furnished to the Holder at the time outstanding.
9. MISCELLANEOUS.
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This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and permitted assigns of the parties
hereto, whether so expressed or not, and, in particular, shall inure to the
benefit of and be enforceable by any Holder or Holders. This Agreement and the
Company Documents embody the entire agreement and understanding between the
Company and the other parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings relating to the subject
matter hereof. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF OHIO. The headings in this Agreement
are for purposes of reference only and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument.
<PAGE>
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
SIGNED IN THE PRESENCE OF: CLEARVIEW CINEMA GROUP, INC.
_________________________________ BY:______________________________________
NAME:____________________________________
_________________________________ TITLE:___________________________________
THE PROVIDENT BANK
BY: ____________________________________
Christopher B. Gribble
Assistant Vice President
<PAGE>
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EXHIBIT A
FORM OF WARRANT
[Exhibit not included herewith, but will be provided by the Company upon
request.]
Exhibit 10.28
AMENDMENT NO. 1 TO WARRANT AGREEMENT
THIS AMENDMENT NO. 1 TO WARRANT AGREEMENT ("Amendment") dated as of
December 13, 1996 between CLEARVIEW CINEMA GROUP, INC., a Delaware corporation,
("Issuer") and THE PROVIDENT BANK, Agent ("Initial Holder") amends a Warrant
Agreement dated as of May 29, 1996 between Issuer and Initial Holder.
NOW, THEREFORE, in consideration of the Lenders extending the Loans to
Borrower, the parties hereby agree as follows:
1. Defined Terms. All capitalized terms used in this Amendment shall have
the meanings given to them in the Warrant Agreement (such meanings to be equally
applicable to both the singular and the plural forms of the term defined) unless
otherwise defined herein.
2. Initial Warrants. The second sentence of the second "WHEREAS" clause of
the Warrant Agreement is hereby amended to in its entirety to read as follows:
"The Holder is entitled to receive on May 29, 1996 two warrants to purchase
73 shares of the Common Stock in the aggregate and on the date hereof one
warrant to purchase 84 shares of the Common Stock in the aggregate (the
"Initial Warrants") (said Initial Warrants issued by the Company to the
Initial Holder, its successors and assigns including any Holder (as defined
below), pursuant hereto or pursuant to any of said warrants, whether upon
transfer, exchange or replacement thereof or otherwise, being hereinafter
referred to collectively as the "Warrants", and each individually as a
"Warrant");"
3. Warrant Purchase. Section 2.1 (a) of the Warrant Agreement is hereby
amended to in its entirety to read as follows:
"(a) On May 29, 1996, the Company issued to the Initial Holder the two
Warrants in the forms attached hereto as Exhibit A, evidencing the Initial
Holder's right to purchase seventy-three (73) shares of Common Stock (in
the aggregate) at the Exercise Price (as defined in the Warrant) and on
December 13, 1996 the Company issued to the Initial Holder additional
Initial Warrants in the forms attached hereto as Exhibit A, evidencing the
Initial Holder's right to purchase an additional eighty-four (84) shares of
Common Stock at the Exercise Price."
4. Miscellaneous. a. All of the terms, conditions and provisions of the
Warrant Agreement not herein modified shall remain in full force and effect. In
the event a term, condition or provision of the Warrant Agreement conflicts with
a term, condition or provision of this Amendment, the latter shall govern.
b. This Amendment shall be governed by and shall be construed and
interpreted in accordance with the laws of the State of Ohio.
c. This Amendment shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, successors and assigns.
d. This Amendment may be executed in several counterparts, each of
which
<PAGE>
shall constitute an original, but all which together shall constitute one and
the same agreement.
[Remainder of page intentionally left blank. Signature page follows.]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 1 to
Warrant Agreement to be duly executed and delivered as of the day and year first
above written.
WITNESSES: ISSUER:
CLEARVIEW CINEMA GROUP, INC.
___________________________ By: ____________________________
___________________________ Name:____________________________
Its: ____________________________
INITIAL HOLDER:
THE PROVIDENT BANK, AGENT
___________________________ By: ____________________________
___________________________ Name:____________________________
Its: ____________________________
[Exhibits are not included herewith, but will be provided by the
Company upon request.]
Exhibit 10.29
FORM OF COMMON STOCK PURCHASE WARRANT A
NEITHER THIS WARRANT NOR THE COMMON STOCK FOR WHICH IT MAY BE EXERCISED HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF,
EXCEPT AS PROVIDED IN ARTICLE 4, UNLESS SO REGISTERED OR UNLESS SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF PURSUANT TO AN EXEMPTION THEREFROM.
No. ___ August 31, 1995
CLEARVIEW CINEMA GROUP, INC.
COMMON STOCK PURCHASE WARRANT A
This CERTIFIES that, for value received _____________, or its
registered assignee (the "Holder") is entitled to subscribe for and purchase
from Clearview Cinema Group, Inc. a Delaware corporation (the "Company"), _____
shares (subject to adjustment as set forth in Article 2 below, the "Warrant
Shares") of Common Stock of the Company, par value $0.01 per share ("Common
Stock"), at the price of $2,000 per share (subject to adjustment as set forth in
Article II below, the "Warrant Purchase Price"), at any time on or after August
31, 1996 but on or before the Expiration Date, subject to the terms provided
herein. This Warrant is issued in connection with the Promissory Note (as herein
defined).
Capitalized terms used herein, and not otherwise defined, shall have
the meanings specified in Article 5. This Warrant is subject to the following
provisions, terms and conditions:
<PAGE>
ARTICLE 1
EXERCISE; RESERVATION OF SHARES
Section 1.01. Warrant Exercise. The rights represented by this Warrant
may be exercised by the Holder by the surrender of this Warrant at any time on
or after August 31, 1996, but in no event later than the Expiration Date, at the
principal office of the Company, together with a duly executed Subscription in
the form annexed as Exhibit "1" hereto, and by payment to the Company by
certified check or bank draft of the Warrant Purchase Price (as adjusted as set
forth in Article 2 below, if applicable) for such shares; provided, however,
that if the issuance of the Underlying Common Stock upon the exercise of this
Warrant requires registration under the Securities Act in the reasonable
judgment of the Company or its counsel, this Warrant shall not be exercisable by
the Holder and no subscription of or payment for shares will be acceptable by
the Company prior to the effectiveness of a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), covering the issuance
of the Underlying Common Stock by the Company to the holder of this Warrant. The
shares so purchased shall be deemed to be issued to the Holder as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been exercised as hereinabove provided.
Section 1.02. Certificates. Certificates for the shares purchased
pursuant to Section 1.01 shall be delivered to the Holder within a reasonable
time, not exceeding 30 days, after the rights represented by this Warrant shall
have been so exercised.
Section 1.03. Reservation of Shares. The Company covenants and agrees:
(a) That all Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof; and
(b) That during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue and delivery upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
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<PAGE>
ARTICLE 2
ADJUSTMENTS
Section 2.01. Reorganization, Reclassification, Consolidation, Merger
or Sale. If any reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation
in which the Company is not the surviving corporation, or the sale of all or
substantially all of its assets to another corporation or similar transaction
(in any instance, a "Capital Event") shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities or assets
(including cash) with respect to or in exchange for their Common Stock, then, as
a condition of such Capital Event, lawful and adequate provisions shall be made
whereby the Holder hereof shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, an amount of such shares of stock, securities or assets
(including cash) as may have been issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such Capital
Event not taken place.
Section 2.02. Subdivision or Combination of Stock. In the event that
the Company shall at any time subdivide or split its outstanding shares of
Common Stock into a greater number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately increased. In
the event that the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately reduced.
Section 2.03. Stock Dividends. In the event that the Company shall at
any time declare any dividend upon its Common Stock payable in stock, the number
of shares subject to issuance upon exercise of this Warrant shall be increased
by the number (and the kind) of shares which would have been issued to the
holder of this Warrant if this Warrant were exercised immediately prior to such
dividend.
Section 2.04. Adjustment to Warrant Purchase Price. If and whenever
the Company shall (i) subdivide or split its outstanding shares of Common Stock
into a greater number of shares or (ii) declare any dividend upon its Common
Stock payable in stock, the Warrant Purchase Price shall be reduced to the
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<PAGE>
price determined by multiplying the Warrant Purchase Price in effect immediately
prior to such subdivision, split, or dividend, by a fraction, the numerator of
which shall be the number of shares (the "Outstanding Section 2.04 Shares") of
Common Stock outstanding immediately prior to such subdivision, split, dividend,
issuance, grant or sale (as if all warrants (including the Specified Warrants)
had been exercised, whether or not actually exercised on such date, outstanding
immediately prior to such subdivision, split or dividend and the denominator of
which shall be the sum of the Outstanding Section 2.04 Shares plus the the
number of additional shares of Common Stock resulting from such subdivision,
split or dividend, provided that in no event will the Warrant Purchase Price be
reduced below the par value of the Common Stock.
Section 2.06. Record Date. In the event that the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend payable in Common Stock, then such record date shall be
deemed for the purposes of this Article 2 to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend.
Section 2.07. Notice of Adjustment. Upon any adjustment, the Company
shall give notice thereof to the Holder, which notice shall state the increase
or decrease, if any, in the number of shares purchasable upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
ARTICLE 3
CANCELLATION
This Warrant shall not be exerciseable and shall be marked canceled
and returned to the Company if the Company shall have paid the Promissory Note
in full prior to September 1, 1996.
ARTICLE 4
TRANSFER RESTRICTIONS
Section 4.01. Transfer of Warrants. This Warrant shall not be
transferrable except to an entity that is controlled by, controlling, or under
common control with the Holder (each a "Permitted Transferee"); provided,
however, that the Permitted Transferee, as a condition to such transfer, shall
execute and deliver a written agreement, in form and substance satisfactory to
the Company, agreeing to be bound by the provisions of this Warrant.
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<PAGE>
Section 4.02. Transfer of Stock; Registration Rights. The shares of
stock issuable upon the exercise of this Warrant shall be subject to that
certain Investment and Stockholders Agreement, dated December 21, 1995, among
the Company, A. Dale Mayo, Brett E. Marks, and CMNY Capital II, L.P, as shares
held by the Investor (as defined therein), including, but not limited to the
restrictions upon transfer contained therein and the rights of registration
granted therein. Any certificate for such shares of Common Stock issued upon the
exercise of this Warrant shall bear an appropriate legend describing the
foregoing restriction.
Section 4.03. Securities Law Transfer Restrictions. By taking and
holding this Warrant, the Holder (i) acknowledges that neither this Warrant nor
any shares of Common Stock issuable upon the exercise of this Warrant have been
registered under the Securities Act or any applicable state securities or blue
sky law (collectively, the "Acts"); and (ii) agrees not to sell, transfer or
otherwise dispose of this Warrant or any such shares of Common Stock without
such registration unless the sale, transfer or disposition can be effected
without such registration and in compliance with the Acts. Any certificate for
shares of Common Stock issued upon exercise of this Warrant shall bear an
appropriate legend describing the foregoing restrictions.
Section 4.04. Provision of Information by Holder. The Holder shall
make available to the Company such written information, presented in form and
content reasonably satisfactory to the Company, as the Company may reasonably
request, from time to time, in order to make the determination provided for in
Section 4.01.
ARTICLE 5
ADDITIONAL DEFINITIONS
As used herein, the following terms shall have the meanings specified
below:
"Expiration Date" shall mean August 31, 2001.
"Promissory Note" shall mean that certain Subordinated Promissory Note
dated the date hereof, in the principal amount of $300,000, payable to CMCO,
INC.
"Specified Warrants" shall mean the Warrants issued by the Company to
CMNY, CMCO, Inc. and Robert G. Davidoff, on the date hereof.
"Underlying Common Stock" shall mean the shares of Common Stock
purchasable by the holder of this Warrant upon the
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<PAGE>
exercise thereof, assuming that this Warrant is then exercisable.
ARTICLE 6
MISCELLANEOUS
Section 6.01. Holder of Record. Each Holder, by holding this Warrant,
consents and agrees that said Holder shall be treated by the Company and all
other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled (i) to exercise the rights represented by
this Warrant, or (ii) to the transfer hereof on the books of the Company, any
notice to the Company to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered Holder as the owner for all
purposes.
Section 6.02. Notices. Any notice or communication to be given
pursuant to this Warrant ("Notice") shall be in writing and shall be delivered
in person or by certified mail, return receipt requested, in the United States
mail, postage prepaid. Notices to the Company shall be addressed to the
Company's principal office. Notices to the Holder shall be addressed to the
Holder's address as reflected in the records of the Company. Notices shall be
effective upon delivery in person, or, if mailed, at midnight on the third
business day after mailing.
Section 6.03. Issue Tax. The issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holders for any issuance tax in respect thereof, provided that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate name other
than that of the Holder of the Warrant exercised.
Section 6.04. No Stockholder Rights. This Warrant
shall not entitle the Holder to any voting rights or other
rights stockholder of the Company.
Section 6.05. Governing Law. This Warrant shall be
governed by and construed in accordance with the laws of the
State of Delaware.
Section 6.06. Headings, Interpretation. The section headings used
herein are for convenience of reference only and not intended to define, limit
or describe the scope or intent any provision of this Warrant. When used in this
Warrant, the term "including" shall mean "including, without limitation by
reason of enumeration".
Section 6.07. Successors. The covenants, agreements
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<PAGE>
and provisions of this Warrant shall bind the parties hereto and their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant be issued this
________ day of ____________, 19 __.
CLEARVIEW CINEMA GROUP, INC.
a Delaware corporation
By____________________________
Its___________________________
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<PAGE>
EXHIBIT "1"
SUBSCRIPTION
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases the number of shares of Common Stock of Clearview
Cinema Group, Inc. purchasable under this Warrant and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant. Such shares are to be registered in the name of the registered holder
of this Warrant and certificates evidencing such shares are to be delivered to
it at its address set forth below its signature unless contrary instructions are
herein given.
Register shares in the name of _______________________________________________.
Deliver certificates to ______________________________________________________.
Dated: ______________________________ ____________________________________
(Signature of Registered Owner)
____________________________________
(Street Address)
____________________________________
(City) (State) (Zip Code)
Exhibit 10.30
FORM OF COMMON STOCK PURCHASE WARRANT B
NEITHER THIS WARRANT NOR THE COMMON STOCK FOR WHICH IT MAY BE EXERCISED HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF,
EXCEPT AS PROVIDED IN ARTICLE 3, UNLESS SO REGISTERED OR UNLESS SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF PURSUANT TO AN EXEMPTION THEREFROM.
No. ____ August 31, 1995
CLEARVIEW CINEMA GROUP, INC.
COMMON STOCK PURCHASE WARRANT B
This CERTIFIES that, for value received _________, or its registered
assignee (the "Holder") is entitled to subscribe for and purchase from Clearview
Cinema Group, Inc. a Delaware corporation (the "Company"), _____ shares (subject
to adjustment as set forth in Article 2 below, the "Warrant Shares") of Common
Stock of the Company, par value $0.01 per share ("Common Stock"), at the price
of $2,000 per share (subject to adjustment as set forth in Article II below, the
"Warrant Purchase Price"), at any time on or after the date of this Warrant but
on or before the Expiration Date, subject to the terms provided herein. This
Warrant is issued in connection with the Promissory Note (as herein defined).
Capitalized terms used herein, and not otherwise defined, shall have
the meanings specified in Article 4. This Warrant is subject to the following
provisions, terms and conditions:
<PAGE>
ARTICLE 1
EXERCISE; RESERVATION OF SHARES
Section 1.01. Warrant Exercise. The rights represented by this Warrant
may be exercised by the Holder by the surrender of this Warrant at any time on
or after the date of this Warrant, but in no event later than the Expiration
Date, at the principal office of the Company, together with a duly executed
Subscription in the form annexed as Exhibit "1" hereto, and by payment to the
Company by certified check or bank draft of the Warrant Purchase Price (as
adjusted as set forth in Article 2 below, if applicable) for such shares;
provided, however, that if the issuance of the Underlying Common Stock upon the
exercise of this Warrant requires registration under the Securities Act in the
reasonable judgment of the Company or its counsel, this Warrant shall not be
exercisable by the Holder and no subscription of or payment for shares will be
acceptable by the Company prior to the effectiveness of a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), covering
the issuance of the Underlying Common Stock by the Company to the holder of this
Warrant. The shares so purchased shall be deemed to be issued to the Holder as
the record owner of such shares as of the close of business on the date on which
this Warrant shall have been exercised as hereinabove provided.
Section 1.02. Certificates. Certificates for the shares purchased
pursuant to Section 1.01 shall be delivered to the Holder within a reasonable
time, not exceeding 30 days, after the rights represented by this Warrant shall
have been so exercised.
Section 1.03. Reservation of Shares. The Company covenants and agrees:
(a) That all Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof; and
(b) That during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue and delivery upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
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<PAGE>
ARTICLE 2
ADJUSTMENTS
Section 2.01. Reorganization, Reclassification, Consolidation, Merger
or Sale. If any reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation
in which the Company is not the surviving corporation, or the sale of all or
substantially all of its assets to another corporation or similar transaction
(in any instance, a "Capital Event") shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities or assets
(including cash) with respect to or in exchange for their Common Stock, then, as
a condition of such Capital Event, lawful and adequate provisions shall be made
whereby the Holder hereof shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, an amount of such shares of stock, securities or assets
(including cash) as may have been issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such Capital
Event not taken place.
Section 2.02. Subdivision or Combination of Stock. In the event that
the Company shall at any time subdivide or split its outstanding shares of
Common Stock into a greater number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately increased. In
the event that the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately reduced.
Section 2.03. Stock Dividends. In the event that the Company shall at
any time declare any dividend upon its Common Stock payable in stock, the number
of shares subject to issuance upon exercise of this Warrant shall be increased
by the number (and the kind) of shares which would have been issued to the
holder of this Warrant if this Warrant were exercised immediately prior to such
dividend.
Section 2.04. Adjustment to Warrant Purchase Price. If and whenever
the Company shall (i) subdivide or split its outstanding shares of Common Stock
into a greater number of shares or (ii) declare any dividend upon its Common
Stock payable in stock, the Warrant Purchase Price shall be reduced to the
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<PAGE>
price determined by multiplying the Warrant Purchase Price in effect immediately
prior to such subdivision, split, or dividend, by a fraction, the numerator of
which shall be the number of shares (the "Outstanding Section 2.04 Shares") of
Common Stock outstanding immediately prior to such subdivision, split, dividend,
issuance, grant or sale (as if all warrants (including the Specified Warrants)
had been exercised, whether or not actually exercised on such date, outstanding
immediately prior to such subdivision, split or dividend and the denominator of
which shall be the sum of the Outstanding Section 2.04 Shares plus the the
number of additional shares of Common Stock resulting from such subdivision,
split or dividend, provided that in no event will the Warrant Purchase Price be
reduced below the par value of the Common Stock.
Section 2.06. Record Date. In the event that the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend payable in Common Stock, then such record date shall be
deemed for the purposes of this Article 2 to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend.
Section 2.07. Notice of Adjustment. Upon any adjustment, the Company
shall give notice thereof to the Holder, which notice shall state the increase
or decrease, if any, in the number of shares purchasable upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
ARTICLE 3
TRANSFER RESTRICTIONS
Section 3.01. Transfer of Warrants. This Warrant shall not be
transferrable except to an entity that is controlled by, controlling, or under
common control with the Holder (each a "Permitted Transferee"); provided,
however, that the Permitted Transferee, as a condition to such transfer, shall
execute and deliver a written agreement, in form and substance satisfactory to
the Company, agreeing to be bound by the provisions of this Warrant.
Section 3.02. Transfer of Stock; Registration Rights. The shares of
stock issuable upon the exercise of this Warrant shall be subject to that
certain Investment and Stockholders Agreement, dated December 21, 1995, among
the Company, A. Dale Mayo, Brett E. Marks, and CMNY Capital II, L.P, as shares
held by the Investor (as defined therein), including, but not limited to the
restrictions upon transfer contained
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<PAGE>
therein and the rights of registration granted therein. Any certificate for such
shares of Common Stock issued upon the exercise of this Warrant shall bear an
appropriate legend describing the foregoing restriction.
Section 3.03. Securities Law Transfer Restrictions. By taking and
holding this Warrant, the Holder (i) acknowledges that neither this Warrant nor
any shares of Common Stock issuable upon the exercise of this Warrant have been
registered under the Securities Act or any applicable state securities or blue
sky law (collectively, the "Acts"); and (ii) agrees not to sell, transfer or
otherwise dispose of this Warrant or any such shares of Common Stock without
such registration unless the sale, transfer or disposition can be effected
without such registration and in compliance with the Acts. Any certificate for
shares of Common Stock issued upon exercise of this Warrant shall bear an
appropriate legend describing the foregoing restrictions.
Section 3.04. Provision of Information by Holder. The Holder shall
make available to the Company such written information, presented in form and
content reasonably satisfactory to the Company, as the Company may reasonably
request, from time to time, in order to make the determination provided for in
Section 3.01.
ARTICLE 4
ADDITIONAL DEFINITIONS
As used herein, the following terms shall have the meanings specified
below:
"Expiration Date" shall mean August 31, 2000.
"Promissory Note" shall mean that certain Subordinated Promissory Note
dated the date hereof, in the principal amount of $50,000, payable to CMCO, Inc.
"Specified Warrants" shall mean the Warrants issued by the Company to
CMNY, CMCO, Inc. and Robert G. Davidoff, on the date hereof.
"Underlying Common Stock" shall mean the shares of Common Stock
purchasable by the holder of this Warrant upon the exercise thereof, assuming
that this Warrant is then exercisable.
ARTICLE 5
MISCELLANEOUS
Section 5.01. Holder of Record. Each Holder, by
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<PAGE>
holding this Warrant, consents and agrees that said Holder shall be treated by
the Company and all other persons dealing with this Warrant as the absolute
owner hereof for any purpose and as the person entitled (i) to exercise the
rights represented by this Warrant, or (ii) to the transfer hereof on the books
of the Company, any notice to the Company to the contrary notwithstanding; but
until such transfer on such books, the Company may treat the registered Holder
as the owner for all purposes.
Section 5.02. Notices. Any notice or communication to be given
pursuant to this Warrant ("Notice") shall be in writing and shall be delivered
in person or by certified mail, return receipt requested, in the United States
mail, postage prepaid. Notices to the Company shall be addressed to the
Company's principal office. Notices to the Holder shall be addressed to the
Holder's address as reflected in the records of the Company. Notices shall be
effective upon delivery in person, or, if mailed, at midnight on the third
business day after mailing.
Section 5.03. Issue Tax. The issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holders for any issuance tax in respect thereof, provided that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate name other
than that of the Holder of the Warrant exercised.
Section 5.04. No Stockholder Rights. This Warrant shall not entitle
the Holder to any voting rights or other rights stockholder of the Company.
Section 5.05. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 5.06. Headings, Interpretation. The section headings used
herein are for convenience of reference only and not intended to define, limit
or describe the scope or intent any provision of this Warrant. When used in this
Warrant, the term "including" shall mean "including, without limitation by
reason of enumeration".
Section 5.07. Successors. The covenants, agreements and provisions of
this Warrant shall bind the parties hereto and their respective successors and
permitted assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant be issued this
________ day of ____________, 19 _.
CLEARVIEW CINEMA GROUP, INC.
a Delaware corporation
By____________________________
Its___________________________
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<PAGE>
EXHIBIT "1"
SUBSCRIPTION
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases the number of shares of Common Stock of Clearview
Cinema Group, Inc. purchasable under this Warrant and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant. Such shares are to be registered in the name of the registered holder
of this Warrant and certificates evidencing such shares are to be delivered to
it at its address set forth below its signature unless contrary instructions are
herein given.
Register shares in the name of ______________________________________________.
Deliver certificates to _____________________________________________________.
Dated: ______________________________ ______________________________________
(Signature of Registered Owner)
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
Exhibit 10.31
WARRANT
NEITHER THIS WARRANT NOR THE COMMON STOCK FOR WHICH IT MAY BE EXERCISED HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF,
EXCEPT AS PROVIDED IN ARTICLE 3, UNLESS SO REGISTERED OR UNLESS SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF PURSUANT TO AN EXEMPTION THEREFROM.
No. 1 May 29, 1996
CLEARVIEW CINEMA GROUP, INC.
----------------------------
COMMON STOCK PURCHASE WARRANT
This CERTIFIES that, for value received THE PROVIDENT BANK, or its
registered assignee (the "Holder") is entitled to subscribe for and purchase
from Clearview Cinema Group, Inc. a Delaware corporation (the "Company"), 65
shares (subject to adjustment as set forth in Article 2 below, the "Warrant
Shares") of Common Stock of the Company, par value $0.01 per share ("Common
Stock"), at the price of $.01 per share (subject to adjustment as set forth in
Article II below, the "Warrant Purchase Price"), at any time on or after the
date of this Warrant but on or before the Expiration Date, subject to the terms
provided herein. This Warrant is issued in connection with the Warrant Agreement
dated as of the date hereof between the Company and the Holder.
Capitalized terms used herein, and not otherwise defined, shall
have the meanings specified in Article 4. This Warrant is subject to the
following provisions, terms and conditions:
ARTICLE 1
EXERCISE; RESERVATION OF SHARES
-------------------------------
Section 1.01. Warrant Exercise. The rights represented by this
Warrant may be exercised in whole or in part by the Holder by the surrender of
this Warrant at any time on or after the date of this Warrant, but in no event
later than the Expiration Date, at the principal office of the Company, together
with a duly executed Subscription in the form annexed as Exhibit "1" hereto
(each a "Subscription Agreement"), and by payment to the Company by certified
check or bank draft of the
<PAGE>
Warrant Purchase Price (as adjusted as set forth in Article 2 below, if
applicable) for such shares; provided, however, that if the issuance of the
Underlying Common Stock upon the exercise of this Warrant requires registration
under the Securities Act in the reasonable judgment of the Company or its
counsel, this Warrant shall not be exercisable by the Holder and no subscription
of or payment for shares will be acceptable by the Company prior to the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), covering the issuance of the Underlying Common
Stock by the Company to the holder of this Warrant. The shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
exercised as hereinabove provided.
Section 1.02. Net Issue Exercise. Notwithstanding any
provisions herein to the contrary, if the Market Price (as defined below) for
one share of Common Stock is greater than the Purchase Price (on the date of
exercise of all or a part of this Warrant), in lieu of exercising this Warrant
for cash, the Holder may elect to receive Common Stock equal to the value (as
determined below) of this Warrant (or the portion hereof being exercised) by
surrender of this Warrant at the principal office of the Company, together with
a Subscription Agreement fully executed, in which event the Company shall issue
to the Holder that number of Shares of Common Stock computed using the following
formula:
X = Y x [(A-B) / A]
Where Y = the aggregate number of Shares of Common Stock
purchasable under this Warrant or, if only a
portion of this Warrant is being exercised, the
number of Shares of Common Stock for which this
Warrant is being exercised (at the date of such
calculation)
A = Market Price of one Share of Common Stock (at the
date of such calculation)
B = Purchase Price (as adjusted to the date of such
calculation).
For purposes of this Section 1.02, "Market Price" shall mean, if
the Underlying Common Stock is traded on a national securities exchange, the
NASDAQ National Market System or the over-the-counter market, the last reported
price on the date of valuation at which the Underlying Common Stock has traded
on such exchange or the average of the bid and asked prices on the
over-the-counter market on the date of valuation or, if no sale took place on
such date, the last date on which a sale took place. If
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<PAGE>
the Underlying Common Stock is not so traded, "Market Price" shall be the value
of one share of Underlying Common Stock as determined by agreement of the
parties hereto, or if the parties hereto cannot reach agreement, then such value
shall be determined by appraisal by an independent investment banking firm
selected by the Company and acceptable to the Holder; provided, however, that if
the Holder and the Company cannot agree on such investment banking firm, such
appraised value shall be determined by averaging the appraised values calculated
by (i) an independent investment banking firm selected by the company; (ii) an
independent investment banking firm selected by the Holder; and (iii) an
independent investment banking firm selected by the investment banking firms
selected by the Company and the Holder. Such appraisals shall be at the Holder's
expense.
Section 1.03. Certificates. Certificates for the shares purchased
pursuant to Section 1.01 shall be delivered to the Holder within a reasonable
time, not exceeding 30 days, after the rights represented by this Warrant shall
have been so exercised.
Section 1.04. Reservation of Shares. The Company covenants and
agrees:
(a) That all Common Stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof; and
(b) That during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue and delivery upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
ARTICLE 2
ADJUSTMENTS
-----------
Section 2.01. Reorganization, Reclassification, Consolidation,
Merger or Sale. If any reorganization or reclassification of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation in which the Company is not the surviving corporation, or the sale
of all or substantially all of its assets to another corporation or similar
transaction (in any instance, a "Capital Event") shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities or
assets cash with respect to or in exchange for their Common Stock, then, as a
condition of such Capital Event, lawful and adequate provisions shall be made
whereby the Holder hereof shall
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<PAGE>
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions specified in this Warrant and in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, an amount of such shares of
stock, securities or assets (including cash) as may have been issued or payable
with respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby
had such Capital Event not taken place.
Section 2.02. Subdivision or Combination of Stock. In the event
that the Company shall at any time subdivide or split its outstanding shares of
Common Stock into a greater number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately increased. In
the event that the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately reduced.
Section 2.03. Stock Dividends. In the event that the Company shall
at any time declare any dividend upon its Common Stock payable in stock, the
number of shares subject to issuance upon exercise of this Warrant shall be
increased by the number (and the kind) of shares which would have been issued to
the holder of this Warrant if this Warrant were exercised immediately prior to
such dividend.
Section 2.04. Issuance at less than Purchase Price.
(a) Subject to Section 2.04(d) below, in the event that the
Company shall at any time issue or sell any shares of Common Stock for a
consideration per share less than $2,558.48 (the "Purchase Price"), then in any
such event, the holder of this Warrant shall be entitled to receive, in lieu of
the number of shares of Common Stock theretofore receiveable upon the exercise
of this Warrant, a number of shares of Common Stock determined by (a) dividing
the Purchase Price by the Adjusted Purchase Prices (as defined herein) and (b)
multiplying the result by the number of shares of Common Stock called for on the
face of this Warrant. The Adjusted Purchase Prices shall be calculated (to the
nearest full cent) by dividing (i) the sum of (x) the number of shares of Common
Stock outstanding or deemed to be outstanding 2.04(b) below immediately prior to
such issue or sale, multiplied by the Purchase Price in effect immediately prior
to such issue or sale and (y) the aggregate amount of the consideration received
by the Company upon such issue or sale by (ii) the total number of shares of
Common Stock outstanding or deemed to be outstanding pursuant to Section 2.04(b)
below immediately after such issue or sale.
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<PAGE>
(b) Subject to Section 2.04(d) below, in case the Company
shall issue or sell options, rights or warrants entitling the holders thereof to
subscribe for or purchase shares of Common Stock, the number of shares of Common
Stock theretofore receiveable upon the exercise of this Warrant shall be
adjusted on the date of such issuance or sale, as set forth in Section 2.04(a)
above, based on a sale price equal to the sum of the price of such instrument
and its minimum exercise price if the total thereof shall be less than the
Purchase Price in effect immediately prior to such issue or sale, and assuming
the exercise or conversion of all such options, rights or warrants so issued or
sold.
(c) In case the Company shall issue or sell any other
security or instrument directly or indirectly convertible into or exchangeable
for Common Stock ("Convertible Securities"), the number of shares of Common
Stock theretofore receivable upon the exercise of this Warrant shall be adjusted
on the date of issue or sale, as set forth in Section 2.04(a) above, based on a
sale price equal to the sum of the purchase price of such Convertible Security
and the price at which its conversion to Common Stock may be experienced if the
total thereof shall be less than the Purchase Price immediately prior to such
issue or sale, and assuming the conversion of all such Convertible Securities so
issued or sold.
(d) Notwithstanding any of the provisions contained in this
Section 2.04, in no event shall there be an adjustment of the number of shares
of Common Stock theretofore receivable upon exercise of this Warrant as a result
of (x) the exercise of any warrants, rights, options or conversion privileges
that were outstanding on or prior to the date of the initial issuance of this
Warrant (y) the exercise of any warrants, options, rights or similar instruments
issued after the date hereof for which adjustment has already been made pursuant
to Section 2.04(b) above.
(e) If any rights, options or warrants or Convertible
Securities shall by their terms provide for an increase or decrease, with the
passage of time or the occurrence or non-occurrence of an event, in the minimum
amount of additional consideration payable to the Company upon the exercise
thereof, the number of shares of Common Stock theretofore receivable upon
exercise of this Warrant shall, forthwith upon any such increase or decrease
becoming effective, be readjusted to reflect such increase or decrease in such
minimum amount.
(f) If any rights, options or warrants or Convertible
Securities as to which an adjustment has been previously made pursuant to this
Section 2.04 shall expire without having been exercised, the number of shares of
Common Stock theretofore receivable upon exercise of this Warrant shall
forthwith be
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<PAGE>
adjusted to the number of shares of Common Stock which would have been in effect
had an adjustment been made on the basis that the only rights or warrants or
Convertible Securities previously issued or sold were those rights or warrants
or Convertible Securities actually exercised or not yet expired.
(g) No adjustment in the number of shares of Common Stock
receivable upon the exercise of this Warrant need be made unless the adjustment
would require an increase or decrease of at least one whole share of Common
Stock, provided, however, such adjustment shall be carried forward and made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
at one whole share of Common Stock.
(h) No adjustment in the number of shares of Common Stock
receiveable upon exercise of this Warrant need be made under this Section for
any change in the par value of the Common Stock. If an adjustment is made to the
number of shares of Common Stock receiveable upon exercise of this Warrant upon
establishment of a record date for distribution subject to this Section and if
such distribution is subsequently canceled, the number of shares of Common Stock
receivable upon exercise of this Warrant then in effect shall be readjusted,
effective as of the date when the Board of Directors of the Company determines
to cancel such distribution, to the number of shares of Common Stock receivable
upon exercise of this Warrant as would have been in effect is such record date
had not been fixed.
Section 2.05. Record Date. In the event that the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend payable in Common Stock, then such record date shall
be deemed for the purposes of this Article 2 to be the date of the issue or sale
of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend.
Section 2.06. Notice of Adjustment. Upon any adjustment, the
Company shall give notice thereof to the Holder, which notice shall state the
increase or decrease, if any, in the number of shares purchasable upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
ARTICLE 3
TRANSFER RESTRICTIONS
Section 3.01. Transfer of Warrants. This Warrant shall not be
transferrable except to an entity that is controlled by, controlling, or under
common control with the Holder (each a "Permitted Transferee"); provided,
however, that the Permitted
-6-
<PAGE>
Transferee, as a condition to such transfer, shall execute and deliver a written
agreement, in form and substance satisfactory to the Company, agreeing to be
bound by the provisions of this Warrant.
Section 3.02. Transfer of Stock; Registration Rights. The shares
of stock issuable upon the exercise of this Warrant shall be subject to the
Stockholders and Registration Rights Agreement, including, but not limited to
the restrictions upon transfer contained therein. Any certificate for such
shares of Common Stock issued upon the exercise of this Warrant shall bear an
appropriate legend describing the foregoing restriction.
Section 3.03. Securities Law Transfer Restrictions. By taking and
holding this Warrant, the Holder (i) acknowledges that neither this Warrant nor
any shares of Common Stock issuable upon the exercise of this Warrant have been
registered under the Securities Act or any applicable state securities or blue
sky law (collectively, the "Acts"); and (ii) agrees not to sell, transfer or
otherwise dispose of this Warrant or any such shares of Common Stock without
such registration unless the sale, transfer or disposition can be effected
without such registration and in compliance with the Acts. Any certificate for
shares of Common Stock issued upon exercise of this Warrant shall bear an
appropriate legend describing the foregoing restrictions.
Section 3.04. Provision of Information by Holder. The Holder shall
make available to the Company such written information, presented in form and
content reasonably satisfactory to the Company, as the Company may reasonably
request, from time to time, in order to make the determination provided for in
Section 3.01.
ARTICLE 4
ADDITIONAL DEFINITIONS
As used herein, the following terms shall have the meanings
specified below:
"Expiration Date" shall mean the seventh anniversary of the date
of the Warrant.
"Underlying Common Stock" shall mean the shares of Common Stock
purchasable by the holder of this Warrant upon the exercise thereof, assuming
that this Warrant is then exercisable.
-7-
<PAGE>
ARTICLE 5
MISCELLANEOUS
Section 5.01. Holder of Record. Each Holder, by holding this
Warrant, consents and agrees that said Holder shall be treated by the Company
and all other persons dealing with this Warrant as the absolute owner hereof for
any purpose and as the person entitled (i) to exercise the rights represented by
this Warrant, or (ii) to the transfer hereof on the books of the Company, any
notice to the Company to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered Holder as the owner for all
purposes.
Section 5.02. Notices. Any notice or communication to be given
pursuant to this Warrant ("Notice") shall be in writing and shall be delivered
in person or by certified mail, return receipt requested, in the United States
mail, postage prepaid. Notices to the Company shall be addressed to the
Company's principal office. Notices to the Holder shall be addressed to the
Holder's address as reflected in the records of the Company. Notices shall be
effective upon delivery in person, or, if mailed, at midnight on the third
business day after mailing.
Section 5.03. Issue Tax. The issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holders for any issuance tax in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate name other
than that of the Holder of the Warrant exercised.
Section 5.04. No Stockholder Rights. This Warrant shall not
entitle the Holder to any voting rights or other rights stockholder of the
Company.
Section 5.05. Information. The Company shall furnish each Holder
of Warrants with copies of all reports, proxy statements, and similar materials
that it furnishes generally to Holders of its Stock. In addition, it shall
furnish to each such Holder of Warrants copies of all reports filed by it with
the Securities and Exchange Commission.
Section 5.05. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 5.06. Headings, Interpretation. The section headings used
herein are for convenience of reference only and not intended to define, limit
or describe the scope or intent any
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<PAGE>
provision of this Warrant. When used in this Warrant, the term "including" shall
mean "including, without limitation by reason of enumeration".
Section 5.07. Successors. The covenants, agreements and provisions
of this Warrant shall bind the parties hereto and their respective successors
and permitted assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant be issued
this ____ day of May 1996.
CLEARVIEW CINEMA GROUP, INC.
a Delaware corporation
By: ________________________
A. Dale Mayo,
President and Secretary
-9-
<PAGE>
EXHIBIT "1"
SUBSCRIPTION
------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for and purchases the number of shares of Common Stock of
Clearview Cinema Group, Inc. purchasable under this Warrant and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
this Warrant. Such shares are to be registered in the name of the registered
holder of this Warrant and certificates evidencing such shares are to be
delivered to it at its address set forth below its signature unless contrary
instructions are herein given.
Register shares in the name of ________________________________________________.
Deliver certificates to _______________________________________________________.
Dated: _______________________ _________________________________________________
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
Exhibit 10.32
WARRANT
NEITHER THIS WARRANT NOR THE COMMON STOCK FOR WHICH IT MAY BE EXERCISED HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF,
EXCEPT AS PROVIDED IN ARTICLE 3, UNLESS SO REGISTERED OR UNLESS SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF PURSUANT TO AN EXEMPTION THEREFROM.
No. 2 May 29, 1996
CLEARVIEW CINEMA GROUP, INC.
----------------------------
COMMON STOCK PURCHASE WARRANT
This CERTIFIES that, for value received THE PROVIDENT BANK, or its
registered assignee (the "Holder") is entitled to subscribe for and purchase
from Clearview Cinema Group, Inc. a Delaware corporation (the "Company"), 8
shares (subject to adjustment as set forth in Article 2 below, the "Warrant
Shares") of Common Stock of the Company, par value $0.01 per share ("Common
Stock"), at the price of $.01 per share (subject to adjustment as set forth in
Article II below, the "Warrant Purchase Price"), at any time on or after the
date of this Warrant but on or before the Expiration Date, subject to the terms
provided herein. This Warrant is issued in connection with the Warrant Agreement
dated as of the date hereof between the Company and the Holder.
Capitalized terms used herein, and not otherwise defined, shall
have the meanings specified in Article 4. This Warrant is subject to the
following provisions, terms and conditions:
ARTICLE 1
EXERCISE; RESERVATION OF SHARES
-------------------------------
Section 1.01. Warrant Exercise. The rights represented by this
Warrant may be exercised in whole or in part by the Holder by the surrender of
this Warrant at any time on or after the date of this Warrant, but in no event
later than the Expiration Date, at the principal office of the Company, together
with a duly executed Subscription in the form annexed as Exhibit "1" hereto
(each a "Subscription Agreement"), and by payment to the Company by certified
check or bank draft of the
<PAGE>
Warrant Purchase Price (as adjusted as set forth in Article 2 below, if
applicable) for such shares; provided, however, that if the issuance of the
Underlying Common Stock upon the exercise of this Warrant requires registration
under the Securities Act in the reasonable judgment of the Company or its
counsel, this Warrant shall not be exercisable by the Holder and no subscription
of or payment for shares will be acceptable by the Company prior to the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), covering the issuance of the Underlying Common
Stock by the Company to the holder of this Warrant. The shares so purchased
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
exercised as hereinabove provided.
Section 1.02. Net Issue Exercise. Notwithstanding any
provisions herein to the contrary, if the Market Price (as defined below) for
one share of Common Stock is greater than the Purchase Price (on the date of
exercise of all or a part of this Warrant), in lieu of exercising this Warrant
for cash, the Holder may elect to receive Common Stock equal to the value (as
determined below) of this Warrant (or the portion hereof being exercised) by
surrender of this Warrant at the principal office of the Company, together with
a Subscription Agreement fully executed, in which event the Company shall issue
to the Holder that number of Shares of Common Stock computed using the following
formula:
X = Y x [(A-B) / A]
Where Y = the aggregate number of Shares of Common Stock
purchasable under this Warrant or, if only a
portion of this Warrant is being exercised, the
number of Shares of Common Stock for which this
Warrant is being exercised (at the date of such
calculation)
A = Market Price of one Share of Common Stock (at the
date of such calculation)
B = Purchase Price (as adjusted to the date of such
calculation).
For purposes of this Section 1.02, "Market Price" shall mean, if
the Underlying Common Stock is traded on a national securities exchange, the
NASDAQ National Market System or the over-the-counter market, the last reported
price on the date of valuation at which the Underlying Common Stock has traded
on such exchange or the average of the bid and asked prices on the
over-the-counter market on the date of valuation or, if no sale took place on
such date, the last date on which a sale took place. If
-2-
<PAGE>
the Underlying Common Stock is not so traded, "Market Price" shall be the value
of one share of Underlying Common Stock as determined by agreement of the
parties hereto, or if the parties hereto cannot reach agreement, then such value
shall be determined by appraisal by an independent investment banking firm
selected by the Company and acceptable to the Holder; provided, however, that if
the Holder and the Company cannot agree on such investment banking firm, such
appraised value shall be determined by averaging the appraised values calculated
by (i) an independent investment banking firm selected by the company; (ii) an
independent investment banking firm selected by the Holder; and (iii) an
independent investment banking firm selected by the investment banking firms
selected by the Company and the Holder. Such appraisals shall be at the Holder's
expense.
Section 1.03. Certificates. Certificates for the shares purchased
pursuant to Section 1.01 shall be delivered to the Holder within a reasonable
time, not exceeding 30 days, after the rights represented by this Warrant shall
have been so exercised.
Section 1.04. Reservation of Shares. The Company covenants and
agrees:
(a) That all Common Stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof; and
(b) That during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue and delivery upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
ARTICLE 2
ADJUSTMENTS
-----------
Section 2.01. Reorganization, Reclassification, Consolidation,
Merger or Sale. If any reorganization or reclassification of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation in which the Company is not the surviving corporation, or the sale
of all or substantially all of its assets to another corporation or similar
transaction (in any instance, a "Capital Event") shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities or
assets cash with respect to or in exchange for their Common Stock, then, as a
condition of such Capital Event, lawful and adequate
-3-
<PAGE>
provisions shall be made whereby the Holder hereof shall thereafter have the
right to purchase and receive upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, an amount of such shares of stock, securities or
assets (including cash) as may have been issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such Capital
Event not taken place.
Section 2.02. Subdivision or Combination of Stock. In the event
that the Company shall at any time subdivide or split its outstanding shares of
Common Stock into a greater number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately increased. In
the event that the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately reduced.
Section 2.03. Stock Dividends. In the event that the Company shall
at any time declare any dividend upon its Common Stock payable in stock, the
number of shares subject to issuance upon exercise of this Warrant shall be
increased by the number (and the kind) of shares which would have been issued to
the holder of this Warrant if this Warrant were exercised immediately prior to
such dividend.
Section 2.04. Issuance at less than Purchase Price.
(a) Subject to Section 2.04(d) below, in the event that the
Company shall at any time issue or sell any shares of Common Stock for a
consideration per share less than $2,558.48 (the "Purchase Price"), then in any
such event, the holder of this Warrant shall be entitled to receive, in lieu of
the number of shares of Common Stock theretofore receiveable upon the exercise
of this Warrant, a number of shares of Common Stock determined by (a) dividing
the Purchase Price by the Adjusted Purchase Prices (as defined herein) and (b)
multiplying the result by the number of shares of Common Stock called for on the
face of this Warrant. The Adjusted Purchase Prices shall be calculated (to the
nearest full cent) by dividing (i) the sum of (x) the number of shares of Common
Stock outstanding or deemed to be outstanding 2.04(b) below immediately prior to
such issue or sale, multiplied by the Purchase Price in effect immediately prior
to such issue or sale and (y) the aggregate amount of the consideration received
by the Company upon such issue or sale by (ii) the total number of shares of
Common Stock outstanding or
-4-
<PAGE>
deemed to be outstanding pursuant to Section 2.04(b) below immediately after
such issue or sale.
(b) Subject to Section 2.04(d) below, in case the Company shall
issue or sell options, rights or warrants entitling the holders thereof to
subscribe for or purchase shares of Common Stock, the number of shares of Common
Stock theretofore receiveable upon the exercise of this Warrant shall be
adjusted on the date of such issuance or sale, as set forth in Section 2.04(a)
above, based on a sale price equal to the sum of the price of such instrument
and its minimum exercise price if the total thereof shall be less than the
Purchase Price in effect immediately prior to such issue or sale, and assuming
the exercise or conversion of all such options, rights or warrants so issued or
sold.
(c) In case the Company shall issue or sell any other security or
instrument directly or indirectly convertible into or exchangeable for Common
Stock ("Convertible Securities"), the number of shares of Common Stock
theretofore receivable upon the exercise of this Warrant shall be adjusted on
the date of issue or sale, as set forth in Section 2.04(a) above, based on a
sale price equal to the sum of the purchase price of such Convertible Security
and the price at which its conversion to Common Stock may be experienced if the
total thereof shall be less than the Purchase Price immediately prior to such
issue or sale, and assuming the conversion of all such Convertible Securities so
issued or sold.
(d) Notwithstanding any of the provisions contained in this
Section 2.04, in no event shall there be an adjustment of the number of shares
of Common Stock theretofore receivable upon exercise of this Warrant as a result
of (x) the exercise of any warrants, rights, options or conversion privileges
that were outstanding on or prior to the date of the initial issuance of this
Warrant (y) the exercise of any warrants, options, rights or similar instruments
issued after the date hereof for which adjustment has already been made pursuant
to Section 2.04(b) above.
(e) If any rights, options or warrants or Convertible Securities
shall by their terms provide for an increase or decrease, with the passage of
time or the occurrence or non-occurrence of an event, in the minimum amount of
additional consideration payable to the Company upon the exercise thereof, the
number of shares of Common Stock theretofore receivable upon exercise of this
Warrant shall, forthwith upon any such increase or decrease becoming effective,
be readjusted to reflect such increase or decrease in such minimum amount.
(f) If any rights, options or warrants or Convertible Securities
as to which an adjustment has been previously made
-5-
<PAGE>
pursuant to this Section 2.04 shall expire without having been exercised, the
number of shares of Common Stock theretofore receivable upon exercise of this
Warrant shall forthwith be adjusted to the number of shares of Common Stock
which would have been in effect had an adjustment been made on the basis that
the only rights or warrants or Convertible Securities previously issued or sold
were those rights or warrants or Convertible Securities actually exercised or
not yet expired.
(g) No adjustment in the number of shares of Common Stock
receivable upon the exercise of this Warrant need be made unless the adjustment
would require an increase or decrease of at least one whole share of Common
Stock, provided, however, such adjustment shall be carried forward and made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
at one whole share of Common Stock.
(h) No adjustment in the number of shares of Common Stock
receiveable upon exercise of this Warrant need be made under this Section for
any change in the par value of the Common Stock. If an adjustment is made to the
number of shares of Common Stock receiveable upon exercise of this Warrant upon
establishment of a record date for distribution subject to this Section and if
such distribution is subsequently canceled, the number of shares of Common Stock
receivable upon exercise of this Warrant then in effect shall be readjusted,
effective as of the date when the Board of Directors of the Company determines
to cancel such distribution, to the number of shares of Common Stock receivable
upon exercise of this Warrant as would have been in effect is such record date
had not been fixed.
Section 2.05. Record Date. In the event that the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend payable in Common Stock, then such record date shall
be deemed for the purposes of this Article 2 to be the date of the issue or sale
of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend.
Section 2.05. Reduction upon Reduction of Shares of Capital Stock
receiveable upon exercise of the MidMark Warrant. The number of shares of Common
Stock receiveable upon exercise of this Warrant shall be reduced by multiplying
the number of shares of Common Stock called for on the face of this Warrant by a
fraction the numerator of which shall be the number of shares of Preferred or of
Commmon Stock actually issued by the Company to MidMark Capital, L.P.
("MidMark") upon the exercise of the MidMark Warrant (as defined herein) and the
denominator of which shall be 228. The "MidMark Warrant" shall mean the Warrant
issued to Midmark by the Company dated the date hereof, providing upon the
exercise of such Warrant for the issuance to MidMark by
-6-
<PAGE>
the Company of up to 228 shares of Preferred or of Common Stock, subject to
adjustment as set forth therein.
Section 2.06. Notice of Adjustment. Upon any adjustment, the
Company shall give notice thereof to the Holder, which notice shall state the
increase or decrease, if any, in the number of shares purchasable upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
ARTICLE 3
TRANSFER RESTRICTIONS
---------------------
Section 3.01. Transfer of Warrants. This Warrant shall not be
transferrable except to an entity that is controlled by, controlling, or under
common control with the Holder (each a "Permitted Transferee"); provided,
however, that the Permitted Transferee, as a condition to such transfer, shall
execute and deliver a written agreement, in form and substance satisfactory to
the Company, agreeing to be bound by the provisions of this Warrant.
Section 3.02. Transfer of Stock; Registration Rights. The shares
of stock issuable upon the exercise of this Warrant shall be subject to the
Stockholders and Registration Rights Agreement, including, but not limited to
the restrictions upon transfer contained therein. Any certificate for such
shares of Common Stock issued upon the exercise of this Warrant shall bear an
appropriate legend describing the foregoing restriction.
Section 3.03. Securities Law Transfer Restrictions. By taking and
holding this Warrant, the Holder (i) acknowledges that neither this Warrant nor
any shares of Common Stock issuable upon the exercise of this Warrant have been
registered under the Securities Act or any applicable state securities or blue
sky law (collectively, the "Acts"); and (ii) agrees not to sell, transfer or
otherwise dispose of this Warrant or any such shares of Common Stock without
such registration unless the sale, transfer or disposition can be effected
without such registration and in compliance with the Acts. Any certificate for
shares of Common Stock issued upon exercise of this Warrant shall bear an
appropriate legend describing the foregoing restrictions.
Section 3.04. Provision of Information by Holder. The Holder shall
make available to the Company such written information, presented in form and
content reasonably satisfactory to the Company, as the Company may reasonably
request, from time to time, in order to make the determination provided for in
Section 3.01.
-7-
<PAGE>
ARTICLE 4
ADDITIONAL DEFINITIONS
----------------------
As used herein, the following terms shall have the meanings
specified below:
"Expiration Date" shall mean the seventh anniversary of the date
of the Warrant.
"Underlying Common Stock" shall mean the shares of Common Stock
purchasable by the holder of this Warrant upon the exercise thereof, assuming
that this Warrant is then exercisable.
ARTICLE 5
MISCELLANEOUS
-------------
Section 5.01. Holder of Record. Each Holder, by holding this
Warrant, consents and agrees that said Holder shall be treated by the Company
and all other persons dealing with this Warrant as the absolute owner hereof for
any purpose and as the person entitled (i) to exercise the rights represented by
this Warrant, or (ii) to the transfer hereof on the books of the Company, any
notice to the Company to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered Holder as the owner for all
purposes.
Section 5.02. Notices. Any notice or communication to be given
pursuant to this Warrant ("Notice") shall be in writing and shall be delivered
in person or by certified mail, return receipt requested, in the United States
mail, postage prepaid. Notices to the Company shall be addressed to the
Company's principal office. Notices to the Holder shall be addressed to the
Holder's address as reflected in the records of the Company. Notices shall be
effective upon delivery in person, or, if mailed, at midnight on the third
business day after mailing.
Section 5.03. Issue Tax. The issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holders for any issuance tax in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate name other
than that of the Holder of the Warrant exercised.
Section 5.04. No Stockholder Rights. This Warrant shall not
entitle the Holder to any voting rights or other rights stockholder of the
Company.
-8-
<PAGE>
Section 5.05. Information. The Company shall furnish each Holder
of Warrants with copies of all reports, proxy statements, and similar materials
that it furnishes generally to Holders of its Stock. In addition, it shall
furnish to each such Holder of Warrants copies of all reports filed by it with
the Securities and Exchange Commission.
Section 5.05. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 5.06. Headings, Interpretation. The section headings used
herein are for convenience of reference only and not intended to define, limit
or describe the scope or intent any provision of this Warrant. When used in this
Warrant, the term "including" shall mean "including, without limitation by
reason of enumeration".
Section 5.07. Successors. The covenants, agreements and provisions
of this Warrant shall bind the parties hereto and their respective successors
and permitted assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant be issued
this ____ day of May 1996.
CLEARVIEW CINEMA GROUP, INC.
a Delaware corporation
By: __________________________
A. Dale Mayo,
President and Secretary
-9-
<PAGE>
EXHIBIT "1"
-----------
SUBSCRIPTION
------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for and purchases the number of shares of Common Stock of
Clearview Cinema Group, Inc. purchasable under this Warrant and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
this Warrant. Such shares are to be registered in the name of the registered
holder of this Warrant and certificates evidencing such shares are to be
delivered to it at its address set forth below its signature unless contrary
instructions are herein given.
Register shares in the name of _______________________________________________.
Deliver certificates to ______________________________________________________.
Dated: ________________________________ ____________________________________
(Signature of Registered Owner)
----------------------------------
(Street Address)
----------------------------------
(City) (State) (Zip Code)
Exhibit 10.33
WARRANT
NEITHER THIS WARRANT NOR THE COMMON STOCK FOR WHICH IT MAY BE EXERCISED HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF,
EXCEPT AS PROVIDED IN ARTICLE 3, UNLESS SO REGISTERED OR UNLESS SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF PURSUANT TO AN EXEMPTION THEREFROM.
No. 3 DECEMBER 13, 1996
CLEARVIEW CINEMA GROUP, INC.
----------------------------
COMMON STOCK PURCHASE WARRANT
This CERTIFIES that, for value received THE PROVIDENT BANK, or its
registered assignee (the "Holder") is entitled to subscribe for and purchase
from Clearview Cinema Group, Inc. a Delaware corporation (the "Company"), 84
shares (subject to adjustment as set forth in Article 2 below, the "Warrant
Shares") of Common Stock of the Company, par value $0.01 per share ("Common
Stock"), at the price of $.01 per share (subject to adjustment as set forth in
Article II below, the "Warrant Purchase Price"), at any time on or after the
date of this Warrant but on or before the Expiration Date, subject to the terms
provided herein. This Warrant is issued in connection with the Warrant Agreement
dated as of the date hereof between the Company and the Holder.
Capitalized terms used herein, and not otherwise defined, shall
have the meanings specified in Article 4. This Warrant is subject to the
following provisions, terms and conditions:
ARTICLE 1
EXERCISE; RESERVATION OF SHARES
Section 1.01. Warrant Exercise. The rights represented by this
Warrant may be exercised in whole or in part by the Holder by the surrender of
this Warrant at any time on or after the date of this Warrant, but in no event
later than the Expiration Date, at the principal office of the Company, together
with a duly executed Subscription in the form annexed as Exhibit "1" hereto
(each a "Subscription Agreement"), and by payment to the Company by certified
check or bank draft of the Warrant Purchase Price (as adjusted as set forth in
Article 2 below, if applicable) for such shares; provided, however, that if
<PAGE>
the issuance of the Underlying Common Stock upon the exercise of this Warrant
requires registration under the Securities Act in the reasonable judgment of the
Company or its counsel, this Warrant shall not be exercisable by the Holder and
no subscription of or payment for shares will be acceptable by the Company prior
to the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), covering the issuance of the Underlying
Common Stock by the Company to the holder of this Warrant. The shares so
purchased shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been exercised as hereinabove provided.
Section 1.02. Net Issue Exercise. Notwithstanding any
provisions herein to the contrary, if the Market Price (as defined below) for
one share of Common Stock is greater than the Purchase Price (on the date of
exercise of all or a part of this Warrant), in lieu of exercising this Warrant
for cash, the Holder may elect to receive Common Stock equal to the value (as
determined below) of this Warrant (or the portion hereof being exercised) by
surrender of this Warrant at the principal office of the Company, together with
a Subscription Agreement fully executed, in which event the Company shall issue
to the Holder that number of Shares of Common Stock computed using the following
formula:
X = Y x [(A-B) / A]
Where Y = the aggregate number of Shares of Common Stock
purchasable under this Warrant or, if only a
portion of this Warrant is being exercised, the
number of Shares of Common Stock for which this
Warrant is being exercised (at the date of such
calculation)
A = Market Price of one Share of Common Stock (at the
date of such calculation)
B = Purchase Price (as adjusted to the date of such
calculation).
For purposes of this Section 1.02, "Market Price" shall mean, if
the Underlying Common Stock is traded on a national securities exchange, the
NASDAQ National Market System or the over-the-counter market, the last reported
price on the date of valuation at which the Underlying Common Stock has traded
on such exchange or the average of the bid and asked prices on the
over-the-counter market on the date of valuation or, if no sale took place on
such date, the last date on which a sale took place. If the Underlying Common
Stock is not so traded, "Market Price" shall be the value of one share of
Underlying Common Stock as
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determined by agreement of the parties hereto, or if the parties hereto cannot
reach agreement, then such value shall be determined by appraisal by an
independent investment banking firm selected by the Company and acceptable to
the Holder; provided, however, that if the Holder and the Company cannot agree
on such investment banking firm, such appraised value shall be determined by
averaging the appraised values calculated by (i) an independent investment
banking firm selected by the company; (ii) an independent investment banking
firm selected by the Holder; and (iii) an independent investment banking firm
selected by the investment banking firms selected by the Company and the Holder.
Such appraisals shall be at the Holder's expense.
Section 1.03. Certificates. Certificates for the shares purchased
pursuant to Section 1.01 shall be delivered to the Holder within a reasonable
time, not exceeding 30 days, after the rights represented by this Warrant shall
have been so exercised.
Section 1.04. Reservation of Shares. The Company covenants and
agrees:
(a) That all Common Stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof; and
(b) That during the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue and delivery upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
ARTICLE 2
ADJUSTMENTS
-----------
Section 2.01. Reorganization, Reclassification, Consolidation,
Merger or Sale. If any reorganization or reclassification of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation in which the Company is not the surviving corporation, or the sale
of all or substantially all of its assets to another corporation or similar
transaction (in any instance, a "Capital Event") shall be effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities or
assets cash with respect to or in exchange for their Common Stock, then, as a
condition of such Capital Event, lawful and adequate provisions shall be made
whereby the Holder hereof shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant and
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<PAGE>
in lieu of the shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
an amount of such shares of stock, securities or assets (including cash) as may
have been issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby had such Capital Event not taken place.
Section 2.02. Subdivision or Combination of Stock. In the event
that the Company shall at any time subdivide or split its outstanding shares of
Common Stock into a greater number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately increased. In
the event that the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately reduced.
Section 2.03. Stock Dividends. In the event that the Company shall
at any time declare any dividend upon its Common Stock payable in stock, the
number of shares subject to issuance upon exercise of this Warrant shall be
increased by the number (and the kind) of shares which would have been issued to
the holder of this Warrant if this Warrant were exercised immediately prior to
such dividend.
Section 2.04. Issuance at less than Purchase Price.
(a) Subject to Section 2.04(d) below, in the event that the
Company shall at any time issue or sell any shares of Common Stock for a
consideration per share less than $2,558.48 (the "Purchase Price"), then in any
such event, the holder of this Warrant shall be entitled to receive, in lieu of
the number of shares of Common Stock theretofore receiveable upon the exercise
of this Warrant, a number of shares of Common Stock determined by (a) dividing
the Purchase Price by the Adjusted Purchase Prices (as defined herein) and (b)
multiplying the result by the number of shares of Common Stock called for on the
face of this Warrant. The Adjusted Purchase Prices shall be calculated (to the
nearest full cent) by dividing (i) the sum of (x) the number of shares of Common
Stock outstanding or deemed to be outstanding 2.04(b) below immediately prior to
such issue or sale, multiplied by the Purchase Price in effect immediately prior
to such issue or sale and (y) the aggregate amount of the consideration received
by the Company upon such issue or sale by (ii) the total number of shares of
Common Stock outstanding or deemed to be outstanding pursuant to Section 2.04(b)
below immediately after such issue or sale.
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<PAGE>
(b) Subject to Section 2.04(d) below, in case the Company shall
issue or sell options, rights or warrants entitling the holders thereof to
subscribe for or purchase shares of Common Stock, the number of shares of Common
Stock theretofore receiveable upon the exercise of this Warrant shall be
adjusted on the date of such issuance or sale, as set forth in Section 2.04(a)
above, based on a sale price equal to the sum of the price of such instrument
and its minimum exercise price if the total thereof shall be less than the
Purchase Price in effect immediately prior to such issue or sale, and assuming
the exercise or conversion of all such options, rights or warrants so issued or
sold.
(c) In case the Company shall issue or sell any other security or
instrument directly or indirectly convertible into or exchangeable for Common
Stock ("Convertible Securities"), the number of shares of Common Stock
theretofore receivable upon the exercise of this Warrant shall be adjusted on
the date of issue or sale, as set forth in Section 2.04(a) above, based on a
sale price equal to the sum of the purchase price of such Convertible Security
and the price at which its conversion to Common Stock may be experienced if the
total thereof shall be less than the Purchase Price immediately prior to such
issue or sale, and assuming the conversion of all such Convertible Securities so
issued or sold.
(d) Notwithstanding any of the provisions contained in this
Section 2.04, in no event shall there be an adjustment of the number of shares
of Common Stock theretofore receivable upon exercise of this Warrant as a result
of (x) the exercise of any warrants, rights, options or conversion privileges
that were outstanding on or prior to the date of the initial issuance of this
Warrant (y) the exercise of any warrants, options, rights or similar instruments
issued after the date hereof for which adjustment has already been made pursuant
to Section 2.04(b) above.
(e) If any rights, options or warrants or Convertible Securities
shall by their terms provide for an increase or decrease, with the passage of
time or the occurrence or non-occurrence of an event, in the minimum amount of
additional consideration payable to the Company upon the exercise thereof, the
number of shares of Common Stock theretofore receivable upon exercise of this
Warrant shall, forthwith upon any such increase or decrease becoming effective,
be readjusted to reflect such increase or decrease in such minimum amount.
(f) If any rights, options or warrants or Convertible Securities
as to which an adjustment has been previously made pursuant to this Section 2.04
shall expire without having been exercised, the number of shares of Common Stock
theretofore receivable upon exercise of this Warrant shall forthwith be
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<PAGE>
adjusted to the number of shares of Common Stock which would have been in effect
had an adjustment been made on the basis that the only rights or warrants or
Convertible Securities previously issued or sold were those rights or warrants
or Convertible Securities actually exercised or not yet expired.
(g) No adjustment in the number of shares of Common Stock
receivable upon the exercise of this Warrant need be made unless the adjustment
would require an increase or decrease of at least one whole share of Common
Stock, provided, however, such adjustment shall be carried forward and made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
at one whole share of Common Stock.
(h) No adjustment in the number of shares of Common Stock
receiveable upon exercise of this Warrant need be made under this Section for
any change in the par value of the Common Stock. If an adjustment is made to the
number of shares of Common Stock receiveable upon exercise of this Warrant upon
establishment of a record date for distribution subject to this Section and if
such distribution is subsequently canceled, the number of shares of Common Stock
receivable upon exercise of this Warrant then in effect shall be readjusted,
effective as of the date when the Board of Directors of the Company determines
to cancel such distribution, to the number of shares of Common Stock receivable
upon exercise of this Warrant as would have been in effect is such record date
had not been fixed.
Section 2.05. Record Date. In the event that the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend payable in Common Stock, then such record date shall
be deemed for the purposes of this Article 2 to be the date of the issue or sale
of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend.
Section 2.06. Notice of Adjustment. Upon any adjustment, the
Company shall give notice thereof to the Holder, which notice shall state the
increase or decrease, if any, in the number of shares purchasable upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
ARTICLE 3
TRANSFER RESTRICTIONS
Section 3.01. Transfer of Warrants. This Warrant shall not be
transferrable except to an entity that is controlled by, controlling, or under
common control with the Holder (each a "Permitted Transferee"); provided,
however, that the Permitted
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<PAGE>
Transferee, as a condition to such transfer, shall execute and deliver a written
agreement, in form and substance satisfactory to the Company, agreeing to be
bound by the provisions of this Warrant.
Section 3.02. Transfer of Stock; Registration Rights. The shares
of stock issuable upon the exercise of this Warrant shall be subject to the
Stockholders and Registration Rights Agreement, including, but not limited to
the restrictions upon transfer contained therein. Any certificate for such
shares of Common Stock issued upon the exercise of this Warrant shall bear an
appropriate legend describing the foregoing restriction.
Section 3.03. Securities Law Transfer Restrictions. By taking and
holding this Warrant, the Holder (i) acknowledges that neither this Warrant nor
any shares of Common Stock issuable upon the exercise of this Warrant have been
registered under the Securities Act or any applicable state securities or blue
sky law (collectively, the "Acts"); and (ii) agrees not to sell, transfer or
otherwise dispose of this Warrant or any such shares of Common Stock without
such registration unless the sale, transfer or disposition can be effected
without such registration and in compliance with the Acts. Any certificate for
shares of Common Stock issued upon exercise of this Warrant shall bear an
appropriate legend describing the foregoing restrictions.
Section 3.04. Provision of Information by Holder. The Holder shall
make available to the Company such written information, presented in form and
content reasonably satisfactory to the Company, as the Company may reasonably
request, from time to time, in order to make the determination provided for in
Section 3.01.
ARTICLE 4
ADDITIONAL DEFINITIONS
As used herein, the following terms shall have the meanings
specified below:
"Expiration Date" shall mean the seventh anniversary of the date
of the Warrant.
"Underlying Common Stock" shall mean the shares of Common Stock
purchasable by the holder of this Warrant upon the exercise thereof, assuming
that this Warrant is then exercisable.
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<PAGE>
ARTICLE 5
MISCELLANEOUS
Section 5.01. Holder of Record. Each Holder, by holding this
Warrant, consents and agrees that said Holder shall be treated by the Company
and all other persons dealing with this Warrant as the absolute owner hereof for
any purpose and as the person entitled (i) to exercise the rights represented by
this Warrant, or (ii) to the transfer hereof on the books of the Company, any
notice to the Company to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered Holder as the owner for all
purposes.
Section 5.02. Notices. Any notice or communication to be given
pursuant to this Warrant ("Notice") shall be in writing and shall be delivered
in person or by certified mail, return receipt requested, in the United States
mail, postage prepaid. Notices to the Company shall be addressed to the
Company's principal office. Notices to the Holder shall be addressed to the
Holder's address as reflected in the records of the Company. Notices shall be
effective upon delivery in person, or, if mailed, at midnight on the third
business day after mailing.
Section 5.03. Issue Tax. The issuance of certificates for shares
of Common Stock upon the exercise of this Warrant shall be made without charge
to the Holders for any issuance tax in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate name other
than that of the Holder of the Warrant exercised.
Section 5.04. No Stockholder Rights. This Warrant shall not
entitle the Holder to any voting rights or other rights stockholder of the
Company.
Section 5.05. Information. The Company shall furnish each Holder
of Warrants with copies of all reports, proxy statements, and similar materials
that it furnishes generally to Holders of its Stock. In addition, it shall
furnish to each such Holder of Warrants copies of all reports filed by it with
the Securities and Exchange Commission.
Section 5.05. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 5.06. Headings, Interpretation. The section headings used
herein are for convenience of reference only and not intended to define, limit
or describe the scope or intent any
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<PAGE>
provision of this Warrant. When used in this Warrant, the term "including" shall
mean "including, without limitation by reason of enumeration".
Section 5.07. Successors. The covenants, agreements and provisions
of this Warrant shall bind the parties hereto and their respective successors
and permitted assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant be issued
this ____ day of December, 1996.
CLEARVIEW CINEMA GROUP, INC.
a Delaware corporation
By: __________________________
A. Dale Mayo,
President and Secretary
<PAGE>
EXHIBIT "1"
SUBSCRIPTION
------------
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for and purchases the number of shares of Common Stock of
Clearview Cinema Group, Inc. purchasable under this Warrant and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
this Warrant. Such shares are to be registered in the name of the registered
holder of this Warrant and certificates evidencing such shares are to be
delivered to it at its address set forth below its signature unless contrary
instructions are herein given.
Register shares in the name of ____________________________________________.
Deliver certificates to ___________________________________________________.
Dated: ____________________________ _____________________________________
(Signature of Registered Owner)
_______________________________
(Street Address)
_______________________________
(City) (State) (Zip Code)
Exhibit 10.34
Neither this Warrant nor the shares of Class A Convertible Preferred
Stock or Common Stock issuable upon exercise of this Warrant have been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and this Warrant cannot be exercised, sold or
transferred, and the shares of Class A Convertible Preferred Stock and
Common Stock issuable upon exercise of this Warrant cannot be sold or
transferred, unless and until they are so registered or unless such
registration is not then required under the circumstances of such
exercise, sale or transfer.
No. W -1
Dated: May 29, 1996 Warrant to Purchase an aggregate
of 228 Shares of Class A
Convertible Preferred Stock
and/or up to that number of Shares
of Common Stock into which 228
Shares of Class A Convertible
Preferred Stock may be converted.
CLEARVIEW CINEMA GROUP, INC.
WARRANT
Exercisable on or before 5:00 P.M., June 1, 2006
(unless extended)
This certifies that, for value received, MIDMARK CAPITAL, L.P., the
registered holder hereof ("Holder"), is entitled, subject to the terms and
conditions hereof, to purchase from CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation (the "Corporation"), at any time or from time-to-time during the
periods specified in Section 1 hereof, up to 228 shares of Class A Convertible
Preferred Stock of the Corporation ("Class A Convertible Preferred Stock");
provided, however, at the option of the Holder hereof, upon exercise of this
Warrant in whole or in part, the Holder hereof may elect to receive, in lieu of
any or all of the shares of Class A Convertible Preferred Stock for which this
Warrant shall have been so exercised, that number of shares of common stock, par
value $.01 per share ("Common Stock"), of the Corporation into which such shares
of Class A Convertible Preferred Stock shall be convertible on the date of such
exercise. The shares of Class A Convertible Preferred Stock and Common Stock
purchasable pursuant to this Warrant are collectively referred to herein as the
"Warrant Shares". The Warrant Shares shall be purchasable at a price (the
"Exercise Price" per share as determined pursuant to Section 7 hereof. The
number of warrant
<PAGE>
Shares issuable upon exercise of this Warrant is subject to adjustment as
provided in Section 7 below. As used herein, the term "Warrant" shall include
this Warrant and any warrants delivered in substitution or exchange herefor as
provided herein.
1. Term of Warrant; Exercise Period; Early Termination.
(a) Subject to the terms and conditions set forth herein, this Warrant
shall be exercisable, in whole or in part (but not as to fractional shares),
during the period commencing on the earlier of (i) June 1, 2001 or (ii) the date
of the first Liquidity Event (as defined herein), and, unless extended by the
Corporation, ending at 5:00 p.m., Eastern Time, on June 1, 2006, (the "Exercise
Period"), and shall be void thereafter. Exercise of this Warrant, in whole or in
part, during the Exercise Period shall be made in accordance with provisions of
Section 2(a) hereof.
(b) As used herein, a "Liquidity Event" shall mean the first to occur
of any of the following:
(i) a sale of all or a majority of the outstanding Common Stock;
(ii) a merger or consolidation involving the Corporation, other
than a merger or consolidation in which persons who, immediately prior to the
closing of such transaction, were holders of voting securities of the
Corporation having in the aggregate in excess of fifty percent (50%) of the
voting power of the Corporation hold, immediately after such transaction, voting
securities of the surviving entity having in excess of fifty percent (50%) of
the voting power of the surviving entity;
(iii) a sale of all or substantially all of the assets of the
Corporation;
(iv) the consummation of an underwritten public offering of
Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended;
(v) the listing by the Corporation of shares of Common Stock on
the New York Stock Exchange, the American Stock Exchange or the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), and/or
the registration of the Common Stock as a class under the Securities Exchange
Act of 1934, as amended; or
(vi) liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
(c) (i) As used herein, the "Fair Market Value" of a
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share of Common Stock shall equal:
(A) in the case of a Liquidity Event described in subsections
"1(b)(i)" or "(ii)", the aggregate cash and the fair market value (as agreed
upon by the Corporation and the Holder) of any other consideration received by
holders of Common Stock as a result of such event, divided by the number of
outstanding shares of Common Stock (assuming the exercise of all warrants and
options for, and the conversion of all securities convertible into, Common
Stock);
(B) in the case of a Liquidity Event described in subsection
"1(b)(iii)", the aggregate cash and the fair market value (as agreed upon by the
Corporation and the Holder) of any other consideration received by the
Corporation, less all debts and other liabilities of the Corporation, and less
all payments which would be made upon liquidation to holders of securities which
are entitled to preferential payments upon liquidation (other than such
securities which may be convertible into Common Stock), divided by the number of
outstanding shares of Common Stock (assuming the exercise of all warrants and
options for, and the conversion of all securities convertible into, Common
Stock)
(C) in the case of a Liquidity Event described in subsections
"1(b)(iv)" or "1(b)(v)", the average of the daily "Common Stock Market Prices"
(as hereinafter defined) for any one hundred and twenty (120) consecutive
"Trading Day" (as hereinafter defined) period following the date of such
listing, provided that the Common Stock Market Price for each day during such
period shall exceed $6,823.59 (i.e., two hundred sixty-six and two-thirds
percent (266 and 2/3%) of the purchase price per share of the Class A
Convertible Preferred Stock being purchased on the date hereof by the Holder
pursuant to that certain Preferred Stock and Warrant Purchase Agreement dated
the date hereof (the "Purchase Agreement"), of which this Warrant is an Exhibit)
(as adjusted when, as and if, and in the same manner as, the Exercise Price (as
hereinafter defined) is adjusted in accordance with Section 7 hereof); and
(D) in the case of a Liquidity Event described in subsection
"l(b)(vi)", the aggregate cash and the fair market value (as agreed upon by the
Corporation and the Holder) of any other consideration received by holders of
Common Stock as a result of such event, divided by the number of outstanding
shares of Common Stock.
(d) As used herein:
(A) The term "Common Stock Market Price" for any day means (1) if
the Common Stock is listed or admitted for trading on the New York Stock
Exchange (or any successor to such
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exchange), or, if not so listed or admitted, on any national or regional
securities exchange, the last sale price, or the closing bid price if no sale
occurred, of the Common Stock on the principal securities exchange on which the
Common Stock is listed, or (2) if not listed or traded as described in clause
(1), the last reported sales price of the Common Stock on the National Market
System of the National Association of Securities Dealers Automated Quotations
System, or any similar system of automated dissemination of quotations of
securities prices then in common use, if so quoted, or (3) if not quoted as
described in clause (2), the mean between the high bid and the low asked
quotations for the Common Stock as reported by the National Quotation Bureau
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for the Common Stock on as least five of the ten preceding days. If
the Common Stock is quoted on a national securities or central market system in
lieu of a market or quotation system described above, then the closing price
shall be determined in the manner set forth in clause (1) of the preceding
sentence if actual transactions are reported and in the manner set forth in
clause (3) of the preceding sentence if bid and asked quotations are reported
but actual transactions are not.
(B) The term "Trading Day" shall mean (1) a date on which the New
York Stock Exchange (or any successor to such exchange) is open for the
transaction of business, or (2) if the Common Stock is not at such time listed
or admitted for trading on the New York Stock Exchange (or any successor to such
Exchange), a date upon which the principal national or regional securities
exchange upon which the Common Stock is listed or admitted to trading is open
for the transaction of business, or (3) if not listed or admitted to trading as
described in clauses (1) or (2), and if at such time the sales price of Common
Stock is quoted on the National Market System of the National Association of
Securities Dealers Automated Quotations System, or any similar system of
automated dissemination of quotations of securities prices then in common use, a
date for which such system provides quotations with respect to securities upon
which it reports, or (4) if not so quoted, and if at such time the bid and asked
prices of the Common Stock are reported by the National Quotation Bureau
Incorporated, a date for which the National Quotation Bureau Incorporated
provides bid and asked prices with respect to securities upon which it reports,
or (5) if not so quoted, any business day.
(e) Notwithstanding anything to the contrary contained herein, if the
Fair Market Value per share of Common Stock established as a result of any such
Liquidity Event shall exceed $6,823.59 (i.e., two hundred sixty-six and
two-thirds percent (266 and 2/3%) of the purchase price per share of the Class A
Convertible Preferred Stock being purchased on the date hereof by the Holder
pursuant to that certain Preferred Stock and Warrant
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<PAGE>
Purchase Agreement dated the date hereof (the "Purchase Agreement"), of which
this Warrant is an Exhibit) (as adjusted when, as and if, and in the same manner
as, the Exercise Price (as hereinafter defined) is adjusted in accordance with
Section 7 hereof), then the number of shares of Class A Convertible Preferred
Stock and Common Stock for which this Warrant is then exercisable shall be
reduced to a number determined by multiplying such number by a percentage
determined in accordance with the following chart (or as determined by straight
line interpolation between the two closest percentages set forth in such chart):
FMV Actual % Difference New % of Warrant Shares
- --- ------------------- -----------------------
$ 266 2/3% 100%
$ 300% 75%
$ 333 1/3% 50%
$ 366 2/3% 25%
$ 400% or greater 0%
2. Exercise of Warrant. (a) This Warrant may be exercised by the Holder, in
whole or in part, at the Exercise Price, at any time during the Exercise Period
in accordance with Section 1(a) hereof, by mailing or otherwise delivering this
Warrant, along with an Exercise Notice in the form attached hereto as Annex A
duly executed by the Holder (or the Holder's duly authorized attorney or
representative) and payment of the Exercise Price for the Warrant Shares to be
purchased, to the address of the Corporation designated pursuant to Section 9
hereof. Following the receipt of notice of any contemplated Liquidity Event
pursuant to Section 8 hereof, the Holder may, at any time prior to such
Liquidity Event, deliver this Warrant, along with a duly executed Exercise
Notice and payment of the Exercise Price for the Warrant Shares to be purchased,
to the Corporation for exercise effective upon the consummation of such
Liquidity Event. Any such attempted exercise shall be effective only as to those
Warrant Shares which, pursuant to Section 1(e) hereof, remain available
following such Liquidity Event; any excess Exercise Price shall be promptly
returned by the Corporation to the Holder.
(b) Payment for the Warrant Shares to be purchased shall be made (i)
in cash or by check, (ii) by cancellation by the Holder of indebtedness of the
Corporation to the Holder or (iii) by a combination of (i) and (ii).
(c) In the event that this Warrant is exercised for less than all of
the Warrant Shares purchasable hereunder, the Corporation will, upon surrender
of this Warrant to the
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<PAGE>
Corporation, execute and deliver a new Warrant of like tenor and exercisable for
the balance of the Warrant Shares for which this Warrant may then be exercised.
(e) This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the Holder entitled to receive Warrant Shares issuable upon
exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date.
3. Replacement of Warrant. On receipt of evidence of the loss, theft,
destruction or mutilation of this Warrant and, in the case of loss, theft or
destruction, on delivery of indemnity and or security reasonably satisfactory to
the Corporation or, in the case of mutilation, on surrender and cancellation of
this Warrant, the Corporation shall execute and deliver a new Warrant of like
tenor in substitution hereof.
4. No Rights as Stockholders. Nothing contained in this Warrant shall be
construed to confer upon the Holder of this warrant, in its capacity as such,
any right to vote for the election of directors or upon any other matter
submitted to stockholders of the Corporation at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings,
or to receive dividends or subscription rights, or any other rights or
privileges of a stockholder of the Corporation, until the Warrant shall have
been exercised as provided herein.
5. Transfer of Warrant.
(a) Restriction on Transferability of Warrant. Neither this Warrant
nor any rights of the Holder hereof may be transferred or assigned, in whole or
in part, except with the prior written consent of the Corporation.
Notwithstanding anything contained herein to the contrary, this Warrant,
together with all rights of the Holder hereof, may be transferred or assigned,
without consent of the Corporation, to any (i) "affiliate" of the Holder, (ii)
successor of the Holder pursuant to a merger, consolidation or sale of
substantially all assets, (iii) partner of Holder or of MidMark Equity Partners,
L.P., or (iv) other party to whom the shares of Class A Convertible Preferred
Stock and/or Common Stock held by the Holder may, pursuant to that certain
Stockholders and Registration Rights Agreement, be transferred pursuant to
Section 2.2 thereof. For the purposes of the immediately preceding sentence the
term "affiliate" shall have the meaning ascribed thereto pursuant to Rule 405 of
the Rules and Regulations promulgated by the Securities and Exchange Commission
pursuant to the Securities Act.
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<PAGE>
(b) Exchange of Warrant Upon Transfer. If this warrant is presented
for transfer in accordance with the terms hereof, it shall be surrendered by the
Holder at the of,ice of the Corporation and accompanied by an assignment in form
and substance reasonably satisfactory to the Corporation, duly executed by the
Holder or the Holder's duly authorized attorney or representative. On surrender
of this Warrant for transfer, the Corporation shall issue a new warrant to
Holder's transferee (if transferred in whole), or to the Holder and Holder's
transferee, as appropriate (if transferred in part), for the number of shares
then issuable upon exercise hereof.
(c) Warrant Register. The Corporation will maintain a register (the
"Warrant Register") containing the names and addresses of the Holder and the
holders of other warrants issued by the Corporation. The Holder of this Warrant
may change its address shown on the Warrant Register by written notice to the
Corporation requesting such change. Until this Warrant is transferred on the
Warrant Register of the Corporation, the Corporation shall be entitled to treat
the registered holder as shown on the Warrant Register as the owner of this
Warrant for all purposes, notwithstanding any notice to the contrary, and shall
not be bound to recognize any equitable or other claim to or interest in such
Warrant on the part of any other person.
6. Reservation of Stock. The Corporation covenants that until the
expiration of this Warrant, the Corporation will keep reserved from its
authorized and unissued Class A Convertible Preferred Stock and Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of this Warrant, as such number may vary from time-to-time.
The Corporation further covenants that all shares that may be issued upon the
exercise of this Warrant and upon payment of the Exercise Price in accordance
with the terms hereof will be duly authorized, validly issued, and fully paid
and nonassessable.
7. Exercise Price. The Exercise Price for each Warrant Share purchasable
pursuant to this Warrant shall be one cent ($0.01) per Warrant Share purchased.
The Exercise Price shall be subject to adjustment from time to time as
hereinafter provided (such price, or the price as last adjusted, also being
referred to herein as the "Exercise Price"). Upon each adjustment of the
Exercise Price, the Holder shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of Warrant Shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment, and dividing the product thereof by the Exercise Price
resulting from such adjustment.
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<PAGE>
(a) Subdivision or Combination of Stock. In case the Corporation shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares by way of stock split, stock dividend or similar event, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares by way of reverse
stock split or similar event, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased.
(b) Reorganization, Reclassification, Consolidation, Mercer or Sale.
If any capital reorganization or reclassification of the capital stock of the
Corporation, any consolidation or merger of the Corporation with another entity,
or the sale of all or substantially all of the Corporation's assets to another
entity shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions shall be made
whereby the Holder shall thereafter have the right to purchase and receive upon
the basis and the terms and conditions specified in this Warrant and in lieu of
the shares of Common Stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such
reorganization, reclassification, consolidation, merger or sale not taken place
and in any such case appropriate provision shall be made with respect to the
rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Exercise Price and of the number of shares of Common Stock purchasable and
receivable upon the exercise of this Warrant) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Corporation will not effect
any such consolidation, merger or sale, unless prior to the consummation thereof
the successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument, executed and mailed or delivered to the Holder at the
last address thereof appearing on the books of the Corporation, the obligation
to deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase.
(c) Notice of Adjustment. Upon any adjustment of the Exercise Price
and/or number of Warrant Shares, then and in each
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<PAGE>
such case the Corporation shall give written notice thereof, by first class
mail, postage prepaid, addressed to the holder at the address thereof as shown
on the books of the Corporation. The notice shall state the Exercise Price
and/or number of Warrant Shares resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
(d) No Change of Warrant. The form of this Warrant need not be changed
because of any adjustment in number and kind of Warrant Shares purchasable
hereunder pursuant to this Section 7. Any Warrant issued after any such
adjustment upon any partial exercise or upon replacement or transfer may
continue to express the same terms as are stated in this Warrant as initially
issued, and the number and kind of Warrant Shares purchasable hereunder shall be
considered to have been so changed as to the close of business on the date or
dates of adjustment.
8. Notice of Corporate Events. In the event the Corporation shall propose
to:
(a) issue to the holders of the outstanding Common Stock any option,
warrant or other right to subscribe for or purchase any shares of
capital stock of any class or any other securities of the
Corporation, or
(b) effect a merger or consolidation of the Corporation with or into
another entity, or
(c) undertake any Liquidity Event;
then, in each such case, the Corporation will give the Holder written notice
thereof at least 60 days prior to the earlier of (i) the record date for
determining the stockholders entitled to receive such dividend, distribution or
right or to vote upon such merger, consolidation, dissolution, liquidation or
winding-up, or (ii) the contemplated effective date of the Liquidity Event.
9. Notices. All notices required or permitted hereunder shall be in writing
and shall be sufficiently given if: (a) hand delivered (in which case the notice
shall be effective upon delivery); (b) telecopied, provided that in such case a
copy of such notice shall be concurrently sent by registered or certified mail,
return receipt requested, postage prepaid (in which case the notice shall be
effective two days following dispatch); (c) delivered by Express Mail, Federal
Express or other nationally recognized overnight courier service (in which case
the notice shall be effective one business day following dispatch); or (d)
delivered or mailed by registered or certified mail, return receipt requested,
postage prepaid (in which case the notice shall
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<PAGE>
be effective three days following dispatch), to the parties at the following
addresses and/or telecopier numbers, or to such other address or number as a
party shall specify by written notice to the others in accordance with this
Section 9.
If to the Holder:
MidMark Capital, L.P.
466 Southern Blvd.
Chatham, New Jersey 07928
Fax: 201-822-8911
with a copy to:
David F. Broderick, Esq.
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07101
Fax: 201-624-7070
If to the Corporation:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, New Jersey 07940
Attention: A. Dale Mayo, President
Fax: 201-377-4303
with a copy to:
Warren Colodner, Esq.
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
45th Floor
New York, New York 10020
Fax: 212-536-3901
10. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
11. Certain Events. In the event of the dissolution, liquidation or
winding up of the Corporation, the rights to purchase Warrant Shares evidenced
by this Warrant Certificate shall terminate and expire and, except as otherwise
provided in Section 1(e), the Holder of this Warrant Certificate shall be
entitled to receive from the Corporation, after payment of all debts,
obligations and liabilities of the Corporation and after payment of any
liquidation preference on any class of capital stock of the Corporation having a
preference as to such payments
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<PAGE>
over the holders of Class A Convertible Preferred Stock, payment in an amount
equal to the greater of (i) the product of (a) the amount by which the
liquidating payment per share of Class A Convertible Preferred Stock exceeds the
Exercise Price per share of Class A Convertible Preferred Stock, multiplied by
(b) the number of shares of Class A Convertible Preferred Stock purchasable
pursuant to this Warrant Certificate, or (ii) the product of (a) the liquidating
payment per share of Common Stock multiplied by (b) the number of shares of
Common Stock issuable upon conversion of all shares of Class A Convertible
Preferred Stock purchasable pursuant to this Warrant Certificate.
12. Preferred Stock and Warrant Purchase Agreement. This Warrant is the
Warrant originally authorized for issuance pursuant to the Purchase Agreement.
The Holder is entitled to the benefits of the Purchase Agreement and may enforce
the agreements of the Corporation contained therein, all in accordance with the
terms thereof. Certain terms used in this Warrant not otherwise defined herein
shall have the respective meanings specified in the Purchase Agreement.
13. Stockholders Agreement. All Class A Convertible Preferred Stock, Common
Stock or other securities issuable upon exercise of this Warrant shall be
subject to all of the provisions of and shall be entitled to the benefits of the
Stockholders and Registration Rights Agreement dated as of the date hereof by
and among the Corporation and the stockholders of the Corporation as of such
date (the "Stockholders Agreement"). Upon such exercise, the holder of the Class
A Convertible Preferred Stock, Common Stock or other securities issuable
hereunder shall become a "Stockholder" under such Agreement, as the Stockholders
Agreement may have been modified, supplemented or amended prior to the date of
such exercise. The provisions of this Section 13 shall not apply if the
Stockholders Agreement has been terminated, either by agreement of the parties
thereto or by its own terms, prior to the date of such exercise.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
by its duly authorized officer on the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By:________________________________
Name: A. Dale Mayo
Title: President
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<PAGE>
Annex A
EXERCISE NOTICE
The undersigned hereby elects to exercise the right to purchase:
(i) __________ shares of Class A Convertible Preferred Stock of Clearview
Cinema Group, Inc., covered by this Warrant in accordance with the
terms and conditions hereof and, in connection therewith, elects to
receive:
(a) __________ shares of Class A Convertible Preferred Stock, [and/or
(b) that number of shares of Common Stock as would be issuable upon
conversion of __________ shares of Class A Convertible Preferred
Stock at the Conversion Price in effect on the date hereof].
The undersigned herewith makes payment of the Exercise Price of such Warrant
Shares in full in the following manner:
( ) Cash in the amount of $__________,
( ) Check, bank draft or money order payable to the order
of "Clearview Cinema Group, Inc." in the amount of
$__________, and/or
( ) Discharge of Indebtedness in principal amount of
$__________, due to the Holder pursuant to
_______________________________________________________.
Dated: _________________
___________________________________
Holder
By:________________________________
Name:
Title:
___________________________________
Social Security Number or
Taxpayer's Identification
Number
Exhibit 10.35
Neither this Warrant nor the shares of Class A Convertible Preferred
Stock or Common Stock issuable upon exercise of this Warrant have been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and this Warrant cannot be exercised, sold or
transferred, and the shares of Class A Convertible Preferred Stock and
Common Stock issuable upon exercise of this Warrant cannot be sold or
transferred, unless and until they are so registered or unless such
registration is not then required under the circumstances of such
exercise, sale or transfer.
No. W -2
Dated: July 2, 1996 Warrant to Purchase an aggregate
of 243 Shares of Class A
Convertible Preferred Stock
and/or up to that number of Shares
of Common Stock into which 243
Shares of Class A Convertible
Preferred Stock may be converted.
CLEARVIEW CINEMA GROUP, INC.
WARRANT
Exercisable on or before 5:00 P.M., June 1, 2006
(unless extended)
This certifies that, for value received, MIDMARK CAPITAL, L.P., the
registered holder hereof ("Holder"), is entitled, subject to the terms and
conditions hereof, to purchase from CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation (the "Corporation"), at any time or from time-to-time during the
periods specified in Section 1 hereof, up to 243 shares of Class A Convertible
Preferred Stock of the Corporation ("Class A Convertible Preferred Stock");
provided, however, at the option of the Holder hereof, upon exercise of this
Warrant in whole or in part, the Holder hereof may elect to receive, in lieu of
any or all of the shares of Class A Convertible Preferred Stock for which this
Warrant shall have been so exercised, that number of shares of common stock, par
value $.01 per share ("Common Stock"), of the Corporation into which such shares
of Class A Convertible Preferred Stock shall be convertible on the date of such
exercise. The shares of Class A Convertible Preferred Stock and Common Stock
purchasable pursuant to this Warrant are collectively referred to herein as the
"Warrant Shares". The Warrant Shares
<PAGE>
shall be purchasable at a price (the "Exercise Price" per share as determined
pursuant to Section 7 hereof. The number of warrant Shares issuable upon
exercise of this Warrant is subject to adjustment as provided in Section 7
below. As used herein, the term "Warrant" shall include this Warrant and any
warrants delivered in substitution or exchange herefor as provided herein.
1. Term of Warrant; Exercise Period; Early Termination.
(a) Subject to the terms and conditions set forth herein, this Warrant
shall be exercisable, in whole or in part (but not as to fractional shares),
during the period commencing on the earlier of (i) June 1, 2001 or (ii) the date
of the first Liquidity Event (as defined herein), and, unless extended by the
Corporation, ending at 5:00 p.m., Eastern Time, on June 1, 2006, (the "Exercise
Period"), and shall be void thereafter. Exercise of this Warrant, in whole or in
part, during the Exercise Period shall be made in accordance with provisions of
Section 2(a) hereof.
(b) As used herein, a "Liquidity Event" shall mean the first to occur
of any of the following:
(i) a sale of all or a majority of the outstanding Common Stock;
(ii) a merger or consolidation involving the Corporation, other
than a merger or consolidation in which persons who, immediately prior to the
closing of such transaction, were holders of voting securities of the
Corporation having in the aggregate in excess of fifty percent (50%) of the
voting power of the Corporation hold, immediately after such transaction, voting
securities of the surviving entity having in excess of fifty percent (50%) of
the voting power of the surviving entity;
(iii) a sale of all or substantially all of the assets of the
Corporation;
(iv) the consummation of an underwritten public offering of
Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended;
(v) the listing by the Corporation of shares of Common Stock on
the New York Stock Exchange, the American Stock Exchange or the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), and/or
the registration of The Common Stock as a class under the Securities Exchange
Act of 1934, as amended; or
(vi) liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
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<PAGE>
(c) (i) As used herein, the "Fair Market Value" of a share of Common
Stock shall equal:
(A) In the case of a Liquidity Event described in subsections
"1(b)(i)" or "(ii)", the aggregate cash and the fair market value (as agreed
upon by the Corporation and the Holder) of any other consideration received by
holders of Common Stock as a result of such event, divided by the number of
outstanding shares of Common Stock (assuming the exercise of all warrants and
options for, and the conversion of all securities convertible into, Common
Stock);
(B) in the case of a Liquidity Event described in subsection
"1(b)(iii)", the aggregate cash and the fair market value (as agreed upon by the
Corporation and the Holder) of any other consideration received by the
Corporation, less all debts and other liabilities of the Corporation, and less
all payments which would be made upon liquidation to holders of securities which
are entitled to preferential payments upon liquidation (other than such
securities which may be convertible into Common Stock), divided by the number of
outstanding shares of Common Stock assuming the exercise of all warrants and
options for, and the conversion of all securities convertible into, Common
Stock)
(C) in the case of a Liquidity Event described in subsections
"1(b)(iv)" or "1(b)(v)", the average of the daily "Common Stock Market Prices"
(as hereinafter defined) for any one hundred and twenty (120) consecutive
"Trading Day" (as hereinafter defined) period following the date of such
listing, provided that the Common Stock Market Price for each day during such
period shall exceed $6,823.59 (i.e., two hundred sixty-six and two-thirds
percent (266 and 2/3%) of the purchase price per share of the Class A
Convertible Preferred Stock being purchased on the date hereof by the Holder
pursuant to that certain Preferred Stock and Warrant Purchase Agreement dated
the date hereof (the "Purchase Agreement"), of which this Warrant is an Exhibit)
(as adjusted when, as and if, and in the same manner as, the Exercise Price (as
hereinafter defined) is adjusted in accordance with Section 7 hereof); and
(D) in the case of a Liquidity Event described in subsection
"1(b)(vi)", the aggregate cash and the fair market value (as agreed upon by the
Corporation and the Holder) of any other consideration received by holders of
Common Stock as a result of such event, divided by the number of outstanding
shares of Common Stock.
(d) As used herein:
(A) The term "Common Stock Market Price" for any
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<PAGE>
day means (1) if the Common Stock is listed or admitted for trading on the New
York Stock Exchange (or any successor to such exchange), or, if not so listed or
admitted, on any national or regional securities exchange, the last sale price,
or the closing bid price if no sale occurred, of the Common Stock on the
principal securities exchange on which the Common Stock is listed, or (2) if not
listed or traded as described in clause (1), the last reported sales price of
the Common Stock on the National Market System of the National Association of
Securities Dealers Automated Quotations System, or any similar system of
automated dissemination of quotations of securities prices then ln common use,
if so quoted, or (3) if not quoted as described in clause (2), the mean between
the high bid and the low asked quotations for the Common Stock as reported by
the National Quotation Bureau Incorporated if at least two securities dealers
have inserted both bid and asked quotations for the Common Stock on as least
five of the ten preceding days. If the Common Stock is quoted on a national
securities or central market system in lieu of a market or quotation system
described above, then the closing price shall be determined in the manner set
forth in clause (1) of the preceding sentence if actual transactions are
reported and in the manner set forth in clause (3) of the preceding sentence if
bid and asked quotations are reported but actual transactions are not.
(B) The term "Trading Day" shall mean (1) a date on which the New
York Stock Exchange (or any successor to such exchange) is open for the
transaction of business, or (2) if the Common Stock is not at such time listed
or admitted for trading on the New York Stock Exchange (or any successor to such
Exchange), a date upon which the principal national or regional securities
exchange upon which the Common Stock is listed or admitted to trading is open
for the transaction of business, or (3) if not listed or admitted to trading as
described in clauses (1) or (2), and if at such time the sales price of Common
Stock is quoted on the National Market System of the National Association of
Securities Dealers Automated Quotations System, or any similar system of
automated dissemination of quotations of securities prices then in common use, a
date for which such system provides quotations with respect to securities upon
which reports, or (4) if not so quoted, and if at such time the bid and asked
prices of the Common Stock are reported by the National Quotation Bureau
Incorporated, a date for which the National Quotation Bureau Incorporated
provides bid and asked prices with respect to securities upon which it reports,
or (5) if not so quoted, any business day.
(e) Notwithstanding anything to the contrary contained herein, if the
Fair Market Value per share of Common Stock established as a result cf any such
Liquidity Event shall exceed $6,823.59 (i.e., two hundred sixty-six and
two-thirds percent (266 and 2/3%) of the purchase price per share of the Class A
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<PAGE>
Convertible Preferred Stock being purchased on the date hereof by the Holder
pursuant to that certain Preferred Stock and Warrant Purchase Agreement dated
the date hereof (the "Purchase Agreement"), of which this warrant is an Exhibit)
(as adjusted when, as and if, and in the same manner as, the Exercise Price (as
hereinafter defined) is adjusted in accordance with Section 7 hereof), then the
number of shares of Class A Convertible Preferred Stock and Common Stock for
which this Warrant is then exercisable shall be reduced to a number determined
by multiplying such number by a percentage determined in accordance with the
following chart (or as determined by straight line interpolation between the two
closest percentages set forth in such chart):
FMV Actual % Difference New % of Warrant Shares
- --- ------------------- -----------------------
$ 266 2/3% 100%
$ 300% 75%
$ 333 1/3% 50%
$ 366 2/3% 25%
$ 400% or greater 0%
2. Exercise of Warrant. (a) This Warrant may be exercised by the Holder, in
whole or in part, at the Exercise Price, at any time during the Exercise Period
in accordance with Section 1(a) hereof, by mailing or otherwise delivering this
Warrant, along with an Exercise Notice in the form attached hereto as Annex A
duly executed by the Holder (or the Holder's duly authorized attorney or
representative) and payment of the Exercise Price for the Warrant Shares to be
purchased, to the address of the Corporation designated pursuant to Section 9
hereof. Following the receipt of notice of any contemplated Liquidity Event
pursuant to Section 8 hereof, the Holder may, at any time prior to such
Liquidity Event, deliver this Warrant, along with a duly executed Exercise
Notice and payment of the Exercise Price for the Warrant Shares to be purchased,
to the Corporation for exercise effective upon the consummation of such
Liquidity Event. Any such attempted exercise shall be effective only as to those
warrant Shares which, pursuant to Section 1(e) hereof, remain available
following such Liquidity Event; any excess Exercise Price shall be promptly
returned by the Corporation to the Holder.
(b) Payment for the Warrant Shares to be purchased shall be made (i)
in cash or by check, (ii) by cancellation Dy the Holder of indebtedness of the
Corporation to the Holder or (iii) by a combination of (i) and (ii).
(c) In the event that this Warrant is exercised for
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<PAGE>
less than all of the warrant Shares purchasable hereunder, the Corporation will,
upon surrender of this Warrant to the Corporation, execute and deliver a new
warrant of like tenor and exercisable for the balance of the Warrant Shares for
which this warrant may then be exercised.
(e) This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the Holder entitled to receive Warrant Shares issuable upon
exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date.
3. Replacement of Warrant. On receipt of evidence of the loss, theft,
destruction or mutilation of this Warrant and, in the case of loss, theft or
destruction, on delivery of indemnity and or security reasonably satisfactory to
the Corporation or, in the case of mutilation, on surrender and cancellation of
this Warrant, the Corporation shall execute and deliver a new Warrant of like
tenor in substitution hereof.
4. No Rights as Stockholders. Nothing contained in this Warrant shall be
construed to confer upon the Holder of this warrant, in its capacity as such,
any right to vote for the election of directors or upon any other matter
submitted to stockholders of the Corporation at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings,
or to receive dividends or subscription rights, or any other rights or
privileges of a stockholder of the Corporation, until the Warrant shall have
been exercised as provided herein.
5. Transfer of Warrant.
(a) Restriction on Transferability of Warrant. Neither this Warrant
nor any rights of the Holder hereof may be transferred or assigned, in whole or
in part, except with the prior written consent of the Corporation.
Notwithstanding anything contained herein to the contrary, this Warrant,
together with all rights of the Holder hereof, may be transferred or assigned,
without consent of the Corporation, to any (i) "affiliate" of the Holder, (ii)
successor of the Holder pursuant to a merger, consolidation or sale of
substantially all assets, (iii) partner of Holder or of MidMark Equity Partners,
L.P., or (iv) other party to whom the shares of Class A Convertible Preferred
Stock and/or Common Stock held by the Holder may, pursuant to that certain
Stockholders and Registration Rights Agreement, be transferred pursuant to
Section 2.2 thereof. For the purposes of the immediately preceding sentence the
term "affiliate" shall have the meaning ascribed thereto pursuant to Rule 405 of
the Rules and Regulations promulgated by the
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<PAGE>
Securities and Exchange Commission pursuant to the Securities Act.
(b) Exchange of Warrant Upon Transfer. If this warrant is presented
for transfer in accordance with the terms hereof, it shall be surrendered by the
Holder at the of,ice of the Corporation and accompanied by an assignment in form
and substance reasonably satisfactory to the Corporation, duly executed by the
Holder or the Holder's duly authorized attorney or representative. On surrender
of this Warrant for transfer, the Corporation shall issue a new warrant to
Holder's transferee (if transferred in whole), or to the Holder and Holder's
transferee, as appropriate (if transferred in part), for the number of shares
then issuable upon exercise hereof.
(c) Warrant Register. The Corporation will maintain a register (the
"Warrant Register") containing the names and addresses of the Holder and the
holders of other warrants issued by the Corporation. The Holder of this Warrant
may change its address shown on the Warrant Register by written notice to the
Corporation requesting such change. Until this Warrant is transferred on the
Warrant Register of the Corporation, the Corporation shall be entitled to treat
the registered holder as shown on the Warrant Register as the owner of this
Warrant for all purposes, notwithstanding any notice to the contrary, and shall
not be bound to recognize any equitable or other claim to or interest in such
Warrant on the part of any other person.
6. Reservation of Stock. The Corporation covenants that until the
expiration of this Warrant, the Corporation will keep reserved from its
authorized and unissued Class A Convertible Preferred Stock and Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of this Warrant, as such number may vary from time-to-time.
The Corporation further covenants that all shares that may be issued upon the
exercise of this Warrant and upon payment of the Exercise Price in accordance
with the terms hereof will be duly authorized, validly issued, and fully paid
and nonassessable.
7. Exercise Price. The Exercise Price for each Warrant Share purchasable
pursuant to this Warrant shall be one cent ($0.01) per Warrant Share purchased.
The Exercise Price shall be subject to adjustment from time to time as
hereinafter provided (such price, or the price as last adjusted, also being
referred to herein as the "Exercise Price"). Upon each adjustment of the
Exercise Price, the Holder shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, .he number of warrant Shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment, and dividing the product thereof by the Exercise Price
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<PAGE>
resulting from such adjustment.
(a) Subdivision or Combination of Stock. In case the Corporation shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares by way of stock split, stock dividend or similar event, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares by way of reverse
stock split or similar event, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale.
If any capital reorganization or reclassification of the capital stock of the
Corporation, any consolidation or merger of the Corporation with another entity,
or the sale of all or substantially all of the Corporation's assets to another
entity shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions shall be made
whereby the Holder shall thereafter have the right to purchase and receive upon
the basis and the terms and conditions specified in this Warrant and in lieu of
the shares of Common Stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such
reorganization, reclassification, consolidation, merger or sale not taken place
and in any such case appropriate provision shall be made with respect to the
rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Exercise Price and of the number of shares of Common Stock purchasable and
receivable upon the exercise of this Warrant) shall thereafter be applicable, as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Corporation will not effect
any such consolidation, merger or sale, unless prior to the consummation thereof
the successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument, executed and mailed or delivered to the Holder at the
last address thereof appearing on the books of the Corporation, the obligation
to deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase.
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(c) Notice of Adjustment. Upon any adjustment of the Exercise Price
and/or number of Warrant Shares, then and in each such case the Corporation
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the holder at the address thereof as shown on the books of the
Corporation. The notice shall state the Exercise Price and/or number of Warrant
Shares resulting from such adjustment, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
(d) No Change of Warrant. The form of this warrant need not be changed
because of any adjustment in number and kind of Warrant Shares purchasable
hereunder pursuant to this Section 7. Any Warrant issued after any such
adjustment upon any partial exercise or upon replacement or transfer may
continue to express the same terms as are stated in this Warrant as initially
issued, and the number and kind of Warrant Shares purchasable hereunder shall be
considered to have been so changed as to the close of business on the date or
dates of adjustment.
8. Notice of Corporate Events. In the event the Corporation shall propose
to:
(a) issue to the holders of the outstanding Common Stock any option,
warrant or other right to subscribe for or purchase any shares of
capital stock of any class or any other securities of the
Corporation, or
(b) effect a merger or consolidation of the Corporation with or into
another entity, or
(c) undertake any Liquidity Event;
then, in each such case, the Corporation will give the Holder written notice
thereof at least 60 days prior to the earlier of (i) the record date for
determining the stockholders entitled to receive such dividend, distribution or
right or to vote upon such merger, consolidation, dissolution, liquidation or
winding-up, or (ii) the contemplated effective date of the Liquidity Event.
9. Notices. All notices required or permitted hereunder shall be in writing
and shall be sufficiently given if: (a) hand delivered (in which case the notice
shall be effective upon delivery); (b) telecopied, provided that in such case a
copy of such notice shall be concurrently sent by registered or certified mall,
return receipt requested, postage prepaid (in which case the notice shall be
effective two days following dispatch); (c) delivered by Express Mail, Federal
Express or other nationally recognized overnight courier service (in which case
the notice shall be effective one business day following dispatch); or
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(d) delivered or mailed by registered or certified mail, return receipt
requested, postage prepaid (in which case the notice shall be effective three
days following dispatch), to the parties at the following addresses and/or
telecopier numbers, or to such other address or number as a party shall specify
by written notice to the others in accordance with this Section 9.
If to the Holder:
MidMark Capital, L.P.
466 Southern Blvd.
Chatham, New Jersey 07928
Fax: 201-822-8911
with a copy to:
David F. Broderick, Esq.
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07101
Fax: 201-624-7070
If to the Corporation:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, New Jersey 07940
Attention: A. Dale Mayo, President
Fax: 201-377-4303
with a copy to:
Warren Colodner, Esq.
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
45th Floor
New York, New York 10020
Fax: 212-536-3901
10. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
11. Certain Events. In the event of the dissolution, liquidation or
winding up of the Corporation, the rights to purchase Warrant Shares evidenced
by this Warrant Certificate shall terminate and expire and, except as otherwise
provided in Section 1(e), the Holder of this Warrant Certificate shall be
entitled to receive from the Corporation, after payment of all debts,
obligations and liabilities of the Corporation and after
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payment of any liquidation preference on any class of capital stock of the
Corporation having a preference as to such payments over the holders of Class A
Convertible Preferred Stock, payment in an amount equal to the greater of (i)
the product of (a) the amount by which the liquidating payment per share of
Class A Convertible Preferred Stock exceeds the Exercise Price per share of
Class A Convertible Preferred Stock, multiplied by (b) the number of shares of
Class A Convertible Preferred Stock purchasable pursuant to this Warrant
Certificate, or (ii) the product of (a) the liquidating payment per share of
Common Stock multiplied by (b) the number of shares of Common Stock issuable
upon conversion of all shares of Class A Convertible Preferred Stock purchasable
pursuant to this Warrant Certificate.
12. Preferred Stock and Warrant Purchase Agreement. This Warrant is the
Warrant originally authorized for issuance pursuant to the Purchase Agreement.
The Holder is entitled to the benefits of the Purchase Agreement and may enforce
the agreements of the Corporation contained therein, all in accordance with the
terms thereof. Certain terms used in this Warrant not otherwise defined herein
shall have the respective meanings specified in the Purchase Agreement.
13. Stockholders Agreement. All Class A Convertible Preferred Stock, Common
Stock or other securities issuable upon exercise of this Warrant shall be
subject to all of the provisions of and shall be entitled to the benefits of the
Stockholders and Registration Rights Agreement dated as of the date hereof by
and among the Corporation and the stockholders of the Corporation as of such
date (the "Stockholders Agreement"). Upon such exercise, the holder of the Class
A Convertible Preferred Stock, Common Stock or other securities issuable
hereunder shall become a "Stockholder" under such Agreement, as the Stockholders
Agreement may have been modified, supplemented or amended prior to the date of
such exercise. The provisions of this Section 13 shall not apply if the
Stockholders Agreement has been terminated, either by agreement of the parties
thereto or by its own terms, prior to the date of such exercise.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
by its duly authorized officer on the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By:________________________________
Name: A. Dale Mayo
Title: President
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Annex A
EXERCISE NOTICE
The undersigned hereby elects to exercise the right to purchase:
(i) __________ shares of Class A Convertible Preferred Stock of Clearview
Cinema Group, Inc., covered by this Warrant in accordance with the
terms and conditions hereof and, in connection therewith, elects to
receive:
(a) __________ shares of Class A Convertible Preferred Stock, [and/or
(b) that number of shares of Common Stock as would be issuable upon
conversion of __________ shares of Class A Convertible Preferred
Stock at the Conversion Price in effect on the date hereof].
The undersigned herewith makes payment of the Exercise Price of such Warrant
Shares in full in the following manner:
( ) Cash in the amount of $__________
( ) Check, bank draft or money order payable to the order
of "Clearview Cinema Group, Inc." in the amount of
$__________, and/or
( ) Discharge of Indebtedness in principal amount of
$__________, due to the Holder pursuant to ___________
___________________________________________.
Dated: _________________
___________________________________
Holder
By:________________________________
Name:
Title:
___________________________________
Social Security Number or
Taxpayer's Identification
Number
Exhibit 10.36
AGREEMENT
This Agreement is dated as of September 8, 1995, by and among Cinema
Grand Avenue, Inc., a New York corporation ("GAI"), and Triplex Movies at Port
Washington, Inc. a New York corporation ("PWI," together with GAI, the "GG
Group") and Clearview Cinema Group, Inc., a Delaware corporation ("CCG"), CCC
Grand Avenue Cinema Corp., a Delaware corporation ("GACC"), and CCC Port
Washington Cinema Corp., a Delaware corporation ("PWCC," and together with CCG,
and GACC, the "Clearview Group").
The GG Group desires to grant and the Clearview Group desires to
receive an option to purchase certain of the GG Group's assets, upon the terms
and subject to the conditions set forth below.
The GG Group and the Clearview Group further desire that the Clearview
Group shall operate the Theaters (as defined in Section 4.07) for the Clearview
Group's own account, upon the terms and subject to the conditions set forth
below.
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the GG Group and the Clearview Group,
each intending to be legally bound hereby, agree as set forth below.
ARTICLE I
THE OPTION
1.01 Grant of Options. The GG Group hereby grants to the Clearview Group an
exclusive option (the "Option") to purchase the Assets (as defined in Section
2.01) on the terms and subject to the conditions set forth in this Agreement.
1.02 Exercise of Option. The Clearview Group may exercise the Option by
delivering to the GG Group a written notice (the "Option Notice") either (a)
within the thirty-day period immediately following the end of each of the Second
Contract Year, the Third Contract Year, the Fourth Contract Year, or the Fifth
Contract Year or (b) within any Exercise Period (as defined in Section 9.2(b)).
The "First Contract Year" shall be the period
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beginning on September 8, 1995 and ending on September 7, 1996; the "Second
Contract Year" shall be the period beginning on September 8, 1996 and ending on
September 7, 1997; the "Third Contract Year" shall be the period beginning on
September 8, 1997 and ending on September 7, 1998; the "Fourth Contract Year"
shall be the period beginning on September 8, 1998 and ending on September 7,
1999; the "Fifth Contract Year" shall be the period beginning on September 8,
1999 and ending on September 7, 2000; each such period may be referred to in
this Agreement as a "Contract Year."
1.03 Option Payment. In consideration of the Option granted by this
Agreement, the Clearview Group shall pay to the GG Group the payments (each an
"Option Payment" and collectively the "Option Payments") in the amounts and on
the dates set forth below:
(a) Initial Option Payment; Interest Reimbursement. During the First
Contract Year only, the Clearview Group shall pay to the GG Group in the amounts
and on the dates set forth on Schedule 1.03(a), the aggregate amount of $160,000
(the "Initial Option Payment"), plus an additional aggregate amount of $6,400
(the "Interest Reimbursement") as reimbursement for interest charged to the GG
Group or its affiliates by its lender.
(b) Additional Option Payments. The Clearview Group shall also pay to
the GG Group for each Contract Year an amount (each an "Additional Option
Payment" and collectively the "Additional Option Payments") equal to the sum of
(i) $120,000 and (ii) ten percent of the Average Excess Revenue, if any, as of
the end of that Contract Year. By way of example and not limitation, Schedule
1.03(b) sets forth an illustration of option payments over five years.
(c) Time of Payment; Adjustments. The Additional Option Payment for
each Contract Year shall be made in thirteen installments comprising (i) twelve
equal monthly installments based on the Estimated Additional Option Payment for
that Contract Year, payable on the last day of each month during the Contract
Year, and (ii) a final installment consisting of the amount, if any, by which
the Additional Option Payment exceeded the Estimated Additional Option Payment
for that Contract Year, payable within thirty days after the close of the
Contract Year. If the Estimated Additional Option Payment paid on account of a
particular Contract Year exceeds the actual Additional Option Payment for that
Contract Year, the Clearview Group (i) shall be entitled to deduct such excess
(the "Refundable Amount") from (A) the Additional Option Payment for the
succeeding Contract Year, deducting the full Refundable Amount from the initial
installment and continuing to deduct the remaining portion of the Refundable
Amount from each successive installment until the Refundable Amount has been
satisfied in full or (B) if the Clearview Group shall have exercised the Option,
from the Purchase Price, or (ii) in the case of the Fifth Contract Year if the
Clearview Group shall not have exercised the Option, shall be entitled to a cash
refund of such excess within thirty days following the end of the Fifth Contract
Year.
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(d) Definitions.
(i) The "Average Excess Revenue" at the end of a particular
Contract Year shall be equal to two hundred percent of (i) the amount by which
the Gross Revenue for all Contract Years preceding such Closing Date exceeds (A)
$1,840,000 multiplied by (B) the number of such Contract Years divided by (ii)
the number of such Contract Years; provided, however, that in the event that
additional screens are added to certain of the Theaters in accordance with
Section 3.07, for any Contract Year in which the obligation to repay Borrowed
Funds (as defined in Section 3.07) remains outstanding, only 75% of the Gross
Revenue for any Theater on the behalf of which such funds were borrowed shall be
included in the revenue used in calculating the Average Excess Revenue for such
time as the Borrowed Funds shall remain outstanding. By way of example and not
limitation, if in a particular Contract Year the obligation remained outstanding
for eight months of the Contract Year to repay Borrowed Funds in connection with
the addition of screens at the Grand Avenue Theaters, the Gross Revenue for that
Contract Year shall equal the sum of (A) 75% of the Gross Revenues for the Grand
Avenue Theater for eight months during which the Borrowed Funds remained
outstanding plus (B) 100% of the Gross Revenue for the Grand Avenue Theater for
the four months during which the Borrowed Funds were not outstanding plus (C)
100% of the Gross Revenues of the Port Washington Theater.
(ii) The "Estimated Additional Option Payment" shall be (i)
$120,000 for the First Contract Year, (ii) for the Second Contract Year, an
amount equal to the Additional Option Payment for the First Contract Year, (iii)
for the Third Contract Year, an amount equal to the Additional Option Payment
for the Second Contract Year, (iv) for the Fourth Contract Year, an amount equal
to the Additional Option Payment for the Third Contract Year, and (v) for the
Fifth Contract Year, an amount equal to the Additional Option Payment for the
Fourth Contract Year.
(iii) The "Gross Revenue" for a particular Contract Year for a
Theater shall be the sum of all income of all of any kind derived from the
operation of the Theater, including without limitation from rentals, ticket
sales, concessions and all other sources minus any sales taxes paid thereon;
provided, however, that should any Theater be closed for renovation or
additions, the Gross Revenue for that Theater shall include on account of the
period during which the Theater was closed (the "Closed Period") an amount equal
to the average daily Gross Revenue for that Theater calculated over the twelve
months prior to the Closed Period multiplied by the number of days in the Closed
Period.
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(e) Dispute Resolution. The calculation of Excess Revenue and Gross
Revenue shall be made by the Clearview Group, as reflected in the Financial
Statements periodically provided by the Clearview Group to the GG Group pursuant
to Section 3.06. Any disagreement concerning the calculation of the amount of
the Excess Revenue or of the Gross Revenue or the calculation of any Option
Payment or the Purchase Price for a particular Contract Year shall be delivered
to the Clearview Group by the GG Group in writing (the "Dispute Notice") within
sixty days following the end of such Contract Year or, if the Option shall have
been exercised, within thirty days following the delivery of the Option Notice,
provided that the most recent financial statement pursuant to Section 3.6 shall
have been timely delivered. If the Clearview Group and the GG Group do not
resolve such dispute within thirty days after the delivery of such notice, the
Clearview Group and the GG Group shall engage to resolve such dispute the New
York office of the accounting firm of KPMG Peat Marwick, if such firm shall not
have represented any of the Clearview Group or its affiliates within the
three-year period ending on the day of the Dispute Notice is delivered to the
Clearview Group, and otherwise the New York office of the accounting firm of
Arthur Andersen, or if neither such firm accepts such engagement, an accounting
firm designated by the New York office of the American Arbitration Association.
The engagement agreement with such accounting firm shall require the accounting
firm to make their determination with respect to the items in dispute within
ninety days. The Clearview Group and the GG Group shall each pay one half of the
costs of the fees and expenses of such accounting firm. The resolution by the
such accounting firm of such dispute shall be final, binding and conclusive upon
the parties and shall be the parties' sole and exclusive remedy regarding any
dispute concerning the amount of the Excess Revenue or Gross Revenue. During the
period of dispute, the Clearview Group shall continue to pay to the GG Group all
amounts owed to the GG Group that are undisputed. Upon resolution of the
dispute, the accounting firm shall deliver to each of the GG Group and the
Clearview Group, a written resolution of the dispute (the "Resolution Notice").
1.04. Nature of Option Payments. The Option Payments shall be
non-refundable. If the Clearview Group exercises the Option, all Option Payments
paid prior to the Closing Date shall be credited toward the Purchase Price as
defined in Section 2.04.
ARTICLE II.
THE ACQUISITION
The Provisions of this Article II shall be applicable
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only if the Clearview Group shall have exercised the Option as set forth in
Article I.
2.01. Sale and Purchase of Assets. At the Closing (as defined below), the
GG Group shall sell and transfer to the Clearview Group, and the Clearview Group
shall purchase from the GG Group the assets (collectively, the "Assets") set
forth on Schedule 2.01 to the extent owned by the GG Group only.
2.02. Assumption of Liabilities. At the Closing, each of GACC and PWCC
shall assume the Leases (as defined in Section 4.12) for the Grand Avenue and
Port Washington Theaters, respectively; provided, however, that such assumption
shall not release either or both of GAI or PWI from any prior or subsequent
liability under its respective Lease. Except as expressly provided in this
Agreement, the Clearview Group does not and shall not assume or in any way
undertake to pay, perform, satisfy or discharge any other liabilities or
obligations of the GG Group (the "Retained Liabilities") and the GG Group will
pay and satisfy when due all Retained Liabilities.
2.03. Closing Date. The consummation of the purchase and sale of the Assets
(the "Closing") shall take place at the New York offices of Kirkpatrick &
Lockhart LLP, 1251 Avenue of the Americas, New York, New York (or at such other
location in New York City as the Clearview Group shall designate) on a date (the
"Closing Date") not fewer than fifteen nor more than forty-five days after the
date of delivery of the Option Notice.
2.04. Purchase Price.
(a) Calculation. Except as provided in the subsequent sentence, the
aggregate purchase price (the "Purchase Price") for the Assets shall be equal to
the sum of (i) $1,200,000, (ii) the Average Excess Revenue as of the Closing
Date and (iii) all Additional Option Payments made or owing by the Clearview
Group to the Seller on or prior to the Closing Date. Notwithstanding the
previous sentence, if the Option Notice shall have been delivered pursuant to
Section 9.02(b), the Purchase Price shall be adjusted on the terms set forth in
Section 9.02(b). By way of example and not by limitation, Schedule 1.03(b) sets
forth an illustration of the calculation of the Purchase Price pursuant to the
first sentence of this Section.
2.05. Closing. At Closing, the Clearview Group shall pay to the GG Group
the Purchase Price (i) by wire transfer of immediately available federal funds
or (ii) only if the stock of CCG shall be then listed for trading on a national
securities exchange or NASDAQ, at the option of the GG Group by a convertible
promissory note of CCG, in the form attached as
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Exhibit A to this Agreement, in an amount equal to or less than $200,000, and
the remainder by wire transfer of immediately available federal funds. At the
Closing, the Clearview Group shall receive a credit on account of the Purchase
Price for the Initial Option Payment and all Additional Option Payments actually
paid by the Clearview Group to the GG Group on or prior to the Closing Date. The
Clearview Group and the GG Group acknowledge that all Option Payments due and
unpaid at the time of the Purchase Price shall be paid as part of the Purchase
Price and that the Purchase Price when actually paid shall constitute a final
determination of all amounts owed by the Clearview Group to the GG Group. The GG
Group acknowledges that CCG shall have no obligation to file any registration
statement with the Securities and Exchange Commission or any similar state or
federal agency or to cause its stock to be listed for trading on any national
securities exchange or NASDAQ.
2.06 Taxes. All sales and transfer taxes relating to the transactions
contemplated by this Agreement will be borne by the Clearview Group; provided
however, that any Real Property Transfer Gains Tax (pursuant to Article 31-B of
the New York Tax Code) (the "Real Property Gains Tax") will be paid and borne by
the GG Group. The Option Payments and the Purchase Price shall each be allocated
as set forth on Schedule 2.06.
ARTICLE III.
OPERATION OF THEATERS
3.01. Term. From and after the Effective Date of this Agreement until the
earlier of the Closing or Termination of this Agreement in accordance with
Article X, each of GACC and PWCC (each a "CCGS") shall operate the Grand Avenue
Theater and the Port Washington Theater, respectively, as if for its own
account. The Effective Date of this Agreement shall be September 8, 1995.
3.02. Compensation. Until the earlier of the Closing or Termination of this
Agreement each CCGS shall be entitled to retain all revenues of the Theaters
after payment of costs and expenses as set forth in Section 3.03.
3.03. Duties. For each respective Theater, each CCGS shall and CCG shall
cause each CCGS to:
(a) operate all aspects of the business of the Theater, including but
not limited to personnel, programming, finance, accounting, maintenance, sales,
administration, both with respect to day-to-day operations and with respect to
strategic planning, in its complete and sole discretion, subject only to the
following limitations:
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(i) each CCGS shall maintain the present film release policy of
current premium first-run releases in the Long Island, New York Market;
(ii) all employment and termination decisions as to theater
managers, relief managers, and supervisors shall be made by a two-person
committee that shall include Carmi Djiji; and
(iii) each CCGS shall maintain the present admission price of
$7.50 general admission and $4.50 for children under twelve and senior citizens,
and shall not change that admission price unless the admission price charged by
the major theater circuits in Long Island, New York, shall change, in which case
each CCGS shall have the right, but not the obligation, to change the admission
price charged by it in accordance with such change;
(b) be liable for all operating costs and expenses of the Theater
incurred on or after the date of the Effective Date of this Agreement, including
theater rents, additional rents, real estate and other taxes (excluding income
taxes), and insurance premiums, and will cause such costs and expenses to be
paid directly to the obligee no later than seven days after the date such cost
or expense is due (due dates for obligations which are not evidenced by invoices
shall be determined by industry standards); any obligations which become due and
owing after the date of this Agreement but which comprise costs and expenses
incurred and attributable before the date of this Agreement, such as rent,
electricity, gas, water, sewer, telephone, property taxes, employee salary and
benefits and similar items, shall be prorated between the Clearview Group and
the GG Group as of the date of this Agreement;
(c) fulfill all obligations of the GG Group under the Leases (as
defined in Section 4.13).
(d) make or cause to be made all necessary ordinary repairs, renewals,
and replacements of equipment and furnishings, and shall contract for any labor
and materials that may be required in connection therewith, and purchase all
supplies that are necessary for the proper operation of the Theater;
(e) cause to be placed and carried insurance in the types and amounts
(i) currently placed and carried by the GG Group (ii) required by any Lease, or
(iii) required by applicable law which shall name the GG Group as well as any
one else required or to be named;
(f) use its best efforts to maintain the current
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market share of the Theater, which efforts shall include but not be limited to
taking such steps as are reasonable, in the Clearview Group's discretion, to
seek legal correction of any prejudicial or discriminatory action on the part of
exhibitors, film companies, film distributors, or film buyers; and
(g) return the Theaters with all Assets (or suitable replacements (the
"Replacements")) in operating condition upon termination or expiration of this
Agreement; provided, however, that all personal property other than the
Replacements, if any, brought into the Theaters by the Clearview Group shall
remain property of the Clearview Group.
3.04. Labor Negotiations. The GG Group shall be entitled to participate
jointly with the Clearview Group in the negotiation of any labor contract with
IATSE, local number 640 representing the employees of the Clearview Group
employed at the Theaters.
3.05. Employees. The Clearview Group shall be permitted but not obligated
to hire the current or former employees of the GG Group, subject to Section
3.03(a)(ii).
3.06. Financial Statements/Inspection.
(a) On or prior to the fifteenth day of each month, the Clearview
Group shall provide the GG Group with statements, for each Theater, certified by
CCG's President, setting forth for the previous month, the Gross Revenue for
each Theater; the twelfth monthly statement shall provide cumulative information
for the year then ended.
(b) The Clearview Group shall allow the GG Group or its designated
agent access to financial records concerning the Gross Revenues of the Theaters
during regular business hours upon reasonable notice.
(c) The Clearview Group shall instruct its managers to fax to the GG
Group the same revenue information that is faxed to the main office of the
Clearview Group each night.
3.07. Improvements. The Clearview Group may with the written consent of the
GG Group renovate the Grand Avenue Theater to increase the number of screens
from two to four and may, in connection with such renovation, borrow funds (the
"Borrowed Funds") from a third party lender.
3.08. Name of Theaters. At the Clearview Group's sole discretion, the
Clearview Group shall be entitled to operate the Theaters under the names under
which the Theaters are being
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operated as of the date of this Agreement or under the name "Clearview Cinemas"
or any variation of that name. The GG Group acknowledges that it shall have no
right to operate the Theaters under the name "Clearview Cinemas" or any
variation of that name if this Agreement expires or is terminated.
3.09. Remit Funds. After the Effective Date of this Agreement, the GG Group
shall promptly transfer and deliver to the Clearview Group any cash or other
property, if any, that the GG Group may receive relating to the operation of the
Theaters subsequent to the Effective Date and the Clearview Group shall promptly
transfer and deliver to the GG Group any cash or other property, if any, that
the Clearview Group may receive relating to the operation of the Theaters prior
to the Effective Date of this Agreement.
3.10. Nature of Business. The GG Group acknowledges that the Clearview
Group shall operate the Theaters for the Clearview Group's own account and
according to the Clearview Group's business judgments, in its sole and absolute
discretion and except as expressly limited in Section 3.03 shall have no duty to
the GG Group in connection with the Clearview Group's operation of Theaters
except as specifically and expressly required in this Agreement. Neither the GG
Group (except as specifically set forth in Article IV) nor the Clearview Group
makes any representations, warranties or guarantees as to the level of revenues
or profit to be generated by the Theaters under the Clearview Group's operation.
3.11. No Termination. The GG Group acknowledges that it shall have no right
to terminate all or any part of this Agreement, except on the terms set forth in
Article X.
3.12. Nature of Clearview Rights. The Clearview Group acknowledges that the
enjoyment and performance by the Clearview Group of their rights and obligations
under this Article III does not constitute an assignment of the Leases to the
Clearview Group and that no such assignment shall occur until the Closing under
this Agreement.
3.13. Miscellaneous.
(a) the Clearview Group shall permit the GG Group access through the
Port Washington Theater to the office of the GG Group located at 116 Main
Street, Port Washington, New York at all times and shall provide the GG Group
with all keys necessary for such access;
(b) the Clearview Group shall provide the GG Group with the following
passes entitling the holder to free admission
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to any Theater at any time: three season passes for four people each, three
season passes for two people each, and such courtesy passes as shall be
requested by the GG Group, not to exceed seven per week; and
(c) the Clearview Group shall honor currently outstanding season
passes.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE GG GROUP
As an inducement to the Clearview Group to enter into this Agreement
and consummate the transactions contemplated hereby, the GG Group represents and
warrants to the Clearview Group as follows:
4.01. Organization. Each corporation in the GG Group is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the corporate power and authority to own
or lease its properties, carry on its business as now conducted, enter into and
perform its obligations under this Agreement.
4.02. Authorization; Enforceability. This Agreement has been duly executed
and delivered by and constitutes the legal, valid and binding obligations of the
GG Group, enforceable against it in accordance with its terms. All actions
contemplated by this Section have been duly and validly authorized by all
necessary proceedings by the GG Group.
4.03. No Violation of Laws or Agreements; Consents. Neither the execution
and delivery of this Agreement, the consummation of the transactions
contemplated in this Agreement nor the compliance with or fulfillment of its
terms, conditions or provisions by the GG Group will: (i) contravene any
provision of the governing documents of the GG Group, (ii) conflict with, result
in a breach of, constitute a default or an event of default (or an event that
might, with the passage of time or the giving of notice or both, constitute a
default or event of default) under any of the terms of, result in the
termination of, result in the loss of any right under, or give to any other
person the right to cause such a termination of or loss under, any Asset or any
other contract, agreement or instrument to which the GG Group is a party or by
which any of its assets may be bound or affected, (iii) result in the maturation
or acceleration of any liability or obligation of the GG Group (or give to any
other person the right to cause such a creation, maturation or acceleration),
(iv) violate any judgment or order of any
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governmental body to which the GG Group is subject or by which any of the Assets
or any of its other assets may be bound or affected, or (v) result in the
creation or imposition of any encumbrance upon any of the Assets or give to any
other Person any interest or right therein. Except for the consents of the
landlords under the Leases, no consent, approval or authorization of, or
registration or filing with, any person is required in connection with the
execution and delivery by the GG Group of this Agreement or the consummation by
the GG Group of the transactions contemplated by this Agreement.
4.04. Financial Information. The books of account and related records of
the GG Group reflect accurately the assets and liabilities of the GG Group. The
representations and warranties contained in the previous sentence shall survive
only until the end of the First Contract Year.
4.05. Undisclosed Liabilities. The GG Group, to its knowledge, has no debt,
obligation or liability, absolute, fixed, contingent or otherwise, of any nature
whatsoever, whether due or to become due, including any unasserted claim,
whether incurred directly or by any predecessor thereto, and whether arising out
of any act, omission, transaction, circumstance, sale of goods or services,
state of facts or other condition that would have a material effect on
Clearview's operation of the Theaters, except those which have been disclosed in
writing to the Clearview Group. The representations and warranties contained in
this Section shall survive only until the end of the First Contract Year.
4.06. Taxes. Except as set forth on Schedule 4.06, the GG Group has filed
or caused to be filed on a timely basis, or will file or cause to be filed on a
timely basis, all Tax Returns that are required to be filed by it prior to or on
the Closing Date, pursuant to the Law of each governmental authority with taxing
power over it. All such Tax Returns were or will be, as the case may be, correct
and complete. The GG Group has paid all Taxes hat have become due as shown on
such Tax Returns or pursuant to any assessment received as an adjustment to such
Tax Returns. The GG Group has withheld and paid all Taxes required to have been
withheld in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party. There is no pending, or,
to the knowledge of the GG Group, threatened or anticipated, assessment of any
additional Tax against any member of the affiliated group of corporations which
the GG Group is or was a part for any taxable period during which the GG Group
or any predecessor company was a member of such group. "Tax" means any domestic
or foreign, federal, state, county, local or foreign tax, levy, impost or other
charge of any kind whatsoever, including any interest or penalty thereon or
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addition thereto, whether disputed or not. "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to any Tax, including any schedule or attachment thereto, and including
any amendment thereof.
4.07. Condition of Assets; Business. The GG Group is engaged in the
business (the "Business") of the operation of the movie theaters at the
locations set forth in the Leases (each a "Theater" and together the "Theaters")
and no other business. As of the date of this Agreement, the Assets are in
operating condition and repair and are suitable for the purposes for which they
are used in the Business. The representations and warranties contained in the
previous sentence shall survive only for the ninety day period immediately
following the date of this Agreement.
4.08. Title to Assets; No Liens. Subject to any liens or encumbrances
placed or caused to be placed upon the Assets by the lessors under the Grand
Avenue Lease or rights of the Lessors under their leases, the GG Group has good
and marketable title to all of the Assets, and none of the Assets is subject to
any lien, encumbrance or impairment, except as has been disclosed in writing to
the Clearview Group.
4.09. Port Washington Roof. The GG Group has maintained or caused to be
maintained the roofs of the Port Washington Theater in working condition and the
roof does not currently leak and is currently in such condition as not to
require replacement. The representations and warranties contained in the
previous sentence shall survive only for the ninety day period immediately
following the date of this Agreement.
4.10. No Pending Litigation or Proceedings. Except as set forth in Schedule
4.10, no action, suit, investigation, claim or proceeding of any nature or kind
whatsoever, whether civil, criminal or administrative, by or before any
governmental body or arbitrator ("Litigation") is pending or, to the knowledge
of the GG Group, threatened against or affecting the GG Group, the Business, any
of the Assets, or any of the transactions contemplated by this Agreement, and to
the knowledge of the GG Group there is no basis for any Litigation. The GG Group
does not have pending any Litigation against any third party.
4.11. Contracts; Compliance. The GG Group has provided the Clearview Group
with a copy of (i) the Leases (as defined below), (ii) the agreement between the
GG Group and IATSE, local number 640 (each of the foregoing documents referred
to herein as a "Contract" and together, the "Contracts"). The GG Group is not a
party to any other contract, loan agreement, lease, indenture, mortgage,
instrument, commitment or other agreement, arrangement
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or understanding, whether written or oral that would have a material adverse
effect on the operation of the Theaters. To the knowledge of the GG Group, each
Contract is a legal, valid and binding obligation of the GG Group and is in full
force and effect. The GG Group and each other party to each Contract has
performed all obligations required to be performed by it thereunder and is not
in breach or default, and is not alleged to be in breach or default, in any
respect thereunder, and no event has occurred and no condition or state of facts
exists (or would exist upon the giving of notice or the lapse of time or both)
that would become or cause a breach, default or event of default thereunder,
would give to any Person the right to cause such a termination or would cause an
acceleration of any obligation thereunder. The GG Group is not currently
renegotiating any Contract nor has it received any notice of non-renewal or
price increase or sales or production allocation with respect to any Contract.
The representations and warranties contained in this Section shall survive only
until the end of the First Contract Year.
4.12. Permits; Compliance With Law. Schedule 4.11 sets forth each permit,
certificate, license, franchise, privilege, approval, registration and
authorization held by the GG Group (each, a "Permit" and collectively,
"Permits"). To its knowledge, each Permit is valid, subsisting and in full force
and effect. To its knowledge, the GG Group is in compliance with and has
fulfilled and performed its obligations under each Permit, and no event or
condition or state of facts exists (or would exist upon the giving of notice or
lapse of time or both) that could constitute a breach or default under any
Permit. To its knowledge, the GG Group has not been nor is currently in
violation of any Law and has received no notice of any violation of Law, and no
event has occurred or condition or state of facts exists that could give rise to
any such violation. The GG Group has not received any notice of non-renewal of
any Permit. The representations and warranties contained in this Section shall
survive only until the end of the First Contract Year.
4.13. Real Property. The GG Group does not own any real property. The GG
Group holds a leasehold interest in each real property upon which the Theaters
are located (the "Real Property") pursuant to those certain leases (each a
"Lease" and together the "Leases"), between Pericles Rizopoulos and Mollie
Rizopoulos and Cinema Grand Ave., Inc., dated February 1, 1990, and between
Northern Consolidated Realty Company and Triplex Movies at Port Washington,
Inc., dated January 28, 1993. The GG Group has the right to quiet enjoyment of
the Real Property for the full term of the Leases in accordance with the terms
of each Lease. To its knowledge, the use and operation of all Real Property
conform to all applicable building, zoning, safety and
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subdivision Laws, environmental Laws and other Laws, and all restrictive
covenants and restrictions and conditions affecting title. The GG Group has not
received any written or oral notice of assessments for public improvements or
condemnation against any Real Property. The representations and warranties
contained in this Section shall survive only until the end of the First Contract
Year.
4.14. Bank Debt. As of the date of this Agreement, Carmi Djiji, or an
affiliate which is not any of the GG Group, is indebted in the principal amount
of not less than $150,000 to commercial lending institutions, representing funds
borrowed and used in connection with the operation of the Theaters.
4.15. Customer Relations. To the GG Group's knowledge, there exists no
condition or state of facts or circumstances involving the GG Group's customers,
suppliers, distributors or representatives that the GG Group can reasonably
foresee could adversely affect the Business now or in the future. The
representations and warranties contained in this Section shall survive only
until the end of the First Contract Year.
4.16. Finders' Fees. Neither the GG Group nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE CLEARVIEW GROUP
As an inducement to the GG Group to enter into this Agreement and
consummate the transactions contemplated hereby, the Clearview Group represents
and warrants to the GG Group as follows:
5.01. Organization. Each of the Clearview Group is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the corporate power and authority to own
or lease its properties, carry on its business, enter into this Agreement and to
perform its obligations under this Agreement.
5.02. Authorization; Enforceability. This Agreement has been duly executed
and delivered by and constitutes the legal, valid and binding obligations of the
Clearview Group, enforceable against it in accordance with its terms. All
actions contemplated by this Agreement have been duly and validly authorized by
all necessary proceedings by the Clearview Group.
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5.03. No Violation of Laws; Consents. Neither the execution and delivery of
this Agreement, the consummation of the transactions contemplated in this
Agreement nor the compliance with or fulfillment of its terms, conditions or
provisions by the Clearview Group will: (i) contravene any provision of the
governing documents of the Clearview Group, (ii) conflict with, result in a
breach of, constitute a default or an event of default (or an event that might,
with the passage of time or the giving of notice or both, constitute a default
or event of default) under any of the terms of, result in the termination of,
result in the loss of any right under, or give to any other person the right to
cause such a termination of or loss under, any Asset or any other contract,
agreement or instrument to which the Clearview Group is a party or by which any
of its assets may be bound or affected, (iii) result in the maturation or
acceleration of any liability or obligation of the Clearview Group (or give to
any other person the right to cause such a creation, maturation or
acceleration), (iv) violate any judgment or order of any governmental body to
which the Clearview Group is subject or by which any of the Assets or any of its
other assets may be bound or affected, or (v) prior to the Closing, result in
the creation or imposition of any encumbrance upon any of the Assets or give to
any other Person any interest or right therein. No consent, approval or
authorization of, or registration or filing with, any person is required in
connection with the execution and delivery by the Clearview Group of this
Agreement or the consummation by the Clearview Group of the transactions
contemplated by this Agreement.
5.04. No Pending Litigation or Proceedings. Except as set forth in Schedule
5.04, no action, suit, investigation, claim or proceeding of any nature or kind
whatsoever, whether civil, criminal or administrative, by or before any
governmental body or arbitrator ("Litigation") is pending or, to the knowledge
of the Clearview Group, threatened against or affecting the Clearview Group, the
Business, any of the Assets, or any of the transactions contemplated by this
Agreement, and to the knowledge of the Clearview Group there is no basis for any
Litigation. The Clearview Group does not have pending any Litigation against any
third party.
5.05. Finders' Fees. Neither the Clearview Group nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby. Any claim for any brokerage fee,
commission or finders' fee claimed by Brett Marks shall be paid by the Clearview
Group.
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5.06. Financial Statement. The Clearview Group has previously provided to
GGG the audited consolidated and consolidating balance sheets, income
statements, and statements of cash flows for CCG at December 31, 1994 and for
the year then ended (the "Financial Statements"). The Financial Statements (i)
are accurate, correct and complete in accordance with the books of account and
records of CCG, (ii) have been prepared in accordance with GAAP on a consistent
basis throughout the indicated period, (iii) fairly present the consolidated
financial condition, assets, and liabilities and results of operation of CCG at
the dates and for the period indicated in accordance with Accounting Principles.
As of the date of this Agreement, there has been no material adverse change in
the financial condition, business or prospects of CCG.
5.07. Undisclosed Liabilities. The Clearview Group, to its knowledge, has
no debt, obligation or liability, absolute, fixed, contingent or otherwise, of
any nature whatsoever, whether due or to become due, including any unasserted
claim, whether incurred directly or by any predecessor thereto, and whether
arising out of any act, omission, transaction, circumstance, sale of goods or
services, state of facts or other condition that would have a material effect on
GG Group's operation of the Theaters, except those which have been disclosed in
writing to the GG Group. The representations and warranties contained in this
Section shall survive only until the end of the First Contract Year.
5.08. Taxes. The Clearview Group has filed or caused to be filed on a
timely basis, or will file or cause to be filed on a timely basis, all Tax
Returns that are required to be filed by it prior to or on the Closing Date,
pursuant to the Law of each governmental authority with taxing power over it.
All such Tax Returns were or will be, as the case may be, correct and complete.
The Clearview Group has paid all Taxes that have become due as shown on such Tax
Returns or pursuant to any assessment received as an adjustment to such Tax
Returns. The Clearview Group has withheld and paid all Taxes required to have
been withheld in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party. There is no
pending, or, to the knowledge of the Clearview Group, threatened or anticipated,
assessment of any additional Tax against any member of the affiliated group of
corporations which the Clearview Group is or was a part for any taxable period
during which the Clearview Group or any predecessor company was a member of such
group. "Tax" means any domestic or foreign, federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not. "Tax
Return" means any return, declaration, report, claim for refund, or information
return or
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statement relating to any Tax, including any schedule or attachment thereto, and
including any amendment thereof.
ARTICLE VI.
CERTAIN COVENANTS
6.01. Exclusivity. The GG Group shall not sell or transfer the Assets or
the Business or engage in any negotiations regarding the sale of the Assets or
the Business to or with any person other than the Clearview Group. Any issuance
by the GG Group of or sale or transfer by any person of shares of capital stock
of any or all of the GG Group shall be caused or permitted by the GG Group only
(A)(i) upon written notice to the Clearview Group not fewer than ten business
days prior to such issuance, sale or transfer setting forth the name of the
recipient of such shares (the "Recipient") or (ii) pursuant to transfer upon the
demise of Carmi Djiji and (B) upon written acknowledgement by the Recipient that
each of the GG Group is bound by the terms of this Agreement.
6.02. Conduct of Business Pending Closing. The GG Group shall permit the
Clearview Group to operate the Theaters for the Clearview Group's own account in
accordance with the provisions of Article III. The GG Group shall not, without
the prior written consent of the Clearview Group, (a) engage in any business or
enter into any contract or commitment; (b) cause or permit any Contract to be
amended, supplemented or modified in any way; (c) take any action that is
reasonably likely to result in the occurrence of a breach of this Agreement; or
(d) take any action or omit to take any action that will cause a breach or
termination of any Contract.
6.03. Liens, Encumbrances. Prior to the Closing, neither
the Clearview Group nor the GG Group shall pledge or encumber
any of the Assets.
6.04. Mechanics Liens. The Clearview Group shall use its best efforts to
defend any mechanics liens filed against the Theaters or the Assets. In the
event that mechanics liens remain filed against the Theaters or any of the
Assets at the expiration or termination for any reason of this Agreement, the
Clearview Group shall retain liability for the payment of the claims supporting
such liens; provided however, that in connection with such liability, the
Clearview Group shall retain all rights to litigate such claims and shall have
no obligation to pay any such claim until the entry by a court of competent
jurisdiction of a final non-appealable order in favor of claimant and against
the Clearview Group, provided however, that to the extent that the exercise of
any right of Clearview under this Section shall be a
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violation of any Lease, Clearview shall first obtain permission of the Landlord
under that Lease before exercising its rights under this Section.
6.05. Port Washington Roof. If, at any time prior to the end of the Second
Contract Year and provided that the Clearview Group shall have maintained the
roof in a manner, at a minimum, equal to the manner in which the GG Group shall
have maintained the roof, the Port Washington roof shall leak during three
successive periods of rain (and the Clearview Group shall have repaired the roof
after the first two periods of rain), the Clearview Group may, at its option,
seek a professional opinion as to whether the roof requires replacement. If the
Clearview Group shall have obtained a professional opinion that the roof
requires replacement, the Clearview Group and the GG Group shall together obtain
three bids and proposals for replacement of the roof (the GG Group to select the
entity for two of the three bids and the Clearview Group to select the entity
for the third bid), and the Clearview Group and the GG Group shall together
select the entity to perform the roof replacement, and each of the Clearview
Group and the GG Group shall pay fifty percent of the costs and expenses of such
replacement as each bill for such costs and expenses shall come due.
6.06. Indemnification. The GG Group shall indemnify, defend, save and hold
harmless the Clearview Group from and against any and all Damages incurred by
any or all of the Clearview Group in connection with or in any way related to
(a) the tax liabilities of the GG Group set forth in Schedule 4.06 (b) any
contractual obligation of the GG Group to any third party (c) until the end of
the Second Contract Year, any damages, costs and/or expenses limited to the cost
of such repairs incurred by the Clearview Group on account of the requirement,
if any, by the Landlord under the Port Washington Lease that the Port Washington
roof be replaced, unless the Clearview Group shall agree to replace the roof in
accordance with the terms of Section 6.05. For the purpose of this Section
"Damages" shall include all demands, claims, causes of action, losses, costs,
damages, expenses and other liabilities (including court costs, interest,
penalties and reasonable attorneys' fees) incurred by any or all of the
Clearview Group. In addition to and not in lieu of other remedies, either party
shall be entitled to enforce this Section by setting-off any amounts owed to
that party against amounts owed by that party to the other party.
6.07. Publicity. The GG Group and the Clearview Group shall not issue any
press release or otherwise make any announcements to the public or the employees
of the GG Group with respect to this Agreement without the prior written consent
of the other, except as required by Law.
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6.08. Fulfillment of Agreements. Each party hereto shall use its best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement.
6.09. The GG Group Assistance. The GG Group shall cooperate with and assist
the Clearview Group and its authorized representatives in order to provide, to
the extent reasonably requested by the Clearview Group, an efficient transfer of
control of the Assets and to avoid any undue interruption in the activities and
operations of the Business following the Effective Date of this Agreement,
including but not limited to providing the Clearview Group with all information
requested in Schedule 6.09 within seven business days after the execution of
this Agreement.
6.10. Substitution of Lease. The Clearview Group shall allow the GG Group
to cause the Port Washington Lease to be canceled as of the Closing if and only
if (1) the Landlord under the Port Washington Lease shall enter into a new lease
effective as of the date of the Closing with the Clearview Group identical to
the current Port Washington Lease and (2) the Clearview Group's regular
independent accountants shall provide the Clearview Group with an opinion that
in accordance with generally accepted accounting principles the transactions
contemplated in this Section shall not require more than ten percent of the
total Purchase Price to be treated as goodwill or other intangible assets on any
financial statement or in the books and records of the Clearview Group.
Cancellation of the Port Washington Lease in compliance with the terms of this
Section shall neither reduce or increase the Purchase Price under this
Agreement.
6.11. Non-Competition. For a period of ten years after the Closing under
this Agreement, neither Carmi Djiji nor any of the GG Group shall on his or its
own behalf or as a partner, officer, executive, manager, employee, director,
consultant, shareholder (other than as owner of less than five (5%) percent of
the issued and outstanding stock of a publicly owned corporation whose
securities are traded on a nationally recognized stock exchange or quoted on
NASDAQ), directly or indirectly, engage in any business which is, or be employed
by any person or entity whose business is substantially the same as, or
materially competitive with the business of the Theaters within a five mile
radius of any Theater.
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ARTICLE VII.
DELIVERIES AND PROCEEDINGS
7.01. Deliveries and Proceedings Simultaneous with
Execution of this Agreement.
(a) Deliveries by the GG Group to the Clearview Group. The GG Group
shall deliver or cause to be delivered to the Clearview Group simultaneously
with the execution of this Agreement:
(i) Executed consent of the Port Washington Lessor in the form
attached to this Agreement as Exhibit B, consenting to the execution by the GG
Group of this Agreement and the consummation by the GG Group of the transactions
contemplated by this Agreement;
(11) Incumbency and specimen signature certificates dated the
Closing Date, signed by the officers of the GG Group and certified by the
respective Secretaries of the GG Group;
(iii) Certificates of the respective Secretaries of the GG Group
setting forth all resolutions of the Boards of Directors of the GG Group and the
stockholders of the GG Group authorizing the execution and delivery of this
Agreement and the performance by the GG Group of the transactions contemplated
hereby; and
(iv) A certificate of an officer of each GG Group certifying that
Carmi Djiji is the sole stockholder of each of the GG Group and certifying to
his knowledge that all representations made in this Agreement (subject to any
limitations expressly set forth in each representation) are accurate as of the
date of this Agreement.
(b) Deliveries by the Clearview Group to the GG Group. The Clearview
Group shall deliver or cause to be delivered to the GG Group simultaneously with
the execution of this Agreement:
(i) Incumbency and specimen signature certificates signed by the
officers of the Clearview Group and certified by the Secretary of the Clearview
Group;
(ii) A certificate of the Secretary of the Clearview Group
setting forth ali resolutions of the Board of Directors of the Clearview Group
authorizing the execution and delivery of this Agreement and the performance by
the Clearview Group of the transactions contemplated hereby, certified by the
respective Secretaries of the Clearview Group; and
(iii) A certificate of A. Dale Mayo as an officer of each of the
Clearview Group certifying to his knowledge that
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all representations made in this Agreement are accurate as of the date of this
Agreement.
(c) Deliveries by the GG Group to the Escrow Agent. The GG Group shall
deliver or cause to be delivered to the Escrow Agent simultaneously with the
execution of this Agreement:
(i) An assignment of each of the Grand Avenue and the Port
Washington Leases duly executed by the GG Group in the form attached hereto as
Exhibit C;
(ii) A general warranty bill of sale and instrument of assignment
of the Assets, duly executed by the GG Group, in the form attached hereto as
Exhibit D;
(d) Deliveries by the Clearview Group to the Escrow Agent. The
Clearview Group shall deliver or cause to be delivered to the Escrow Agent
simultaneously with the execution of this Agreement:
(i) the Escrowed Funds as provided in
Article VIII of this Agreement; and
(ii) an assignment of all rights of the Clearview Group to the
Assets, including the Leases, under this Agreement, duly executed in the form
attached hereto as Exhibit E.
7.02 Deliveries and Proceedings at Closing.
(a) Deliveries by the Escrow Agent. The Escrow Agent shall deliver or
cause to be delivered to the Clearview Group at the Closing those documents
previously delivered to the Escrow Agent by the GG Group in accordance with
Section 7.01 above.
(b) Deliveries by the GG Group. The GG Group shall deliver to the
Clearview Group at the Closing:
(i) Certificates of the respective Secretaries of the GG Group
certifying that the resolution delivered pursuant to Section 7.1(a)(iii) have
not been amended or superseded and remain in full force and effect;
(ii) a certificate of the President of each of the GG Group
certifying that, to his knowledge, all representation and warranties made by the
GG Group in this Agreement, except those that shall have expired pursuant to the
explicit provisions of this Agreement, are true and correct as of the Closing
Date; and
(iii) evidence of the determination by the
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appropriate taxing authority of the amounts of the Real Property Gains Tax
required to be paid by each of the GG Group upon consummation of this Agreement
and a check or checks made payable to the appropriate taxing authority in such
amounts; provided, however, that if the GG Group shall not deliver any or all of
such evidence and checks, the Clearview Group shall deduct from the Purchase
Price an amount sufficient in the reasonable discretion of the Clearview Group
to pay such tax, which deduction may be used to pay such tax.
(c) Deliveries by the Clearview Group. The Clearview Group shall
deliver or cause to be delivered to the GG Group at the Closing:
(i) (a) A wire transfer of immediately available federal funds in
accordance with Section 2.05 pursuant to complete wire transfer instructions
delivered by the GG Group to the Clearview Group in writing at least two
business days prior to Closing and (b) only if the stock of CCG shall be then
listed for trading on a national securities exchange, including NASDAQ, and if
so elected by the GG Group, a promissory note in an amount requested by the GG
Group equal to or less than $200,000;
(ii) A certificate of the Secretary of the Clearview Group
certifying that the resolution delivered pursuant to Section 7.01(b)(ii) have
not been amended or superseded and remain in full force and effect; and
(iii) a check made payable to the appropriate taxing authority in
the amount of all sales tax required to be paid by the Clearview Group pursuant
to Section 2.06.
ARTICLE VIII.
ESCROWED FUNDS AND DOCUMENTS
8.01. Escrowed Funds. Simultaneously with the execution by the parties of
this Agreement, pursuant to an Escrow Agreement in the form of Exhibit F hereto,
the Clearview Group shall cause to be deposited with an escrow agent (the
"Escrow Agent") acceptable to the Clearview Group and the GG Group, $240,000 in
bank certificates of deposit (the "Escrowed Funds"). The Clearview Group shall
replenish within thirty days any reduction in the Escrow Funds below $240,000.
8.02. Escrow of Documents. Simultaneously with the
execution by the parties of this Agreement, the parties shall
cause to be delivered to the Escrow Agent those documents (the
"Escrowed Documents") set forth in Section 7.01.
8.03. Rights to Escrowed Funds. During the term of this
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Agreement, the Escrowed Funds shall be held for the benefit of the GG Group
pursuant to the terms of this Agreement, and shall not be subject to the rights
of any trustee, creditor, or other person in any bankruptcy, reorganization,
insolvency or receivership proceeding.
8.04. Use of Escrow Funds. The Clearview Group has deposited with the
Escrow Agent the Escrowed Funds for the faithful performance and observance by
the Clearview Group of the terms, provisions, and conditions of this Agreement,
to be used or applied to or for the benefit of the GG Group upon the terms and
subject to the conditions set forth in this Agreement. The Clearview Group
covenants that it will not assign or encumber or attempt to assign or encumber
the Escrowed Funds and that neither the Escrow Agent nor its successors or
assigns shall be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.
ARTICLE IX.
DEFAULT
9.01. Events of Default. The following events shall constitute an
Event of Default:
(a) Failure by the Clearview Group to pay when due any Option Payment;
(b) Failure by the Clearview Group or the GG Group to comply with any
term or condition of the agreement or breach of any representation or warranty;
(c) Failure by the Clearview Group to pay any payment when due under
any Lease;
(d) If any landlord under any Lease shall deliver written notice (the
"Landlord Termination Notice") to the Clearview Group stating that the Lease is
in default and setting forth a date (the "Termination Date") by which such
default must be cured or the Lease shall be terminated, failure by the Clearview
Group to cure such default prior to five business days prior to the Termination
Date;
(e) Filing of any bankruptcy petition or other insolvency proceeding
by or against the Clearview Group under any federal or state law;
(f) Failure by the Clearview Group to vacate within sixty days of the
filing thereof any execution or attachment (excluding mechanics liens) filed
against any Theater or any of the Assets on account of any obligation or because
of the taking
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or the omission of any action by the Clearview Group;
(g) Failure by the GG Group to vacate within sixty days of the filing
thereof any execution or attachment filed against any Theater or any of the
Assets on account of any obligation or because of the taking or the omission of
any action by the GG Group;
(h) Failure by the Clearview Group to repair any damage or destruction
to any Theater in an amount in excess of $50,000 as soon as is practicable in
the reasonable discretion of Clearview Group; or
(i) Failure by the Clearview Group to replenish the Escrow Account
within thirty days of a payment from such account pursuant to Section 9.02(a).
9.02. Rights and Remedies Upon Default.
(a) Use of Escrowed Funds. Upon the occurrence of an Event of Default
that can be cured by the payment of money in an amount equal to or less than the
current outstanding balance of the Escrowed Funds, the GG Group may send a
notice of default (the "Notice of Default") simultaneously to the Escrow Agent
and to Clearview, setting forth with particularity the nature of the default and
attaching to the Notice of Default the bill, invoice or other evidence of the
unpaid obligation (the "Obligation") giving rise to the default. If the
Clearview Group shall not (i) have paid the Obligation and provided proof of
such payment to the Escrow Agent or (ii) delivered to the Escrow Agent written
notice of dispute of the amount (the "Dispute Notice") of the Obligation
together with proof of payment of the undisputed amount, if any, of the
Obligation, within the ten business days immediately following the delivery to
the Clearview Group of the Notice of Default, the Escrow Agent shall pay from
the Escrowed Funds the Obligation directly to the obligee or to the GG Group if
the Obligation is owed directly to the GG Group. If the Clearview Group shall
have delivered the Dispute Notice to the Escrow Agent, and the dispute shall
concern an Option Payment, the Clearview Group and the GG Group shall resolve
the dispute pursuant to the provisions of Section 1.03(e). If the Clearview
Group shall not have delivered proof of payment of the amount of the Option
Payment as set forth in the Resolution Notice as defined in Section 1.03(e)
within ten business days following the delivery to the Clearview Group of the
Resolution Notice, the Escrow Agent shall pay such amount directly to the GG
Group from the Escrowed Funds.
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(b) Termination by the GG Group.
(i) Notice of Termination; Right to Cure or Exercise Option.
Except as provided in Section 9.02(b)(ii), upon the occurrence of an Event of
Default by the Clearview Group which cannot be cured by the payment of money in
an amount equal to or less than the current outstanding balance of the Escrowed
Funds, the GG Group may deliver to the Clearview Group a Notice of Default
setting forth the nature of the default with particularity. If (a) the Clearview
Group shall not have substantially cured such default within the thirty-day
period following the delivery of the Notice of Default (or such lesser period of
time as provided under notice any lessor under any Lease) or (b) the Clearview
Group shall have disputed the payment of any Obligation under Section 9.02(a),
the GG Group may deliver to the Clearview Group, a Notice of Termination. Within
the ten business day period (the "Exercise Period") immediately following the
delivery of the Notice of Termination, the Clearview Group may either cure the
default or exercise the Option by delivering the Option Notice to the GG Group.
If the Default is not cured, the Escrow Agent shall retain so much of the
Escrowed Funds as would be necessary to cure the Default, which shall be
released to the GG Group if a judgment is entered against any of the GG Group in
connection with such Default.
(ii) Closing; Adjustment of Purchase Price. If the Clearview
Group shall have delivered the Option Notice in accordance with this Section
9.02, the Closing shall take place within the sixty day period immediately
following the delivery of the Option Notice; provided, however, that if the
Clearview Group shall have received a Landlord Notice of Default from any
lessors under any Lease, the Closing shall take place on a date not fewer than
five days prior to the date by which the Landlord Notice of Default requires the
default alleged therein to be cured. Upon exercise of the Option pursuant to
this Article, the Purchase Price shall be adjusted to include, to the extent not
already included in the Purchase Price the following amounts, discounted to
present value as of the Closing Date at a rate of ten percent per annum: (A) if
the Option Notice is delivered during the First Contract Year, the Initial
Option Payment and Additional Option Payments that would have been required
through the end of the Second Contract Year and (B) if the Option Notice is
delivered in the Second, Third, Fourth, or Fifth Contract Year, all Additional
Option Payments that would have been required through the end of the Contract
Year during which the Option Notice was delivered. For the purpose of
calculating the adjustments under this Section, the Additional Option Payments
for each Contract Year shall be deemed to be the Estimated Additional Option
Payments for that Contract Year; provided, however, that if the Option Notice is
delivered within the Second Contract Year, the Additional Option Payment for the
Second Contract Year shall be the greater of the Additional Option
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Payment for the First Contract Year or $132,000. If the Clearview Group shall
exercise the Option pursuant to this Article, the Clearview Group shall pay to
the GG Group, to the extent such amount exceeds the amounts already paid to the
GG Group pursuant to this Section, an amount equal to the Option Payments which
would have been due to the GG Group if the Option had not been so exercised
based upon the actual performance of the Clearview Group from the date of the
Closing until the first time at which the Clearview Group was entitled to
exercise its Option under Article One of this Agreement (the "Cut-off Date"),
such payment to be made within the thirty-day period immediately following the
Cut-off Date.
(iii) Failure to Cure or Exercise Option. If at the end of the
Exercise Period, the Clearview Group shall remain in default and shall not have
delivered the Option Notice, the GG Group may terminate this Agreement in
accordance with Article X. If the Default is not cured, the Escrow Funds may be
utilized to the extent available and the Clearview Group shall be responsible
for any deficiency.
(c) Termination by the Clearview Group. Upon the occurrence of an
Event of Default by the GG Group, the Clearview Group may deliver to the GG
Group a Notice of Default setting forth the nature of the default with
particularity. If the GG Group shall not have substantially cured the default
within the thirty business day period following the delivery of the Notice of
Default, the Clearview Group may terminate this Agreement in accordance with
Article X.
ARTICLE X.
TERMINATION
10.1. Termination.
(a) Expiration. This Agreement shall terminate without further action
by any party unless the Clearview Group shall have delivered the Option Notice
to the GG Group on or before the thirtieth day following the end of the Fifth
Contract Year.
(b) Termination. Except as provided in Section 9.2(b), this Agreement
may be terminated by notice given by the following parties at the following
times, such termination to be effective on the fifth business day following the
delivery of such notice:
(i) at any time prior to Closing by mutual written consent of the
Clearview Group and the GG Group;
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(ii) by the Clearview Group (A) within the sixty day period
following the end of the Second Contract Year, if the amount (the "Minimum
Revenue") equal to fifty percent of the sum of (1) the Gross Revenue for all
Theaters for the First Contract Year plus (2) the Gross Revenue for all Theaters
for the Second Contract Year shall not have been equal to or in excess of
$2,040,000; by way of example and not limitation, if the Gross Revenue for the
First Contract Year shall have been $2,000,000 and the Gross Revenue for the
Second Contract Year shall have been $2,400,000, the Minimum Revenue shall be
.5(2,000,000 + $2,400,000) = $2,200,000; or (B) in accordance with the terms and
conditions set forth in Section 9.02(c).
(iii) by the GG Group (A) if the Minimum Revenue shall not have
been equal to or in excess of $2,040,000, the GG Group, within the sixty day
period following the Second Contract Year, shall have delivered to the Clearview
Group written notice of the GG Group's intention to terminate this Agreement
(the "GG Group Notice"), and the Clearview Group shall not have delivered to the
GG Group the Option Notice within thirty days of the receipt of the GG Group
Notice; or (B) in accordance with the terms and conditions set forth in Section
9.2(b).
(c) Inability to Operate. Notwithstanding anything else herein to the
contrary, if prior to Closing, the Clearview Group is rendered substantially
unable to operate the Business for a period of time equal to or greater than 30
days by any reason beyond the Clearview Group's control and which it cannot
reasonably cure, including but not limited to destruction of a substantial
portion of the Assets or if the whole or any part of the Real Property shall be
acquired or condemned by Eminent Domain for any public or quasi-public use, the
Clearview Group at its option, which may be exercised by written notice given to
the GG Group within thirty (30) business days after the Clearview Group's
receipt of notice of such loss, may terminate this Agreement, effective
immediately.
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10.02. Events Upon Termination.
(a) Release of Premises; Payment. Upon the expiration or termination
of this Agreement for any reason, the Clearview Group shall surrender possession
of the Theaters to the GG Group; provided, however, that until such surrender
the Clearview Group shall continue to pay to the GG Group for each month or
fraction thereof an amount equal to the monthly Option Payments (or fraction
thereof) last payable under this Agreement; provided, however, any obligations
which become due and owing after the possession shall be surrendered but which
comprise costs and expenses incurred and attributable before such date, such as
rent, electricity, gas, water, sewer, telephone, property taxes, employee salary
and benefits, pre-paid insurance premium, concession inventories, theater
supplies and similar items, shall be prorated between the Clearview Group and
the GG Group as of the date of surrender.
(b) Escrowed Funds. Upon the termination of this Agreement, the
Escrowed Funds and Escrowed Documents shall be distributed as follows:
(i) if the Agreement shall be terminated by GG pursuant to
Section 10.01(b)(iii)(B), the Escrow Agent shall pay from the Escrowed Funds (A)
directly to each landlord under the Leases, all rent due and owing to such
landlord (each a "Rental Payment Amount") on the date of the delivery of the
Notice of Termination and shall continue to pay such rent as subsequently
becomes due for each Theater until the earlier of (1) for each Theater, the date
on which the GG Group shall first charge admission for entrance to such Theater
or (2) the end of the six month period immediately following the delivery of the
Notice of Termination and (B) directly to the GG Group all Additional Option
Payments which would have been due and payable to the GG Group through the end
of the Contract Year during which the Notice of Termination was delivered to the
Clearview Group together with interest at twelve-percent per annum on such
amount calculated from the date of delivery of the Notice of Termination through
the date on which such payment is made by the Escrow Agent to the GG Group (the
"Additional Option Payment Amount") and shall release the Escrowed Documents to
the GG Group. Not less than twenty four hours after the first date upon which
the GG Group shall first charge admission for entrance to each Theater, the GG
Group shall notify the Escrow Agent in writing of such occurrence (each a
"Operation Notice"). If the GG Group shall fail to so notify the Escrow Agent,
the Clearview Group may deliver such notice to the Escrow Agent.
(ii) if the Agreement shall expire or shall be terminated for any
reason other than the termination of the
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Agreement by the GG Group pursuant to Section 10.01(b)(iii)(B), the Escrow Agent
shall immediately release the Escrowed Funds and the Escrowed Documents (other
than Exhibit E) signed by the Clearview Group to the Clearview Group; provided,
however, that if the Agreement shall expire or be terminated for a reason other
than default by the GG Group, the Escrow Agent shall release to the GG Group the
amount of the Escrow Funds equal to the amounts owed by the Clearview Group to
the GG Group and to the lessors under the Leases, including amounts due to the
GG Group and to the lessors until the Clearview Group shall have delivered
possession of the Theaters to the GG Group.
ARTICLE XI.
MISCELLANEOUS
11.01. Nature of Relationship. It is not the intention of the parties to
this Agreement and nothing provided in this Agreement shall be deemed to create
a joint venture or partnership between the Clearview Group and the GG Group.
Neither party shall have the authority to enter into any contract or commitment
in the name and on behalf of the other party.
11.02. Costs and Expenses. The Clearview Group and the GG
Group shall each pay its respective expenses in connection with
this Agreement and the transactions contemplated in this
Agreement.
11.03. Specific Performance. The GG Group acknowledges that damages at law
would be an inadequate remedy for (i) viola-tion of any provision relating to
the exercise of the Option by the Clearview Group and (ii) breach by the GG
Group of Section 6.11. Accordingly, in the event of (i) the violation of any
provision of this Agreement relating to the exercise of the Option by the
Clearview Group or (ii) breach by the GG Group of Section 6.11, the Clearview
Group, in addition to and not in lieu of other remedies, shall be entitled to
compel specific performance by the GG Group of its obligations under this
Agreement.
11.04. Further Assurances. The GG Group shall, at any time and from time to
time on and after the Closing Date, upon request by the Clearview Group and
without further consideration, take or cause to be taken such actions and
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, documents, transfers, conveyances and assurances as
may be required for the better conveying, transferring, assigning, delivering,
assuring and confirming the Assets to the Clearview Group.
11.05. Notices.
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(a) Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made (i) the second business day after the date of mailing, if
delivered by registered or certified mail, postage prepaid, (ii) upon delivery,
if sent by hand delivery, (iii) upon delivery, if sent by prepaid courier, with
a record of receipt, or (iv) the next day after the date of dispatch, if sent by
cable, telegram, facsimile or telecopy: to the parties at the following
addresses:
if to the Clearview Group, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
with a required copy to:
Warren H. Colodner, Esquire
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
New York, New York 10020
Telecopy: (212) 536-3901
if to the GG Group, to:
Carmi Djiji
30 Wren Drive
Roslyn, New York 11576
Telecopy: (516) 626-3302
with a required copy to:
Hollenberg, Levin, Solomon, Ross
and Belsky, LLP
585 Stewart Avenue
Garden City, NY 11530
Telecopy: (516) 745-6642
(b) Simultaneous Transmission; Change of Address. All notices or other
communications given or made pursuant to Section 11.05(i) shall be
simultaneously sent by facsimile and all notices or other communications given
or made pursuant to Section 11.05(iv) shall be simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested. Any party hereto
may change the address to which notice to it, or copies thereof, shall be
addressed, by giving notice thereof to
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the other parties hereto in conformity with the foregoing.
11.06. Assignment; Governing Law. This Agreement and all the rights and
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective permitted successors and assigns. This Agreement and the
rights, interests, and obligations hereunder may not be assigned by any party
hereto and the Leases may not be sublet by the Clearview Group without the prior
written consent of the other parties hereto, except that the Clearview Group may
make such assignments or sublet to any Affiliate of the Clearview Group provided
that the Clearview Group remains liable under this Agreement and the Clearview
Group obtains such consent, if any, that is required to be obtained by any CCGS
under any Lease or Leases (except Port Washington) and the GG Group may make
such assignments to any affiliate of the GG Group provided that the GG Group
remains liable hereunder. This Agreement shall be governed by and construed in
accordance with the laws of New York without regard to its conflict of law
doctrines.
11.07. Amendment and Waiver. To be effective, any amendment or waiver under
this Agreement must be in writing and be signed by the party against whom
enforcement of the same is sought. Neither the failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or to insist
upon compliance by any other party with its obligations hereunder, nor any
custom or practice of the parties at variance with the terms hereof shall
constitute a waiver by such party of its right to exercise any such right, power
or remedy or to demand such compliance.
11.08. Entire Agreement; No Third Party Beneficiaries. This Agreement and
the Schedules and Exhibits set forth all of the promises, covenants, agreements,
conditions and undertakings between the parties hereto with respect to the
subject matter hereof, and supersede all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express or implied,
oral or written. This Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
11.09. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions
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contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Cinema Grand Avenue, Inc.
By:______________________________
Title: ______________________
Triplex Movies at Port
Washington, Inc.
By:______________________________
Title: ______________________
Clearview Cinema Group, Inc.
By:______________________________
Title: ______________________
CCC Grand Avenue Cinema Corp.
By:_____________________________
Title: _____________________
CCC Port Washington Cinema Corp.
By:_____________________________
Title: _____________________
[Schedules and Exhibits are not included herewith, but will be provided by the
Company upon request.]
Exhibit 10.37
AGREEMENT
This Agreement is dated as of ____________, 1995, by and among Cinema
Herricks, Inc., a New York corporation (the "GG Group"), Clearview Cinema Group,
Inc., a Delaware corporation ("CCG") and CCC Herricks Cinema Corp., a Delaware
corporation ("HCC" together with CCG the "Clearview Group").
The GG Group desires to grant and the Clearview Group desires to
receive an option to purchase certain of the GG Group's assets, upon the terms
and subject to the conditions set forth below.
The GG Group and the Clearview Group further desire that the Clearview
Group shall manage the Theater on behalf of the GG Group (as defined in Section
4.7) upon the terms and subject to the conditions set forth below.
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the GG Group, and the Clearview Group,
each intending to be legally bound hereby, agree as set forth below.
ARTICLE I.
MANAGEMENT OF THEATER
1.01 Term. From and after the Effective Date of this Agreement until the
earlier of the Closing or Termination of this Agreement in accordance with
Article X, HCC shall manage the Herricks Theater upon the terms and subject to
the conditions set forth in this Agreement. The Effective Date of this Agreement
shall be September 8, 1995.
1.02 Retention Fee.
(a) Retention Fees. Until the earlier of the Closing or Termination
of this Agreement the GG Group for each Contract Year shall receive an amount
(each a "Retention Fee" and collectively the "Retention Fees"), equal to the sum
of (i) $30,000 and (ii) ten percent of the Average Excess Revenue, if any, as of
the end of that Contract Year.
(b) Time of Payment; Adjustments. The Retention
Fee for each Contract Year shall be made in thirteen installments
<PAGE>
comprising (i) twelve equal monthly installments based on the Estimated
Retention Fee for that Contract Year, payable on the last day of each month
during the Contract Year, and (ii) a final installment consisting of the amount,
if any, by which the Retention Fee exceeded the Estimated Retention Fee for that
Contract Year, payable within thirty days after the close of the Contract Year.
If the Estimated Retention Fee paid on account of a particular Contract Year
exceeds the actual Retention Fee for that Contract Year, the Clearview Group (i)
shall be entitled to deduct such excess (the "Refundable Amount") from (A) the
Retention Fee for the succeeding Contract Year, deducting the full Refundable
Amount from the initial installment and continuing to deduct the remaining
portion of the Refundable Amount from each successive installment until the
Refundable Amount has been satisfied in full or (B) if the Clearview Group shall
have exercised the Option, as a set-off against the Purchase Price, or (ii) in
the case of the Fifth Contract Year if the Clearview Group shall not have
exercised the Option, shall be entitled to a cash refund of such excess within
thirty days following the end of the Fifth Contract Year.
(c) Definitions.
(i) The "Average Excess Revenue" at the end of a particular
Contract Year shall be equal to two hundred percent of (i) the amount by which
the Gross Revenue for all Contract Years preceding such Closing Date exceeds (A)
$460,000 multiplied by (B) the number of such Contract Years divided by (ii) the
number of such Contract Years; provided, however, that in the event that
additional screens are added to the Theater in accordance with Section 1.7, for
any Contract Year in which the obligation to repay Borrowed Funds (as defined in
Section 1.7) remains outstanding, only 75% of the Gross Revenue for the Theater
shall be included in the revenue used in calculating the Average Excess Revenue
for such time as the Borrowed Funds shall remain outstanding. By way of example
and not limitation, if in a particular Contract Year the obligation remained
outstanding for five months of the Contract Year to repay Borrowed Funds in
connection with the addition of screens at the Herricks Theaters the Gross
Revenue for that Contract Year shall equal the sum of (A) 75% of the Gross
Revenues for the Herricks Theater for the five months during which the Borrowed
Funds remained outstanding plus (B) 100% of the Gross Revenue for the Herricks
Theater for the seven months during which the Borrowed Funds were not
outstanding.
(ii) The "Estimated Retention Fee" shall be (i) $30,000 for the
First Contract Year, (ii) for the Second Contract Year, an amount equal to the
Retention Fee for the First Contract Year, (iii) for the Third Contract Year, an
amount equal to the
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Retention Fee for the Second Contract Year, (iv) for the Fourth Contract Year,
an amount equal to the Retention Fee for the Third Contract Year, and (v) for
the Fifth Contract Year, an amount equal to the Retention Fee for the Fourth
Contract Year.
(iii) The "Gross Revenue" for a particular Contract Year for
the Theater shall be the sum of all income of any kind derived from the
operation of the Theater, including without limitation from rentals, ticket
sales, concessions and all other sources minus any sales taxes paid thereon;
provided, however, that should any Theater be closed for renovation or
additions, the Gross Revenue for that Theater shall include on account of the
period during which the Theater was closed (the "Closed Period") an amount equal
to the average daily Gross Revenue for that Theater calculated over the twelve
months prior to the Closed Period multiplied by the number of days in the Closed
Period.
(d) Nature of Retention Fees. The Retention Fees shall be
non-refundable. If the Clearview Group exercises the Option, Option Payment
shall be credited toward the Purchase Price as defined in Section 2.5.
1.03 Duties. With respect to the HCC Theater, HCC shall and CCG shall cause
HCC to:
(a) operate and manage all aspects of the business of the Theater,
including but not limited to personnel, programming, finance, accounting,
maintenance, sales, administration, both with respect to day-to-day operations
and with respect to strategic planning, in its complete and sole discretion,
subject only to the following limitations:
(i) HCC shall maintain the present film release policy of
current premium first-run releases in the Long Island, New York Market;
(ii) all employment and termination decisions as to theater
managers, relief managers, and supervisors shall be made by a two-person
committee that shall include Carmi Djiji; and
(iii) HCC shall maintain the present admission price of $7.50
general admission and $4.50 for children under twelve and senior citizens, and
shall not change that admission price unless the admission price charged by the
major theater circuits in Long Island, New York, shall change, in which case HCC
shall have the right, but not the obligation, to change the admission price
charged by it in accordance with such change;
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(b) be liable for all operating costs and expenses of the Theater
incurred on or after the date of the Effective Date of this Agreement, including
theater rents, additional rents, real-estate and other taxes (excluding income
taxes), and insurance premiums, and will cause such costs and expenses to be
paid directly to the GG Group, who shall pay same directly, no later than seven
days after the date such cost or expense is due (due dates for obligations which
are not evidenced by invoices shall be determined by industry standards); any
obligations which become due and owing after the date of this Agreement but
which comprise costs and expenses incurred and attributable before the date of
this Agreement, such as rent, electricity, gas, water, sewer, telephone,
property taxes, employee salary and benefits and similar items, shall be
prorated between the Clearview Group and the GG Group as of the date of this
Agreement;
(c) fulfill all obligations of the GG Group under the Leases;
(d) make or cause to be made all necessary ordinary repairs,
renewals, and replacements of equipment and furnishings, and shall contract for
any labor and materials that may be required in connection therewith, and
purchase all supplies that are necessary for the proper operation of the
Theater;
(e) cause to be placed and carried insurance in the types and
amounts (i) currently placed and carried by the GG Group, (ii) required by the
Lease, or (iii) required by applicable law which shall name the GG Group as well
as anyone else required or be named;
(f) use its best efforts to maintain the current market share of the
Theater, which efforts shall include but not be limited to taking such steps as
are reasonable, in the Clearview Group's sole discretion, to seek legal
correction of any prejudicial or discriminatory action on the part of
exhibitors, film companies, film distributors, or film buyers; and
(g) return the Theater with all Assets (or suitable replacements
(the "Replacements")) in operating condition upon termination or expiration of
this Agreement; provided, however, that all personal property other than the
Replacements, if any, brought into the Theater by the Clearview Group shall
remain property of the Clearview Group.
1.04. Labor Negotiations. The GG Group shall participate jointly with the
Clearview Group in the negotiation of any labor contract with IATSE, local
number 640 representing the employees of the Clearview Group employed at the
Theater.
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1.05. Employees. The Clearview Group shall be permitted but not obligated
to hire the current or former employees of the GG Group, subject to Section
1.3(a)(ii).
1.06. Financial Statements/Inspection.
(a) On or prior to the fifteenth day of each month, the Clearview
Group shall provide the GG Group with statements, for the Theater, certified by
CCG's President, setting forth for the previous month, the Gross Revenue for the
Theater; the twelfth monthly statement shall provide cumulative information for
the year then ended.
(b) The Clearview Group shall allow the GG Group or its designated
agent access to financial records concerning the Gross Revenues of the Theater
during regular business hours upon reasonable notice.
(c) The Clearview Group shall instruct the theater manager to
transmit by facsimile to the GG Group the same revenue information that is
transmitted by facsimile to the main office of the Clearview Group each night.
1.07. Improvements. The Clearview Group may with the written consent of the
GG Group renovate the Theater to increase the number of screens at the Theater
from two to four and may, in connection with such renovation, borrow funds (the
"Borrowed Funds") from a third party lender.
1.08. Name of Theaters. Until the expiration or termination of this
Agreement, the Clearview Group shall manage the Theater under the name
"Clearview Cinemas" or variation of that name as requested by the Clearview
Group on behalf of the GG Group. The GG Group acknowledges that it shall have no
right to operate the Theaters under the name "Clearview Cinemas" or any
variation of that name if this Agreement expires or is terminated.
1.09. Remit Funds. After the Effective Date of this Agreement, the GG Group
shall promptly transfer and deliver to the Clearview Group any cash or other
property, if any, that the GG Group may receive relating to the operation of the
Theaters subsequent to the Effective Date and the Clearview Group shall promptly
transfer and deliver to the GG Group any cash or other property, if any, that
the Clearview Group may receive relating to the operation of the Theaters prior
to the Effective Date of this Agreement.
1.10. Nature of Business. The GG Group acknowledges that the Clearview
Group shall manage the Theater on behalf of the GG
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Group according to Clearview Group's business judgments, in its sole and
absolute discretion and except as expressly limited in Section 1.3 shall have no
duty to the GG Group in connection with the Clearview Group's management of
Theaters except as specifically and expressly required in this Agreement.
Neither the GG Group (except as specifically set forth in Article IV) nor the
Clearview Group makes any representations, warranties or guarantees as to the
level of revenues or profit to be generated by the Theaters under the Clearview
Group's management.
1.11. No Termination. The GG Group acknowledges that it
shall have no right to terminate all or any part of this
Agreement except on the terms set forth in Article X.
1.12. Miscellaneous.
(a) the Clearview Group shall provide the GG Group with the
following passes entitling the holder to free admission to the Theater at any
time: three season passes for four people each, three season passes for two
people each, and such courtesy passes as shall be requested by the GG Group, not
to exceed seven per week; and
(b) the Clearview Group shall honor currently outstanding season
passes.
ARTICLE II.
THE OPTION
2.01. Grant of Option. The GG Group hereby grants to the Clearview Group an
exclusive option (the "Option") to purchase the Assets (as defined in Section
3.1) on the terms and subject to the conditions set forth in this Agreement to
the extent owned by the GG Group only.
2.02. Exercise of Option. The Clearview Group may exercise the Option by
delivering to the GG Group a written notice (the "Option Notice") either (a)
within the thirty-day period immediately following the end of each of the Second
Contract Year, the Third Contract Year, the Fourth Contract Year, or the Fifth
Contract Year or (b) within any Exercise Period (as defined in Section 9.2(b)).
The "First Contract Year" shall be the period beginning on September 8, 1995 and
ending on September 7, 1996; the "Second Contract Year" shall be the period
beginning on September 8, 1996 and ending on September 7, 1997; the "Third
Contract Year" shall be the period beginning on September 8, 1997 and ending on
September 7, 1998; the "Fourth Contract Year" shall be the period beginning on
September 8, 1998 and ending on September 7, 1999; the "Fifth Contract Year"
shall be the period beginning on September 8, 1999 and ending on September 7,
2000;
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each such period may be referred to in this Agreement as a "Contract Year."
2.03. Option Payment. In consideration of the Option granted by this
Agreement, the Clearview Group shall pay to the GG Group the amounts and on the
dates set forth on Schedule 2.3(a), the aggregate amount of $40,000.00 (the
"Option Payment"), plus an additional aggregate amount of $1,600 (the "Interest
Reimbursement") as reimbursement for interest.
ARTICLE III.
THE ACQUISITION
The Provisions of this Article III shall be applicable only if the
Clearview Group shall have exercised the Option as set forth in Article II.
3.01. Sale and Purchase of Assets. At the Closing (as defined below), the
GG Group shall sell and transfer to the Clearview Group, and the Clearview Group
shall purchase from the GG Group the assets (collectively, the "Assets") set
forth on Schedule 3.1.
3.02. Assumption of Liabilities. At the Closing, HCC shall assume the Lease
for the Herricks Theater; provided, however, that such assumption shall not
release HI from any prior or subsequent liability under its Lease. Except as
expressly provided in this Agreement, the Clearview Group does not and shall not
assume or in any way undertake to pay, perform, satisfy or discharge any other
liabilities or obligations of the GG Group (the "Retained Liabilities") and the
GG Group will pay and satisfy when due all Retained Liabilities.
3.03. Closing Date. The consummation of the purchase and sale of the Assets
(the "Closing) shall take place at the New York offices of Kirkpatrick &
Lockhart LLP, 1251 Avenue of the Americas, New York, New York (or at such other
location in New York City as the Clearview Group shall designate) on a date (the
"Closing Date") not fewer than fifteen nor more than forty-five days after the
date of delivery of the Option Notice.
3.04. Purchase Price. The aggregate purchase price (the "Purchase Price")
for the Assets shall be equal to the sum of (i) $300,000 plus Average Excess
Revenue as of the Closing Date. By way of example and not limitation, Schedule
3.4 sets forth an illustration of the Purchase Price.
3.05. Closing. At Closing, the Clearview Group shall pay to the GG Group
the Purchase Price (i) by wire transfer of immediately available federal funds
or (ii) only if the stock of
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CCG shall be then listed for trading on a national securities exchange or
NASDAQ, at the option of the GG Group by a convertible promissory note of CCG,
in the form attached as Exhibit A to this Agreement, in an amount equal to or
less than $50,000, and the remainder by wire transfer of immediately available
federal funds. At the Closing, the Clearview Group shall receive a credit on
account of the Purchase Price for the Initial Option Payment. The GG Group
acknowledges that CCG shall have no obligation to file any registration
statement with the Securities and Exchange Commission or any similar state or
federal agency or to cause its stock to be listed for trading on any national
securities exchange or NASDAQ.
3.06. Taxes. All sales and transfer taxes relating to the transactions
contemplated by this Agreement will be borne by the Clearview Group; provided
however, that any Real Property Transfer Gains Tax (pursuant to Article 31-B of
the New York Tax Code) (the "Real Property Gains Tax") will be paid and borne by
the GG Group. The Purchase Price shall be allocated as set forth on Schedule
3.6.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE GG GROUP
As an inducement to the Clearview Group to enter into this Agreement and
consummate the transactions contemplated hereby, the GG Group represents and
warrants to the Clearview Group as follows:
4.01. Organization. The GG Group is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to own or lease its
properties, carry on its business as now conducted, enter into and perform its
obligations under this Agreement.
4.02. Authorization; Enforceability. This Agreement has been duly executed
and delivered by and constitutes the legal, valid and binding obligations of the
GG Group, enforceable against it in accordance with its terms. All actions
contemplated by this Section have been duly and validly authorized by all
necessary proceedings by the GG Group.
4.03. No Violation of Laws or Agreements; Consents. Neither the execution
and delivery of this Agreement, the consummation of the transactions
contemplated in this Agreement nor the compliance with or fulfillment of its
terms, conditions or provisions by the GG Group will: (i) contravene any
provision of the governing documents of the GG Group, (ii) conflict with,
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result in a breach of, constitute a default or an event of default (or an event
that might, with the passage of time or the giving of notice or both, constitute
a default or event of default) under any of the terms of, result in the
termination of, result in the loss of any right under, or give to any other
person the right to cause such a termination of or loss under, any Asset or any
other contract, agreement or instrument to which the GG Group is a party or by
which any of its assets may be bound or affected, (iii) result in the maturation
or acceleration of any liability or obligation of the GG Group (or give to any
other person the right to cause such a creation, maturation or acceleration),
(iv) violate any judgment or order of any governmental body to which the GG
Group is subject or by which any of the Assets or any of its other assets may be
bound or affected, or (v) result in the creation or imposition of any
encumbrance upon any of the Assets or give to any other Person any interest or
right therein. Except for the consents of the Landlords under the Leases, no
consent, approval or authorization of, or registration or filing with, any
person is required in connection with the execution and delivery by the GG Group
of this Agreement or the consummation by the GG Group of the transactions
contemplated by this Agreement.
4.04. Financial Information. The books of account and related records of
the GG Group reflect accurately the assets and liabilities of the GG Group. The
representations and warranties contained in the previous sentence shall survive
only until the end of the First Contract Year.
4.05. Undisclosed Liabilities. The GG Group, to its knowledge, has no debt,
obligation or liability, absolute, fixed, contingent or otherwise, of any nature
whatsoever, whether due or to become due, including any unasserted claim,
whether incurred directly or by any predecessor thereto, and whether arising out
of any act, omission, transaction, circumstance, sale of goods or services,
state of facts or other condition that would have a material effect on
Clearview's operation of the Theaters, except those which have been disclosed in
writing to the Clearview Group. The representations and warranties contained in
this Section shall survive only until the end of the First Contract Year.
4.06. Taxes. Except as set forth on Schedule 4.6, the GG Group has filed or
caused to be filed on a timely basis, or will file or cause to be filed on a
timely basis, all Tax Returns that are required to be filed by it prior to or on
the Closing Date, pursuant to the Law of each governmental authority with taxing
power over it. All such Tax Returns were or will be, as the case may be, correct
and complete. The GG Group has paid all Taxes that have become due as shown on
such Tax Returns or pursuant to
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any assessment received as an adjustment to such Tax Returns. The GG Group has
withheld and paid all Taxes required to have been withheld in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party. There is no pending, or, to the knowledge of
the GG Group, threatened or anticipated, assessment of any additional Tax
against any member of the affiliated group of corporations which the GG Group is
or was a part for any taxable period during which the GG Group or any
predecessor company was a member of such group. "Tax" means any domestic or
foreign, federal, state, county, local or foreign tax, levy, impost or other
charge of any kind whatsoever, including any interest or penalty thereon or
addition thereto, whether disputed or not. "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to any Tax, including any schedule or attachment thereto, and including
any amendment thereof.
4.07. Condition of Assets; Business. The GG Group is engaged in the
business (the "Business") of the operation of a movie theater (the "Theater") at
the location set forth in the Lease and no other business. As of the date of
this Agreement, the Assets are in operating condition and repair and are
suitable for the purposes for which they are used in the Business. The
representations and warranties contained in the previous sentence shall survive
only for the ninety day period immediately following the date of this Agreement.
4.08. Title to Assets; No Liens. Subject to any liens or encumbrances
placed or caused to be placed upon the Assets by the lessors or rights of the
lessor under the Herricks Lease, the GG Group has good and marketable title to
all of the Assets, and none of the Assets is subject to any lien, encumbrance or
impairment, except as has been disclosed in writing to the Clearview Group.
4.09. No Pending Litigation or Proceedings. Except as set forth in Schedule
4.9, no action, suit, investigation, claim or proceeding of any nature or kind
whatsoever, whether civil, criminal or administrative, by or before any
governmental body or arbitrator ("Litigation") is pending or, to the knowledge
of the GG Group, threatened against or affecting the GG Group, the Business, any
of the Assets, or any of the transactions contemplated by this Agreement, and to
the knowledge of the GG Group there is no basis for any Litigation. The GG Group
does not have pending any Litigation against any third party.
4.10. Contracts; Compliance. The GG Group has provided the Clearview Group
with a copy of (i) the Lease (as defined below), (ii) the agreement between the
GG Group and IATSE, local number 640 (each of the foregoing documents referred
to herein as a
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"Contract" and together, the "Contracts"). The GG Group is not a party to any
other contract, loan agreement, lease, indenture, mortgage, instrument,
commitment or other agreement, arrangement or understanding, whether written or
oral that would have a material adverse effect on the operation of the Theaters.
To the knowledge of the GG Group, each Contract is a legal, valid and binding
obligation of the GG Group and is in full force and effect. The GG Group and
each other party to each Contract has performed all obligations required to be
performed by it thereunder and is not in breach or default, and is not alleged
to be in breach or default, in any respect thereunder, and no event has occurred
and no condition or state of facts exists (or would exist upon the giving of
notice or the lapse of time or both) that would become or cause a breach,
default or event of default thereunder, would give to any Person the right to
cause such a termination or would cause an acceleration of any obligation
thereunder. The GG Group is not currently renegotiating any Contract nor has it
received any notice of non-renewal or price increase or sales or production
allocation with respect to any Contract. The representations and warranties
contained in this Section shall survive only until the end of the First Contract
Year.
4.11. Permits; Compliance With Law. Schedule 4.11 sets forth each permit,
certificate, license, franchise, privilege, approval, registration and
authorization held by the GG Group (each, a "Permit" and collectively,
"Permits"). To its knowledge, each Permit is valid, subsisting and in full force
and effect. To its knowledge, the GG Group is in compliance with and has
fulfilled and performed its obligations under each Permit, and no event or
condition or state of facts exists (or would exist upon the giving of notice or
lapse of time or both) that could constitute a breach or default under any
Permit. To its knowledge, the GG Group has not been nor is currently in
violation of any Law and has received no notice of any violation of Law, and no
event has occurred or condition or state of facts exists that could give rise to
any such violation. The GG Group has not received any notice of non-renewal of
any Permit. The representations and warranties contained in this Section shall
survive only until the end of the First Contract Year.
4.12. Real Property. The GG Group does not own any real property. The GG
Group holds a leasehold interest in the real property upon which the Theater is
located (the "Real Property") pursuant to that certain lease (the "Lease")
between Purmil Company and Cinema Herricks, Inc., dated January 1, 1994. The GG
Group has the right to quiet enjoyment of the Real Property for the full term of
the Leases in accordance with the terms of the Lease. To its knowledge, the use
and operation of the Real Property conforms to all applicable building, zoning,
safety and
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subdivision Laws, environmental Laws and other Laws, and all restrictive
covenants and restrictions and conditions affecting title. The GG Group has not
received any written or oral notice of assessments for public improvements or
condemnation against the Real Property. The representations and warranties
contained in this Section shall survive only until the end of the First Contract
Year.
4.13. Bank Debt. As of the date of this Agreement, Carmi Djiji, or an
affiliate which is not the GG Group, is indebted in the principal amount of not
less than $150,000 to commercial lending institutions, representing funds
borrowed and used in connection with the operation of the Theater.
4.14. Customer Relations. To the GG Group's knowledge, there exists no
condition or state of facts or circumstances involving the GG Group's customers,
suppliers, distributors or representatives that the GG Group can reasonably
foresee could adversely affect the Business now or in the future. The
representations and warranties contained in this Section shall survive only
until the end of the First Contract Year.
4.15. Finders' Fees. Neither the GG Group nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE Clearview GROUP
As an inducement to the GG Group to enter into this Agreement and
consummate the transactions contemplated hereby, the Clearview Group represents
and warrants to the GG Group as follows:
5.01. Organization. Each of the Clearview Group is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the corporate power and authority to own
or lease its properties, carry on its business, enter into this Agreement and to
perform its obligations under this Agreement.
5.02. Authorization; Enforceability. This Agreement has been duly executed
and delivered by and constitutes the legal, valid and binding obligations of the
Clearview Group, enforceable against it in accordance with its terms. All
actions contemplated by this Agreement have been duly and validly authorized by
all necessary proceedings by the Clearview Group.
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5.03. No Violation of Laws; Consents. Neither the execution and delivery of
this Agreement, the consummation of the transactions contemplated in this
Agreement nor the compliance with or fulfillment of its terms, conditions or
provisions by the Clearview Group will: (i) contravene any provision of the
governing documents of the Clearview Group, (ii) conflict with, result in a
breach of, constitute a default or an event of default (or an event that might,
with the passage of time or the giving of notice or both, constitute a default
or event of default) under any of the terms of, result in the termination of,
result in the loss of any right under, or give to any other person the right to
cause such a termination of or loss under, any Asset or any other contract,
agreement or instrument to which the Clearview Group is a party or by which any
of its assets may be bound or affected, (iii) result in the maturation or
acceleration of any liability or obligation of the Clearview Group (or give to
any other person the right to cause such a creation, maturation or
acceleration), (iv) violate any judgment or order of any governmental body to
which the Clearview Group is subject or by which any of the Assets or any of its
other assets may be bound or affected, or (v) prior to the Closing, result in
the creation or imposition of any encumbrance upon any of the Assets or give to
any other Person any interest or right therein. No consent, approval or
authorization of, or registration or filing with, any person is required in
connection with the execution and delivery by the Clearview Group of this
Agreement or the consummation by the Clearview Group of the transactions
contemplated by this Agreement.
5.04. No Pending Litigation or Proceedings. Except as set forth in Schedule
5.4, no action, suit, investigation, claim or proceeding of any nature or kind
whatsoever, whether civil, criminal or administrative, by or before any
governmental body or arbitrator ("Litigation") is pending or, to the knowledge
of the Clearview Group, threatened against or affecting the Clearview Group, the
Business, any of the Assets, or any of the transactions contemplated by this
Agreement, and to the knowledge of the Clearview Group there is no basis for any
Litigation. The Clearview Group does not have pending any Litigation against any
third party.
5.05. Finders' Fees. Neither the Clearview Group nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby. Any claim for any brokerage fee,
commission or finders' fee claimed by Brett Marks shall be paid by the Clearview
Group.
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5.06. Financial Statement. The Clearview Group has previously provided to
the GG Group the audited consolidated and consolidating balance sheets, income
statements, and statements of cash flows for CCG at December 31, 1994 and for
the year then ended (the "Financial Statements"). The Financial Statements (i)
are accurate, correct and complete in accordance with the books of account and
records of CCG, (ii) have been prepared in accordance with GAAP on a consistent
basis throughout the indicated period, (iii) fairly present the consolidated
financial condition, assets, and liabilities and results of operation of CCG at
the dates and for the period indicated in accordance with Accounting Principles.
As of the date of this Agreement, there has been no material adverse change in
the financial condition, business or prospects of CCG.
5.07. Undisclosed Liabilities. The Clearview Group, to its knowledge, has
no debt, obligation or liability, absolute, fixed, contingent or otherwise, of
any nature whatsoever, whether due or to become due, including any unasserted
claim, whether incurred directly or by any predecessor thereto, and whether
arising out of any act, omission, transaction, circumstance, sale of goods or
services, state of facts or other condition that would have a material effect on
GG Group's operation of the Theaters, except those which have been disclosed in
writing to the GG Group. the representations and warranties contained in this
Section shall survive only until the end of the First Contract Year.
5.08. Taxes. The Clearview Group has filed or caused to be filed on a
timely basis, or will file or cause to be filed on a timely basis, all Tax
Returns that are required to be filed by it prior to or on the Closing Date,
pursuant to the Law of each governmental authority with taxing power over it.
All such Tax Returns were or will be, as the case may be, correct and complete.
The Clearview Group has paid all Taxes that have become due as shown on such Tax
Returns or pursuant to any assessment received as an adjustment to such Tax
Returns. The Clearview Group has withheld and paid all Taxes required to have
been withheld in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party. There is no
pending, or, to the knowledge of the Clearview Group, threatened or anticipated,
assessment of any additional Tax against any member of the affiliated group of
corporations which the Clearview Group is or was a part for any taxable period
during which the Clearview Group or any predecessor company was a member of such
group. "Tax" means any domestic or foreign, federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not. "Tax
Return" means any return, declaration, report, claim for refund, or information
return or
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statement relating to any Tax, including any schedule or attachment thereto, and
including any amendment thereof.
ARTICLE VI.
CERTAIN COVENANTS
6.01. Exclusivity. The GG Group shall not sell or transfer the Assets or
the Business or engage in any negotiations regarding the sale of the Assets or
the Business to or with any person other than the Clearview Group. Any issuance
by the GG Group of or sale or transfer by any person of shares of capital stock
of any or all of the GG Group shall be caused or permitted by the GG Group only
(A) (i) upon written notice to the Clearview Group not fewer than ten business
days prior to such issuance, sale or transfer setting forth the name of the
recipient of such shares (the "Recipient") or (ii) pursuant to transfer upon the
demise of Carmi Djiji and (B) upon written agreement by the Recipient that each
of the GG Group is bound by the terms of this Agreement.
6.02. Conduct of Business Pending Closing. The GG Group shall permit the
Clearview Group to manage the Theater in accordance with the provisions of
Article I. The GG Group shall not, without the prior written consent of the
Clearview Group, (a) engage in any business or enter into any contract or
commitment; (b) cause or permit any Contract to be amended, supplemented or
modified in any way; (c) take any action that is reasonably likely to result in
the occurrence of a breach of this Agreement; or (d) take any action or omit to
take any action that will cause a breach or termination of any Contract.
6.03. Liens, Encumbrances. Prior to the Closing, neither the Clearview
Group nor the GG Group shall pledge or encumber any of the Assets.
6.04. Mechanics Liens. The Clearview Group shall use its best efforts to
defend any mechanics liens filed against the Theaters or the Assets. In the
event that mechanics liens remain filed against the Theaters or any of the
Assets at the expiration or termination for any reason of this Agreement, the
Clearview Group shall retain liability for the payment of the claims supporting
such liens; provided however, that in connection with such liability, the
Clearview Group shall retain all rights to litigate such claims and shall have
no obligation to pay any such claim until the entry by a court of competent
jurisdiction of a final non-appealable order in favor of claimant and against
the Clearview Group, provided however, that to the extent that the exercise of
any right of Clearview under this Section shall be a violation of the Lease,
Clearview shall first obtain permission
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of the landlord under the Lease before exercising its rights under this Section.
6.05. Indemnification. The GG Group shall indemnify, defend, save and hold
harmless the Clearview Group from and against any and all Damages incurred by
any or all of the Clearview Group in connection with or in any way related to
(a) the tax liabilities of the GG Group set forth in Schedule 4.6 and (b) any
contractual obligation of the GG Group to any third party. For the purpose of
this section "Damages" shall include all demands, claims, causes of action,
losses, costs, damages, expenses and other liabilities (including court costs,
interest, penalties and reasonable attorneys' fees) incurred by any or all of
the Clearview Group. In addition to and not in lieu of other remedies, the
Clearview Group shall be entitled to enforce this Section by setting-off any
amounts owed to that party against amounts owed by that party to the other
party.
6.06. Publicity. The GG Group and the Clearview Group shall not issue any
press release or otherwise make any announcements to the public or the employees
of the GG Group with respect to this Agreement without the prior written consent
of the other, except as required by Law.
6.07. Fulfillment of Agreements. each party hereto shall use its best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement.
6.08. The GG Group Assistance. The GG Group shall cooperate with and assist
the Clearview Group and its authorized representatives in order to provide, to
the extent reasonably requested by the Clearview Group, an efficient transfer of
control of the Assets and to avoid any undue interruption in the activities and
operations of the Business following the Effective Date of this Agreement,
including but not limited to providing the Clearview Group with all information
requested in Schedule 6.8 within seven business days after the execution of this
Agreement.
6.09. Non-Competition. For a period of ten years after the Closing under
this Agreement, neither Carmi Djiji nor any of the GG Group shall on his or its
own behalf or as a partner, officer, executive, a manager, employee, director,
consultant, shareholder (other than as owner of less than five (5%) percent of
the issued and outstanding stock of a publicly owned corporation whose
securities are traded on a nationally recognized stock exchange or quoted on
NASDAQ), directly or indirectly, engage in any business which is, or be employed
by any person or entity whose
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business is substantially the same as, or materially competitive with the
business of the theater within a five mile radius of the Theater.
ARTICLE VII.
DELIVERIES AND PROCEEDINGS
7.01. Deliveries and Proceedings Simultaneous with Execution of this
Agreement.
(a) Deliveries by the GG Group to the Clearview Group. The GG Group
shall deliver or cause to be delivered to the Clearview Group simultaneously
with the execution of this Agreement:
(i) Incumbency and specimen signature certificates dated the Closing
Date, signed by the officers of the GG Group and certified by the Secretary of
the GG Group;
(ii) Certificates of the Secretary of the GG Group setting forth all
resolutions of the Boards of Directors of the GG Group and the stockholders of
the GG Group authorizing the execution and delivery of this Agreement and the
performance by the GG Group of the transactions contemplated hereby; and
(iii) A certificate of an officer of each GG Group certifying that
Carmi Djiji is the sole stockholder of the GG Group and certifying to his
knowledge that all representations made in this Agreement (subject to any
limitations expressly set forth in each representation) are accurate as of the
date of this agreement.
(b) Deliveries by the Clearview Group to the GG Group. The Clearview
Group shall deliver or cause to be delivered to the GG Group simultaneously with
the execution of this Agreement:
(i) Incumbency and specimen signature certificates
signed by the officers of the Clearview Group and certified by
the Secretary of the Clearview Group;
(ii) A Certificate of the Secretary of the Clearview Group setting
forth all resolutions of the Board of Directors of the Clearview Group
authorizing the execution and delivery of this Agreement and the performance by
the Clearview Group of the transactions contemplated hereby, certified by the
respective Secretaries of the Clearview Group; and
(iii) A certificate of A. Dale Mayo as an officer of each of the
Clearview Group certifying to his knowledge that
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all representations made in this Agreement are accurate as of the date of this
Agreement.
(c) Deliveries by the GG Group to the Escrow Agent. The GG Group
shall deliver or cause to be delivered to the Escrow Agent simultaneously with
the execution of this Agreement:
(i) An assignment of the Herricks Lease duly
executed by the GG Group in the form attached hereto as Exhibit
C; and
(ii) A General warranty bill of sale and instrument of assignment of
the Assets, duly executed by the GG Group, in the form attached hereto as
Exhibit D.
(d) Deliveries by the Clearview Group to the Escrow Agent. The
Clearview Group shall deliver or cause to be delivered to the Escrow Agent
simultaneously with the execution of this Agreement:
(i) The Escrowed Funds as provided in Article VIII
of this Agreement; and
(ii) an assignment of all rights of the Clearview Group to the
Assets, including the Leases, under this Agreement, duly executed in the form
attached hereto as Exhibit E.
7.02. Deliveries and Proceedings at Closing.
(a) Deliveries by the Escrow Agent. The Escrow Agent shall deliver
or cause to be delivered to the Clearview Group at the Closing those documents
previously delivered to the Escrow Agent by the GG Group in accordance with
Section 7.01 above.
(b) Deliveries by the GG Group. The GG Group shall deliver to the
Clearview Group at the Closing:
(i) Certificates of the Secretary of the GG Group certifying that
the resolutions delivered pursuant to Section 7.1(a)(iii) have not been amended
or superseded and remain in full force and effect;
(ii) A certificate of the President of the GG Group certifying that,
to his knowledge, all representation and warranties made by the GG Group in this
Agreement, except those that shall have expired pursuant to the explicit
provisions of this Agreement, are true and correct as of the Closing Date; and
(iii) evidence of the determination by the appropriate taxing
authority of the amounts of the Real Property
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Gains Tax required to be paid by the GG Group upon consummation of this
Agreement and a check or checks made payable to the appropriate taxing authority
in such amounts; provided, however, that if the GG Group shall not deliver any
or all of such evidence and checks, the Clearview Group shall deduct from the
Purchase Price an amount sufficient in the reasonable discretion of the
Clearview Group to pay such tax, which deduction may be used to pay such tax.
(c) Deliveries by the Clearview Group. The Clearview Group shall
deliver or cause to be delivered to the GG Group at the Closing:
(i) (a) A wire transfer of immediately available federal funds in
accordance with Section 2.05 pursuant to complete wire transfer instructions
delivered by the GG Group to the Clearview Group in writing at least two
business days prior to Closing and (b) only if the stock of CCG shall be then
listed for trading on a national securities exchange, including NASDAQ, and if
so elected by the GG Group, a promissory note in an amount requested by the GG
Group equal to or less than $50,000;
(ii) A certificate of the Secretary of the Clearview Group
certifying that the resolution delivered pursuant to Section 7.01(b)(ii) have
not been amended or superseded and remain in full force and effect; and
(iii) A check made payable to the appropriate taxing authority in
the amount of all sales tax required to be paid by the Clearview Group pursuant
to Section 2.06.
ARTICLE VIII.
ESCROWED FUNDS AND DOCUMENTS
8.01. Escrowed Funds. Simultaneously with the execution by the parties of
this Agreement, pursuant to an Escrow Agreement in the form of Exhibit F hereto,
the Clearview Group shall cause to be deposited with an escrow agent (the
"Escrow Agent") acceptable to the Clearview Group and the GG Group, $60,000 in
bank certificates of deposit (the "Escrowed Funds"). The Clearview Group shall
replenish within thirty days any reduction in the Escrow Funds below $60,000.
8.02. Escrow of Documents. Simultaneously with the execution by the
parties of this Agreement, the parties shall cause to be delivered to the Escrow
Agent those documents (the "Escrowed Documents") set forth in Section 8.01.
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8.03. Rights to Escrowed Funds. During the term of this Agreement, the
Escrowed Funds shall be held for the benefit of the GG Group pursuant to the
terms of this Agreement, and shall not be subject to the rights of any trustee,
creditor, or other person in any bankruptcy, reorganization, insolvency or
receivership proceeding.
8.04. Use of Escrow Funds. The Clearview Group has deposited with the
Escrow Agent the Escrowed Funds for the faithful performance and observance by
the Clearview Group of the terms, provisions, and conditions of this Agreement,
to be distributed to or for the benefit of the GG Group upon the terms and
subject to the conditions set forth in this Agreement. The Clearview Group
covenants that it will not assign or encumber or attempt to assign or encumber
the Escrowed Funds and that neither the Escrow Agent nor its successors or
assigns shall be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.
ARTICLE IX.
DEFAULT
9.01. Events of Default. The following events shall constitute an Event of
Default:
(a) Failure by the Clearview Group to pay when due any Option
Payment;
(b) Failure by the Clearview Group or the GG Group to comply with
any term or condition of the agreement or breach of any representation or
warranty;
(c) Failure by the Clearview Group to pay any payment when due under
any Lease;
(d) If the landlord under the Lease shall deliver written notice
(the "Landlord Termination Notice") to the Clearview Group stating that the
Lease is in default and setting forth a date (the "Termination Date") by which
such default must be cured or the Lease shall be terminated, failure by the
Clearview Group to cure such default prior to five business days prior to the
Termination Date;
(e) Filing of any bankruptcy petition or other insolvency proceeding
by or against the Clearview Group under any federal or state law;
(f) Failure by the Clearview Group to vacate within sixty days of
the filing thereof any execution or attachment
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(excluding mechanics liens) filed against the Theater or any of the Assets on
account of any obligation or because of the taking or the omission of any action
by the Clearview Group;
(g) Failure by the GG Group to vacate within sixty days of the
filing thereof any execution or attachment filed against the Theater or any of
the Assets on account of any obligation or because of the taking or the omission
of any action by the GG Group;
(h) Failure by the Clearview Group to repair any damage or
destruction to the Theater in an amount in excess of $50,000 as soon as is
practicable in the reasonable discretion of the Clearview Group; or
(i) Failure by the Clearview Group to replenish the Escrow Account
within thirty days of a payment from such account pursuant to Section 9.2(a).
9.02. Rights and Remedies Upon Default.
(a) Use of Escrowed Funds. Upon the occurrence of an Event of
Default that can be cured by the payment of money in an amount equal to or less
than the current outstanding balance of the Escrowed Funds, the GG Group may
send a notice of default (the "Notice of DeFault") simultaneously to the Escrow
Agent and to Clearview, setting forth with particularity the nature of the
default and attaching to the Notice of Default the bill, invoice or other
evidence of the unpaid obligation (the "Obligation") giving rise to the default.
If the Clearview Group shall not (i) have paid the Obligation and provided proof
of such payment to the Escrow Agent or (ii) delivered to the Escrow Agent
written notice of dispute of the amount (the "Dispute Notice") of the Obligation
together with proof of payment of the undisputed amount, if any, of the
Obligation, within the ten business days immediately following the delivery to
the Clearview Group of the Notice of Default, the Escrow Agent shall pay from
the Escrowed Funds the Obligation directly to the obligee or to the GG Group if
the Obligation is owed directly to the GG Group. If the Clearview Group shall
have delivered the Dispute Notice to the Escrow Agent, and the dispute shall
concern an Option Payment, the Clearview Group and the GG Group shall resolve
the dispute pursuant to the provisions of Section 1.3(e). If the Clearview Group
shall not have delivered proof of payment of the amount of the Option Payment as
set forth in the Resolution Notice as defined in Section 1.3(e) within ten
business days following the delivery to the Clearview Group of the Resolution
Notice, the Escrow Agent shall pay such amount directly to the GG Group from the
Escrowed Funds.
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(b) Termination by the GG Group.
(i) Notice of Termination; Right to Cure or Exercise Option. Except
as provided in Section 9.2(b)(ii), upon the occurrence of an Event of Default by
the Clearview Group which cannot be cured by the payment of money in an amount
equal to or less than the current outstanding balance of the Escrowed Funds, the
GG Group may deliver to the Clearview Group a Notice of Default setting forth
the nature of the default with particularity. If (a) the Clearview Group shall
not have substantially cured such default within the thirty-day period following
the delivery of the Notice of Default (or such lesser period of time as provided
under notice the lessor under the Lease) or (b) the Clearview Group shall have
disputed the payment of any Obligation under Section 9.2(a), the GG Group may
deliver to the Clearview Group a Notice of Termination. Within the ten business
day period (the "Exercise Period") immediately following the delivery of the
Notice of Termination, the Clearview Group may either cure the default or
exercise the Option by delivering the Option Notice to the GG Group. If the
Default is not cured, the Escrow Agent shall retain so much of the Escrowed
Funds as would be necessary to cure the Default, which shall be released to the
GG Group if a judgment is entered against the GG Group in connection with such
Default.
(ii) Closing; Adjustment of Purchase Price. If the Clearview Group
shall have delivered the Option Notice in accordance with this Section 9.2, the
Closing shall take place within the sixty day period immediately following the
delivery of the Option Notice; provided, however, that if the Clearview Group
shall have received a Landlord Notice of Default from the lessor under the
Lease, the Closing shall take place on a date not fewer than five days prior to
the date by which the Landlord Notice of Default requires the default alleged
therein to be cured. Upon exercise of the Option pursuant to this Article, the
Purchase Price shall be adjusted to include, to the extent not already included
in the Purchase Price, the following amounts, discounted to present value as of
the Closing Date at a rate of ten percent per annum: (A) if the Option Notice is
delivered during the First Contract Year, the Option Payment and all Retention
Fees that would have been required through the end of the Second Contract Year
and (B) if the Option Notice is delivered in the Second, Third, Fourth, or Fifth
Contract Year, all Retention Fees that would have been required through the end
of the Contract Year during which the Option Notice was delivered. For the
purpose of calculating the adjustments under this Section, all Retention Fees
for each Contract Year shall be deemed to be the Estimated all Retention Fees
for that Contract Year; provided, however, that if the Option Notice is
delivered within the Second Contract Year, all Retention Fees for the Second
Contract Year
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shall be the greater of the Retention Fees for the First Contract Year or
$165,000. If the Clearview Group shall exercise the Option pursuant to this
Article, the Clearview Group shall pay to the GG Group, to the extent such
amount exceeds the amounts already paid to the GG Group pursuant to this
Section, an amount equal to the Retention Fees which would have been due to the
GG Group if the Option had not been so exercised, based upon the actual
performance of the Clearview Group from the date of the Closing until the first
time at which the Clearview Group was entitled to exercise its Option under
Article One of this Agreement (the "Cut-off Date"), such payment to be made
within the thirty-day period immediately following the Cut-off Date.
(iii) Failure to Cure or Exercise Option. If at the end of the
Exercise Period the Clearview Group shall remain in default and shall not have
delivered the Option Notice, the GG Group may terminate this Agreement in
accordance with Article X. If the Default is not cured, the Escrow Funds may be
utilized to the extent available and the Clearview Group shall be responsible
for any deficiency.
(c) Termination by the Clearview Group. Upon the occurrence of an
Event of Default by the GG Group, the Clearview Group may deliver to the GG
Group a Notice of Default setting forth the nature of the default with
particularity. If the GG Group shall not have substantially cured the default
within the thirty business day period following the delivery of the Notice of
Default, the Clearview Group may terminate this Agreement in accordance with
Article X.
ARTICLE X.
TERMINATION
10.01. Termination.
(a) Expiration. This Agreement shall terminate without further
action by any party unless the Clearview Group shall have delivered the Option
Notice to the GG Group on or before the thirtieth day following the end of the
Fifth Contract Year.
(b) Termination. Except as provided in Section 9.2(b), this
Agreement may be terminated by notice given by the following parties at the
following times, such termination to be effective on the fifth business day
following the delivery of such notice:
(i) at any time prior to Closing by mutual written consent of the
Clearview Group and the GG Group;
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(ii) by the Clearview Group (A) within the sixty day period
following the end of the Second Contract Year, if the amount (the "Minimum
Revenue") equal to fifty percent of the sum of (1) the Gross Revenue for the
Theater for the First Contract Year plus (2) the Gross Revenue for the Theater
for the Second Contract Year shall not have been equal to or in excess of
$510,000; by way of example and not limitation, if the Gross Revenue for the
First Contract Year shall have been $500,000 and the Gross Revenue for the
Second Contract Year shall have been $600,000, the Minimum Revenue shall be .5
(500,000 + 600,000) = 550,000; or (B) in accordance with the terms and
conditions set forth in Section 9.2(c).
(iii) by the GG Group (A) if the Minimum revenue shall not have been
equal to or in excess of $510,000, the GG Group, within the sixty day period
following the Second Contract Year, shall have delivered to the Clearview Group
written notice of the GG Group's intention to terminate this Agreement (the "GG
Group Notice"), and the Clearview Group shall not have delivered to the GG Group
the Option Notice within thirty days of the receipt of the GG Group Notice; or
(B) in accordance with the terms and conditions set forth in Section 9.2(b).
(c) Inability to Operate. Notwithstanding anything else herein to
the contrary, if prior to Closing, the Clearview Group is rendered substantially
unable to operate the Business for a period of time equal to or greater than 30
days by any reason beyond the Clearview Group's control and which it cannot
reasonably cure, including but not limited to destruction of a substantial
portion of the Assets or if the whole or any part of the Real Property shall be
acquired or condemned by Eminent Domain for any public or quasi-public use, the
Clearview Group at its option, which may be exercised by written notice given to
the GG Group within thirty (30) business days after the Clearview Group's
receipt of notice of such loss, may terminate this Agreement, effective
immediately.
10.02. Events Upon Termination.
(a) Release of Premises; Payment. Upon the expiration or termination
of this Agreement for any reason, the Clearview Group shall surrender possession
of the Theaters to the GG Group; provided, however, that until such surrender
the Clearview Group shall continue to pay to the GG Group for each month or
fraction thereof an amount equal to the monthly Option Payments (or fraction
thereof) last payable under this Agreement; provided, however, any obligations
which become due and owing after the possession shall be surrendered but which
comprise costs and expenses incurred and attributable before such date, such as
rent, electricity, gas, water, sewer, telephone, property
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taxes, employee salary and benefits and similar items, shall be prorated between
the Clearview Group and the GG Group as of the date of surrender.
(b) Escrowed Funds. Upon the termination of this Agreement, the
Escrowed Funds and Escrowed Documents shall be pre-paid insurance premiums,
concession inventories, theater supplies from the Escrow Funds distributed as
follows:
(i) if the Agreement shall be terminated by GG pursuant to Section
10.1(b)(iii)(B), the Escrow Agent shall pay from the Escrow Funds (A) directly
to the landlord, under the Lease, all rent due and owing to the landlord (a
"Rental Payment Amount") on the date of the delivery of the Notice of
Termination and shall continue to pay such rent as subsequently becomes due for
the theater until the earlier of (1) the date on which the GG Group shall first
charge admission for entrance to the Theater or (2) the end of the six month
period immediately following the delivery of the Notice of Termination and (B)
directly to the GG Group all Retention Fees which would have been due and
payable to the GG Group through the end of the Contract Year during which the
Notice of Termination was delivered to the Clearview Group together with
interest at twelve percent per annum on such amount calculated from the date of
delivery of the Notice of Termination through the date on which such payment is
made by the Escrow Agent to the GG Group (the "Retention Fee Amount") and shall
release the Escrowed Documents to the GG Group. Not less than twenty-four hours
after the first date upon which the GG Group shall first charge admission for
entrance to the Theater, the GG Group shall notify the Escrow Agent in writing
of such occurrence (each an "Operation Notice"). If the GG Group shall fail to
so notify the Escrow Agent, the Clearview Group may deliver such notice to the
Escrow Agent.
(ii) if the Agreement shall expire or shall be terminated for any
reason other than the termination of the Agreement by the GG Group pursuant to
Section 10.1(b)(iii)(B), the Escrow Agent shall immediately release the Escrowed
Funds and the Escrowed Documents (other than Exhibit E) signed by the Clearview
Group to the Clearview Group; provided, however, that if the Agreement shall
expire or be terminated for a reason other than default by the GG Group, the
Escrow Agent shall release to the GG Group the amount of the Escrow Funds equal
to the amounts owed by the Clearview Group to the GG Group and to the lessors
under the Leases, including amounts due to the GG Group and to the lessors until
the Clearview Group shall have delivered possession of the Theaters to the GG
Group.
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ARTICLE XI.
DISPUTE RESOLUTION
11.01. Dispute Resolution. The calculation of Excess Revenue and Gross
Revenue shall be made by the Clearview Group, as reflected in the Financial
Statements periodically provided by the Clearview Group to the GG Group pursuant
to Section 1.6. Any disagreement concerning the calculation of the amount of the
Excess Revenue or of the Gross Revenue or the calculation of any Retention Fee
or the Purchase Price for a particular Contract Year shall be delivered to the
Clearview Group by the GG Group in writing (the "Dispute Notice") within sixty
days following the end of such Contract Year or, if the Option shall have been
exercised, within thirty days following the delivery of the Option Notice,
provided that the most recent financial statement pursuant to Section 1.6 shall
have been timely delivered. If the Clearview Group and the GG Group do not
resolve such dispute within thirty days after the delivery of such notice, the
Clearview Group and the GG Group shall engage to resolve such dispute at the New
York office of the accounting firm of KPMG Peat Marwick, if such firm shall not
have represented any of the Clearview Group or its affiliates within the
three-year period ending on the day the Dispute Notice is delivered to the
Clearview Group, and otherwise the New York office of the accounting firm of
Arthur Andersen, or if neither such firm accepts such engagement, an accounting
firm designated by the New York office of the American Arbitration Association.
The management agreement with such accounting firm shall require the accounting
firm to make their determination with respect to the items in dispute within
ninety days. The Clearview Group and the GG Group shall each pay one-half of the
costs of the fees and expenses of such accounting firm. The resolution by such
accounting firm of such dispute shall be final, binding and conclusive upon the
parties and shall be the parties' sole and exclusive remedy regarding any
dispute concerning the amount of the Excess Revenue or Gross Revenue. During the
period of dispute, the Clearview Group shall continue to pay to the GG Group all
amounts owed to the GG Group that are undisputed. Upon resolution of the
dispute, the accounting firm shall deliver to each of the GG Group and the
Clearview Group a written resolution of the dispute (the "Resolution Notice").
ARTICLE XII.
MISCELLANEOUS
12.01. Nature of Relationship. It is not the intention of the parties to
this Agreement and nothing provided in this Agreement shall be deemed to create
a joint venture or partnership between the Clearview Group and the GG Group. It
is
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further intended that this Agreement does not constitute an assignment or
sublease of the GG Group's rights under the Lease prior to exercise of the
Option and payment of the Purchase Price by the Clearview Group. Neither party
shall have the authority to enter into any contract or commitment in the name
and on behalf of the other party.
12.02. Costs and Expenses. The Clearview Group and the GG Group shall each
pay its respective expenses in connection with this Agreement and the
transactions contemplated in this Agreement.
12.03. Specific Performance. The GG Group acknowledges that damages at law
would be an inadequate remedy for (i) violation of any provision relating to the
exercise of the Option by the Clearview Group and (ii) breach by the GG Group of
Section 6.9. Accordingly, in the event of (i) the violation of any provision of
this Agreement relating to the exercise of the Option by the Clearview Group or
(ii) breach by the GG Group of Section 6.9, the Clearview Group, in addition to
and not in lieu of other remedies, shall be entitled to compel specific
performance by the GG Group of its obligations under this Agreement.
12.04. Further Assurances. The GG Group shall, at any time and from time to
time on and after the Closing Date, upon request by the Clearview Group and
without further consideration, take or cause to be taken such actions and
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, documents, transfers, conveyances and assurances as
may be required for the better conveying, transferring, assigning, delivering,
assuring and confirming the Assets to the Clearview Group.
12.05. Notices.
(a) Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made i. the second business day after the date of mailing, if
delivered by registered or certified mail, postage prepaid, ii. upon delivery,
if sent by hand delivery, iii. upon delivery, if sent by prepaid courier, with a
record of receipt, or iv. the next day after the date of dispatch, if sent by
cable, telegram, facsimile or telecopy: to the parties at the following
addresses:
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if to the Clearview Group, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
with a required copy to:
Warren H. Colodner, Esquire
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
New York, New York 10020
Telecopy: (212) 536-3901
if to the GG Group, to:
Carmi Djiji
30 Wren Drive
Roslyn, New York 11576
Telecopy: (516) 626-3302
with a required copy to:
Hollenberg, Levin, Solomon, Ross
and Belsky, LLP
585 Stewart Avenue
Garden City, NY 11530
Telecopy: (516) 745-6642
(b) Simultaneous Transmission; Change of Address. All notices or
other communications given or made pursuant to Section 12.5(a)(i) shall be
simultaneously sent by facsimile and all notices or other communications given
or made pursuant to Section 12.5(a)(iv) shall be simultaneously sent by
registered or certified mail, postage prepaid, return receipt request). Any
party hereto may change the address to which notice to it, or copies thereof,
shall be addressed by giving notice thereof to the other parties hereto in
conformity with the foregoing.
12.06. Assignment; Governing Law. This Agreement and all the rights and
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective permitted successors and assigns. This Agreement and the
rights, interests and obligations hereunder may not be assigned by any party
hereto and the Leases may not be sublet by the Clearview Group without the prior
written consent of the other parties hereto, except that the Clearview Group may
make such assignments or sublet to any Affiliate of the Clearview Group provided
that the Clearview Group remains liable under this Agreement and the Clearview
Group
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obtains such consent, if any, that is required to be obtained by any CCGS under
the Lease and the GG Group may make such assignments to any affiliate of the GG
Group provided that the GG Group remains liable hereunder. This Agreement shall
be governed by and construed in accordance with the laws of New York without
regard to its conflict of law doctrines.
12.07. Amendment and Waiver. To be effective, any amendment or waiver under
this Agreement must be in writing and be signed by the party against whom
enforcement of the same is sought. Neither the failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or to insist
upon compliance by any other party with its obligations hereunder, nor any
custom or practice of the parties at variance with the terms hereof, shall
constitute a waiver by such party of its right to exercise any such right, power
or remedy or to demand such compliance.
12.08. Entire Agreement; No Third Party Beneficiaries. This Agreement and
the Schedules and Exhibits set forth all of the promises, covenants, agreements,
conditions and undertakings between the parties hereto with respect to the
subject matter hereof, and supersede all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express or implied,
oral or written. This Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
12.09. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
12.10. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an
original but all of which together shall be deemed to be one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Cinema Herricks, Inc.
By:_____________________________
Title:_______________________
CCC Herricks Cinema Corp.
By:_____________________________
Title:_______________________
Clearview Cinema Group
By:_____________________________
Title:_______________________
[Schedules and Exhibits are not included herewith, but will be
provided by the Company upon request.]
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Exhibit 10.38
ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement") made and entered into as of
the 8 day of September, 1995 by and among Cinema Grand Ave., Inc., a New York
corporation ("GAI"), and Triplex Movies at Port Washington, Inc. a New York
corporation ("PWI," and together with GAI, the "GG Group") and Clearview Cinema
Group, Inc. a Delaware corporation ("CCG"), CCC Grand Avenue Cinema Corp., a
Delaware corporation ("GACC"), and CCC Port Washington Cinema Corp., a Delaware
corporation ("PWCC," and together with CCG and GACC, the "Clearview Group") and
Hollenberg, Levin, Solomon, Ross and Belsky, LLP as escrow agent (hereinafter
referred to as the "Escrow Agent");
The Clearview Group and the GG Group have entered into an Agreement
dated the date hereof (the "Agreement") that requires that the Clearview Group
and the GG Group to place certain funds and documents into escrow with the
Escrow Agent to be held and disbursed in accordance with the terms and
conditions of that Agreement.
The Clearview Group and the GG Group desire to deposit with the Escrow
Agent the funds and documents described herein to be distributed as set forth
herein.
In consideration of the foregoing and the mutual covenants set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
Deliveries to the Escrow Agent.
1.1 Escrow Fund. Simultaneously with the execution of this Escrow
Agreement, the Clearview Group is depositing with the Escrow Agent, the
principal sum of Two Thousand Forty-one Thousand, Two Hundred Forty Thousand
Dollars ($240,000) (the "Principal Amount"). The Principal Amount and any
interest thereon, are hereinafter collectively referred to as the "Escrow Fund".
The Escrow Agent shall subject to collection of the Principal Amount invest the
assets in the Escrow Fund in certificates of deposit at the Stewart Avenue
Garden City Branch of Fleet Bank in an account entitled Security Deposit of
Clearview Cinema Group, Inc., CCC Grand Avenue Cinema Corp. and CCC Port
Washington Cinema Corp. for the benefit of the GG Group pursuant to Escrow
Agreement, dated September 8, 1995. The Clearview Group may, from time to time,
deposit additional funds with the Escrow Agent; provided, however, that the
maximum amount of Escrowed Funds held at a particular time shall not exceed
<PAGE>
$240,000, plus accrued interest.
1.2 Escrowed Documents. Simultaneously with the execution of this
Escrow Agreement, (i) the GG Group is delivering to the Escrow Agent (a)
assignments of Grand Avenue and Port Washington Leases duly executed by the GG
Group and (b) a general warranty bill of sale and instrument of assignment duly
executed by the GG Group, and (ii) the Clearview Group is delivering to the
Escrow Agent simultaneously with the execution of this Agreement an assignment
of rights of the Clearview Group.
ARTICLE II
Disposition of the Escrow Fund and Documents.
2.1 Use of Escrow Funds. The rights of each of the GG Group and the
Clearview Group to the Escrow Funds shall be as set forth in the Agreement. The
Clearview Group covenants that it will not assign or encumber or attempt to
assign or encumber the Escrow Funds and neither the Escrow Agent nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.
2.2 Request of the Parties. Upon receipt of written request (the
"Request") from either of the GG Group or the Clearview Group (each an
"Instructing Party") to disburse funds and/or documents, the Escrow Agent shall
immediately deliver by facsimile and certified mail a copy of the Request to the
other of the Clearview Group or the GG Group (each an "Instructed Party"). If,
within the ten business day period following the delivery of the Request to the
Instructed Party the Instructed Party shall not have delivered to the Escrow
Agent a written objection to the Request, the Escrow Agent shall disburse funds
and documents in accordance with the Request.
2.3 Expiration of the Agreement. The Escrow Agent shall pay the Escrow
Fund directly to the Clearview Group as soon as shall be practicable after the
Termination Date (as defined in Section 4.1), unless, as of the Termination
Date, the Escrow Agent shall (i) have pending before it any request to pay any
of the Escrow Fund pursuant to any other Section of this Escrow Agreement or
(ii) have filed an interpleader action pursuant to Section 4.4 of this Escrow
Agreement.
ARTICLE III
Delivery of Notices; Statements.
3.1 If the GG Group shall send any certificate, notice, request,
demand and other communication ( each a "Certificate") to the Escrow Agent, the
GG Group shall
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<PAGE>
simultaneously send such Certificate to the Clearview Group by facsimile and
certified mail. If the Clearview Group shall send a Certificate to the Escrow
Agent, the Clearview Group shall simultaneously send such Certificate to the GG
Group by facsimile and certified mail.
3.2 All certificates, notices, requests, demands and other
communications hereunder or with respect hereto shall be in writing and shall be
deemed to have been duly given or made upon the second business day after the
date of mailing, if delivered by certified mail, postage prepaid, i) upon
delivery, if sent by hand delivery, ii) upon delivery, if sent by prepaid
courier or overnight service (such as Federal Express), with a record of
receipt, or iii) the next day after the date of dispatch, if sent by cable,
telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested), to the parties at
the following addresses:
(i) if to the Clearview Group, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
with a required copy to:
Warren H. Colodner, Esquire
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
New York, New York 10020
Telecopy: (212) 536-3901
(ii) if to the GG Group, to:
Carmi Djiji
30 Wren Drive
Roslyn, New York 11576
Telecopy: (516) 627-3302
with a required copy to:
Herbert W. Solomon
Hollenberg, Levin, Solomon, Ross
and Belsky, LLP
585 Stewart Avenue
Garden City, NY 11530
Telecopy: (516) 745-6642
(iii) if to Escrow Agent, to:
Herbert W. Solomon
Hollenberg, Levin, Solomon, Ross
and Belsky, LLP
585 Stewart Avenue
Garden City, NY 11530
Telecopy: (516) 745-6642
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
3.3 The Escrow Agent shall promptly deliver or cause to be delivered
to the Clearview Group and to the GG Group monthly bank statements reflecting
the status of and any activity in the account.
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<PAGE>
ARTICLE IV
General Provisions
4.1 If not sooner terminated by the written consent of both the GG
Group and the Clearview Group, this Escrow Agreement shall terminate on August
31, 2000 or later, if required pursuant to the Escrow Agent's obligations under
this Agreement (the "Termination Date").
4.2 The Clearview Group and the GG Group agree to indemnify Escrow
Agent and hold it harmless from any loss or liability, including reasonable
attorneys' fees and expenses, arising from its service as Escrow Agent hereunder
and any actions taken pursuant hereto, except for losses or liabilities arising
from Escrow Agent's fraud, gross negligence or willful misconduct. The
provisions of this Section 4.2 relating to indemnity of the Escrow Agent shall
survive the Termination Date and the final disbursement of the Escrow Fund or
the sooner expiration of this Escrow Agreement or removal of the Escrow Agent
for any reason.
4.3 In the absence of fraud on its part, Escrow Agent shall be
entitled to rely conclusively, as to the truth of the statements contained
therein, upon any certificate, notice, authorization or other document delivered
to it hereunder which it reasonably believes to be in conformity with the
requirements of this Escrow Agreement and to be genuine and to have been signed
by any authorized representative of the Clearview Group or the GG Group (as the
case may be) from time to time. The Escrow Agent need not investigate any
factual matters averred or stated in any such certificate, notice, authorization
or other document; provided, however, that Escrow Agent shall examine each such
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<PAGE>
document to determine whether it conforms to the requirements of this Escrow
Agreement.
4.4 If Escrow Agent in good faith is in doubt as to what actions
should be taken hereunder, Escrow Agent shall have the absolute right to deposit
the Escrow Fund with the Clerk of the Supreme Court of Nassau County in
accordance with CPLB 1006 and upon such deposit the Escrow Agent shall be
released from all liability under this Escrow Agreement.
4.5 The service of Hollenberg, Levin, Solomon, Ross and Belsky, LLP as
Escrow Agent under this Agreement shall not disqualify Hollenberg, Levin,
Solomon, Ross and Belsky, LLP from the representation of Carmi Djiji or any of
the GG Group in any matter, including but not limited to, any dispute relating
to this Escrow Agreement.
4.6 The Clearview Cinema Group, Inc. shall file tax
returns reflecting the interest earned on the Escrow Funds, and
shall pay any and all taxes due on the income to Clearview
Cinema Group, Inc. on account of the interest earned on the
Escrow Funds. Its Taxpayer Identification Number is
_______________.
4.7 During the term of the Agreement, the Escrowed Funds shall be held
for the benefit of the GG Group pursuant to the terms of the Agreement, and
shall not be subject to the rights of any trustee, creditor, or other person
with respect to the Clearview Group in any bankruptcy, reorganization,
insolvency or receivership proceeding.
4.8 This Escrow Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors. The Clearview
Group may not assign its rights under this Agreement. This Escrow Agreement is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
4.9 This Escrow Agreement may not be revoked, rescinded or modified as
to any of its terms or conditions except upon consent in writing of all the
parties hereto.
4.10 This Escrow Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.
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<PAGE>
WITNESS the due execution hereof the day and year first above written.
Cinema Grand Ave., Inc.
By:_________________________
Title:___________________
Triplex Movies at Port
Washington, Inc.
By:_________________________
Title:___________________
Clearview Cinema Group, Inc.
By:_________________________
Title:___________________
CCC Grand Avenue Cinema Corp.
By:_________________________
Title:___________________
CCC Port Washington Cinema
Corp.
By:_________________________
Title:___________________
Hollenberg, Levin, Solomon,
Ross and Belsky, LLP
By:_________________________
Title:___________________
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Exhibit 10.39
ESCROW AGREEMENT
This Escrow Agreement ("Escrow Agreement") made and entered into
as of the ___ day of ________, 1995 by and among Cinema Herricks, Inc., a New
York corporation (the "GG Group"), Clearview Cinema Group, Inc. a Delaware
corporation ("CCG") and CCC Herricks Cinema Corp., a Delaware corporation ("HCC"
together with CCG the "Clearview Group") and Hollenberg, Levin, Solomon, Ross
and Belsky, LLP, as escrow agent (hereinafter referred to as the "Escrow
Agent");
The Clearview Group and the GG Group have entered into an
Agreement dated the date hereof (the "Agreement") that requires that the
Clearview Group and the GG Group to place certain funds and documents into
escrow with the Escrow Agent to be held and disbursed in accordance with the
terms and conditions of that Agreement.
The Clearview Group and the GG Group desire to deposit with the
Escrow Agent the funds and documents described herein to be distributed as set
forth herein.
In consideration of the foregoing and the mutual covenants set
forth herein, and intending to be legally bound hereby, the parties hereto agree
as follows:
I Article
Deliveries to the Escrow Agent.
1.1 Escrow Fund. Simultaneously with the execution of this Escrow
Agreement, the Clearview Group is depositing with the Escrow Agent, the
principal sum of Sixty Thousand Dollars ($60,000) (the "Principal Amount"). The
Principal Amount and any interest thereon, are hereinafter collectively referred
to as the "Escrow Fund". The Escrow Agent shall subject to the collection of the
Principal Amount invest the assets in the Escrow Fund in certificates of deposit
at the Stewart Avenue Garden City Branch of Fleet Bank in an account entitled
Security Deposit of Clearview Cinema Group, Inc. and CCC Herricks Cinema Corp.,
for the benefit of the GG Group pursuant to Escrow Agreement, dated _______,
1995. The Clearview Group may, from time to time, deposit additional funds with
the Escrow Agent; provided, however, that the maximum amount of Escrowed Funds
held at a particular time shall not exceed $60,000, plus accrued interest.
1.2 Escrowed Documents. Simultaneously with the execution of this
Escrow Agreement, (i) the GG Group is
<PAGE>
delivering to the Escrow Agent (a) assignments of Grand Avenue and Port
Washington Leases duly executed by the GG Group and (b) a general warranty bill
of sale and instrument of assignment duly executed by the GG Group, and (ii) the
Clearview Group is delivering to the Escrow Agent simultaneously with the
execution of this Agreement an assignment of rights of the Clearview Group.
II ARTICLE
Disposition of the Escrow Fund and Documents.
2.1 Use of Escrow Funds. The rights of each of the GG Group and
the Clearview Group to the Escrow Funds shall be as set forth in the Agreement.
The Clearview Group covenants that it will not assign or encumber or attempt to
assign or encumber the Escrow Funds and neither the Escrow Agent nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.
2.2 Request of the Parties. Upon receipt of written request (the
"Request") from either of the GG Group or the Clearview Group (each an
"Instructing Party") to disburse funds and/or documents, the Escrow Agent shall
immediately deliver by facsimile and certified mail a copy of the Request to the
other of the Clearview Group or the GG Group (each an "Instructed Party"). If,
within the ten business day period following the delivery of the Request to the
Instructed Party, the Instructed Party shall not have delivered to the Escrow
Agent a written objection to the Request, the Escrow Agent shall disburse funds
and documents in accordance with the Request.
2.3 Expiration of the Agreement. The Escrow Agent shall pay the
Escrow Fund directly to the Clearview Group as soon as shall be practicable
after the Termination Date (as defined in Section 4.1), unless, as of the
Termination Date, the Escrow Agent shall (i) have pending before it any request
to pay any of the Escrow Fund pursuant to any other Section of this Escrow
Agreement or (ii) have filed an interpleader action pursuant to Section 4.4 of
this Escrow Agreement.
III ARTICLE
Delivery of Notices; Statements.
3.1 If the GG Group shall send any certificate, notice, request,
demand and other communication (each a "Certificate") to the Escrow Agent, the
GG Group shall simultaneously send such Certificate to the Clearview Group by
facsimile and certified mail. If the Clearview Group shall send a Certificate to
the Escrow Agent, the Clearview Group shall simultaneously send such Certificate
to the GG Group by facsimile and certified mail.
3.2 All certificates, notices, requests, demands and other
communications hereunder or with respect hereto shall be in writing and shall be
deemed to have been duly given or made upon
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<PAGE>
the second business day after the date of mailing, if delivered by certified
mail, postage prepaid, upon delivery, if sent by hand delivery, upon delivery,
if sent by prepaid courier or overnight service (such as Federal Express), with
a record of receipt, or the next day after the date of dispatch, if sent by
cable, telegram, facsimile or telecopy (with a copy simultaneously sent by
registered or certified mail, postage prepaid, return receipt requested), to the
parties at the following addresses:
(i) if to the Clearview Group, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
with a required copy to:
Warren H. Colodner, Esquire
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
New York, New York 10020
Telecopy: (212) 536-3901
(ii) if to the GG Group, to:
Carmi Djiji
30 Wren Drive
Roslyn, New York 11576
Telecopy: (516) 627-3302
with a required copy to:
Herbert W. Solomon
Hollenberg, Levin, Solomon, Ross
and Belsky, LLP
585 Stewart Avenue
Garden City, NY 11530
Telecopy: (516) 745-6642
(iii) if to Escrow Agent, to:
Herbert W. Solomon
Hollenberg, Levin, Solomon, Ross
and Belsky, LLP
585 Stewart Avenue
Garden City, NY 11530
Telecopy: (516) 745-6642
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
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<PAGE>
3.3 The Escrow Agent shall promptly deliver or cause to be
delivered to the Clearview Group and to the GG Group monthly bank statements
reflecting the status of and any activity in the account.
IV ARTICLE
General Provisions
4.1 If not sooner terminated by the written consent of both the GG
Group and the Clearview Group, this Escrow Agreement shall terminate on August
31, 2000 or later, if required pursuant to the Escrow Agents obligations under
the Agreement (the "Termination Date").
4.2 The Clearview Group and the GG Group agree to indemnify Escrow
Agent and hold it harmless from any loss or liability, including reasonable
attorneys' fees and expenses, arising from its service as Escrow Agent hereunder
and any actions taken pursuant hereto, except for losses or liabilities arising
from Escrow Agent's fraud, gross negligence or willful misconduct. The
provisions of this Section 4.2 relating to indemnity of the Escrow Agent shall
survive the Termination Date and the final disbursement of the Escrow Fund or
the sooner expiration of this Escrow Agreement or removal of the Escrow Agent
for any reason.
4.3 In the absence of fraud on its part, Escrow Agent shall be
entitled to rely conclusively, as to the truth of the statements contained
therein, upon any certificate, notice, authorization or other document delivered
to it hereunder which it reasonably believes to be in conformity with the
requirements of this Escrow Agreement and to be genuine and to have been signed
by any authorized representative of the Clearview Group or the GG Group (as the
case may be) from time to time. The Escrow Agent need not investigate any
factual matters averred or stated in any such certificate, notice, authorization
or other document; provided, however, that Escrow Agent shall examine each such
document to determine whether it conforms to the requirements of this Escrow
Agreement.
4.4 If Escrow Agent in good faith is in doubt as to what actions
should be taken hereunder, Escrow Agent shall have the absolute right to deposit
the Escrow Fund with the Clerk of the Supreme Court of Nassau County in
accordance with CPLB 1006 and upon such deposit the Escrow Agent shall be
released from all liability under this Escrow Agreement.
4.5 The service of Hollenberg, Levin, Solomon, Ross and Belsky,
LLP as Escrow Agent under this Agreement shall not disqualify Hollenberg, Levin,
Solomon, Ross and Belsky, LLP from the representation of Carmi Djiji or any of
the GG Group in any matter, including but not limited to, any dispute relating
to this Escrow Agreement.
-4-
<PAGE>
4.6 The Clearview Cinema Group, Inc. shall file tax returns
reflecting the interest earned on the Escrow Funds, and shall pay any and all
taxes due on the income to Clearview Cinema Group, Inc. on account of the
interest earned on the Escrow Funds. Its Taxpayer Identification Number is
______________.
4.7 During the term of the Agreement, the Escrowed Funds shall be
held for the benefit of the GG Group pursuant to the terms of the Agreement, and
shall not be subject to the rights of any trustee, creditor, or other person
with respect to the Clearview Group in any bankruptcy, reorganization,
insolvency or receivership proceeding.
4.8 This Escrow Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors. The Clearview
Group may not assign its rights under this Agreement. This Escrow Agreement is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
4.9 This Escrow Agreement may not be revoked, rescinded or
modified as to any of its terms or conditions except upon consent in writing of
all the parties hereto.
4.10 This Escrow Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.
WITNESS the due execution hereof the day and year first above
written.
Cinema Herricks, Inc.
By: __________________________
Title: ___________________
Clearview Cinema Group, Inc.
By: __________________________
Title: ___________________
CCC Herricks Cinema Corp.
By: __________________________
Title: ___________________
Hollenberg, Levin, Solomon,
Ross and Belsky, LLP
By: __________________________
Title: ___________________
Exhibit 10.40
November 8, 1995
Herbert W. Solomon, Esq.
Hollenberg Levin Solomon
Ross & Belsky, LLP
585 Stewart Avenue
Garden City, NY 11530-4732
Re: Lease dated January 1, 1994, between PURMIL CO., ("Landlord"),
and CINEMA HERRICKS, INC. ("Cinema"), as Tenant, for premises located at
3324 Hillside Avenue, New Hyde Park, New York (the "Lease")
Dear Mr. Solomon:
The following constitutes the settlement proposal discussed at our
conference. Provided compliance is had with all the provisions herein, Landlord
agrees as follows:
1. The Landlord consents to the assignment of the lease by Cinema to CCC
Herricks Cinema Corp. ("CCC") provided that CCC unconditionally assumes the
Lease, and all obligations thereunder, as if it were the original tenant
thereunder. The form of assignment and assumption agreement shall be Blumberg
form P586 or its equivalent (the "Assignment") which is annexed hereto as
Exhibit "A".
2. The Assignment may provide that it shall be null and void if CCC fails
to meets its obligations to Cinema or shall fail to exercise its purchase option
pursuant to the written Agreement dated September 8, 1995 between Cinema and
CCC. Only the assignment shall be voided but no CCC's assumption which
obligation will continue to the end of the Lease. The Landlord shall receive
notice of any claim by Cinema that would give rise to a cancellation of the
Assignment and notice of the actual cancellation. Upon the Assignment becoming
null and void Cinema shall resume as the tenant pursuant to the terms of the
Lease and shall be given a reasonable opportunity to promptly cure any defaults
existing thereunder.
3. Cinema shall pay to us our fees in connection with reviewing, revising
and/or preparing documentation relating to this transaction, other services,
costs and disbursements relevant thereto, and legal fees and disbursements in
connection with the legal proceedings being settled herewith in the total amount
of $7,500.00.
4. That nothing herein, nor shall any dealings between the Landlord and CCC
subsequent hereto, including, but not limited to, any modification of the Lease,
release Cinema's
<PAGE>
Herbert W. Solomon, Esq.
November , 1995
Page #2
liability under the Lease. Landlord will send Cinema a copy of any modification
and will advise Cinema in writing of all defaults under the Lease when, as and
if submitted to the Assignee. Shall any default occur by CCC, Cinema shall be
simultaneously notified in writing of such default and be given a reasonable
opportunity to promptly cure any defaults thereunder.
5. That a true and complete copy of the closing statement of the
transaction between Cinema and CCC with duplicate copies of all signed documents
shall be delivered to us after consummation of the agreement. Original executed
copies of the Assignment and Assumption Agreement shall be provided to us.
6. That CCC and/or Cinema will be the owner of all operating equipment,
fixtures and personal property in the premises (the "Equipment") free and clear
of any and all mortgages, liens and security interests and shall execute and
deliver to our office a security agreement in a form acceptable to us, and duly
executed UCC-1's, to evidence that the Landlord shall have a first perfected
security interest in all of the Equipment and all proceeds and replacements
thereof, as additional security under the Lease. In addition, a complete
inventory of such Equipment identifying each item of Equipment and its serial
number shall be delivered. Both Cinema and CCC shall deliver such further
assurances to Landlord, as Landlord shall require, to evidence such security
interest.
7. That there shall be deposited a cash security of $8,700.00 to be held by
Landlord in accordance with Article 31 of the Lease and as the rent increases
additional deposits shall be made upon ten (10) days demand in writing to both
CCC and Cinema so that at all times there will be three (3) months security on
deposit.
8. That it is acknowledged that heretofore Landlord executed an application
for a building permit for the conversion of the premises to a four (4) screen
theatre; that same was done as an accommodation to Cinema so that cinema could
determine the feasibility of such conversion; that the execution of such
application was not intended, nor did same, constitute the landlord's consent to
actually convert the theatre from two (2) screens to four (4) screens or to
modify the limitation of use contained in Article 2 of the Lease. The parties
acknowledge and ratify that Landlord's consent is required to increase the
number of screens at the premises and that such consent has not been previously
given.
9. That the failure to comply with any of the provisions of this letter
shall be a material breach of the Lease.
10. That the action entitled Cinema Herricks, Inc. v. Purmil Company,
presently pending in the Supreme Court, Nassau County, under Index No. 29473/95
shall immediately be discontinued and all motions therein withdrawn.
<PAGE>
Herbert W. Solomon, Esq.
November , 1995
Page #3
11. That the transactions referred to herein shall all be fully completed
by November 29, 1995. This Agreement may be executed by fax and in counterpart.
Very truly yours,
GLEICH, SIEGEL & FARKAS
______________________________
Stephan B. Gleich
SBG:FAV
AGREED AND ACCEPTED:
CINEMA HERRICKS, INC. PURMIL COMPANY
By:_____________________________ By:___________________________
Name:___________________________ Herbert Rudinger
Title:__________________________
CCC HERRICKS CINEMA CORP.
By:_____________________________
Name:___________________________
Title:__________________________
Exhibit 10.41
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is
dated as of May 29, 1996, by and among Clearview Cinema Group, Inc., a Delaware
corporation ("CCG "); CCC Emerson Cinema Corp., a Delaware Corporation ("CCC
Emerson " and collectively with CCG, the "Transferees"); and Emerson Cinema,
Inc., a New Jersey corporation (the "Transferor").
The Transferor currently owns and operates the Theater, as
hereinafter defined.
The Transferor desires to transfer to the Transferees, and the
Transferees desire to receive from the Transferor, certain of the assets owned
by the Transferor and utilized in the operation of the Theater, upon the terms
and subject to the conditions set forth below.
For federal income tax purposes, it is intended that this
transaction shall qualify as a reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code ").
In consideration of the representations, warranties, covenants,
and agreements contained in this Agreement, the parties, each intending to be
legally bound hereby, agree as set forth below:
I ARTICLE
DEFINITIONS; CONSTRUCTION
1.01. Definitions. As used in this Agreement, the following terms have
the meanings specified in this Section. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"Agreement" means this Agreement and Plan of Reorganization, as it may
be amended from time to time.
"Benefit Plan" has the meaning given that term in Section 3.19(a).
"Business" means business of the operation of the Theater conducted by
Transferor.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List pursuant to Superfund.
<PAGE>
"Closing" has the meaning given that term in Section 2.05.
"Closing Date" has the meaning given that term in Section 2.05.
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
"Contract" and "Contracts" have the respective meanings given those
terms in Section 3.10.
"Damages" has the meaning given that term in Section 7.04.
"Defined Benefit Plan" has the meaning given that term in Section
3.19(e).
"Encumbrance" means any mortgage, deed of trust, pledge, security
interest, encumbrance, option, right of first refusal, agreement of sale,
adverse claim, easement, lien, lease, assessment, restrictive covenant,
encroachment, right-of-way, burden or charge of any kind or nature whatsoever or
any item similar or related to the foregoing.
"Environmental Law" means any applicable Law relating to public health
and safety or protection of the environment, including common law nuisance,
property damage and similar common law theories.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the applicable rulings and regulations thereunder.
"FASB" means the Financial Accounting Standards Board or its successor.
"Financial Statements" has the meaning given that term in Section
3.04(a).
"GAAP" means United States generally accepted accounting principles.
"Governing Documents" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter documents or
organization or governing documents or instruments of such Person.
"Governmental Body" means any court, government (federal, state, local
or foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality.
"Indemnified Party" has the meaning given that term in Section 7.05.
"Indemnifying Party" has the meaning given that term in Section 7.05.
"Intellectual Property" has the meaning given that term in Section 3.18.
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<PAGE>
"IRS" means the Internal Revenue Service.
"knowledge" as to any person means, as to a natural person, the actual
knowledge of such person and, as to any other person, the actual knowledge of an
executive officer of such person.
"Law" means any applicable federal, state, municipal, local or foreign
statute, law, ordinance, rule, regulation, judgment or order of any kind or
nature whatsoever including any public policy, judgment or order of any
Governmental Body or principle of common law.
"Leases" has the meaning given that term in Section 3.12.
"Liabilities" with respect to any Person, means all debts, liabilities
and obligations of such Person of any nature or kind whatsoever, whether or not
due or to become due, accrued, fixed, absolute, matured, determined,
determinable or contingent and whether or not incurred directly by such Person
or by any predecessor of such Person, and whether or not arising out of any act,
omission, transaction, circumstance, sale of goods or service or otherwise.
"Litigation" has the meaning given that term in Section 3.09.
"Multiemployer Plan" has the meaning given that term in Section 3.19(f).
"Other Agreement" means each other agreement or document to be executed
and delivered in connection with the transactions contemplated by this Agreement
on or before Closing.
"Permit" and "Permits" have the respective meanings given those terms in
Section 3.11.
"Permitted Encumbrances" means (i) liens for current taxes not yet due,
and (ii) Encumbrances that do not or will not either individually or in the
aggregate adversely affect the value of the property encumbered or prohibit or
interfere with the operations of the Business.
"Person" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any other legal entity, or
a Governmental Body.
"Transferred Assets" has the meaning given that term in Section 2.01.
"Transferee Damages" has the meaning given that term in Section 7.02.
"Transferee Indemnitees" has the meaning given that term in Section
7.02.
"Qualified Plan" has the meaning given that term in Section 3.19(d).
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<PAGE>
"Real Property" has the meaning given that term in Section 3.12.
"Regulated Material" means any hazardous substance as defined by any
Environmental Law and any other material regulated by any applicable
Environmental Law, including petroleum, petroleum-related material, crude oil or
any fraction thereof, polychlorinated biphenyls, and any friable asbestos.
"Related Party" means (i) Transferor, (ii) any Affiliate of Transferor,
(iii) any officer or director of any Person identified in clauses (i) or (ii)
preceding, and (iv) any spouse, sibling, ancestor or lineal descendant of any
natural Person identified in any one of the preceding clauses.
"Retained Liabilities" has the meaning given that term in Section 2.03.
"Security Deposits" has the meaning given that term in Section 2.01(b).
"Security Right" means, with respect to any security, any option,
warrant, subscription right, preemptive right, other right, proxy, put, call,
demand, plan, commitment, agreement, understanding or arrangement of any kind
relating to such security, whether issued or unissued, or any other security
convertible into or exchangeable for any such security. "Security Right"
includes any right relating to issuance, sale, assignment, transfer, purchase,
redemption, conversion, exchange, registration or voting and includes rights
conferred by statute, by the issuer's Governing Documents or by agreement.
"Transferor Damages" has the meaning given that term in Section 7.03.
"Transferor Indemnitees" has the meaning given that term in Section
7.03.
"Transferor Plan" has the meaning given that term in Section 3.19(a).
"Superfund" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as amended.
"Tax" means any domestic or foreign federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
"Theater" means the movie theater operated by the Transferor at the
location set forth in the Lease.
"12-31-95 Balance Sheet" means the balance sheet of Transferor dated
12-31-95.
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<PAGE>
1.02. Construction. As used herein, unless the context otherwise
requires: (i) references to "Article" or "Section" are to an article or section
hereof; (ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits
and Schedules attached hereto and are incorporated herein by reference and made
a part hereof; (iii) "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
ARTICLE II
TRANSFER
2.01. Exchange of Assets. At the Closing, Transferor shall transfer to
Transferees, and Transferees shall receive from Transferor, all of Transferor's
properties and business as a going concern and goodwill and assets of every
kind, nature and description existing on the Closing Date, wherever such assets
are located and whether real, personal or mixed, tangible or intangible, in
electronic form or otherwise, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements, except those assets
specifically excluded pursuant to Section 2.02, free and clear of all
Encumbrances other than Permitted Encumbrances. The properties, business,
goodwill and assets of Transferor to be transferred hereunder (collectively, the
"Transferred Assets") shall include but not be limited to the following:
(a) All of Transferor's furniture, fixtures, equipment, paper concession
goods, and supplies including the items listed on Schedule 2.01(a);
(b) All of Transferor's rights under the Lease (as defined in Section
3.12) and all of Transferor's rights under all other leases, contracts,
agreements and purchase and sale orders (collectively, the "Contracts")
including any and all security deposits paid under the Lease and the Contracts
(the "Security Deposits") and all of Transferor's rights in and to the telephone
numbers currently used for the Theater;
(c) All of Transferor's goodwill and rights in and to the name of the
Theater and in any other tradename, trademark, fictitious name or service mark,
or any variant of any of them, and any applications therefor or registrations
thereof, and any other forms of Intellectual Property;
(d) To the extent not described above, all of the assets reflected on
the Balance Sheet.
2.02. Retained Assets. Transferor shall retain and the Transferred
Assets shall not include the following assets: (i) the consideration to be
delivered to Transferor pursuant to this Agreement, (ii) Transferor's other
rights hereunder, (iii) Transferor's minute book, stock book and seal, (iv) all
claims, choses in action, causes of action and judgments in respect of any
litigation matter identified on Schedule 3.12 and with respect to any other
Retained Liability, and (v) all of Transferor's cash, cash in banks, cash
equivalents, bank and mutual
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fund accounts, trade and other notes and accounts receivable, deposits (other
than the Security Deposits), investments, securities, advance payments, prepaid
items and expenses, deferred charges, rights of offset and credits and claims
for refund (collectively, the "Retained Assets").
2.03. Assumption of Certain Obligations; Retained Liabilities. At the
Closing, each of ECC shall assume the liabilities and obligations of Emerson
arising from the Lease (as defined in Section 3.12) and the Contracts. Except as
expressly provided in this Agreement, the Transferees do not and shall not
assume or in any way undertake to pay, perform, satisfy or discharge any other
liabilities or obligations of the Transferor (the "Retained Liabilities") and
the Transferor shall pay and satisfy when due all Retained Liabilities.
2.04. Exchange of Stock for Assets.
(a) Exchange of Stock. In exchange for the Transferred Assets,
the Transferor shall receive 347 shares of Common Stock of CCG ("CCG Shares"),
par value $.01 per share, 174 of which shall be delivered to Transferor at
Closing and 173 of which shall be delivered to Jack Wenarsky, Esq., as Escrow
Agent under the Indemnification Escrow Agreement in substantially the form
attached hereto as Exhibit A. CCG hereby acknowledges that the Common Stock
possesses voting rights. The CCG Shares shall be subject to a voting trust
agreement in favor of A. Dale Mayo, in form attached hereto as Exhibit G.
(b) Section 3.68. This transaction is intended to be a
reorganization within the meaning of Section 368 of the Code. The CCG Common
Shares to be issued as the hereunder will be issued solely in exchange for the
Transferred Assets, and no agreement contained herein or contemplated hereby
represents, provides for, or is intended to be consideration for the Transferred
Assets. The parties hereto shall take reasonable steps including but not limited
to compliance with IRS Regulation Section 1.368-3 necessary to ensure that the
transaction contemplated herein is treated for federal income tax purposes as
set forth in this Section.
2.05. Closing. Subject to the terms and conditions of this Agreement,
the transfer of the Transferred Assets and the assumption of the Assumed
Liabilities contemplated hereby shall take place at a closing (the "Closing") at
the offices of Kirkpatrick & Lockhart LLP, 1251 Avenue of the Americas, 45th
Floor, New York, New York 10020 at such time or on such date as the Transferor
and the Transferees may mutually agree (the day on which the Closing takes place
being the "Closing Date"), but in no event later than July 31, 1996.
2.06. Proration of Expenses. All accrued expenses associated with the
Leases included in the Transferred Assets, such as electricity, gas, water,
sewer, telephone, property taxes, security services and similar items, shall be
prorated between Transferees and Transferor as of the Closing Date. Transferees
and Transferor shall settle such amounts on or before forty-five days after the
Closing Date.
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2.07. Passage of Title. Title to all Transferred Assets shall pass from
the Transferor to Transferees at Closing, subject to the terms and conditions of
this Agreement. Transferees assume no risk of loss to the Transferred Assets
prior to Closing.
2.08. Certain Consents. Nothing in this Agreement shall be construed as
an attempt to assign any contract, agreement, Permit, franchise, or claim
included in the Transferred Assets which is by its terms or in law nonassignable
without the consent of the other party or parties thereto, unless such consent
shall have been given, or as to which all the remedies for the enforcement
thereof enjoyed by Transferor would not, as a matter of law, pass to Transferees
as an incident of the assignments provided for by this Agreement. In order,
however, to provide Transferees with the full realization and value of every
contract, agreement, Permit, franchise and claim of the character described in
the immediately preceding sentence, Transferor agrees that on and after the
Closing, they will, at the request and under the direction of Transferees, in
the name of Transferor or otherwise as Transferees shall specify take all
reasonable action (including without limitation the appointment of the
appropriate Transferee as attorney-in-fact for Transferor) and do or cause to be
done all such things as shall in the opinion of Transferees or their counsel be
necessary or proper (i) to assure that the rights of Transferor under such
contracts, agreements, Permits, franchises and claims shall be preserved for the
benefit of Transferees and (ii) to facilitate receipt of the consideration to be
received by Transferor in and under every such contract, agreement, Permit,
franchise and claim, which consideration shall be held for the benefit of, and
shall be delivered to, Transferees. Nothing in this Section shall in any way
diminish Transferor's obligations hereunder to obtain all consents and approvals
and to take all such other actions prior to or at Closing as are necessary to
enable Transferor to convey or assign valid title to all the Transferred Assets
to Transferees.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE Transferor
The Transferor represents and warrants, jointly and severally, to the
Transferees as follows:
3.01. Organization, Qualification; Capitalization. The Transferor is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has the corporate power and authority
to own or lease its properties, and carry on the Business as now conducted, and
the Transferor has the power and authority to enter into this Agreement and the
Other Agreements to which it is or is to become a party and perform its
obligations hereunder and thereunder. The Transferor is duly qualified and in
good standing as a foreign corporation and is duly authorized to transact
business in each jurisdiction wherein the character of the properties owned or
leased by it, or the nature of the activities conducted by it make such
qualification and good standing necessary, except in those jurisdictions where
the failure to be so qualified and in good standing would not have a material
adverse effect on the Transferor. The authorized capital stock of the Transferor
and the issued and outstanding shares and the record owners thereof,
respectively, are as set forth on Schedule 3.01.
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3.02. Authorization; Enforceability. This Agreement and each Other
Agreement to which the Transferor is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of the
Transferor, enforceable against the Transferor in accordance with their
respective terms and each Other Agreement to which the Transferor is to become a
party pursuant to the provisions hereof, when executed and delivered by the
Transferor, will constitute the legal, valid and binding obligation of the
Transferor, enforceable against the Transferor in accordance with the terms of
such Other Agreement, except as may be limited by applicable bankruptcy,
insolvency, moratorium, fraudulent transfer, preference and other laws and
equitable principles affecting the scope and enforcement to creditors' rights
generally, and are also limited by Transferee's implied covenants of good faith,
fair dealing and commercially reasonable conduct, and by the effects of judicial
discretion on the availability of remedies and realization of benefits under and
enforceability of this Agreement and the Other Agreements in all respects as
written. All actions contemplated by this Agreement have been duly and validly
authorized by all necessary proceedings by the Transferor.
3.03. No Violation of Laws or Agreements; Consents. Neither the
execution and delivery of this Agreement or any Other Agreement to which the
Transferor is or is to become a party, the consummation of the transactions
contemplated hereby or thereby nor the compliance with or fulfillment of the
terms, conditions or provisions hereof or thereof by the Transferor will: (i)
contravene any provision of any Governing Document of the Transferor, (ii)
conflict with, result in a breach of, constitute a default or an event of
default (or an event that might, with the passage of time or the giving of
notice or both, constitute a default or event of default) under any of the terms
of, result in the termination of, result in the loss of any right under, or give
to any other Person the right to cause such a termination of or loss under, any
Transferred Asset or any other contract, agreement or instrument to which the
Transferor is a party or by which any of its assets may be bound or affected,
(iii) result in the creation, maturation or acceleration of any Assumed
Liability or any other Liability of the Transferor (or give to any other Person
the right to cause such a creation, maturation or acceleration), (iv) violate
any Law or violate any judgment or order of any Governmental Body to which the
Transferor is subject or by which any of the Transferred Assets or any of its
other assets may be bound or affected, or (v) result in the creation or
imposition of any Encumbrance upon any of the Transferred Assets or give to any
other Person any interest or right therein. Except as set forth on Schedule
3.03, no consent, approval or authorization of, or registration or filing with,
any Person is required in connection with the execution and delivery by the
Transferor of this Agreement or any of the Other Agreements to which the
Transferor is or is to become a party pursuant to the provisions hereof or the
consummation by the Transferor of the transactions contemplated hereby or
thereby.
3.04. Financial Information.
(a) Financial Statements. The Transferor has previously provided
to the Transferees a balance sheet, income statement and statement of cash flows
for each Transferor at December 31, 1995 and for the year then ended, and income
statements and statements of cash flows for the Transferor at December 31, 1993
and December 31, 1994 and for the years then ended (collectively, the "Financial
Statements"). The Financial
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Statements: (i) have been prepared in accordance with GAAP on a consistent basis
throughout the indicated periods, and (ii) fairly present the financial
condition, assets and liabilities and results of operation of Transferor at the
dates and for the relevant periods indicated in GAAP. All references in this
Agreement to Transferor's "12-31-95 Balance Sheet" mean Transferor's balance
sheet dated 12-31-95.
(b) The aggregate gross box office and concession revenues for the
period from January 1, 1995 through December 31, 1995 are in excess of $765,000.
3.05. Undisclosed Liabilities. The Transferor has no debt, obligation or
liability, absolute, fixed, contingent or otherwise, of any nature whatsoever,
whether due or to become due, including any unasserted claim, whether incurred
directly or by any predecessor thereto, and whether arising out of any act,
omission, transaction, circumstance, sale of goods or services, state of facts
or other condition, except: (i) those reflected or reserved against on the
12-31-95 Balance Sheet in the amounts shown therein; (ii) those not required
under GAAP to be reflected or reserved against in the 12-31-95 Balance Sheet
that are expressly quantified and set forth in the Contracts identified pursuant
to Section 3.15; (iii) those disclosed on Schedule 3.05; and (iv) those of the
same nature as those set forth on the 12-31-95 Balance Sheet that have arisen in
the ordinary course of business of the Company after December 31, 1995 through
the date hereof, all of which have been consistent in amount and character with
past practice and experience, and none of which, individually or in the
aggregate, has had or will have an adverse effect on the business, financial
condition or prospects of the Transferor and none of which is a liability for
breach of contract or warranty or has arisen out of tort, infringement of any
intellectual property rights, or violation of Law or is claimed in any pending
or threatened legal proceeding.
3.06. No Changes. Since December 31, 1995, the Transferor has conducted
the Business only in the ordinary course. Without limiting the generality of the
foregoing sentence, since December 31, 1995, except as set forth on Schedule
3.06, there has not been any: (i) adverse change in the assets, Liabilities,
earning power, Business or prospects of the Transferor; (ii) damage or
destruction to or loss of any asset of the Transferor, whether or not covered by
insurance; (iii) strike or other labor trouble at the Transferor; (iv) creation
of any Encumbrance on any asset of the Transferor other than any Permitted
Encumbrance; (v) increase in the salary, wage or bonus of any employee of any
Transferor; (vi) asset acquisition in excess of $1000 for any individual
acquisition, including capital expenditure, other than the purchase of inventory
in the ordinary course of business; (vii) disposition of any asset (other than
inventory in the ordinary course of business) for less than fair market value;
(viii) any failure to pay any Liability when due; (ix) creation, termination or
amendment of, or waiver of any right under, any material agreement of the
Transferor; (x) or agreement or commitment to do any of the foregoing.
3.07. Taxes. The Transferor has filed or caused to be filed on a timely
basis, or will file or cause to be filed on a timely basis or within a
timely-obtained extension, all Tax Returns that are required to be filed by it
prior to or on the Closing Date, pursuant to the Law of each governmental
authority with taxing power over it. The Transferor has no Liability for any Tax
except Taxes disclosed on Schedule 3.07.
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3.08. Condition of Assets; Title; Business. The Transferor is engaged in
the Business and no other business. The Transferred Assets have been
professionally maintained and are in good working order and are suitable for the
purposes for which they are used in the Business. The Transferor has good,
marketable and exclusive title to all of the Transferred Assets; the Transferred
Assets include all assets that are necessary for use in and operation of the
Business subject to the terms of the Leases; and none of the Transferred Assets
is subject to any Encumbrance or impairment, whether due to its condition,
utility, collectability or otherwise, other than Permitted Encumbrances.
3.09. No Pending Litigation or Proceedings. No action, suit,
investigation, claim or proceeding of any nature or kind whatsoever, whether
civil, criminal or administrative, by or before any Governmental Body or
arbitrator ("Litigation") is pending or, to the knowledge of the Transferor,
threatened against or affecting the Transferor, the Business, any of the
Transferred Assets, the Assumed Liabilities, or any of the transactions
contemplated by this Agreement or any Other Agreement, and there is no basis for
any such Litigation. There is presently no outstanding judgment, decree or order
of any Governmental Body against or affecting the Transferor, the Business, any
of the Transferred Assets, the Assumed Liabilities, or any of the transactions
contemplated by this Agreement or any Other Agreement. Transferor has no pending
Litigation against any third party.
3.10. Contracts; Compliance. Disclosed on Schedule 3.10 and 3.12 is a
brief description of each contract, lease, indenture, mortgage, instrument,
commitment or other agreement, arrangement or understanding, oral or written,
formal or informal, that is included in the Transferred Assets (each, a
"Contract" and collectively, the "Contracts"). Each Contract is a legal, valid
and binding obligation of the Transferor and is in full force and effect. The
Transferor and each other party to each Contract has performed all obligations
required to be performed by it thereunder and is not in breach or default, and
is not alleged to be in breach or default, in any respect thereunder, and no
event has occurred and no condition or state of facts exists (or would exist
upon the giving of notice or the lapse of time or both) that would become or
cause a breach, default or event of default thereunder, would give to any Person
the right to cause such a termination or would cause an acceleration of any
obligation thereunder. Transferor is not currently renegotiating any Contract
nor has the Transferor received any notice of non-renewal or price increase or
sales or production allocation with respect to any Contract.
3.11. Permits; Compliance With Law. Schedule 3.11 sets forth the
permits, certificates, licenses, franchises, privileges, approvals,
registrations and authorizations held by the Transferor (each, a "Permit" and
collectively, "Permits"). The Permits are all such permits required under any
applicable Law or otherwise advisable in connection with the operation of the
Transferred Assets and Business. Each Permit is valid, subsisting and in full
force and effect. The Transferor is in compliance with and has fulfilled and
performed its obligations under each Permit held by it, and no event or
condition or state of facts exists (or would exist upon the giving of notice or
lapse of time or both) that could constitute a breach or default under any
Permit. Transferor is not currently in violation of any Law nor has Transferor
received any notice of any violation of Law, and no event has occurred or
condition or state of facts exists that could give rise to any such violation.
Transferor has not received any notice of non-renewal of any Permit.
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3.12. Real Property. Schedule 3.12 sets forth the agreements of lease
(the "Leases") pursuant to which the Transferor leases real property
(collectively, the "Real Property") and identifies the record title holder of
all of the Real Property. The Transferor has the right to quiet enjoyment of all
Real Property in which it holds a leasehold interest for the full term,
including all renewal rights, of the lease or similar agreement relating
thereto. The use and operation of all Real Property conform to all applicable
building, zoning, safety and subdivision Laws, Environmental Laws and other
Laws, and all restrictive covenants and restrictions and conditions affecting
title. The Transferor has not received any written or oral notice of assessments
for public improvements against any Real Property or any written or oral notice
or order by any Governmental Body, any insurance company that has issued a
policy with respect to any of such properties or any board of fire underwriters
or other body exercising similar functions that (i) relates to violations of
building, safety or fire ordinances or regulations, (ii) claims any defect or
deficiency with respect to any of such properties or (iii) requests the
performance of any repairs, alterations or other work to or in any of such
properties or in the streets bounding the same. Such public utilities are all
connected pursuant to valid permits, are all in good working order and are
adequate to service the operations of such facilities as currently conducted and
permit full compliance with all requirements of Law. Transferor has not received
any written notice of any proposed, planned or actual curtailment of service of
any utility supplied to any facility of the Transferor.
13.3. Environmental Matters. Except as disclosed in Schedule 3.13:
(a) Compliance; No Liability. The Transferor has operated the
Business and each parcel of Real Property in compliance with all applicable
Environmental Laws. Transferor is not subject to any Liability, penalty or
expense (including legal fees), and no Transferee will suffer or incur any loss,
Liability, penalty or expense (including legal fees) by virtue of any violation
of any Environmental Law occurring prior to the Closing, any environmental
activity conducted on or with respect to any property at or prior to the Closing
or any environmental condition existing on or with respect to any property at or
prior to the Closing, in each case whether or not any Transferor permitted or
participated in such act or omission.
(b) Treatment; CERCLIS. Transferor has not treated, stored, generated,
recycled or disposed of any Regulated Material on any real property, and no
other Person has treated, stored, recycled or disposed of any Regulated Material
on any part of the Real Property. There has been no release of any Regulated
Material at, on or under any Real Property. Transferor has not transported any
Regulated Material or arranged for the transportation of any Regulated Material
to any location that is listed or proposed for listing on the National
Priorities List pursuant to Superfund, on CERCLIS or any other location that is
the subject of federal, state or local enforcement action or other investigation
that may lead to claims against such Transferor for cleanup costs, remedial
action, damages to natural resources, to other property or for personal injury
including claims under Superfund. None of the Real Property is listed or, to the
knowledge of the Transferor, proposed for listing on the National Priorities
List pursuant to Superfund, CERCLIS or any state or local list of sites
requiring investigation or cleanup.
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(c) Notices; Existing Claims; Certain Regulated Materials;
Storage Tanks. Transferor has not received any request for information, notice
of claim, demand or other notification that it is or may be potentially
responsible with respect to any investigation, abatement or cleanup of any
threatened or actual release of any Regulated Material. Transferor is not
required to place any notice or restriction relating to the presence of any
Regulated Material at any Real Property or in any deed to any Real Property.
Schedule 3.14(c) sets forth a list of all sites to which Transferors transported
any Regulated Material for recycling, treatment, disposal, other handling or
otherwise. There has been no past, and there is no pending or contemplated,
claim by Transferor under any Environmental Law or Laws based on actions of
others that may have impacted on the Real Property, and Transferor has not
entered into any agreement with any Person regarding any Environmental Law,
remedial action or other environmental Liability or expense. There are no
storage tanks located on the Real Property, whether underground or aboveground.
3.14. Customer Relations. There exists no condition or state of facts or
circumstances involving Transferor's customers, suppliers, distributors or
representatives that Transferor can reasonably foresee could adversely affect
the Business or the Transferred Assets after the Closing Date.
3.15. Transactions With Related Parties. No Related Party has any claim
of any nature, including any inchoate claim, against any of the Transferred
Assets or the Business. Except as expressly provided herein or in any Other
Agreement or as otherwise may be mutually agreed after Closing, (i) no Related
Party will at any time after Closing for any reason, directly or indirectly, be
or become entitled to receive any payment or transfer of money or other property
of any kind from Transferees, and (ii) Transferees will not at any time after
Closing for any reason, directly or indirectly, be or become subject to any
obligation to any Related Party; provided, however, that nothing in this Section
3.15 shall prohibit any post-closing transactions between Related Parties that
do not affect the Transferees, the Transferred Assets or the Business.
3.16. Labor Relations. The relations of the Transferor with its
employees are good. No employee of the Transferor is represented by any union or
other labor organization other than IATSE LOCAL #642. A true and correct copy
of the Union Agreement is attached as Schedule 3.16. No representation election,
arbitration proceeding, grievance, labor strike, dispute, slowdown, stoppage or
other labor trouble is pending or, to the knowledge of the Transferor,
threatened against, involving, affecting or potentially affecting the
Transferor. No complaint against the Transferor is pending or, to the knowledge
of the Transferor, threatened before the National Labor Relations Board, the
Equal Employment Opportunity Commission or any similar state or local agency, by
or on behalf of any employee of the Transferor. The Transferor has no Liability
for any occupational disease of any of its employees, former employees or
others.
3.17. Insurance. The Transferees have been provided with a copy of each
insurance policy as to which the Transferor is the owner, insured or
beneficiary, whether on an "occurrence" or a "claims made" basis, together with
a summary of such policies and copies of certificates of insurance executed by
each insurer or its authorized agent evidencing such insurance.
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3.18. Intellectual Property Rights. Schedule 3.18 contains a complete
list and description of all of the trademark and service mark rights,
applications and registrations, trade names, fictitious names, service marks,
logos and brand names, copyrights, copyright applications, letters patent,
patent applications and licenses of any of the foregoing owned or used by the
Transferor in or applicable to the Business. The Transferor has the entire
right, title and interest in and to, or has the exclusive perpetual royalty-free
right to use, the intellectual property rights disclosed on Schedule 3.18 and
all other processes, know-how, show-how, formulae, trade secrets, inventions,
discoveries, improvements, blueprints, specifications, drawings, designs, and
other proprietary rights necessary or applicable to or advisable for use in the
Business ("Intellectual Property"), free and clear of all Encumbrances. Schedule
3.18 separately discloses all Intellectual Property under license. The
Intellectual Property is valid and not the subject of any interference,
opposition, reexamination or cancellation. To the knowledge of the Transferor,
no Person is infringing upon nor has any Person misappropriated any Intellectual
Property. No Transferor is infringing upon the intellectual property rights of
any other Person.
3.19. Employee Benefits.
(a) Benefit Plans; Transferor Plans. Schedule 3.19 discloses all written
and unwritten "employee benefit plans" within the meaning of Section 3(3) of
ERISA, and any other written and unwritten profit sharing, pension, savings,
deferred compensation, fringe benefit, insurance, medical, medical
reimbursement, life, disability, accident, post-retirement health or welfare
benefit, stock option, stock purchase, sick pay, vacation, employment,
severance, termination or other plan, agreement, contract, policy, trust fund or
arrangement (each, a "Benefit Plan"), whether or not funded and whether or not
terminated, (i) maintained or sponsored by the Transferor, or (ii) with respect
to which the Transferor has or may have Liability or is obligated to contribute,
or (iii) that otherwise covers any of the current or former employees of the
Transferor or its beneficiaries, or (iv) as to which any such current or former
employees or their beneficiaries participated or were entitled to participate or
accrue or have accrued any rights thereunder (each, a "Transferor Plan").
(b) Transferor Group Matters; Funding. Neither the Transferor nor any
corporation that may be aggregated with the Transferor under Sections 414(b),
(c), (m) or (o) of the Code (the "Transferor Group") has any obligation to
contribute to or any Liability under or with respect to any Benefit Plan of the
type described in Sections 4063 and 4064 of ERISA or Section 413(c) of the Code.
The Transferor has no Liability, and after the Closing, no Transferee will have
any Liability, with respect to any Benefit Plan of any other member of the
Transferor Group, whether as a result of delinquent contributions, distress
terminations, fraudulent transfers, failure to pay premiums to the PBGC,
withdrawal Liability or otherwise. No accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code) exists nor has any funding
waiver from the IRS been received or requested with respect to any Transferor
Plan or any Benefit Plan of any member of the Transferor Group, and no excise or
other Tax is due or owing because of any failure to comply with the minimum
funding standards of the Code or ERISA with respect to any of such plans.
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(c) Compliance. Each Transferor Plan and all related trusts, insurance
contracts and funds have been created, maintained, funded and administered in
all respects in compliance with all applicable Laws and in compliance with the
plan document, trust agreement, insurance policy or other writing creating the
same or applicable thereto. No Transferor Plan is or is proposed to be under
audit or investigation, and no completed audit of any Transferor Plan has
resulted in the imposition of any Tax, fine or penalty.
(d) Qualified Plans. Schedule 3.19 discloses each Transferor Plan that
purports to be a qualified plan under Section 401(a) of the Code and exempt from
United States federal income tax under Section 501(a) of the Code (a "Qualified
Plan"). With respect to each Qualified Plan, a determination letter (or opinion
or notification letter, if applicable) has been received from the IRS that such
plan is qualified under Section 401(a) of the Code and exempt from federal
income tax under Section 501(a) of the Code. No Qualified Plan has been amended
since the date of the most recent such letter. No member of the Transferor
Group, nor any fiduciary of any Qualified Plan, nor any agent of any of the
foregoing, has done anything that would adversely affect the qualified status of
a Qualified Plan or the qualified status of any related trust.
(e) No Defined Benefit Plans. No Transferor Plan is a defined benefit
plan within the meaning of Section 3(35) of ERISA (a "Defined Benefit Plan"). No
Defined Benefit Plan sponsored or maintained by any member of the Transferor
Group has been terminated or partially terminated after September 1, 1974,
except as set forth on Schedule 3.19. Each Defined Benefit Plan listed as
terminated on Schedule 3.19 has met the requirement for standard termination of
single-employer plans contained in Section 4041(b) of ERISA. During the
five-year period ending on the Closing Date, no member of the Transferor Group
has transferred a Defined Benefit Plan to a corporation that was not, at the
time of transfer, related to the transferor in any manner described in Sections
414(b), (c), (m) or (o) of the Code.
(f) Multiemployer Plans. Except as set forth on Schedule 3.19 hereto, no
Transferor Plan is a multiemployer plan within the meaning of Section 3(37) or
Section 4001(a)(3) of ERISA (a "Multiemployer Plan"). No member of the
Transferor Group has withdrawn from any Multiemployer Plan or incurred any
withdrawal Liability to or under any Multiemployer Plan. No Transferor Plan
covers any employees of any member of the Transferor Group in any foreign
country or territory.
(g) Prohibited Transactions; Fiduciary Duties; Post-Retirement Benefits.
No prohibited transaction (within the meaning of Section 406 of ERISA and
Section 4975 of the Code) with respect to any Transferor Plan exists or has
occurred that could subject the Transferor to any Liability or Tax under Part 5
of Title I of ERISA or Section 4975 of the Code. No member of the Transferor
Group, nor any administrator or fiduciary of any Transferor Plan, nor any agent
of any of the foregoing, has engaged in any transaction or acted or failed to
act in a manner that will subject the Transferor to any Liability for a breach
of fiduciary or other duty under ERISA or any other applicable Law. With the
exception of the requirements of Section 4980B of the Code, no post-retirement
benefits are provided under any Transferor Plan that is a welfare benefit plan
as described in ERISA Section 3(1).
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3.20. Subsidiaries and Investments. The Transferred Assets do not
contain any shares of capital stock of or other equity interest in any
corporation, partnership, joint venture or other entity.
3.21. Finders' Fees. Neither the Transferor nor any of its officers,
directors or employees has employed any broker or finder or incurred any
Liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby or by any Other Agreement.
3.22. Payments to Craig Zeltner. The rate of compensation to be paid to
Mr. Zeltner doing business as Cinema Services pursuant to Section 5.06 is no
greater than the lowest rate of compensation that the Transferor paid to Mr.
Zeltner during the twelve-month period ending on the Closing Date.
3.23. Disclosure. None of the representations or warranties of the
Transferor contained herein and none of the information contained in the
Schedules referred to herein or the other information or documents furnished or
to be furnished to CCG or any of its representatives by the Transferor expressly
pursuant to the terms of this Agreement is false or misleading in any material
respect or omits to state a fact herein or therein necessary to make the
statements herein or therein not misleading in any material respect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TransfereeS
As an inducement to the Transferor to enter into this Agreement and
consummate the transactions contemplated hereby, the Transferees, jointly and
severally, represent and warrant to the Transferor as follows:
4.01. Organization. Each Transferee is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to own or lease its
properties, carry on its business, enter into this Agreement and the Other
Agreements to which it is or is to become a party and perform its obligations
hereunder and thereunder.
4.02. Authorization; Enforceability. This Agreement and each Other
Agreement to which each Transferee is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of such
Transferee, enforceable against it in accordance with their respective terms and
each Other Agreement to which such Transferee is to become a party pursuant to
the provisions hereof, when executed and delivered by such Transferee, will
constitute the legal, valid and binding obligation of such Transferee,
enforceable against such Transferee in accordance with the terms of such Other
Agreement except as may be limited by applicable bankruptcy, insolvency,
moratorium, fraudulent transfer, preference and other laws and equitable
principles affecting the scope and enforcement to creditors' rights generally,
and are also limited by Transferors' implied covenants of good faith, fair
dealing and commercially reasonable conduct, and by the effects of judicial
discretion on the availability of remedies and realization of benefits under and
enforceability of this Agreement
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and the Other Agreements in all respects as written. All actions contemplated by
this Agreement have been duly and validly authorized by all necessary
proceedings by such Transferee.
4.03. No Violation of Laws; Consents. Neither the execution and delivery
of this Agreement or any Other Agreement to which any Transferee is or is to
become a party, the consummation of the transactions contemplated hereby or
thereby nor the compliance with or fulfillment of the terms, conditions or
provisions hereof or thereof by such Transferee will: (i) contravene any
provision of any Governing Document of such Transferee, or (ii) violate any Law
or any judgment or order of any Governmental Body to which such Transferee is
subject or by which any of its assets may be bound or affected. Except as set
forth on Schedule 4.03 no consent, approval or authorization of, or registration
or filing with, any Person is required in connection with the execution and
delivery by such Transferee of this Agreement or any of the Other Agreements to
which such Transferee is or is to become a party pursuant to the provisions
hereof or the consummation by such Transferee of the transactions contemplated
hereby or thereby.
4.04. No Pending Litigation or Proceedings. No Litigation is pending or,
to the knowledge of any Transferee, threatened against or affecting any
Transferee in connection with any of the transactions contemplated by this
Agreement or any Other Agreement to which any Transferee is or is to become a
party.
4.05. Finders' Fees. No Transferee nor any of its officers, directors or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby.
ARTICLE V
CERTAIN COVENANTS
5.01. Conduct of Business Pending Closing. From and after the date
hereof and until the Closing Date or earlier termination hereof, unless the
Transferees shall otherwise consent in writing, the Transferor shall conduct
their affairs as follows:
(a) Ordinary Course; Compliance. The Business shall be conducted
only in the ordinary course and consistent with past practice. The Transferor
shall professionally maintain the Transferred Assets and Assumed Liabilities in
good condition and shall comply in a timely fashion with the provisions of all
Contracts and Permits and its other agreements and commitments. The Transferor
shall preserve its Business organization intact, keep available the services of
its present employees and preserve the goodwill of its suppliers, customers and
others having business relations with it. The Transferor shall maintain in full
force and effect their policies of insurance, subject only to variations
required by the ordinary operations of the Business, or else shall obtain, prior
to the lapse of any such policy, substantially similar coverage with insurers of
recognized standing.
(b) Transactions. The Transferor shall not: (i) transfer or
dispose of any asset except in the ordinary course of business; (ii) enter into
any contract or commitment the performance of which may extend beyond the
Closing, except those made in the ordinary
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course of business, the terms of which are consistent with past practice; (iii)
enter into any employment or consulting contract or arrangement that is not
terminable at will and without penalty or continuing obligation; (iv) fail to
pay any Liability or charge when due, other than Liabilities contested in good
faith by appropriate proceedings; or (v) take any action or omit to take any
action that will cause a breach or termination of any Permit or Contract, other
than termination by fulfillment of the terms thereunder; or take any other
actions that would cause the representations and warranties in this Agreement
not to be true in any material respect on the Closing Date.
(c) Access, Information and Documents. The Transferor shall give
to Transferees and to Transferees' employees and representatives (including
accountants, actuaries, attorneys, environmental consultants and engineers)
access during normal business hours to all of the properties, books, Tax
Returns, contracts, commitments, records, officers, personnel and accountants
(including independent public accountants and their workpapers concerning
Transferor) of Transferor and shall furnish to Transferees all such documents
and copies of documents and all information with respect to the properties,
Liabilities and affairs of Transferor as Transferees may reasonably request,
including but not limited to weekly reports of gross box office and concession
receipts, at the same time such reports are available to Transferors'
management.
5.02. Publicity. The Transferor and Transferees shall not issue any
press release or otherwise make any announcements to the public or the employees
of Transferors with respect to this Agreement prior to the Closing Date without
the prior written consent of the other, except as required by Law.
5.03. The Transferor shall not (nor shall it permit any of its
affiliates to) directly or indirectly, solicit, initiate or encourage any
inquiries or the making of any proposals from, engage or participate in any
negotiations or discussions with, provide any confidential information or data
to, or enter into (or authorize) any agreement or agreement in principle with
any person or announce any intention to do any of the foregoing, with respect to
any offer or proposal to acquire all or any part of the Transferor's assets,
properties, or Business whether by merger, purchase of capital stock or assets
or otherwise.
5.04. Fulfillment of Agreements. Each party hereto shall use its best
efforts to cause all of those conditions to the obligations of the other under
Article VI that are not beyond its reasonable control to be satisfied on or
prior to the Closing and shall use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement. Without limiting the foregoing, the Transferor shall, prior to
Closing, obtain the Consents identified in Schedule 3.03.
5.05. Certain Transitional Matters. The Transferor shall cooperate with
and assist Transferees and their authorized representatives in order to provide,
to the extent reasonably requested by any Transferee, an efficient transfer of
control of the Transferred Assets and to avoid any undue interruption in the
activities and operations of the Business following the Closing Date.
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5.06. Transferees shall have the right, but not the obligation on or
after the Closing Date to employ any or all of the employees of Transferor.
5.07. Transferees shall continue to use the services of Craig Zeltner
doing business as Cinema Services as film buyer and booker for a period of one
year, at the rate of $150.00 per week with a year-end bonus of $500.00;
provided, however, that the agreement set forth in this Section 5.07 shall be
enforceable solely by the Transferor and shall not constitute an employment
agreement as to Mr. Zeltner nor grant to Mr. Zeltner any rights to enforce such
provision or otherwise.
5.08. To accord to Transferees the full value of their purchase,
Transferor shall not, directly or indirectly, (i) for a period of five years
after the Closing Date, directly or indirectly, engage or become interested in
(as owner, stockholder, partner or otherwise) the operation of any movie theater
within a seven and one-half mile radius of any Theater, or (ii) disclose to
anyone, or use in competition with any Transferee, any information with respect
to any confidential or secret aspect of the operations of the Business. It is
acknowledged that stockholders, officers, and/or directors of the Transferor
currently operate certain movie theaters and nothing in subsection (ii) of the
previous sentence shall prohibit the Transferor from operating such theaters.
The Transferor acknowledges that the remedy at law for breach of the provisions
of this Section 5.08 will be inadequate and that, in addition to any other
remedy Transferees may have, they will be entitled to an injunction restraining
any such breach or threatened breach, without any bond or other security being
required. If any court construes the covenant in this Section 5.08 or any part
thereof, to be unenforceable because of its duration or the area covered
thereby, the court shall have the power to reduce the duration or area to the
extent necessary so that such provision is enforceable. Until the third
anniversary of the Closing Date, the Transferor shall not directly or indirectly
solicit or offer employment to any person who is then an employee of any
Transferee or was an employee of any Transferee at any time after the Closing to
engage in any business similar to or in competition with the business of any
Transferor as it has been conducted prior to Closing.
5.09. As soon as shall be reasonably practicable following the Closing
Date, the Transferor shall file with the appropriate authorities such documents
as may be required to (i) change the Transferor's name to another name bearing
no similarity to the Transferor's current name and (ii) withdraw any other
fictitious names used in the Business. It is acknowledged that no trade names of
the Transferor are currently registered.
5.10. The Transferor shall not destroy or dispose of any books, records,
and files relating to the business, properties, assets or operations of the
Transferor to the extent that they pertain to the operations of the Transferor
prior to the Closing Date for a period of five years from the Closing Date or
for the applicable statute of limitations for any tax liability.
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ARTICLE VI
CONDITIONS TO CLOSING; TERMINATION
6.01. Conditions Precedent to Obligation of Transferees. The obligation
of Transferees to proceed with the Closing under this Agreement is subject to
the fulfillment prior to or at Closing of the following conditions, any one or
more of which may be waived in whole or in part by Transferees at Transferees'
sole option:
(a) Bringdown of Representations and Warranties; Covenants. Each
of the representations and warranties of the Transferor contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date. The
Transferor shall have performed in all respects all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by it at or before the Closing.
(b) Litigation. No statute, regulation or order of any
Governmental Body shall be in effect that restrains or prohibits the
transactions contemplated hereby or that would limit or adversely affect
Transferees' ownership of the Transferred Assets or assumption of the Assumed
Liabilities, and there shall not have been threatened, nor shall there be
pending, any action or proceeding challenging the lawfulness of or seeking to
prevent or delay any of the transactions contemplated by this Agreement or any
of the Other Agreements or seeking monetary or other relief by reason of the
consummation of any of such transactions.
(c) No Material Adverse Change. Between the date hereof and the
Closing Date, there shall have been no material adverse change, regardless of
insurance coverage therefor, in the Business or any of the assets, results of
operations, Liabilities, prospects or condition, financial or otherwise, of the
Transferor.
(d) Closing Certificate. The Transferor shall have delivered a
certificate, dated the Closing Date, in the form of Exhibit B hereto, certifying
to the fulfillment of the conditions set forth in subparagraphs (a), (b) and (c)
of this Section. Such certificate shall constitute a representation and warranty
of the Transferor with regard to the matters therein for purposes of this
Agreement.
(e) Closing Documents. Transferees shall have received the
documents referred to in Section 6.03(a). All agreements, certificates, opinions
and other documents delivered by Transferors to Transferees hereunder shall be
in form and substance satisfactory to Transferees.
(f) Documents Concerning Leasehold Interests. Transferees shall
have received from each lessor of each leasehold estate included in the
Transferred Assets consents to assignment of leasehold interest, consents to
leasehold mortgage, and estoppel certificates, and from each existing mortgagee
with respect to Real Property all consents, nondisturbance agreements, and other
documents as shall be requested by Provident Bank with respect to Provident's
security interest in the leasehold mortgage, all in form and substance
satisfactory to Transferees and Provident Bank.
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(g) Consents. The Transferor shall have received the consents,
approvals and actions of the Persons referred to in Schedule 3.03.
(h) Non-Competition Agreement. Each of John Nelson, Pamela Ferman
and Seth Ferman shall have entered into a Non-Competition Agreement in the form
attached as Exhibit C.
(i) Concessionaire Agreements. Each Transferor shall have
terminated, on or prior to the Closing Date, any and all concessionaire or other
agreements between such Transferor and Theater Confections, Inc. ("TCI"), and
shall have delivered to Transferees a release granted by TCI to each respective
Transferor from any liability under such concessionaire or other agreements.
(j) Payment of Obligations. Each Transferor shall have paid any
and all amounts owed by such Transferor to the Estate of David Sanders.
6.02. Conditions Precedent to Obligation of Transferor. The obligation
of Transferor to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Transferor at Transferor's sole
option:
(a) Bringdown of Representations and Warranties; Covenants. Each
of the representations and warranties of Transferees contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date. Each
Transferee shall have performed all of the covenants and complied in all
respects with all of the provisions required by this Agreement to be performed
or complied with by it at or before the Closing.
(b) Litigation. No statute, regulation or order of any
Governmental Body shall be in effect that restrains or prohibits the
transactions contemplated hereby, and there shall not have been threatened, nor
shall there be pending, any action or proceeding by or before any Governmental
Body challenging the lawfulness of or seeking to prevent or delay any of the
transactions contemplated by this Agreement or the Other Agreements or seeking
monetary or other relief by reason of the consummation of such transactions.
(c) Closing Certificate. Each Transferee shall have delivered a
certificate, dated the Closing Date, in the form of Exhibit D, certifying to the
fulfillment of the conditions set forth in subparagraphs (a) and (b) of this
Section. Such certificate shall constitute a representation and warranty of such
Transferee with regard to the matters therein for purposes of this Agreement.
(d) Closing Documents. Transferor shall have received the
documents referred to in Section 6.03(b). All agreements, certificates, opinions
and other documents delivered by Transferees to Transferor hereunder shall be in
form and substance satisfactory to Transferor.
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6.03. Deliveries and Proceedings at Closing.
(a) Deliveries by Transferors. Transferor shall deliver or cause
to be delivered to Transferees at the Closing:
i) For each Transferor, a general warranty bill of sale and
instrument of assignment to the Transferred Assets in a form acceptable to
Transferees, duly executed by such Transferor.
ii) Assignments of all transferable or assignable licenses,
Permits and warranties relating to the Transferred Assets and of any trademarks,
trade names, patents and other Intellectual Property, duly executed and in form
acceptable to Transferees.
iii) Certificates of the appropriate public officials to the
effect that each Transferor was a validly existing corporation in good standing
in its state of incorporation as of a date not more than 10 days prior to the
Closing Date.
iv) Incumbency and specimen signature certificates dated the
Closing Date, signed by the officers of each Transferor and certified by their
respective Secretaries.
v) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Transferor as of a date not more than 10 days prior to
the Closing Date, certified by the Secretaries of State of their respective
states of incorporation and (B) the bylaws of each Transferor as of the Closing
Date, certified by their respective Secretaries.
vi) Certificates of the respective Secretaries of Transferors (A)
setting forth resolutions of the Board of Directors of each Transferor and, if
required by applicable law, the stockholders of each Transferor authorizing the
execution and delivery of this Agreement and the performance by such Transferor
of the transactions contemplated hereby, and (B) to the effect that the
Governing Documents of Transferor delivered pursuant to Section 6.03(a)(v) were
in effect at the date of adoption of such resolutions, the date of execution of
this Agreement and the Closing Date.
vii) The Stockholders and Registration Rights Agreement (in
substantially the form attached hereto as Exhibit E) executed by the Transferor.
viii) A Voting Trust Agreement (in substantially the form
attached hereto as Exhibit G), executed by the Stockholder.
ix) The opinion of Jack Wenarsky, legal counsel to Transferor, in
substantially the form of Exhibit H.
x) For each Transferor, a completed New Theater Transition Form,
in the form attached hereto as Exhibit I.
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xi) Such other agreements and documents as Transferees may
reasonably request.
(b) Deliveries by Transferees. Transferees shall deliver or cause
to be delivered to Transferors at the Closing:
i) Delivery by the Escrow Agent of the Escrowed Funds and a wire
transfer of federal funds in accordance with Section 2.05 pursuant to complete
wire transfer instructions delivered by Transferors to Transferees in writing at
least five days prior to Closing.
ii) Certificates of the appropriate public official to the effect
that each Transferee was a validly existing corporation in its state of
incorporation as of a date not more than 10 days prior to the Closing Date.
iii) Incumbency and specimen signature certificates dated the
Closing Date signed by the officers of each Transferee and certified by their
respective Secretaries.
iv) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Transferee as of a date not more than 10 days prior to
the Closing Date, certified by the Secretary of State of their respective states
of incorporation and (B) the bylaws of each Transferee as of the Closing Date,
certified by their respective Secretaries.
v) Certificate of the respective Secretaries of the Transferees
(A) setting forth resolutions of the Board of Directors of each Transferee
authorizing the execution and delivery of this Agreement and the performance by
such Transferee of the transactions contemplated hereby, certified by the
Secretary of such Transferee and (B) to the effect that the Governing Documents
of Transferees delivered pursuant to Section 6.03(b)(v) were in effect at the
date of adoption of such resolutions, the date of execution of this Agreement
and the Closing Date.
vi) The opinion of Kirkpatrick & Lockhart LLP, Transferees' legal
counsel, in substantially the form of Exhibit J.
vii) Such other agreements and documents as Transferor may
reasonably request.
6.04. Termination.
(a) Mutual Consent; Failure of Conditions. Except as provided in
Section 6.04(b), this Agreement may be terminated at any time prior to Closing
by: (i) mutual consent of Transferees and Transferors; (ii) Transferees, if any
of the conditions specified in Section 6.01 hereof shall not have been fulfilled
by July 31, 1996 and shall not have been waived by Transferees; or (iii)
Transferors, if any of the conditions specified in Section 6.02 hereof shall not
have been fulfilled by July 31, 1996 and shall not have been waived by
Transferors.
(b) Liquidated Damages. In the event of termination of this
Agreement by Transferors pursuant to clause (iii) of 6.04(a), Transferors shall
receive upon demand, as liquidated damages for and in full settlement of all
claims by Transferors and
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Transferor Indemnitees against Transferees in connection with this Agreement,
the amount of $50,000 in immediately available funds, the nature of this
transaction being such as will not permit any exact determination of the damage
that may be suffered by Transferors under such circumstances. In the event of
termination of this Agreement by Transferees pursuant to clause (ii) of 6.04(a),
Transferees shall receive upon demand, as liquidated damages for and in full
settlement of all claims of Transferees and Transferee Indemnitees against
Transferors in connection with this Agreement, the amount of $50,000 in
immediately available funds, the nature of this transaction being such as will
not permit any exact determination of the damage that may be suffered by
Transferees under such circumstances.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.01. Survival of Representations. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing, but all claims for damages made by virtue of such representations,
warranties and agreements shall be made under, and subject to the limitations
set forth in, this Article VII.
7.02. Indemnification by Transferors. Transferors, jointly and severally
shall indemnify, defend, save and hold Transferees and their officers,
directors, employees, agents and Affiliates (collectively, "Transferee
Indemnitees") harmless from and against all demands, claims, allegations,
assertions, actions or causes of action, assessments, losses, damages,
deficiencies, Liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing) and whether or not any such demands,
claims, allegations, etc., of third parties are meritorious (collectively,
"Transferee Damages") asserted against, imposed upon, resulting to, required to
be paid by, or incurred by any Transferee Indemnitees, directly or indirectly,
in connection with, arising out of, that could result in, or which would not
have occurred but for (i) a breach of any representation or warranty made by any
Transferor in this Agreement, in any certificate or document furnished pursuant
hereto by Transferors or any Other Agreement to which any Transferor is or is to
become a party, (ii) a breach or nonfulfillment of any covenant or agreement
made by any Transferor in or pursuant to this Agreement and in any Other
Agreement to which any Transferor is or is to become a party, and (iii) any
Retained Liability.
7.03. Indemnification by Transferees. Transferees shall indemnify,
defend, save and hold Transferors and their officers, directors, employees,
Affiliates and agents (collectively, "Transferor Indemnitees") harmless from and
against any and all demands, claims, actions or causes of action, assessments,
losses, damages, deficiencies, Liabilities, costs and expenses (including
reasonable legal fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing) and whether or not
any such demands, claims, allegations, etc., of third parties are meritorious
(collectively, "Transferor Damages") asserted against, imposed upon, resulting
to, required to be paid by, or incurred by any Transferor Indemnitees, directly
or indirectly, in connection with, arising out of, that could result in, or
which would not have occurred but for (i) a breach of any representation or
warranty made by any Transferee in this Agreement or in any certificate or
document furnished pursuant hereto by any Transferee or any Other Agreement to
which any
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Transferee is a party, (ii) a breach or nonfulfillment of any covenant or
agreement made by any Transferee in or pursuant to this Agreement and in any
Other Agreement to which any Transferee is a party, and (iii) any Assumed
Liability.
7.04. Limitations.
(a) Time Period. Transferors shall be obligated to indemnify
Transferee Indemnitees and Transferees shall be obligated to indemnify
Transferor Indemnitees only for those Transferee Damages or Transferor Damages
(as the case may be) as to which any Transferee or Transferor has given the
other written notice thereof within one year after the Closing Date.
(b) Cap. Notwithstanding anything else herein to the contrary,
Transferors' obligation to indemnify Transferee Indemnitees for any Transferee
Damages shall not exceed the aggregate value of the Indemnification Escrow.
(c) Basket. Except with regard to any Transferee Damages in
connection with, arising out of, that could result in, or which would not have
occurred but for a breach of the representations and warranties set forth in
Section 3.08 hereof which Transferee Damages shall not be subject to the
limitation set forth in this Section 7.04(c), Transferors shall not be obligated
to indemnify any Transferee Indemnitee against any Transferee Damages until the
aggregate amount of the Transferee Damages thereunder exceeds $12,500 and then
only to the extent of such excess.
(d) No Shareholder Liability. The shareholders, officers,
directors, and/or employees of any Transferor hereunder shall be under no
personal liability with respect to any of the provisions or representations in
this Agreement and if any of such shareholders, officers, directors, and/or
employees is in breach or in default with respect to its obligations or
otherwise under this Agreement, Transferees shall look solely to (i) assets of
the Transferors which said corporations own at the time said claim is made and
(ii) the assets subject to the Indemnification Escrow Agreement for the
satisfaction of such Transferees' remedies, and no property or assets of such
Shareholder shall be subject to levy, execution, or other enforcement procedures
for such satisfaction. Furthermore, no shareholder, officer, director or
employee of any Transferor shall have any liability for any breach, action, or
inaction or other misrepresentation of any Transferor under this Agreement.
(e) Fraud. The limitations set forth in Section 7.04 shall not
apply to Transferor Damages or Transferee Damages arising out of fraud.
7.05. Notice of Claims. If any Transferee Indemnitee or Transferor
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or
will suffer or incur any Transferee Damages or Transferor Damages, as the case
may be ("Damages") for which it is entitled to indemnification under this
Article VII, such Indemnified Party shall so notify the party or parties from
whom indemnification is being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified
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Party shall promptly notify the Indemnifying Party of such action or suit. The
failure of an Indemnified Party to give any notice required by this Section
shall not affect any of such party's rights under this Article VII or otherwise
except and to the extent that such failure is actually prejudicial to the rights
or obligations of the Indemnified Party.
7.06. Third Party Claims. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to undertake, conduct
and control the conduct and settlement of such action or suit, (i) the
Indemnifying Party shall not thereby permit to exist any Encumbrance upon any
asset of the Indemnified Party; (ii) the Indemnifying Party shall not consent to
any settlement that does not include as an unconditional term thereof the giving
of a complete release from liability with respect to such action or suit to the
Indemnified Party; (iii) the Indemnifying Party shall permit the Indemnified
Party to participate in such conduct or settlement through counsel chosen by the
Indemnified Party; and (iv) the Indemnifying Party shall agree promptly to
reimburse the Indemnified Party for the full amount of any Damages including
fees and expenses of counsel for the Indemnified Party incurred after giving the
foregoing notice to the Indemnifying Party and prior to the assumption of the
conduct and control of such action or suit by the Indemnifying Party.
ARTICLE VIII
MISCELLANEOUS
8.01. Costs and Expenses. Transferees and Transferors shall each pay its
respective expenses, brokers' fees and commissions, and Transferors shall pay
all of the pre-Closing expenses of Transferors incurred in connection with this
Agreement and the transactions contemplated hereby, including all accounting,
legal and appraisal fees and settlement charges. All transfer taxes incurred as
a result of the transfer of the Transferred Assets shall be paid by Transferors.
8.02. Further Assurances. Transferors shall, at any time and from time
to time on and after the Closing Date, upon request by Transferees and without
further consideration, take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments, documents, transfers, conveyances and assurances as may be
required or desirable for the better conveying, transferring, assigning,
delivering, assuring and confirming the Transferred Assets to Transferees.
8.03. Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or (i) made the second business day after the date of mailing, if
delivered by registered or certified mail, postage prepaid, (ii) upon delivery,
if sent by hand delivery, (iii) upon delivery, if sent by prepaid courier, with
a record of receipt, or (iv) the next day after the date of dispatch, if sent
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<PAGE>
by cable, telegram, facsimile or telecopy (with a copy simultaneously sent by
registered or certified mail, postage prepaid, return receipt requested), to the
parties at the following addresses:
(a) if to Transferees, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
Attention: A. Dale Mayo, President
with a required copy to:
Warren H. Colodner, Esq.
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
45th Floor
New York, New York 10020
Telecopy: (212) 536-3901
(b) if to Transferor, to:
John Nelson
93 Hope Road
Blairstown, New Jersey 07825
with a required copy to:
Jack Wenarsky, Esq.
225 Route 10
Succasunna, New Jersey 07876
Telecopy: (201) 927-5252
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
8.04. Offset; Assignment; Governing Law. Transferees shall be entitled
to offset or recoup from any amounts due to Transferors from Transferees
hereunder or under any Other Agreement against any obligation of Transferors to
Transferees hereunder or under any Other Agreement. This Agreement and all the
rights and powers granted hereby shall bind and inure to the benefit of the
parties hereto and their respective permitted successors and assigns. This
Agreement and the rights, interests and obligations hereunder may not be
assigned by any party hereto without the prior written consent of the other
parties hereto, except that Transferees may make such assignments to any
Affiliate of Transferees provided that Transferees remains liable hereunder.
This Agreement shall be governed by and
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<PAGE>
construed in accordance with the laws of the state of New Jersey without regard
to its conflict of law doctrines.
8.05. Amendment and Waiver; Cumulative Effect. To be effective, any
amendment or waiver under this Agreement must be in writing and be signed by the
party against whom enforcement of the same is sought. Neither the failure of any
party hereto to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by any other party with its obligations
hereunder, nor any custom or practice of the parties at variance with the terms
hereof shall constitute a waiver by such party of its right to exercise any such
right, power or remedy or to demand such compliance. Except as provided in
Section 6.04, the rights and remedies of the parties hereto are cumulative and
not exclusive of the rights and remedies that they otherwise might have now or
hereafter, at law, in equity, by statute or otherwise.
8.06. Entire Agreement; No Third Party Beneficiaries. Except as set
forth in this Section 8.06, this Agreement and the Schedules and Exhibits set
forth all of the promises, covenants, agreements, conditions and undertakings
between the parties hereto with respect to the subject matter hereof, and
supersede all prior or contemporaneous agreements and understandings,
negotiations, inducements or conditions, express or implied, oral or written.
This Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder, except the provisions of Sections 7.02
and 7.03 relating to Transferee Indemnitees and Transferor Indemnitees.
8.07. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.08. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CLEARVIEW CINEMA GROUP, INC.
By:______________________________
A. Dale Mayo
Title: President
CCC EMERSON CORP.
By:______________________________
A. Dale Mayo
Title: President
EMERSON CINEMA, INC.
By:______________________________
John Nelson
Title: President
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<PAGE>
SCHEDULES
Schedule 2.01(a) - Exchange of Assets
Schedule 3.03 - Consents
Schedule 3.05 - Undisclosed Liabilities
Schedule 3.06 - No changes
Schedule 3.07 - Taxes
Schedule 3.10 - Description of Contracts
Schedule 3.12 - Description of Property
Schedule 3.11 - Permits
Schedule 3.13 - Environmental Matters
Schedule 3.16 - Union Agreement
Schedule 3.18 - Intellectual Property Rights
Schedule 3.19 - Benefit Plans; Transferor Plans
Schedule 4.03 - Consents
[Schedules are not included herewith, but will be provided
by the Company upon request.]
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EXHIBITS
Exhibit A - Indemnification Escrow Agreement
Exhibit B - Transferor Closing Certificate
Exhibit C - Non-Competition Agreement
Exhibit D - Transferee Closing Certificate
Exhibit E - Shareholders Agreement
Exhibit F - Intentionally Deleted
Exhibit G - Voting Trust Agreement
Exhibit H - Opinion of Jack Wenarsky
Exhibit I - New Theater Transition Form
Exhibit J - Opinion of Kirkpatrick & Lockhart LLP
[Exhibits are not included herewith, but will be provided
by the Company upon request.]
Exhibit 10.42
INDEMNIFICATION ESCROW AGREEMENT
This Indemnification Escrow Agreement ("Escrow Agreement") is made and
entered into as of the 29th day of May, 1996 by and among Clearview Cinema
Group, Inc., and CCC Emerson Cinema Corp. (collectively, "CCG"), and Emerson
Cinema, Inc. (the "Transferor") and Jack Wenarsky as escrow agent (hereinafter
referred to as the "Escrow Agent").
CCG and the Transferor have entered into an Agreement and Plan of
Reorganization dated May 29, 1996 (the "Agreement").
Pursuant to Section 2.06 of the Agreement, CCG and the Transferor wish to
establish an escrow account with a portion of the CCG Shares to secure the
obligations of the Transferor under Article VII of the Agreement.
CCG and the Transferor desire to deposit with the Escrow Agent the shares
of stock described herein to be distributed as set forth herein.
In consideration of the foregoing and the mutual covenants set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
Article I
Deliveries to the Escrow Agent.
1.1 Escrow Fund. At the Closing (as defined in the Agreement), CCG shall
deposit with the Escrow Agent, 173 shares of stock of CCG (the "Escrow Fund").
For the purposes of calculating the number of shares to be distributed as a
result of a claim made under this Agreement, the shares shall be valued at book
value ("Book Value") per share computed on a fully diluted basis reflected in
CCG's most recent annual audited financial statements.
1.2 Notice of Claims. Subject to Sections 1.3 and 1.4 below, upon receipt
of notice from CCG (the "Notice") that any Transferee Indemnitee (as defined in
the Agreement) is entitled to a payment pursuant to Article VII of the Agreement
and the amount thereof, the Escrow Agent shall, at least 10 days but not more
than 15 days following receipt of such notice, disburse to such Transferee
Indemnitee an amount equal to the lesser of (i) the number of shares held in the
Escrow Fund or (ii) the number of shares specified in the Notice. Any Notice
shall specify with reasonable detail the reasons why the requesting party is
entitled to the disbursement, the dollar amount of such claim, and the
calculation setting forth the Book Value of the shares.
1.3 Notice of Dispute. Notwithstanding the foregoing, in the event that the
Transferor objects to the disbursement of any portion of the Escrow Fund, they
shall so notify Escrow Agent not more than 9 days from the date of the Notice.
Any objection shall specify with reasonable detail the reasons why the objecting
party is objecting to the disbursement. Such
<PAGE>
a dispute shall be resolved in the manner set forth in Section 1.4 below and
Escrow Agent shall continue to hold the Escrow Fund until it has received a
nonappealable court order from a court of competent jurisdiction directing the
disposition of such property, or until it has received appropriate written
instructions signed by both CCG and by John Nelson or such other person as shall
have been designated by John Nelson.
1.4 Uncertainty. In the event that Escrow Agent, in good faith, shall be in
doubt as to what action it should take hereunder, Escrow Agent may, at its
option, refuse to comply with any claims or demands on it or refuse to take any
other action hereunder, so long as such disagreement continues or such doubt
exists; and in any such event, Escrow Agent shall not be or become liable in any
way or to any person for its failure or refusal to act, and Escrow Agent shall
be entitled to continue to so refrain from acting until it has received (a) a
nonappealable court order from a court of competent jurisdiction directing the
disposition of such property, or (b) appropriate written instructions signed
both by CCG and by John Nelson or such person as is designated by John Nelson.
1.5. Final Disbursement. On the first anniversary of the date hereof, the
Escrow Agent shall set aside and retain in escrow any amount specified in a
Notice theretofore received from CCG pursuant to Section 1.2 and not theretofore
disbursed or otherwise resolved and shall disburse the remainder of the Escrow
Fund, if any, to the Transferor for distribution to the persons entitled thereto
in accordance with the Agreement. Once the claim set forth in any such Notice
has been determined, the Escrow Agent shall distribute the amount of such claim
as finally determined or agreed to CCG and shall distribute the remainder to the
Transferor as set forth in the preceding sentence.
1.6. Time of Essence. The parties agree that time is of the essence with
respect to all deliveries referenced in this Article I.
ARTICLE II
Delivery of Notices; Statements.
2.1 If CCG shall send any certificate, notice, request, demand and other
communication (each a "Certificate") to the Escrow Agent, CCG shall
simultaneously send such Certificate to the Transferor by facsimile and
certified mail. If the Transferor shall send a Certificate to the Escrow Agent,
the Transferor shall simultaneously send such Certificate to CCG by facsimile
and certified mail.
<PAGE>
2.2 All certificates, notices, requests, demands and other communications
hereunder or with respect hereto shall be in writing and shall be deemed to have
been duly given or made (i) upon the second business day after the date of
mailing, if delivered by certified mail, postage prepaid, (ii) upon delivery, if
sent by hand delivery, prepaid courier or overnight service (such as Federal
Express), with a record of receipt, or (iii) the next day after the date of
dispatch, if sent by cable, telegram, facsimile or telecopy (with a copy
simultaneously sent by registered or certified mail, postage prepaid, return
receipt requested), to the parties at the following addresses:
(i) if to CCG, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
with a required copy to:
Warren H. Colodner, Esquire
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
New York, NY 10020
Telecopy: (212) 536-3901
(ii) if to the Transferor, to:
John Nelson
93 Hope Road
Blairsville, NJ 07825
with a required copy to:
Jack Wenarsky, Esquire
225 Route 10
Succasunna, NJ 07876
Telecopy: (201) 927-5252
(iii) if to Escrow Agent, to:
Jack Wenarsky, Esquire
225 Route 10
Succasunna, NJ 07876
Telecopy: (201) 927-5252
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
<PAGE>
ARTICLE III
General Provisions.
3.1 CCG and the Transferor agree to indemnify Escrow Agent and hold him
harmless from any loss or liability, including reasonable attorneys' fees and
expenses, arising from his service as Escrow Agent hereunder and any actions
taken pursuant hereto, except for losses or liabilities arising from Escrow
Agent's fraud, gross negligence or willful misconduct. The provisions of this
Section 3.1 relating to indemnity of the Escrow Agent shall survive the
termination of this Escrow Agreement and the final disbursement of the Escrow
Fund.
3.2 In the absence of fraud on his part, Escrow Agent shall be entitled to
rely conclusively, as to the truth of the statements contained therein, upon any
certificate, notice, authorization or other document delivered to him hereunder
that he reasonably believes to be in conformity with the requirements of this
Escrow Agreement and to be genuine and to have been signed by any authorized
representative of CCG or the Transferor (as the case may be) from time to time,
unless the Escrow Agent shall have received timely objection to such
certificate, notice, authorization or document pursuant to Section 1.3 hereof.
The Escrow Agent need not investigate any factual matters averred or stated in
any such certificate, notice, authorization or other document; provided,
however, that Escrow Agent shall examine each such document to determine whether
it conforms to the requirements of this Escrow Agreement.
3.3 The service of Jack Wenarsky as Escrow Agent under this Agreement shall
not disqualify Mr. Wenarsky from the representation the Transferor in any
matter, including but not limited to, any dispute relating to this Escrow
Agreement.
3.4 This Escrow Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective successors. This Escrow Agreement
may not be assigned with the written consent of the parties hereto. This Escrow
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
3.5 This Escrow Agreement may not be revoked, rescinded or modified as to
any of its terms or conditions except upon consent in writing of all the parties
hereto.
3.6 This Escrow Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which shall together
constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
WITNESS the due execution hereof the day and year first above written.
Clearview Cinema Group, Inc.
By: ____________________
A. Dale Mayo,
President
ACCEPTED AND AGREED
Township of Washington Theatre, Inc.
Allwood Clifton Cinema, Inc.
New City Cinema, Inc.
By: ______________________
John Nelson,
President
Exhibit 10.43
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of
May 29, 1996, by and among Clearview Cinema Group, Inc., a Delaware corporation
("CCG"), CCC Washington Cinema Corp., a Delaware corporation ("WCC"), CCC
Allwood Cinema Corp., a Delaware corporation ("ACC"), and CCC New City Cinema
Corp., a Delaware corporation ("NCC," and collectively with CCG, WCC, ACC, and
NCC, the "Purchasers"), and Township of Washington Theatre, Inc., a New Jersey
corporation ("Washington"), Allwood Clifton Cinema, Inc., a New Jersey
corporation ("Allwood"), and New City Cinema, Inc., a New York corporation ("New
City," and collectively with Washington and Allwood, the "Sellers").
The Sellers currently own and operate the Theaters, as
hereinafter defined.
The Sellers desire to sell to the Purchasers, and the Purchasers
desire to purchase from the Sellers, certain of the assets owned by the Sellers
and utilized in the operation of the Theaters, upon the terms and subject to the
conditions set forth below.
In consideration of the representations, warranties, covenants,
and agreements contained in this Agreement, the parties, each intending to be
legally bound hereby, agree as set forth below:
I ARTICLE
DEFINITIONS; CONSTRUCTION
1.01. Definitions. As used in this Agreement, the following terms have
the meanings specified in this Section. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"Agreement" means this Asset Purchase Agreement, as it may be amended
from time to time.
"Benefit Plan" has the meaning given that term in Section 3.19(a).
"Business" means business of the operation of the Theaters conducted by
Sellers.
<PAGE>
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List pursuant to Superfund.
"Closing" has the meaning given that term in Section 2.05.
"Closing Date" has the meaning given that term in Section 2.05.
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
"Contract" and "Contracts" have the respective meanings given those
terms in Section 3.10.
"Damages" has the meaning given that term in Section 7.05.
"Defined Benefit Plan" has the meaning given that term in Section
3.19(e).
"Encumbrance" means any mortgage, deed of trust, pledge, security
interest, encumbrance, option, right of first refusal, agreement of sale,
adverse claim, easement, lien, lease, assessment, restrictive covenant,
encroachment, right-of-way, burden or charge of any kind or nature whatsoever or
any item similar or related to the foregoing.
"Environmental Law" means any applicable Law relating to public health
and safety or protection of the environment, including common law nuisance,
property damage and similar common law theories.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the applicable rulings and regulations thereunder.
"Escrowed Funds" means the funds held in escrow subject to the Escrow
Agreement dated as of May 16, 1996 among CCG, Washington, Allwood, New City, and
Jack Wenarsky, as Escrow Agent, and the other parties thereto.
"FASB" means the Financial Accounting Standards Board or its successor.
"Financial Statements" has the meaning given that term in Section
3.04(a).
"GAAP" means United States generally accepted accounting principles.
"Governing Documents" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter documents or
organization or governing documents or instruments of such Person.
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<PAGE>
"Governmental Body" means any court, government (federal, state, local
or foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality.
"Indemnification Escrow Fund" has the meaning given that term In Section
2.06.
"Indemnified Party" has the meaning given that term in Section 7.05.
"Indemnifying Party" has the meaning given that term in Section 7.04.
"Intellectual Property" has the meaning given that term in Section 3.18.
"IRS" means the Internal Revenue Service.
"knowledge" as to any person means, as to a natural person, the actual
knowledge of such person and, as to any other person, the actual knowledge of an
executive officer of such person.
"Law" means any applicable federal, state, municipal, local or foreign
statute, law, ordinance, rule, regulation, judgment or order of any kind or
nature whatsoever including any public policy, judgment or order of any
Governmental Body or principle of common law.
"Leases" has the meaning given that term in Section 3.12.
"Liabilities" with respect to any Person, means all debts, liabilities
and obligations of such Person of any nature or kind whatsoever, whether or not
due or to become due, accrued, fixed, absolute, matured, determined,
determinable or contingent and whether or not incurred directly by such Person
or by any predecessor of such Person, and whether or not arising out of any act,
omission, transaction, circumstance, sale of goods or service or otherwise.
"Litigation" has the meaning given that term in Section 3.09.
"Multiemployer Plan" has the meaning given that term in Section 3.19(f).
"Other Agreement" means each other agreement or document to be executed
and delivered in connection with the transactions contemplated by this Agreement
on or before Closing.
"Permit" and "Permits" have the respective meanings given those terms in
Section 3.11.
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<PAGE>
"Permitted Encumbrances" means (i) liens for current taxes not yet due,
and (ii) Encumbrances that do not or will not either individually or in the
aggregate adversely affect the value of the property encumbered or prohibit or
interfere with the operations of the Business.
"Person" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any other legal entity, or
a Governmental Body.
"Purchase Price" has the meaning given that term in Section 2.04.
"Purchased Assets" has the meaning given that term in Section 2.01.
"Purchaser Damages" has the meaning given that term in Section 7.02.
"Purchaser Indemnitees" has the meaning given that term in Section 7.02.
"Qualified Plan" has the meaning given that term in Section 3.19(d).
"Real Property" has the meaning given that term in Section 3.12.
"Regulated Material" means any hazardous substance as defined by any
Environmental Law and any other material regulated by any applicable
Environmental Law, including petroleum, petroleum-related material, crude oil or
any fraction thereof, polychlorinated biphenyls, and any friable asbestos.
"Related Party" means (i) Seller, (ii) any Affiliate of any Seller,
(iii) any officer or director of any Person identified in clauses (i) or (ii)
preceding, and (iv) any spouse, sibling, ancestor or lineal descendant of any
natural Person identified in any one of the preceding clauses.
"Retained Assets" has the meaning given that term in Section 2.02.
"Retained Liabilities" has the meaning given that term in Section 2.03.
"Security Right" means, with respect to any security, any option,
warrant, subscription right, preemptive right, other right, proxy, put, call,
demand, plan, commitment, agreement, understanding or arrangement of any kind
relating to such security, whether issued or unissued, or any other security
convertible into or exchangeable for any such security. "Security Right"
includes any right relating to issuance, sale, assignment, transfer, purchase,
redemption, conversion, exchange, registration or voting and includes rights
conferred by statute, by the issuer's Governing Documents or by agreement.
"Seller Damages" has the meaning given that term in Section 7.03.
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<PAGE>
"Seller Indemnitees" has the meaning given that term in Section 7.03.
"Seller Plan" has the meaning given that term in Section 3.19(b).
"Superfund" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as amended.
"Tax" means any domestic or foreign federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
"Theaters" means the movie theaters operated by the Sellers at the
locations set forth in the Leases.
"12-31-95 Balance Sheet" means balance sheet of any Seller dated
12-31-95.
1.02. Construction. As used herein, unless the context otherwise
requires: (i) references to "Article" or "Section" are to an article or section
hereof; (ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits
and Schedules attached hereto and are incorporated herein by reference and made
a part hereof; (iii) "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
ARTICLE II
PURCHASE AND SALE
2.01. Sale and Purchase of Assets. At the Closing, Sellers shall sell
and transfer to Purchasers, and Purchasers shall purchase from Sellers, all of
Sellers' properties and business as a going concern and goodwill and assets of
every kind, nature and description existing on the Closing Date, wherever such
assets are located and whether real, personal or mixed, tangible or intangible,
in electronic form or otherwise, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements, except those assets
specifically excluded pursuant to Section 2.02, free and clear of all
Encumbrances other than Permitted Encumbrances. The properties, business,
goodwill and assets of Seller to be transferred hereunder (collectively, the
"Purchased Assets") shall include but not be limited to the following:
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(a) All of Sellers' furniture, fixtures, equipment, paper concession
goods, and supplies including the items listed on Schedule 2.01(a);
(b) All of Sellers' rights under the Leases (as defined in Section 3.12)
and all of Sellers' rights under all other leases, contracts, agreements and
purchase and sale orders (collectively, the "Contracts") including any and all
security deposits paid under the Leases and the Contracts (the "Security
Deposits") and all of Sellers' rights in and to the telephone numbers currently
used for the Theaters;
(c) All of Sellers' goodwill and rights in and to the names of each of
the Theaters and in any other tradename, trademark, fictitious name or service
mark, or any variant of any of them, and any applications therefor or
registrations thereof, and any other forms of Intellectual Property;
(d) To the extent not described above, all of the assets reflected on
the Balance Sheets.
2.02. Retained Assets. Sellers shall retain and the Purchased Assets
shall not include the following assets: (i) the consideration to be delivered to
Sellers pursuant to this Agreement, (ii) Sellers' other rights hereunder, (iii)
Sellers' minute book, stock book and seal, (iv) all claims, choses in action,
causes of action and judgments in respect of any litigation matter identified on
Schedule 3.12 and with respect to any other Retained Liability, and (v) all of
Sellers' cash, cash in banks, cash equivalents, bank and mutual fund accounts,
trade and other notes and accounts receivable, deposits (other than the Security
Deposits), investments, securities, advance payments, prepaid items and
expenses, deferred charges, rights of offset and credits and claims for refund
(collectively, the "Retained Assets").
2.03. Assumption of Certain Obligations; Retained Liabilities. At the
Closing, each of WCC, ACC, and NCC shall respectively assume the liabilities and
obligations of Washington, Allwood and New City arising from the Leases (as
defined in Section 3.12) and the Contracts. Except as expressly provided in this
Agreement, the Purchasers do not and shall not assume or in any way undertake to
pay, perform, satisfy or discharge any other liabilities or obligations of the
Sellers (the "Retained Liabilities") and the Sellers shall pay and satisfy when
due all Retained Liabilities.
2.04. Purchase Price; Allocation of Purchase Price.
(a) Purchase Price. The aggregate purchase price for the Purchased
Assets (the "Purchase Price") shall be Four Million Eight Hundred Thousand
Dollars ($4,800,000).
(b) Allocation. The Purchase Price shall be allocated among the
Purchased Assets in accordance with the allocation set forth in Schedule 2.04.
Purchasers and Sellers shall report the federal, state and local income and
other tax consequences of the purchase and sale contemplated hereby in a manner
consistent with such allocation and shall not take
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<PAGE>
any position inconsistent therewith upon examination of any tax return, in any
refund claim, in any litigation, or otherwise.
2.05. Closing. Subject to the terms and conditions of this Agreement,
the sale and purchase of the Purchased Assets and the assumption of the Assumed
Liabilities contemplated hereby shall take place at a closing (the "Closing") at
the offices of Kirkpatrick & Lockhart LLP, 1251 Avenue of the Americas, 45th
Floor, New York, New York 10020 at such time or on such date as the Sellers and
the Purchasers may mutually agree (the day on which the Closing takes place
being the "Closing Date"), but in no event later than July 31, 1996.
2.06. Payment of the Purchase Price. At Closing, the Purchase Price
shall be paid by Purchasers to Sellers as follows:
(i) delivery by Jack Wenarsky, as Escrow Agent, to Sellers of the
Escrowed Funds
(ii) wire transfer of federal funds in the amount of $100,000 to
be held in Escrow (the "Indemnification Escrow Fund") by Jack Wenarsky, Esq. as
Escrow Agent pursuant to the Indemnification Escrow Agreement in the form of
Exhibit A hereto (the "Indemnification Escrow Agreement"); and
(iii) the remainder of the Purchase Price (calculated as (A) the
Purchase Price minus (B) the sum of (1) the Escrowed Funds and (2) the
Indemnification Escrow Fund) by wire transfer of federal funds to Sellers
pursuant to wire transfer instructions supplied by Sellers to Purchasers.
2.07. Proration of Expenses. All accrued expenses associated with the
Leases included in the Purchased Assets, such as electricity, gas, water, sewer,
telephone, property taxes, security services and similar items, shall be
prorated between Purchasers and Sellers as of the Closing Date. Purchasers and
Sellers shall settle such amounts on or before forty-five days after the Closing
Date.
2.08. Passage of Title. Title to all Purchased Assets shall pass from
Sellers to Purchasers at Closing, subject to the terms and conditions of this
Agreement. Purchasers assume no risk of loss to the Purchased Assets prior to
Closing.
2.09. Certain Consents. Nothing in this Agreement shall be construed as
an attempt to assign any contract, agreement, Permit, franchise, or claim
included in the Purchased Assets which is by its terms or in law nonassignable
without the consent of the other party or parties thereto, unless such consent
shall have been given, or as to which all the remedies for the enforcement
thereof enjoyed by Seller would not, as a matter of law, pass to Purchasers as
an incident of the assignments provided for by this Agreement. In order,
however, to provide Purchasers with the full realization and value of every
contract, agreement, Permit, franchise and claim of the character described in
the immediately preceding sentence, Sellers
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agree that on and after the Closing, they will, at the request and under the
direction of Purchasers, in the name of Sellers or otherwise as Purchasers shall
specify take all reasonable action (including without limitation the appointment
of the appropriate Purchaser as attorney-in-fact for Sellers) and do or cause to
be done all such things as shall in the opinion of Purchasers or their counsel
be necessary or proper (i) to assure that the rights of Sellers under such
contracts, agreements, Permits, franchises and claims shall be preserved for the
benefit of Purchasers and (ii) to facilitate receipt of the consideration to be
received by Sellers in and under every such contract, agreement, Permit,
franchise and claim, which consideration shall be held for the benefit of, and
shall be delivered to, Purchasers. Nothing in this Section shall in any way
diminish Sellers' obligations hereunder to obtain all consents and approvals and
to take all such other actions prior to or at Closing as are necessary to enable
Sellers to convey or assign valid title to all the Purchased Assets to
Purchasers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant, jointly and severally, to the
Purchasers as follows:
3.01. Organization, Qualification; Capitalization. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has the corporate power and authority
to own or lease its properties, and carry on the Business as now conducted, and
each Seller has the power and authority to enter into this Agreement and the
Other Agreements to which it is or is to become a party and perform its
obligations hereunder and thereunder. Each Seller is duly qualified and in good
standing as a foreign corporation and is duly authorized to transact business in
each jurisdiction wherein the character of the properties owned or leased by it,
or the nature of the activities conducted by it make such qualification and good
standing necessary, except in those jurisdictions where the failure to be so
qualified and in good standing would not have a material adverse effect on such
Seller. The authorized capital stock of each Seller and the issued and
outstanding shares and the record owners thereof, respectively, are as set forth
on Schedule 3.01.
3.02. Authorization; Enforceability. This Agreement and each Other
Agreement to which each Seller is a party have been duly executed and delivered
by and constitute the legal, valid and binding obligations of such Seller,
enforceable against such Seller in accordance with their respective terms and
each Other Agreement to which each Seller is to become a party pursuant to the
provisions hereof, when executed and delivered by such Seller, will constitute
the legal, valid and binding obligation of such Seller, enforceable against such
Seller in accordance with the terms of such Other Agreement, except as may be
limited by applicable bankruptcy, insolvency, moratorium, fraudulent transfer,
preference and other laws and equitable principles affecting the scope and
enforcement to creditors' rights generally, and are also limited by Purchaser's
implied covenants of good faith, fair dealing and commercially reasonable
conduct, and by the effects of judicial discretion on the availability of
remedies and realization of benefits under and enforceability of this Agreement
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and the Other Agreements in all respects as written. All actions contemplated by
this Agreement have been duly and validly authorized by all necessary
proceedings by each Seller.
3.03. No Violation of Laws or Agreements; Consents. Neither the
execution and delivery of this Agreement or any Other Agreement to which any
Seller is or is to become a party, the consummation of the transactions
contemplated hereby or thereby nor the compliance with or fulfillment of the
terms, conditions or provisions hereof or thereof by such Seller will: (
contravene any provision of any Governing Document of any Seller, ( conflict
with, result in a breach of, constitute a default or an event of default (or an
event that might, with the passage of time or the giving of notice or both,
constitute a default or event of default) under any of the terms of, result in
the termination of, result in the loss of any right under, or give to any other
Person the right to cause such a termination of or loss under, any Purchased
Asset or any other contract, agreement or instrument to which such Seller is a
party or by which any of its assets may be bound or affected, ( result in the
creation, maturation or acceleration of any Assumed Liability or any other
Liability of any Seller (or give to any other Person the right to cause such a
creation, maturation or acceleration), ( violate any Law or violate any judgment
or order of any Governmental Body to which any Seller is subject or by which any
of the Purchased Assets or any of its other assets may be bound or affected, or
( result in the creation or imposition of any Encumbrance upon any of the
Purchased Assets or give to any other Person any interest or right therein.
Except as set forth on Schedule 3.03, no consent, approval or authorization of,
or registration or filing with, any Person is required in connection with the
execution and delivery by any Seller of this Agreement or any of the Other
Agreements to which such Seller is or is to become a party pursuant to the
provisions hereof or the consummation by Sellers of the transactions
contemplated hereby or thereby.
3.04. Financial Information.
(a) Financial Statements. The Sellers have previously provided to
the Purchasers a balance sheet, income statement and statement of cash flows for
each Seller at December 31, 1995 and for the year then ended, and income
statements and statements of cash flows for each Seller at December 31, 1993 and
December 31, 1994 and for the years then ended (collectively, the "Financial
Statements"). The Financial Statements: (i) have been prepared in accordance
with GAAP on a consistent basis throughout the indicated periods, and (ii)
fairly present the financial condition, assets and liabilities and results of
operation of Sellers at the dates and for the relevant periods indicated in
GAAP. All references in this Agreement to a Seller's "12-31-95 Balance Sheet"
mean such Seller's balance sheet dated 12-31-95.
(b) The aggregate gross box office and concession revenues for the
period from January 1, 1995 through December 31, 1995 are in excess of
$3,490,000.
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3.05. Undisclosed Liabilities. None of the Sellers has any debt,
obligation or liability, absolute, fixed, contingent or otherwise, of any nature
whatsoever, whether due or to become due, including any unasserted claim,
whether incurred directly or by any predecessor thereto, and whether arising out
of any act, omission, transaction, circumstance, sale of goods or services,
state of facts or other condition, except: (i) those reflected or reserved
against on the 12-31-95 Balance Sheet in the amounts shown therein; (ii) those
not required under GAAP to be reflected or reserved against in the 12-31-95
Balance Sheet that are expressly quantified and set forth in the Contracts
identified pursuant to Section 3.15; (iii) those disclosed on Schedule 3.05; and
(iv) those of the same nature as those set forth on the 12-31-95 Balance Sheet
that have arisen in the ordinary course of business of the Company after
December 31, 1995 through the date hereof, all of which have been consistent in
amount and character with past practice and experience, and none of which,
individually or in the aggregate, has had or will have an adverse effect on the
business, financial condition or prospects of any of the Sellers and none of
which is a liability for breach of contract or warranty or has arisen out of
tort, infringement of any intellectual property rights, or violation of Law or
is claimed in any pending or threatened legal proceeding.
3.06. No Changes. Since December 31, 1995, each Seller has conducted the
Business only in the ordinary course. Without limiting the generality of the
foregoing sentence, since December 31, 1995, except as set forth on Schedule
3.06, there has not been any: i) adverse change in the assets, Liabilities,
earning power, Business or prospects of any Seller; ii) damage or destruction to
or loss of any asset of any Seller, whether or not covered by insurance; iii)
strike or other labor trouble at any Seller; iv) creation of any Encumbrance on
any asset of the Seller other than any Permitted Encumbrance; v) increase in the
salary, wage or bonus of any employee of any Seller; vi) asset acquisition in
excess of $1000 for any individual acquisition, including capital expenditure,
other than the purchase of inventory in the ordinary course of business; vii)
disposition of any asset (other than inventory in the ordinary course of
business) for less than fair market value; viii) any failure to pay any
Liability when due; creation, termination or amendment of, or waiver of any
right under, any material agreement of Seller; or x) agreement or commitment to
do any of the foregoing.
3.07. Taxes. Each Seller has filed or caused to be filed on a timely
basis, or will file or cause to be filed on a timely basis or within a
timely-obtained extension, all Tax Returns that are required to be filed by it
prior to or on the Closing Date, pursuant to the Law of each governmental
authority with taxing power over it. No Seller has any Liability for any Tax
except Taxes disclosed on Schedule 3.07.
3.08. Condition of Assets; Title; Business. Sellers are engaged in the
Business and no other business. The Purchased Assets have been professionally
maintained and are in good working order and are suitable for the purposes for
which they are used in the Business. The Sellers have good, marketable and
exclusive title to all of the Purchased Assets subject to the terms of the
Leases; the Purchased Assets include all assets that are necessary for use in
and operation of the Business; and none of the Purchased Assets is
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subject to any Encumbrance or impairment, whether due to its condition, utility,
collectability or otherwise, other than Permitted Encumbrances.
3.09. No Pending Litigation or Proceedings. No action, suit,
investigation, claim or proceeding of any nature or kind whatsoever, whether
civil, criminal or administrative, by or before any Governmental Body or
arbitrator ("Litigation") is pending or, to the knowledge of any Seller,
threatened against or affecting Seller, the Business, any of the Purchased
Assets, the Assumed Liabilities, or any of the transactions contemplated by this
Agreement or any Other Agreement, and there is no basis for any such Litigation.
There is presently no outstanding judgment, decree or order of any Governmental
Body against or affecting any Seller, the Business, any of the Purchased Assets,
the Assumed Liabilities, or any of the transactions contemplated by this
Agreement or any Other Agreement. No Seller has pending Litigation against any
third party.
3.10. Contracts; Compliance. Disclosed on Schedule 3.10 and 3.12 is a
brief description of each contract, lease, indenture, mortgage, instrument,
commitment or other agreement, arrangement or understanding, oral or written,
formal or informal, that is included in the Purchased Assets (each, a "Contract"
and collectively, the "Contracts"). Each Contract is a legal, valid and binding
obligation of each Seller who is a party thereto and is in full force and
effect. Each Seller and each other party to each Contract has performed all
obligations required to be performed by it thereunder and is not in breach or
default, and is not alleged to be in breach or default, in any respect
thereunder, and no event has occurred and no condition or state of facts exists
(or would exist upon the giving of notice or the lapse of time or both) that
would become or cause a breach, default or event of default thereunder, would
give to any Person the right to cause such a termination or would cause an
acceleration of any obligation thereunder. No Seller is currently renegotiating
any Contract nor has any Seller received any notice of non-renewal or price
increase or sales or production allocation with respect to any Contract.
3.11. Permits; Compliance With Law. Schedule 3.11 sets forth for each
Seller the permits, certificates, licenses, franchises, privileges, approvals,
registrations and authorizations held by such Seller (each, a "Permit" and
collectively, "Permits"). The Permits are all such permits required under any
applicable Law or otherwise advisable in connection with the operation of the
Purchased Assets and Business. Each Permit is valid, subsisting and in full
force and effect. Each Seller is in compliance with and has fulfilled and
performed its obligations under each Permit held by it, and no event or
condition or state of facts exists (or would exist upon the giving of notice or
lapse of time or both) that could constitute a breach or default under any
Permit. No Seller is currently in violation of any Law or has received any
notice of any violation of Law, and no event has occurred or condition or state
of facts exists that could give rise to any such violation. No Seller has
received any notice of non-renewal of any Permit.
3.12. Real Property. Schedule 3.12 sets forth the agreements of lease
(the "Leases") pursuant to which the Sellers lease real property (collectively,
the "Real
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Property") and identifies the record title holder of all of the Real Property.
Each Seller has the right to quiet enjoyment of all Real Property in which it
holds a leasehold interest for the full term, including all renewal rights, of
the lease or similar agreement relating thereto. The use and operation of all
Real Property conform to all applicable building, zoning, safety and subdivision
Laws, Environmental Laws and other Laws, and all restrictive covenants and
restrictions and conditions affecting title. No Seller has received any written
or oral notice of assessments for public improvements against any Real Property
or any written or oral notice or order by any Governmental Body, any insurance
company that has issued a policy with respect to any of such properties or any
board of fire underwriters or other body exercising similar functions that i)
relates to violations of building, safety or fire ordinances or regulations, ii)
claims any defect or deficiency with respect to any of such properties or iii)
requests the performance of any repairs, alterations or other work to or in any
of such properties or in the streets bounding the same. Such public utilities
are all connected pursuant to valid permits, are all in good working order and
are adequate to service the operations of such facilities as currently conducted
and permit full compliance with all requirements of Law. No Seller has received
any written notice of any proposed, planned or actual curtailment of service of
any utility supplied to any facility of such Seller.
3.13. Environmental Matters. Except as disclosed in Schedule 3.13:
(a) Compliance; No Liability. Each Seller has operated the
Business and each parcel of Real Property in compliance with all applicable
Environmental Laws. No Seller is subject to any Liability, penalty or expense
(including legal fees), and no Purchaser will suffer or incur any loss,
Liability, penalty or expense (including legal fees) by virtue of any violation
of any Environmental Law occurring prior to the Closing, any environmental
activity conducted on or with respect to any property at or prior to the Closing
or any environmental condition existing on or with respect to any property at or
prior to the Closing, in each case whether or not any Seller permitted or
participated in such act or omission.
(b) Treatment; CERCLIS. No Seller has treated, stored, generated,
recycled or disposed of any Regulated Material on any real property, and no
other Person has treated, stored, recycled or disposed of any Regulated Material
on any part of the Real Property. There has been no release of any Regulated
Material at, on or under any Real Property. No Seller has transported any
Regulated Material or arranged for the transportation of any Regulated Material
to any location that is listed or proposed for listing on the National
Priorities List pursuant to Superfund, on CERCLIS or any other location that is
the subject of federal, state or local enforcement action or other investigation
that may lead to claims against such Seller for cleanup costs, remedial action,
damages to natural resources, to other property or for personal injury including
claims under Superfund. None of the Real Property is listed or, to the knowledge
of Sellers, proposed for listing on the National Priorities List pursuant to
Superfund, CERCLIS or any state or local list of sites requiring investigation
or cleanup.
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(c) Notices; Existing Claims; Certain Regulated Materials; Storage
Tanks. No Seller has received any request for information, notice of claim,
demand or other notification that it is or may be potentially responsible with
respect to any investigation, abatement or cleanup of any threatened or actual
release of any Regulated Material. No Seller is required to place any notice or
restriction relating to the presence of any Regulated Material at any Real
Property or in any deed to any Real Property. Schedule 3.14(c) sets forth a list
of all sites to which Sellers transported any Regulated Material for recycling,
treatment, disposal, other handling or otherwise. There has been no past, and
there is no pending or contemplated, claim by Sellers under any Environmental
Law or Laws based on actions of others that may have impacted on the Real
Property, and Sellers have not entered into any agreement with any Person
regarding any Environmental Law, remedial action or other environmental
Liability or expense. There are no storage tanks located on the Real Property,
whether underground or aboveground.
3.14. Customer Relations. There exists no condition or state of facts or
circumstances involving Sellers' customers, suppliers, distributors or
representatives that any Seller can reasonably foresee could adversely affect
the Business or the Purchased Assets after the Closing Date.
3.15. Transactions With Related Parties. No Related Party has any claim
of any nature, including any inchoate claim, against any of the Purchased Assets
or the Business. Except as expressly provided herein or in any Other Agreement
or as otherwise may be mutually agreed after Closing, (i) no Related Party will
at any time after Closing for any reason, directly or indirectly, be or become
entitled to receive any payment or transfer of money or other property of any
kind from Purchasers, and (ii) Purchasers will not at any time after Closing for
any reason, directly or indirectly, be or become subject to any obligation to
any Related Party; provided, however, that nothing in this Section 3.15 shall
prohibit any post-closing transactions between Related Parties that do not
affect the Purchasers, the Purchased Assets or the Business.
3.16. Labor Relations. The relations of each Seller with its employees
are good. No employee of any Seller is represented by any union or other labor
organization other than IATSE LOCAL #642, IATSE LOCAL #645, and IATSE LOCAL #
362. True and correct copies of the Union Agreements are attached as Schedule
3.16. No representation election, arbitration proceeding, grievance, labor
strike, dispute, slowdown, stoppage or other labor trouble is pending or, to the
knowledge of any Seller, threatened against, involving, affecting or potentially
affecting any Seller. No complaint against any Seller is pending or, to the
knowledge of Seller, threatened before the National Labor Relations Board, the
Equal Employment Opportunity Commission or any similar state or local agency, by
or on behalf of any employee of any Seller. No Seller has any Liability for any
occupational disease of any of its employees, former employees or others.
3.17. Insurance. The Purchasers have been provided a copy of each
insurance policy as to which any Seller is the owner, insured or beneficiary,
whether on an
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"occurrence" or a "claims made" basis, together with a summary of such policies
and copies of certificates of insurance executed by each insurer or its
authorized agent evidencing such insurance.
3.18. Intellectual Property Rights. Schedule 3.18 contains a complete
list and description of all of the trademark and service mark rights,
applications and registrations, trade names, fictitious names, service marks,
logos and brand names, copyrights, copyright applications, letters patent,
patent applications and licenses of any of the foregoing owned or used by any
Seller in or applicable to the Business. Each Seller has the entire right, title
and interest in and to, or has the exclusive perpetual royalty-free right to
use, the intellectual property rights disclosed on Schedule 3.18 and all other
processes, know-how, show-how, formulae, trade secrets, inventions, discoveries,
improvements, blueprints, specifications, drawings, designs, and other
proprietary rights necessary or applicable to or advisable for use in the
Business ("Intellectual Property"), free and clear of all Encumbrances. Schedule
3.18 separately discloses all Intellectual Property under license. The
Intellectual Property is valid and not the subject of any interference,
opposition, reexamination or cancellation. To the knowledge of any Seller, no
Person is infringing upon nor has any Person misappropriated any Intellectual
Property. No Seller is infringing upon the intellectual property rights of any
other Person.
3.19. Employee Benefits.
(a) Benefit Plans; Seller Plans. Schedule 3.19 discloses all written and
unwritten "employee benefit plans" within the meaning of Section 3(3) of ERISA,
and any other written and unwritten profit sharing, pension, savings, deferred
compensation, fringe benefit, insurance, medical, medical reimbursement, life,
disability, accident, post-retirement health or welfare benefit, stock option,
stock purchase, sick pay, vacation, employment, severance, termination or other
plan, agreement, contract, policy, trust fund or arrangement (each, a "Benefit
Plan"), whether or not funded and whether or not terminated, (i) maintained or
sponsored by any Seller, or (ii) with respect to which any Seller has or may
have Liability or is obligated to contribute, or (iii) that otherwise covers any
of the current or former employees of any Seller or their beneficiaries, or (iv)
as to which any such current or former employees or their beneficiaries
participated or were entitled to participate or accrue or have accrued any
rights thereunder (each, a "Seller Plan").
(b) Seller Group Matters; Funding. No Seller nor any corporation that
may be aggregated with any Seller under Sections 414(b), (c), (m) or (o) of the
Code (the "Seller Group") has any obligation to contribute to or any Liability
under or with respect to any Benefit Plan of the type described in Sections 4063
and 4064 of ERISA or Section 413(c) of the Code. No Seller has any Liability,
and after the Closing, no Purchaser will have any Liability, with respect to any
Benefit Plan of any other member of the Seller Group, whether as a result of
delinquent contributions, distress terminations, fraudulent transfers, failure
to pay premiums to the PBGC, withdrawal Liability or otherwise. No accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code) exists nor has
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any funding waiver from the IRS been received or requested with respect to any
Seller Plan or any Benefit Plan of any member of the Seller Group, and no excise
or other Tax is due or owing because of any failure to comply with the minimum
funding standards of the Code or ERISA with respect to any of such plans.
(c) Compliance. Each Seller Plan and all related trusts, insurance
contracts and funds have been created, maintained, funded and administered in
all respects in compliance with all applicable Laws and in compliance with the
plan document, trust agreement, insurance policy or other writing creating the
same or applicable thereto. No Seller Plan is or is proposed to be under audit
or investigation, and no completed audit of any Seller Plan has resulted in the
imposition of any Tax, fine or penalty.
(d) Qualified Plans. Schedule 3.19 discloses each Seller Plan that
purports to be a qualified plan under Section 401(a) of the Code and exempt from
United States federal income tax under Section 501(a) of the Code (a "Qualified
Plan"). With respect to each Qualified Plan, a determination letter (or opinion
or notification letter, if applicable) has been received from the IRS that such
plan is qualified under Section 401(a) of the Code and exempt from federal
income tax under Section 501(a) of the Code. No Qualified Plan has been amended
since the date of the most recent such letter. No member of the Seller Group,
nor any fiduciary of any Qualified Plan, nor any agent of any of the foregoing,
has done anything that would adversely affect the qualified status of a
Qualified Plan or the qualified status of any related trust.
(e) No Defined Benefit Plans. No Seller Plan is a defined benefit plan
within the meaning of Section 3(35) of ERISA (a "Defined Benefit Plan"). No
Defined Benefit Plan sponsored or maintained by any member of the Seller Group
has been terminated or partially terminated after September 1, 1974, except as
set forth on Schedule 3.19. Each Defined Benefit Plan listed as terminated on
Schedule 3.19 has met the requirement for standard termination of
single-employer plans contained in Section 4041(b) of ERISA. During the
five-year period ending on the Closing Date, no member of the Seller Group has
transferred a Defined Benefit Plan to a corporation that was not, at the time of
transfer, related to the transferor in any manner described in Sections 414(b),
(c), (m) or (o) of the Code.
(f) Multiemployer Plans. Except as set forth on Schedule 3.19 hereto, no
Seller Plan is a multiemployer plan within the meaning of Section 3(37) or
Section 4001(a)(3) of ERISA (a "Multiemployer Plan"). No member of the Seller
Group has withdrawn from any Multiemployer Plan or incurred any withdrawal
Liability to or under any Multiemployer Plan. No Seller Plan covers any
employees of any member of the Seller Group in any foreign country or territory.
(g) Prohibited Transactions; Fiduciary Duties; Post-Retirement Benefits.
No prohibited transaction (within the meaning of Section 406 of ERISA and
Section 4975 of the Code) with respect to any Seller Plan exists or has occurred
that could subject any Seller to any Liability or Tax under Part 5 of Title I of
ERISA or Section 4975 of the Code. No
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member of the Seller Group, nor any administrator or fiduciary of any Seller
Plan, nor any agent of any of the foregoing, has engaged in any transaction or
acted or failed to act in a manner that will subject any Seller to any Liability
for a breach of fiduciary or other duty under ERISA or any other applicable Law.
With the exception of the requirements of Section 4980B of the Code, no
post-retirement benefits are provided under any Seller Plan that is a welfare
benefit plan as described in ERISA Section 3(1).
3.20. Subsidiaries and Investments. The Purchased Assets do not contain
any shares of capital stock of or other equity interest in any corporation,
partnership, joint venture or other entity.
3.21. Finders' Fees. No Seller nor any of its officers, directors or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby or by any Other Agreement.
3.22. Payments to Craig Zeltner. The rate of compensation to be paid to
Mr. Zeltner doing business as Cinema Services pursuant to Section 5.06 is no
greater than the lowest rate of compensation that the Sellers paid to Mr.
Zeltner during the twelve-month period ending on the Closing Date.
3.23. Disclosure. None of the representations or warranties of Sellers
contained herein and none of the information contained in the Schedules referred
to herein or the other information or documents furnished or to be furnished to
CCG or any of its representatives by any Seller expressly pursuant to the terms
of this Agreement is false or misleading in any material respect or omits to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As an inducement to Sellers to enter into this Agreement and consummate
the transactions contemplated hereby, the Purchasers, jointly and severally,
represent and warrant to Sellers as follows:
4.01. Organization. Each Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to own or lease its
properties, carry on its business, enter into this Agreement and the Other
Agreements to which it is or is to become a party and perform its obligations
hereunder and thereunder.
4.02. Authorization; Enforceability. This Agreement and each Other
Agreement to which each Purchaser is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of such
Purchaser, enforceable against it in accordance
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with their respective terms and each Other Agreement to which such Purchaser is
to become a party pursuant to the provisions hereof, when executed and delivered
by such Purchaser, will constitute the legal, valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with the terms
of such Other Agreement except as may be limited by applicable bankruptcy,
insolvency, moratorium, fraudulent transfer, preference and other laws and
equitable principles affecting the scope and enforcement to creditors' rights
generally, and are also limited by Sellers' implied covenants of good faith,
fair dealing and commercially reasonable conduct, and by the effects of judicial
discretion on the availability of remedies and realization of benefits under and
enforceability of this Agreement and the Other Agreements in all respects as
written. All actions contemplated by this Agreement have been duly and validly
authorized by all necessary proceedings by such Purchaser.
4.03. No Violation of Laws; Consents. Neither the execution and delivery
of this Agreement or any Other Agreement to which any Purchaser is or is to
become a party, the consummation of the transactions contemplated hereby or
thereby nor the compliance with or fulfillment of the terms, conditions or
provisions hereof or thereof by such Purchaser will: i) contravene any provision
of any Governing Document of such Purchaser, or ii) violate any Law or any
judgment or order of any Governmental Body to which such Purchaser is subject or
by which any of its assets may be bound or affected. Except as set forth on
Schedule 4.03 no consent, approval or authorization of, or registration or
filing with, any Person is required in connection with the execution and
delivery by such Purchaser of this Agreement or any of the Other Agreements to
which such Purchaser is or is to become a party pursuant to the provisions
hereof or the consummation by such Purchaser of the transactions contemplated
hereby or thereby.
4.04. No Pending Litigation or Proceedings. No Litigation is pending or,
to the knowledge of any Purchaser, threatened against or affecting any Purchaser
in connection with any of the transactions contemplated by this Agreement or any
Other Agreement to which any Purchaser is or is to become a party.
4.05. Finders' Fees. No Purchaser nor any of its officers, directors or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby.
ARTICLE V
CERTAIN COVENANTS
5.01. Conduct of Business Pending Closing. From and after the date
hereof and until the Closing Date or earlier termination hereof, unless the
Purchasers shall otherwise consent in writing, Sellers shall conduct their
affairs as follows:
(a) Ordinary Course; Compliance. The Business shall be conducted
only in the ordinary course and consistent with past practice. Sellers shall
professionally maintain
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the Purchased Assets and Assumed Liabilities in good condition and shall comply
in a timely fashion with the provisions of all Contracts and Permits and its
other agreements and commitments. Sellers shall preserve its Business
organization intact, keep available the services of its present employees and
preserve the goodwill of its suppliers, customers and others having business
relations with it. Sellers shall maintain in full force and effect their
policies of insurance, subject only to variations required by the ordinary
operations of the Business, or else shall obtain, prior to the lapse of any such
policy, substantially similar coverage with insurers of recognized standing.
(b) Transactions. No Seller shall: (i) transfer or dispose of any
asset except in the ordinary course of business; (ii) enter into any contract or
commitment the performance of which may extend beyond the Closing, except those
made in the ordinary course of business, the terms of which are consistent with
past practice; (iii) enter into any employment or consulting contract or
arrangement that is not terminable at will and without penalty or continuing
obligation; (iv) fail to pay any Liability or charge when due, other than
Liabilities contested in good faith by appropriate proceedings; or (v) take any
action or omit to take any action that will cause a breach or termination of any
Permit or Contract, other than termination by fulfillment of the terms
thereunder; or take any other actions that would cause the representations and
warranties in this Agreement not to be true in any material respect on the
Closing Date.
(c) Access, Information and Documents. Sellers shall give to
Purchasers and to Purchasers' employees and representatives (including
accountants, actuaries, attorneys, environmental consultants and engineers)
access during normal business hours to all of the properties, books, Tax
Returns, contracts, commitments, records, officers, personnel and accountants
(including independent public accountants and their workpapers concerning
Sellers) of Sellers and shall furnish to Purchasers all such documents and
copies of documents and all information with respect to the properties,
Liabilities and affairs of Sellers as Purchasers may reasonably request,
including but not limited to weekly reports of gross box office and concession
receipts, at the same time such reports are available to Sellers' management.
5.02. Publicity. Sellers and Purchasers shall not issue any press
release or otherwise make any announcements to the public or the employees of
Sellers with respect to this Agreement prior to the Closing Date without the
prior written consent of the other, except as required by Law.
5.03. Acquisition Proposals. No Seller shall (nor shall they permit any
of their affiliates to) directly or indirectly, solicit, initiate or encourage
any inquiries or the making of any proposals from, engage or participate in any
negotiations or discussions with, provide any confidential information or data
to, or enter into (or authorize) any agreement or agreement in principle with
any person or announce any intention to do any of the foregoing, with respect to
any offer or proposal to acquire all or any part of any Seller's assets,
properties, or Business whether by merger, purchase of capital stock or assets
or otherwise.
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5.04. Fulfillment of Agreements. Each party hereto shall use its best
efforts to cause all of those conditions to the obligations of the other under
Article VI that are not beyond its reasonable control to be satisfied on or
prior to the Closing and shall use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement. Without limiting the foregoing, Sellers shall, prior to Closing,
obtain the Consents identified in Schedule 3.03.
5.05. Certain Transitional Matters. Sellers shall cooperate with and
assist Purchasers and their authorized representatives in order to provide, to
the extent reasonably requested by any Purchaser, an efficient transfer of
control of the Purchased Assets and to avoid any undue interruption in the
activities and operations of the Business following the Closing Date.
5.06. Sellers' Employees. Purchasers shall have the right, but not the
obligation on or after the Closing Date to employ any or all of the employees of
Sellers.
5.07. Craig Zeltner. Purchasers shall continue to use the services of
Craig Zeltner doing business as Cinema Services as film buyer and booker for a
period of one year, at the following rates: New City ($200.00 per week), Allwood
($250.00 per week), and Washington ($150.00 per week), with a aggregate year-
end bonus for all three theaters of $1,500; provided, however, that the
agreement set forth in this Section 5.07 shall be enforceable solely by the
Sellers and shall not constitute an employment agreement as to Mr. Zeltner nor
grant to Mr. Zeltner any rights to enforce such provision or otherwise.
5.08. Covenant Against Competition and Disclosure. To accord to
Purchasers the full value of their purchase, no Seller shall, directly or
indirectly, (i) for a period of five years after the Closing Date, directly or
indirectly, engage or become interested in (as owner, stockholder, partner or
otherwise) the operation of any movie theater within a seven and one-half mile
radius of any Theater, or (ii) disclose to anyone, or use in competition with
any Purchaser, any information with respect to any confidential or secret aspect
of the operations of the Business. It is acknowledged that stockholders,
officers, and/or directors of the Sellers currently operate certain movie
theaters and nothing in subsection (ii) of the previous sentence shall prohibit
the Sellers from operating such theaters. Sellers acknowledge that the remedy at
law for breach of the provisions of this Section 5.08 will be inadequate and
that, in addition to any other remedy Purchasers may have, they will be entitled
to an injunction restraining any such breach or threatened breach, without any
bond or other security being required. If any court construes the covenant in
this Section 5.08 or any part thereof, to be unenforceable because of its
duration or the area covered thereby, the court shall have the power to reduce
the duration or area to the extent necessary so that such provision is
enforceable. Until the third anniversary of the Closing Date, Sellers shall not
directly or indirectly solicit or offer employment to any person who is then an
employee of any Purchaser or was an employee of any Purchaser at any time after
the Closing to engage
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in any business similar to or in competition with the business of any Seller as
it has been conducted prior to Closing.
5.09. Change in Name. As soon as shall be reasonably practicable
following the Closing Date, each Seller shall file with the appropriate
authorities such documents as may be required to (i) change such Seller's name
to another name bearing no similarity to such Seller's current name and (ii)
withdraw any other fictitious names used in the Business. It is acknowledged
that no trade names of the Sellers are currently registered.
5.10. Books and Records. Sellers shall not destroy or dispose of any
books, records, and files relating to the business, properties, assets or
operations of any Seller to the extent that they pertain to the operations of
any Seller prior to the Closing Date for a period of five years from the Closing
Date or for the applicable statute of limitations for any tax liability.
ARTICLE VI
CONDITIONS TO CLOSING; TERMINATION
6.01 Conditions Precedent to Obligation of Purchasers. The obligation of
Purchasers to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Purchasers at Purchasers' sole
option:
(a) Bringdown of Representations and Warranties; Covenants. Each
of the representations and warranties of Sellers contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date.
Sellers shall have performed in all respects all of the covenants and complied
with all of the provisions required by this Agreement to be performed or
complied with by them at or before the Closing.
(b) Litigation. No statute, regulation or order of any
Governmental Body shall be in effect that restrains or prohibits the
transactions contemplated hereby or that would limit or adversely affect
Purchasers' ownership of the Purchased Assets or assumption of the Assumed
Liabilities, and there shall not have been threatened, nor shall there be
pending, any action or proceeding challenging the lawfulness of or seeking to
prevent or delay any of the transactions contemplated by this Agreement or any
of the Other Agreements or seeking monetary or other relief by reason of the
consummation of any of such transactions.
(c) No Material Adverse Change. Between the date hereof and the
Closing Date, there shall have been no material adverse change, regardless of
insurance coverage therefor, in the Business or any of the assets, results of
operations, Liabilities, prospects or condition, financial or otherwise, of any
Seller.
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(d) Closing Certificate. Each Seller shall have delivered a
certificate, dated the Closing Date, in the form of Exhibit B hereto, certifying
to the fulfillment of the conditions set forth in subparagraphs (a), (b) and (c)
of this Section. Such certificate shall constitute a representation and warranty
of such Seller with regard to the matters therein for purposes of this
Agreement.
(e) Closing Documents. Purchasers shall have received the
documents referred to in Section 6.03(a). All agreements, certificates, opinions
and other documents delivered by Sellers to Purchasers hereunder shall be in
form and substance satisfactory to Purchasers.
(f) Documents Concerning Leasehold Interests. Purchasers shall
have received from each lessor of each leasehold estate included in the
Purchased Assets consents to assignment of leasehold interest, consents to
leasehold mortgage, and estoppel certificates, and from each existing mortgagee
with respect to Real Property all consents, nondisturbance agreements, and other
documents as shall be requested by Provident Bank with respect to Provident's
security interest in the leasehold mortgage, all in form and substance
satisfactory to Purchasers and Provident Bank.
(g) Consents. Sellers shall have received the consents, approvals
and actions of the Persons referred to in Schedule 3.03.
(h) Right of First Refusal. Each of John Nelson, Pamela Ferman
and Seth Ferman shall have entered into an agreement in the form attached as
Exhibit c hereto, with respect to the purchase of the Parsippany and Succasunna
Multiplex Theaters owned by John Nelson, Pamela Ferman and Seth Ferman, granting
a right of first refusal in favor of CCG, assignable by CCG to any wholly-owned
subsidiary now existing or created in the future, for a period of three years
after the Closing Date.
(i) Non-Competition Agreement. Each of John Nelson, Pamela Ferman
and Seth Ferman shall have entered into a Non-Competition Agreement in the form
attached as Exhibit D.
(j) Concessionaire Agreements. Each Seller shall have terminated,
on or prior to the Closing Date, any and all concessionaire or other agreements
between such Seller and Theater Confections, Inc. ("TCI"), and shall have
delivered to Purchasers a release granted by TCI to each respective Seller from
any liability under such concessionaire or other agreements.
(k) Payment of Obligations. Each Seller shall have paid any and
all amounts owed by such Seller to the Estate of David Sanders.
6.02. Conditions Precedent to Obligation of Sellers. The obligation of
Sellers to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at
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Closing of the following conditions, any one or more of which may be waived in
whole or in part by Sellers at Sellers' sole option:
(a) Bringdown of Representations and Warranties; Covenants. Each
of the representations and warranties of Purchasers contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date. Each
Purchaser shall have performed all of the covenants and complied in all respects
with all of the provisions required by this Agreement to be performed or
complied with by it at or before the Closing.
(b) Litigation. No statute, regulation or order of any
Governmental Body shall be in effect that restrains or prohibits the
transactions contemplated hereby, and there shall not have been threatened, nor
shall there be pending, any action or proceeding by or before any Governmental
Body challenging the lawfulness of or seeking to prevent or delay any of the
transactions contemplated by this Agreement or the Other Agreements or seeking
monetary or other relief by reason of the consummation of such transactions.
(c) Closing Certificate. Each Purchaser shall have delivered a
certificate, dated the Closing Date, in the form of Exhibit E, certifying to the
fulfillment of the conditions set forth in subparagraphs (a) and (b) of this
Section. Such certificate shall constitute a representation and warranty of such
Purchaser with regard to the matters therein for purposes of this Agreement.
(d) Closing Documents. Sellers shall have received the documents
referred to in Section 6.03(b). All agreements, certificates, opinions and other
documents delivered by Purchasers to Sellers hereunder shall be in form and
substance satisfactory to Sellers.
6.03. Deliveries and Proceedings at Closing.
(a) Deliveries by Sellers. Sellers shall deliver or cause to be
delivered to Purchasers at the Closing:
i) For each Seller, a general warranty bill of sale and
instrument of assignment to the Purchased Assets in a form acceptable to
Purchasers, duly executed by such Seller.
ii) Assignments of all transferable or assignable licenses,
Permits and warranties relating to the Purchased Assets and of any trademarks,
trade names, patents and other Intellectual Property, duly executed and in form
acceptable to Purchasers.
iii) Certificates of the appropriate public officials to the
effect that each Seller was a validly existing corporation in good standing in
its state of incorporation as of a date not more than 10 days prior to the
Closing Date.
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iv) Incumbency and specimen signature certificates dated the
Closing Date, signed by the officers of each Seller and certified by their
respective Secretaries.
v) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Seller as of a date not more than 10 days prior to the
Closing Date, certified by the Secretaries of State of their respective states
of incorporation and (B) the bylaws of each Seller as of the Closing Date,
certified by their respective Secretaries.
vi) Certificates of the respective Secretaries of Sellers (A)
setting forth resolutions of the Board of Directors of each Seller and, if
required by applicable law, the stockholders of each Seller authorizing the
execution and delivery of this Agreement and the performance by such Seller of
the transactions contemplated hereby, and (B) to the effect that the Governing
Documents of Seller delivered pursuant to Section 6.03(a)(v) were in effect at
the date of adoption of such resolutions, the date of execution of this
Agreement and the Closing Date.
vii) The opinion of Jack Wenarsky, legal counsel to Seller, in
substantially the form of Exhibit F.
viii) For each Seller, a completed New Theater Transition Form,
in the form attached hereto as Exhibit G.
ix) Such other agreements and documents as Purchasers may
reasonably request.
(b) Deliveries by Purchasers. Purchasers shall deliver or cause
to be delivered to Sellers at the Closing:
i) Delivery by the Escrow Agent of the Escrowed Funds and a wire
transfer of federal funds in accordance with Section 2.05 pursuant to complete
wire transfer instructions delivered by Sellers to Purchasers in writing at
least five days prior to Closing.
ii) Certificates of the appropriate public official to the effect
that each Purchaser was a validly existing corporation in its state of
incorporation as of a date not more than 10 days prior to the Closing Date.
iii) Incumbency and specimen signature certificates dated the
Closing Date signed by the officers of each Purchaser and certified by their
respective Secretaries.
iv) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Purchaser as of a date not more than 10 days prior to
the Closing Date, certified by the Secretary of State of their respective states
of incorporation and (B) the bylaws of each Purchaser as of the Closing Date,
certified by their respective Secretaries.
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v) Certificate of the respective Secretaries of the Purchasers
(A) setting forth resolutions of the Board of Directors of each Purchaser
authorizing the execution and delivery of this Agreement and the performance by
such Purchaser of the transactions contemplated hereby, certified by the
Secretary of such Purchaser and (B) to the effect that the Governing Documents
of Purchasers delivered pursuant to Section 6.03(b)(v) were in effect at the
date of adoption of such resolutions, the date of execution of this Agreement
and the Closing Date.
vi) The opinion of Kirkpatrick & Lockhart LLP, Purchasers' legal
counsel, in substantially the form of Exhibit H.
vii) Such other agreements and documents as Seller may reasonably
request.
6.04. Termination.
(a) Mutual Consent; Failure of Conditions. Except as
provided in Section 6.04(b), this Agreement may be terminated at any time prior
to Closing by: (i) mutual consent of Purchasers and Sellers; (ii) Purchasers, if
any of the conditions specified in Section 6.01 hereof shall not have been
fulfilled by July 31, 1996 and shall not have been waived by Purchasers; or
(iii) Sellers, if any of the conditions specified in Section 6.02 hereof shall
not have been fulfilled by July 31, 1996 and shall not have been waived by
Sellers.
(b) Liquidated Damages. In the event of termination of
this Agreement by Sellers pursuant to clause (iii) of 6.04(a), Sellers shall
receive upon demand, as liquidated damages for and in full settlement of all
claims by Sellers and Seller Indemnitees against Purchasers in connection with
this Agreement, the Escrowed Funds, the nature of this transaction being such as
will not permit any exact determination of the damage that may be suffered by
Sellers under such circumstances. In the event of termination of this Agreement
by Purchasers pursuant to clause (ii) of 6.04(a), Purchasers shall receive upon
demand, as liquidated damages for and in full settlement of all claims of
Purchasers and Purchaser Indemnitees against Sellers in connection with this
Agreement, the amount of $50,000 in immediately available funds, the nature of
this transaction being such as will not permit any exact determination of the
damage that may be suffered by Purchasers under such circumstances.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.01. Survival of Representations. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing, but all claims for damages made by virtue of such representations,
warranties and agreements shall be made under, and subject to the limitations
set forth in, this Article VII.
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7.02. Indemnification by Sellers. Sellers, jointly and severally shall
indemnify, defend, save and hold Purchasers and their officers, directors,
employees, agents and Affiliates (collectively, "Purchaser Indemnitees")
harmless from and against all demands, claims, allegations, assertions, actions
or causes of action, assessments, losses, damages, deficiencies, Liabilities,
costs and expenses (including reasonable legal fees, interest, penalties, and
all reasonable amounts paid in investigation, defense or settlement of any of
the foregoing) and whether or not any such demands, claims, allegations, etc.,
of third parties are meritorious (collectively, "Purchaser Damages") asserted
against, imposed upon, resulting to, required to be paid by, or incurred by any
Purchaser Indemnitees, directly or indirectly, in connection with, arising out
of, that could result in, or which would not have occurred but for i) a breach
of any representation or warranty made by any Seller in this Agreement, in any
certificate or document furnished pursuant hereto by Sellers or any Other
Agreement to which any Seller is or is to become a party, ii) a breach or
nonfulfillment of any covenant or agreement made by any Seller in or pursuant to
this Agreement and in any Other Agreement to which any Seller is or is to become
a party, and any iii) Retained Liability.
7.03. Indemnification by Purchasers. Purchasers shall indemnify, defend,
save and hold Sellers and their officers, directors, employees, Affiliates and
agents (collectively, "Seller Indemnitees") harmless from and against any and
all demands, claims, actions or causes of action, assessments, losses, damages,
deficiencies, Liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing) and whether or not any such demands,
claims, allegations, etc., of third parties are meritorious (collectively,
"Seller Damages") asserted against, imposed upon, resulting to, required to be
paid by, or incurred by any Seller Indemnitees, directly or indirectly, in
connection with, arising out of, that could result in, or which would not have
occurred but for i) a breach of any representation or warranty made by any
Purchaser in this Agreement or in any certificate or document furnished pursuant
hereto by any Purchaser or any Other Agreement to which any Purchaser is a
party, ii) a breach or nonfulfillment of any covenant or agreement made by any
Purchaser in or pursuant to this Agreement and in any Other Agreement to which
any Purchaser is a party, and iii) any Assumed Liability.
7.04. Limitations.
(a) Time Period. Sellers shall be obligated to indemnify
Purchaser Indemnitees and Purchasers shall be obligated to indemnify Seller
Indemnitees only for those Purchaser Damages or Seller Damages (as the case may
be) as to which any Purchaser or Seller has given the other written notice
thereof within one year after the Closing Date.
(b) Cap. Notwithstanding anything else herein to the contrary,
Sellers' obligation to indemnify Purchaser Indemnitees for any Purchaser Damages
shall not exceed $100,000 in the aggregate.
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(c) Basket. Except with regard to any Purchaser Damages in
connection with, arising out of, that could result in, or which would not have
occurred but for a breach of the representations and warranties set forth in
Section 3.08 hereof which Purchaser Damages shall not be subject to the
limitation set forth in this Section 7.04(c), Sellers shall not be obligated to
indemnify any Purchaser Indemnitee against any Purchaser Damages until the
aggregate amount of the Purchaser Damages thereunder exceeds $12,500 and then
only to the extent of such excess.
(d) No Shareholder Liability. The shareholders, officers,
directors, and/or employees of any Seller hereunder shall be under no personal
liability with respect to any of the provisions or representations in this
Agreement and if any such officers, directors, and/or employees is in breach or
in default with respect to its obligations or otherwise under this Agreement,
Purchasers shall look solely to (i) assets of the Sellers which said
corporations own at the time said claim is made and (ii) the assets subject to
the Indemnification Escrow Agreement for the satisfaction of such Purchasers'
remedies, and no property or assets of such shareholders, officers, directors,
and/or employees shall be subject to levy, execution, or other enforcement
procedures for such satisfaction. Furthermore, no shareholder, office, director
or employee of any Seller shall have any liability for any breach, action, or
inaction or other misrepresentation of any Seller under this Agreement.
(d) Fraud. The limitations set forth in Section 7.03 shall not
apply to Seller Damages or Purchaser Damages arising out of fraud.
7.05. Notice of Claims. If any Purchaser Indemnitee or Seller Indemnitee
(an "Indemnified Party") believes that it has suffered or incurred or will
suffer or incur any Purchaser Damages or Seller Damages, as the case may be
("Damages") for which it is entitled to indemnification under this Article VII,
such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this Section shall not affect any of such party's rights under this
Article VII or otherwise except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnified Party.
7.06. Third Party Claims. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to
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undertake, conduct and control the conduct and settlement of such action or
suit, the Indemnifying Party shall not thereby permit to exist any Encumbrance
upon any asset of the Indemnified Party; the Indemnifying Party shall not
consent to any settlement that does not include as an unconditional term thereof
the giving of a complete release from liability with respect to such action or
suit to the Indemnified Party; the Indemnifying Party shall permit the
Indemnified Party to participate in such conduct or settlement through counsel
chosen by the Indemnified Party; and the Indemnifying Party shall agree promptly
to reimburse the Indemnified Party for the full amount of any Damages including
fees and expenses of counsel for the Indemnified Party incurred after giving the
foregoing notice to the Indemnifying Party and prior to the assumption of the
conduct and control of such action or suit by the Indemnifying Party.
ARTICLE VIII
MISCELLANEOUS
8.01. Costs and Expenses. Purchasers and Sellers shall each pay its
respective expenses, brokers' fees and commissions, and Sellers shall pay all of
the pre-Closing expenses of Sellers incurred in connection with this Agreement
and the transactions contemplated hereby, including all accounting, legal and
appraisal fees and settlement charges. All transfer taxes incurred as a result
of the transfer of the Purchased Assets shall be paid by Sellers.
8.02. Further Assurances. Sellers shall, at any time and from time to
time on and after the Closing Date, upon request by Purchasers and without
further consideration, take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments, documents, transfers, conveyances and assurances as may be
required or desirable for the better conveying, transferring, assigning,
delivering, assuring and confirming the Purchased Assets to Purchasers.
8.03. Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made i) the second business day after the date of mailing, if
delivered by registered or certified mail, postage prepaid, ii) upon delivery,
if sent by hand delivery, iii) upon delivery, if sent by prepaid courier, with a
record of receipt, or iv) the next day after the date of dispatch, if sent by
cable, telegram, facsimile or telecopy (with a copy simultaneously sent by
registered or certified mail, postage prepaid, return receipt requested), to the
parties at the following addresses:
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(a) if to Purchasers, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
Attention: A. Dale Mayo, President
with a required copy to:
Warren H. Colodner, Esq.
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
45th Floor
New York, New York 10020
Telecopy: (212) 536-3901
(b) if to Seller, to:
John Nelson
93 Hope Road
Blairstown, New Jersey 07825
with a required copy to:
Jack Wenarsky, Esq.
225 Route 10
Succasunna, New Jersey 07876
Telecopy: (201) 927-5252
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
8.04. Offset; Assignment; Governing Law. Purchasers shall be entitled to
offset or recoup from any amounts due to Sellers from Purchasers hereunder or
under any Other Agreement against any obligation of Sellers to Purchasers
hereunder or under any Other Agreement. This Agreement and all the rights and
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective permitted successors and assigns. This Agreement and the
rights, interests and obligations hereunder may not be assigned by any party
hereto without the prior written consent of the other parties hereto, except
that Purchasers may make such assignments to any Affiliate of Purchasers
provided that Purchasers remains liable hereunder. This Agreement shall be
governed by and construed in accordance with the laws of the state of New Jersey
without regard to its conflict of law doctrines.
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8.05. Amendment and Waiver; Cumulative Effect. To be effective, any
amendment or waiver under this Agreement must be in writing and be signed by the
party against whom enforcement of the same is sought. Neither the failure of any
party hereto to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by any other party with its obligations
hereunder, nor any custom or practice of the parties at variance with the terms
hereof shall constitute a waiver by such party of its right to exercise any such
right, power or remedy or to demand such compliance. Except as provided in
Section 6.04, the rights and remedies of the parties hereto are cumulative and
not exclusive of the rights and remedies that they otherwise might have now or
hereafter, at law, in equity, by statute or otherwise.
8.06. Entire Agreement; No Third Party Beneficiaries. Except as set
forth in this Section 8.06, this Agreement and the Schedules and Exhibits set
forth all of the promises, covenants, agreements, conditions and undertakings
between the parties hereto with respect to the subject matter hereof, and
supersede all prior or contemporaneous agreements and understandings,
negotiations, inducements or conditions, express or implied, oral or written,
including the Letter of Intent dated May 16, 1996. The Escrow Agreement dated
May 16, 1996 between CCG, the Sellers, the other parties thereto and Jack
Wenarsky, Esquire as Escrow Agent shall remain in full force and effect and
shall not be superseded by this Agreement. This Agreement is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder, except the provisions of Sections 7.02 and 7.03 relating to Purchaser
Indemnitees and Seller Indemnitees.
8.07. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.08. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
-29-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CLEARVIEW CINEMA GROUP, INC.
By:______________________________
A. Dale Mayo
Title: President
CCC WASHINGTON CINEMA CORP.
By:______________________________
A. Dale Mayo
Title: President
CCC ALLWOOD CINEMA CORP.
By:______________________________
A. Dale Mayo
Title: President
CCC NEW CITY CINEMA CORP.
By:______________________________
A. Dale Mayo
Title: President
TOWNSHIP OF WASHINGTON THEATRE,
INC.
By:______________________________
John Nelson
Title: President
ALLWOOD CLIFTON CINEMA INC.
By:______________________________
John Nelson
Title: President
NEW CITY CINEMA, INC.
By:______________________________
John Nelson
Title: President
-30-
<PAGE>
SCHEDULES
Schedule 2.01(a) - Sales and Purchase of Assets
Schedule 2.04 - Allocation
Schedule 3.01 - Capitalization
Schedule 3.03 - Consents
Schedule 3.05 - Undisclosed Liabilities
Schedule 3.06 - No changes
Schedule 3.07 - Taxes
Schedule 3.10 - Description of Contracts
Schedule 3.11 - Permits
Schedule 3.12 - Description of Property
Schedule 3.13 - Environmental Matters
Schedule 3.16 - Union Agreement
Schedule 3.18 - Intellectual Property Rights
Schedule 3.19 - Benefit Plans; Seller Plans
Schedule 4.03 - Purchaser Consents
[Schedules are not included herewith, but will be provided
by the Company, upon request.]
-31-
<PAGE>
EXHIBITS
Exhibit A - Indemnification Escrow Agreement
Exhibit B - Seller Closing Certificate
Exhibit C - Right of First Refusal Agreement
Exhibit D - Non-Competition Agreement
Exhibit E - Purchaser Closing Certificate
Exhibit F - Opinion of Jack Wenarsky
Exhibit G - Transition Form
Exhibit H - Opinion of Kirkpatrick & Lockhart
[Exhibits are not included herewith, but will be provided
by the Company, upon request.]
Exhibit 10.44
INDEMNIFICATION ESCROW AGREEMENT
This Indemnification Escrow Agreement ("Escrow Agreement") is made and
entered into as of the 29th day of May, 1996 by and among Clearview Cinema
Group, Inc., CCC Washington Cinema Corp., CCC Allwood Cinema Corp., and CCC New
City Cinema Corp. (collectively, "CCG"), and Township of Washington Theatre,
Inc. ("Washington"), Allwood Clifton Cinema, Inc. ("Allwood"), and New City
Cinema, Inc. ("New City" and collectively with Washington, and Allwood, the
"Seller Group") and Jack Wenarsky as escrow agent (hereinafter referred to as
the "Escrow Agent").
CCG and the Seller Group have entered into an Asset Purchase Agreement
dated May 29, 1996 (the "Asset Purchase Agreement").
Pursuant to Section 2.06 of the Asset Purchase Agreement, CCG and the
Seller Group wish to establish an escrow account with a portion of the purchase
price to secure the obligations of the Sellers under Article VII of the Asset
Purchase Agreement.
CCG and the Seller Group desire to deposit with the Escrow Agent the funds
described herein to be distributed as set forth herein.
In consideration of the foregoing and the mutual covenants set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
Article I
Deliveries to the Escrow Agent.
1.1 Escrow Fund. At the Closing (as defined in the Asset Purchase
Agreement), CCG shall deposit with the Escrow Agent, the principal sum of
$100,000 (the "Principal Amount"). The Principal Amount and any interest thereon
are hereinafter collectively referred to as the "Escrow Fund". The Escrow Agent
shall place the Principal Amount in his trust account.
1.2 Notice of Claims. Subject to Sections 1.3 and 1.4 below, upon receipt
of notice from CCG (the "Notice") that any Purchaser Indemnitee (as defined in
the Asset Purchase Agreement) is entitled to a payment pursuant to Article VII
of the Agreement and the amount thereof, the Escrow Agent shall, at least 10
days but not more than 15 days following receipt of such notice, disburse to
such Purchaser Indemnitee an amount equal to the lesser of (i) the balance of
the Escrow Fund or (ii) the amount specified in the Notice. Any Notice shall
specify with reasonable detail the reasons why the requesting party is entitled
to the disbursement.
1.3 Notice of Dispute. Notwithstanding the foregoing, in the event that the
Seller Group objects to the disbursement of any portion of the Escrow Fund, they
shall so notify Escrow Agent not more than 9 days from the date of the Notice.
Any objection shall specify with
<PAGE>
reasonable detail the reasons why the objecting party is objecting to the
disbursement. Such a dispute shall be resolved in the manner set forth in
Section 1.4 below and Escrow Agent shall continue to hold the Escrow Fund until
it has received a nonappealable court order from a court of competent
jurisdiction directing the disposition of such property, or until it has
received appropriate written instructions signed by both CCG and by John Nelson
or such other person as shall have been designated by John Nelson.
1.4 Uncertainty. In the event that Escrow Agent, in good faith, shall be in
doubt as to what action it should take hereunder, Escrow Agent may, at its
option, refuse to comply with any claims or demands on it or refuse to take any
other action hereunder, so long as such disagreement continues or such doubt
exists; and in any such event, Escrow Agent shall not be or become liable in any
way or to any person for its failure or refusal to act, and Escrow Agent shall
be entitled to continue to so refrain from acting until it has received (a) a
nonappealable court order from a court of competent jurisdiction directing the
disposition of such property, or (b) appropriate written instructions signed
both by CCG and by John Nelson or such person as is designated by John Nelson.
1.5. Final Disbursement. On the first anniversary of the date hereof, the
Escrow Agent shall set aside and retain in escrow any amount specified in a
Notice theretofore received from CCG pursuant to Section 1.2 and not theretofore
disbursed or otherwise resolved and shall disburse the remainder of the Escrow
Fund, if any, to the Seller Group for distribution to the persons entitled
thereto in accordance with the Asset Purchase Agreement. Once the claim set
forth in any such Notice has been determined, the Escrow Agent shall distribute
the amount of such claim as finally determined or agreed to CCG and shall
distribute the remainder to the Seller Group as set forth in the preceding
sentence.
1.6. Time of Essence. The parties agree that time is of the essence with
respect to all deliveries referenced in this Article 1.
ARTICLE II
Delivery of Notices; Statements.
2.1 If CCG shall send any certificate, notice, request, demand and other
communication (each a "Certificate") to the Escrow Agent, CCG shall
simultaneously send such Certificate to the Seller Group by facsimile and
certified mail. If the Seller Group shall send a Certificate to the Escrow
Agent, the Seller Group shall simultaneously send such Certificate to CCG by
facsimile and certified mail.
2.2 All certificates, notices, requests, demands and other communications
hereunder or with respect hereto shall be in writing and shall be deemed to have
been duly given or made (i) upon the second business day after the date of
mailing, if delivered by certified mail, postage prepaid, (ii) upon delivery, if
sent by hand delivery, prepaid courier or overnight service (such as Federal
Express), with a record of receipt, or (iii) the next day after the date of
dispatch, if sent by cable, telegram, facsimile or telecopy (with a copy
simultaneously sent by registered or certified mail, postage prepaid, return
receipt requested), to the parties at the following addresses:
<PAGE>
(i) if to CCG, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
with a required copy to:
Warren H. Colodner, Esquire
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
New York, NY 10020
Telecopy: (212) 536-3901
(ii) if to the Seller Group, to:
John Nelson
93 Hope Road
Blairstown, NJ 07825
with a required copy to:
Jack Wenarsky, Esquire
225 Route 10
Succasunna, NJ 07876
Telecopy: (201) 927-5252
(iii) if to Escrow Agent, to:
Jack Wenarsky, Esquire
225 Route 10
Succasunna, NJ 07876
Telecopy: (201) 927-5252
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
ARTICLE III
General Provisions.
3.1 CCG and the Seller Group agree to indemnify Escrow Agent and hold him
harmless from any loss or liability, including reasonable attorneys' fees and
expenses, arising from
<PAGE>
his service as Escrow Agent hereunder and any actions taken pursuant hereto,
except for losses or liabilities arising from Escrow Agent's fraud, gross
negligence or willful misconduct.
The provisions of this Section 3.1 relating to indemnity of the Escrow Agent
shall survive the termination of this Escrow Agreement and the final
disbursement of the Escrow Fund.
3.2 In the absence of fraud on his part, Escrow Agent shall be entitled to
rely conclusively, as to the truth of the statements contained therein, upon any
certificate, notice, authorization or other document delivered to him hereunder
that he reasonably believes to be in conformity with the requirements of this
Escrow Agreement and to be genuine and to have been signed by any authorized
representative of CCG or the Seller Group (as the case may be) from time to
time, unless the Escrow Agent shall have received timely objection to such
certificate, notice, authorization or document pursuant to Section 1.3 hereof.
The Escrow Agent need not investigate any factual matters averred or stated in
any such certificate, notice, authorization or other document; provided,
however, that Escrow Agent shall examine each such document to determine whether
it conforms to the requirements of this Escrow Agreement.
3.3 The service of Jack Wenarsky as Escrow Agent under this Agreement shall
not disqualify Mr. Wenarsky from the representation the Seller Group in any
matter, including but not limited to, any dispute relating to this Escrow
Agreement.
3.4 This Escrow Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective successors. This Escrow Agreement
may not be assigned with the written consent of the parties hereto. This Escrow
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
3.5 This Escrow Agreement may not be revoked, rescinded or modified as to
any of its terms or conditions except upon consent in writing of all the parties
hereto.
3.6 This Escrow Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which shall together
constitute one and the same instrument.
WITNESS the due execution hereof the day and year first above written.
Clearview Cinema Group, Inc.
By:
---------------------------
A. Dale Mayo
President
<PAGE>
ACCEPTED AND AGREED
Township of Washington Theatre, Inc.
Allwood Clifton Cinema, Inc.
New City Cinema, Inc.
By:
----------------------------
John Nelson
President
Exhibit 10.45
AGREEMENT
This AGREEMENT (this "Agreement") is dated as of May ___, 1996, by
and among Clearview Cinema Group, Inc., a Delaware corporation ("CCG"), Roxbury
Cinema, Inc. ("Roxbury"), F&N Cinema, Inc. ("F&N") and John Nelson, Seth Ferman,
and Pamela Ferman (collectively, the "Stockholders")
The CCG and CCC Washington Cinema Corp. ("WCC"), CCC Allwood
Cinema Corp., ("ACC"), and CCC New City Cinema Corp., a Delaware corporation
("NCC," and collectively with CCG, WCC, ACC, and NCC, the "Purchasers") and
Township of Washington Theater, Inc. ("Washington"), Allwood Clifton Cinema,
Inc., ("Allwood"), and New City Cinema, Inc. ("New City," and collectively with
Washington and Allwood, the "Sellers") have entered into an Asset Purchase
Agreement dated as of the date hereof, pursuant to which the Purchasers have
agreed to purchase and the Sellers have agreed to sell substantially all of the
assets used by the Sellers in operating certain theaters, all as more fully set
forth in the Asset Purchase Agreement.
The Stockholders are all of the stockholders of Sellers.
The Stockholders own all of the shares of (i) Roxbury which
corporation owns and operates the Cinema Ten Succasunna theater (the "Succasunna
Theater") and (ii) F&N which corporation owns and operates the Parsippany Twelve
theater (the "Parsippany Theater" and together with the Succasunna Theater, the
"Retained Theaters"). The Stockholders together with Roxbury and F&N are
sometimes referred to herein collectively as the "Transferors", or individually
as a "Transferor".
The Asset Purchase Agreement requires as a condition to closing
thereunder that the Stockholders shall have entered into this Agreement granting
to CCG a right of first refusal to purchase the Retained Theaters.
In consideration of $200,000 paid to the Stockholders, the receipt
of which is hereby acknowledged, the parties, each intending to be legally bound
hereby, agree as set forth below:
1. Transfer Restriction. No Transferor shall sell, alienate or
otherwise transfer (collectively a "Transfer") nor permit any corporate
Transferor in which such Transferor holds any interest to Transfer any interest
in whole or any part in any
<PAGE>
Retained Theater, except in accordance with the terms of this Agreement;
provided, however, that any Transferor may Transfer his, her or its interest to
any other Transferor; and further provided that any Transferor may Transfer his
or her interest in the Retained Theaters by his or her will but only if, prior
to such Transfer, the beneficiary of such Transfer executes and delivers a
written agreement, in form and substance reasonably satisfactory to CCG,
agreeing to be bound by the terms of this Agreement; and further provided that
any Transferor may transfer up to five percent of the capital stock of such
Transferor to any employee or independent contractor of such Transferor but only
if, prior to such Transfer, the recipient of such Transfer executes and delivers
a written agreement, in form and substance reasonably satisfactory to CCG,
agreeeing to be bound by the terms of this Agreement.
2. Right of First Refusal; Notice. If any Transferor shall at any
time wish to sell, assign, transfer or otherwise dispose (each a "Transfer") of
all or any portion of one or both of the Retained Theaters or shall have
received an offer (an "Offer") soliciting such Transfer, such Transferor shall
promptly delivery written notice (the "Notice") of the terms of such Transfer,
together with a copy of the Offer, if any, to CCG. In the event that the Offer
encompasses other property in addition to the Retained Theaters, the Notice
shall be limited to the part of the Retained Theaters that is included in the
Offer, on such terms as apply to the Retained Theater(s) or that portion thereof
and at such price as shall be reasonably allocated to the Retained Theaters.
3. Exercise. Within the ten day period (the "Exercise Period")
commencing with the date of delivery of the Notice to CCG, CCG may notify the
Transferors in writing of its election (the "Exercise Election") to exercise the
right of first refusal and to purchase the interest in the Retained Theater(s)
on terms, conditions, limitations, and restrictions identical to those set forth
in the Notice. If CCG shall exercise its right of first refusal the Transferors
shall sell, grant, and convey, and CCG shall purchase such portion of the
Retained Theaters as is the subject of the Notice.
4. Access. During the Exercise Period, the Transferors shall
provide to CCG, and such employees, agents, and other representatives as CCG
shall designate, unobstructed access during normal working hours to all parts of
the Retained Theater(s) that is subject to the Offer for the purpose of
conducting due diligence. The Transferors shall provide to CCG such information
and assistance as shall reasonably be requested.
5. Procedure. (a) Immediately upon delivery of the Exercise
Election, CCG shall deposit with John Nelson, as agent for the Transferors (or
such other person as shall be identified
-2-
<PAGE>
to CCG in writing signed by each party (other than CCG) to this Agreement), a
cash amount (the "Initial Deposit") equal to 1% of the purchase price set forth
in the Notice.
(b) At the earlier of (i) thirty days thereafter or (ii) the
signing of definitive transaction documents as provided in section 5(c), CCG
shall deposit with such person as shall be named in a writing signed by all of
the Transferors, an additional amount (the "Deposit") equal to 9% of the
purchase price set forth in the Notice.
(c) the definitive deal documents shall provide terms (including
but not limited to purchase price and closing date) and conditions,
representations, warranties, and covenants, and provisions for indemnification
("Deal Terms") identical to those in the Offer to the extent present in the
Offer and for those Deal Terms not present in the Offer substantially similar to
those contained in the Asset Purchase Agreement dated as of May 29, 1996 among
Clearview Cinema Group, Inc., CCC Washington Cinema Corp., CCC Allwood Cinema
Corp., CCC New City Cinema Corp., Township of Washington Theater, Inc., Allwood
Clifton Cinema, Inc., and New City Cinema, Inc.
(d) The Inital Deposit and the Deposit shall be retained by the
Transferors only in the event that (i) CCG is unwilling or unable to close the
transactions described in the definitive acquisition agreements and (ii) it is
not the case that (A) such unwillingness or inability to close is caused by any
of the Transferors unwillingness or inability to close, (B) any of the Retained
Theaters landlords or existing mortgagees with regard to the fee interest, as
the case may be, have not provided timely consents to assignments of the real
property leases to the subsidiaries of CCG, timely consents to leasehold
mortgages in favor of CCG's lender, timely estoppel certificates, timely
non-disturbance agreements or any other document reasonably requested by CCG and
its lenders in connection with the assignment of such leases or such lender's
security interest in such leases (C) there has occurred a material adverse
change in any of the Retained Theater's business, financial condition or
prospects after the date of the latest financial statements provided to CCG
prior to the delivery by CCG of the Initial Deposit (D) any material or
information provided by the Transferors to CCG shall be or have been materially
incorrect or misleading or (E) any of the Transferors shall have breached in any
material respect any representation, warranty or covenants or conditions set
forth in the definitive acquisition agreements.
6. Sale to Other Persons. In the event that CCG does not deliver
written notice exercising its option within the Exercise Period, the Transferors
may Transfer the interest in the Retained Theaters only upon same terms as those
stated in the Notice to the entity set forth in the Notice; provided, however,
-3-
<PAGE>
that a difference between the purchase price set forth in the definitive
acquisition documents as executed and delivered by the Transferors and the
purchase price as set forth in the Notice that is less than 10% of the purchase
price shall not be considered a difference for the purpose of this Section 6.
7. Term. This Agreement shall terminate on the third anniversary
of the date hereof, unless such date shall fall within an Exercise Period
commenced by a Notice delivered to CCG in which case the term of this Agreement
shall be automatically extended until the termination of such Exercise Period.
8. Severability. If any term or other provision of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal or incapable
of being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
9. Specific Performance. The parties hereto acknowledge and agree
that this Agreement may be enforced in a court of competent jurisdiction by a
decree of specific performance. Such remedy shall, however, be cumulative and
not exclusive and shall be in addition to any remedies that the parties hereto
possess.
10. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon each party hereto, its heirs, legal
representatives, successors and assigns; provided, however, CCG may assign this
Agreement only to a wholly-owned subsidiary of CCG.
11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey (except the
conflict of law provisions thereof).
12. Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made i) the second business day after the date of mailing, if
delivered by registered or certified mail, postage prepaid, ii) upon delivery,
-4-
<PAGE>
if sent by hand delivery, iii) upon delivery, if sent by prepaid courier, with a
record of receipt, or the next day after the date of dispatch, if sent by cable,
telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested), to the parties at
the following addresses:
(a) if to CCG, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
Attention: A. Dale Mayo, President
with a required copy to:
Warren H. Colodner, Esq.
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
45th Floor
New York, New York 10020
Telecopy: (212) 536-3901
(b) if to any Transferor to:
John Nelson
93 Hope Road
Blairstown, New Jersey 07825
with a required copy to:
Jack Wenarsky, Esq.
225 Route 10
Succasunna, New Jersey 07876
Telecopy: (201) 927-5252
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
13. Modification; Waiver; Remedies Cumulative. To be effective,
any amendment or waiver under this Agreement must be in writing and be signed by
the party against whom enforcement of the same is sought. Neither the failure of
any party hereto to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by any other party with its obligations
hereunder, nor any custom or practice of the parties at variance with the terms
hereof shall constitute a waiver by such party of its right to exercise any such
right, power or remedy or to demand such compliance. The rights and remedies of
the parties hereto are cumulative and not exclusive of the rights
-5-
<PAGE>
and remedies that they otherwise might have now or hereafter, at law, in equity,
by statute or otherwise.
14. Headings. The headings of the various articles, sections and
other subdivisions hereof are for convenience of reference only and shall not
modify, define or limit any of the terms or provisions hereof.
15. Entire Agreement. This Agreement sets forth all of the
agreement between the parties hereto with respect to the subject matter hereof,
and supersede all prior or contemporaneous agreements and understandings,
negotiations, inducements or conditions, express or implied, oral or written.
This Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
CLEARVIEW CINEMA GROUP, INC.
By:______________________________
A. Dale Mayo
Title: President
ROXBURY CINEMA, INC.
By:______________________________
Name:
Title:
F&N CINEMA, INC.
By:______________________________
Name:
Title: President
---------------------------------
John Nelson
---------------------------------
Pamela Ferman
---------------------------------
Seth Ferman
Exhibit 10.46
NON-COMPETITION AGREEMENT
This AGREEMENT (this "Agreement") is dated as of May 29, 1996, by
and among Clearview Cinema Group, Inc., a Delaware corporation ("CCG "); CCC
Emerson Cinema Corp., a Delaware Corporation ("CCC Emerson " and together with
CCG, the Transferees"); and John Nelson, Pamela Ferman, and Seth Ferman (each, a
"Shareholder" and, collectively, the "Shareholders").
CCG and CCC Emerson are parties to an Agreement and Plan of
Reorganization (the "Emerson Agreement") dated as of the date hereof among
Clearview Cinema Group, Inc., CCC Emerson Cinema Corp., and Emerson Cinema, Inc.
(the "Transferor"), providing for the transfer to CCC Emerson of substantially
all of the assets of Transferor.
The Shareholders are all of the shareholders of Transferor.
This Agreement is the Agreement contemplated to be entered into
between the Shareholders and the Transferees pursuant to Section 6.01(h) of the
Emerson Agreement.
The parties, each intending to be legally bound hereby, agree as
set forth below:
1. To accord to Transferees the full value of their purchase, no
Shareholder shall, directly or indirectly, (i) for a period of five years after
the date hereof, directly or indirectly, engage or become interested in (as
owner, stockholder, partner or otherwise) the operation of any movie theater
within a seven and one-half mile radius of any Theater (as defined in the
Emerson Agreement), or (ii) disclose to anyone, or use in competition with any
Transferee, any information with respect to any confidential or secret aspect of
the operations of the Business; provided, however, that it is acknowledged that
stockholders, officers, and/or directors of the Transferor currently operate
certain movie theaters and nothing in subsection (ii) of the previous sentence
shall prohibit the such persons from operating such theaters in their present
locations.
2. Each Shareholder acknowledges that the remedy at law for breach
of the provisions of this Agreement will be inadequate and that, in addition to
any other remedy Transferees may have, they will be entitled to an injunction
restraining any such breach or threatened breach, without any bond or other
security being required.
<PAGE>
3. If any court construes the covenant in this Agreement or any
part thereof, to be unenforceable because of its duration or the area covered
thereby, the court shall have the power to reduce the duration or area to the
extent necessary so that such provision is enforceable.
4. Until the third anniversary of the date hereof, no Shareholder
shall directly or indirectly solicit or offer employment to any person who is
then an employee of any Transferee was an employee of any Transferee at any time
after the date hereof to engage in any business similar to or in competition
with the business of the Transferor (as defined in the Emerson Agreement) as it
has been conducted prior to the date hereof.
5. To be effective, any amendment or waiver under this Agreement
must be in writing and be signed by the party against whom enforcement of the
same is sought. Neither the failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or to insist upon compliance by
any other party with its obligations hereunder, nor any custom or practice of
the parties at variance with the terms hereof shall constitute a waiver by such
party of its right to exercise any such right, power or remedy or to demand such
compliance. The rights and remedies of the parties hereto are cumulative and not
exclusive of the rights and remedies that they otherwise might have now or
hereafter, at law, in equity, by statute or otherwise.
6. This Agreement sets forth all of the agreement between the
parties hereto with respect to the subject matter hereof, and supersede all
prior or contemporaneous agreements and understandings, negotiations,
inducements or conditions, express or implied, oral or written. This Agreement
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
7. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original but all of which together shall
be deemed to be one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
CLEARVIEW CINEMA GROUP, INC.
By: _____________________________
A. Dale Mayo,
President
CCC EMERSON CINEMA CORP.
By: _____________________________
A. Dale Mayo,
President
-----------------------------
John Nelson
-----------------------------
Pamela Ferman
-----------------------------
Seth Ferman
Exhibit 10.47
Asset Purchase Agreement
Dated as of December 13, 1996
Among
Magic Cinemas, L.L.C.
CCC Tenafly Cinema Corp.
CCC Bergenfield Cinema Corp.
CCC Closter Cinema Corp.
and
Clearview Cinema Group, Inc.
<PAGE>
ARTICLE I. DEFINITIONS; CONSTRUCTION....................................... 3
1.1. Definitions..................................................... 3
1.2. Construction.................................................... 8
ARTICLE II. THE TRANSACTION................................................ 8
2.1. Sale and Purchase of Assets..................................... 8
2.2. Owned Real Estate; Cash; Etc.................................... 10
2.3. Retained Assets................................................. 10
2.4. Assumption of Liabilities....................................... 10
2.5. Retained Liabilities............................................ 10
2.6. Purchase Price.................................................. 11
2.7. Closing......................................................... 11
2.8. Payment of Purchase Price....................................... 11
2.9. Allocation of Purchase Price.................................... 11
2.10. Title.......................................................... 12
2.11. Certain Consents............................................... 12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER...................... 12
3.1. Organization.................................................... 12
3.2. Authorization; Enforceability................................... 12
3.3. No Violation of Laws or Agreements; Consents.................... 12
3.4. Cinema Income Statements........................................ 13
3.5. No Changes...................................................... 13
3.6. Taxes........................................................... 13
3.7. Undisclosed Liabilities......................................... 14
3.8. Condition of Assets; Title; Business............................ 14
3.9. No Pending Litigation or Proceedings............................ 14
3.10. Contracts; Compliance.......................................... 14
3.11. Permits; Compliance with Law. Subject to Section 5.10......... 15
3.12. Real Estate.................................................... 15
3.13. Labor Relations................................................ 15
3.14. Insurance...................................................... 16
3.15. Intellectual Property Rights................................... 16
3.16. Employee Benefits.............................................. 16
3.17. Environmental Matters.......................................... 16
3.18. Finders' Fees.................................................. 17
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYERS....................... 17
4.1. Organization.................................................... 17
4.2. Authorization and Enforceability................................ 18
4.3. No Violation of Laws; Consents.................................. 18
4.4. No Pending Litigation or Proceedings............................ 18
4.5. Finders' Fees................................................... 18
4.6. CCG Financial Statements........................................ 19
4.7. Stock Ownership................................................. 19
ARTICLE V. CERTAIN COVENANTS............................................... 19
5.1. Conduct of Business Pending Closing............................. 19
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5.2. Fulfillment of Agreements....................................... 20
5.3. Employment, Severance and Termination Payments.................. 20
5.4. Seller's Employees.............................................. 20
5.5. Workers' Compensation and Disability Claims..................... 21
5.6. Covenant Not to Compete......................................... 21
5.7. Publicity....................................................... 21
5.8. Transitional Matters............................................ 21
5.9. Books and Records............................................... 22
5.10. Permits; N.J. ISRA............................................. 22
ARTICLE VI. CONDITIONS TO CLOSING; TERMINATION............................. 22
6.1. Conditions Precedent to Obligation of Buyers.................... 22
6.2. Conditions Precedent to Obligation of Seller.................... 24
6.3. Deliveries and Proceedings at Closing........................... 25
6.4. Termination..................................................... 26
ARTICLE VII. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.................. 27
7.1. Survival of Representations..................................... 27
7.2. Indemnification by Seller....................................... 28
7.3. Indemnification by Buyer........................................ 28
7.4. Waiver of Statute of Limitations................................ 28
7.5. Notice of Claims................................................ 28
7.6. Third Party Claims.............................................. 29
7.7. Limitation on Indemnification................................... 29
7.8. Payment......................................................... 29
7.9. Exclusive Remedies.............................................. 29
ARTICLE VIII. MISCELLANEOUS................................................ 29
8.1. Costs and Expenses.............................................. 29
8.2. Proration of Expenses........................................... 30
8.3. Bulk Sales...................................................... 30
8.4. Further Assurances.............................................. 30
8.5. Notices......................................................... 30
8.6. Currency........................................................ 31
8.7. Assignment; Governing Law....................................... 31
8.8. Amendment and Waiver; Cumulative Effect......................... 31
8.9. Entire Agreement; No Third Party Beneficiaries.................. 32
8.10. Third Party Beneficiary........................................ 32
8.11. Severability................................................... 32
8.12. Consent to Jurisdiction; Service of Process.................... 32
8.13. Access; Inspection; Reliance................................... 32
8.14. Counterparts................................................... 33
<PAGE>
Asset Purchase Agreement ("Agreement"), dated as of December
13, 1996, by and among Magic Cinemas, L.L.C., a New Jersey
limited liability company ("Seller"), CCC Tenafly Cinema
Corp., a Delaware corporation ("Tenafly Buyer"), CCC
Bergenfield Cinema Corp., a Delaware corporation
("Bergenfield Buyer"), CCC Closter Cinema Corp., a Delaware
corporation ("Closter Buyer"; Tenafly Buyer, Bergenfield
Buyer and Closter Buyer collectively referred to herein as
"Buyers"), and Clearview Cinema Group, Inc., a Delaware
corporation ("CCG").
Seller currently owns and operates a four screen movie cinema located at
No. 4 1/2 -5 West Railroad Road, Tenafly, New Jersey (the "Tenafly Cinema"), a
four screen movie cinema at Closter Plaza Shopping Center on VerValen Street,
Closter, New Jersey (the "Closter Cinema") and a five screen movie cinema at
58-66 South Washington Avenue Bergenfield, New Jersey (the "Bergenfield Cinema";
the Tenafly Cinema, the Closter Cinema and the Bergenfield Cinema collectively
referred to herein as the "Cinemas"). Each Buyer is a wholly owned subsidiary of
CCG.
Seller also owns the real estate on which the Tenafly Cinema and the
Bergenfield Cinema are located, as such real estate is more particularly
described on Schedule 3.12 hereto (such real estate, including fixtures,
referred to herein as the "Owned Real Estate") and leases the real estate on
which the Closter Cinema is located, as such real estate is more particularly
described on Schedule 3.12 hereto (the "Leased Real Estate").
Seller desires to sell and assign to Buyers, and Buyers desire to purchase
and assume from Seller, the Cinemas and the Leased Real Estate on the terms and
subject to the conditions set forth below. CCC B.C. Realty Corp., a Delaware
corporation and wholly owned subsidiary of CCG ("Realty Corp."), desires to
purchase from Seller the Owned Real Estate pursuant to a separate Real Estate
Purchase Agreement, the purchase of which is a condition to the parties'
obligation to close hereunder.
In consideration of the representations, warranties, covenants and
agreements contained herein, Seller, Buyers and CCG, each intending to be
legally bound hereby, agree as set forth below.
ARTICLE I.
DEFINITIONS; CONSTRUCTION
1.1. Definitions. As used in this Agreement, the following terms have the
meanings specified in this Section 1.1. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
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"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"Agreement" means this Asset Purchase Agreement, as it may be amended from
time to time.
"Assumed Liabilities" has the meaning given that term in Section 2.4.
"Assumption Agreements" has the meaning given that term in Section 2.4.
"Basket Amount" has the meaning given that term in Section 7.7.
"Benefit Plan" means any written and unwritten "employee benefit plans"
within the meaning of Section 3(3) of ERISA, and any other written and unwritten
profit sharing, pension, savings, deferred compensation, fringe benefit,
insurance, medical, medical reimbursement, life, disability, accident,
post-retirement health or welfare benefit, stock option, stock purchase, sick
pay, vacation, employment, severance, termination or other plan, agreement,
contract, policy, trust fund or arrangement, whether or not funded and whether
or not terminated, (i) maintained or sponsored by Seller, or (ii) with respect
to which Seller has or may have Liability or is obligated to contribute, or
(iii) that otherwise covers any of the current or former employees of Seller or
their beneficiaries, or (iv) as to which any such current or former employees of
Seller or their beneficiaries participated or were entitled to participate or
accrue or have accrued any rights thereunder.
"Bergenfield Buyer" has the meaning given that term in the heading of this
Agreement.
"Bergenfield Cinema" has the meaning given that term in the first
introductory paragraph of this Agreement.
"Business" means the operation of the Cinemas.
"Buyers" has the meaning given that term in the heading of this Agreement.
"Buyers Damages" has the meaning given that term in Section 7.2.
"Buyers Indemnitees" has the meaning given that term in Section 7.2.
"CCG" has the meaning given that term in the heading of this Agreement.
"CERCLIS" means the United States Comprehensive Environmental Response
Compensation Liability Information System List pursuant to Superfund.
"Cinemas" has the meaning given that term in the first introductory
paragraph of this Agreement.
"Closing" has the meaning given that term in Section 2.7.
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"Closing Date" has the meaning given that term in Section 2.7.
"Closter Buyer" has the meaning given that term in the heading of this
Agreement.
"Closter Cinema" has the meaning given that term in the first introductory
paragraph of this Agreement.
"Closter Lease" means the lease agreement identified on Schedule 3.10 for
the Leased Real Estate.
"Code" means the United States Internal Revenue Code of 1986, as amended,
and the applicable rulings and regulations thereunder.
"Contracts" has the meaning given that term in Section 3.10.
"Damages" means Buyers Damages or Seller Damages, as the case may be.
"DeLuca" has the meaning given that term in Section 5.4.
"Encumbrance" means any liability, debt, mortgage, deed of trust, pledge,
security interest, encumbrance, option, right of first refusal, agreement of
sale, adverse claim, easement, lien, assessment, restrictive covenant,
encroachment, burden or charge of any kind or nature whatsoever.
"Environmental Law" means any applicable Law relating to public health and
safety or protection of the environment, including common law nuisance, property
damage and similar common law theories.
"ERISA" means the United States Employee Retirement Income Security Act of
1974, as amended, and the applicable rulings and regulations thereunder.
"GAAP" means United States generally accepted accounting principles as they
would be applied to the Cinemas.
"Governing Documents" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter documents or
organization or governing documents or instruments of such Person.
"Governmental Body" means any court, government (federal, state, local or
foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality.
"Income Statements" has the meaning given that term in Section 3.4.
"Indemnified Party" has the meaning given that term in Section 7.5.
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"Indemnifying Party" has the meaning given that term in Section 7.5.
"Intellectual Property Rights" means trademark and service mark rights,
applications and registrations, trade names, fictitious names, service marks,
logos and brand names, copyrights, copyright applications, letters patent,
patent applications and licenses of any of the foregoing, improvements,
blueprints, specifications, drawings, designs and other intellectual property
and proprietary rights.
"In-Touch Agreement" means the Software Licensing Agreement dated July 1,
1996 between In-Touch Technologies, Ltd., a New York corporation, and Seller.
"IRS" means the United States Internal Revenue Service.
"Law" means any applicable federal, state, municipal, local or foreign
statute, law, ordinance, rule, regulation, judgment or order of any kind or
nature whatsoever including any public policy, judgment or order of any
Governmental Body or principle of common law.
"Leased Real Estate" has the meaning given that term in the second
introductory paragraph of this Agreement.
"Letter of Credit" means the letter of credit in the amount of $4.4 million
issued by The Provident Bank for the benefit of Seller to secure the Secured
Note in the form attached as Exhibit A.
"Liabilities" with respect to any Person, means all debts, liabilities and
obligations of such Person of any nature or kind whatsoever, whether or not due
or to become due, accrued, fixed, absolute, matured, determined, determinable or
contingent and whether or not incurred directly by such Person or by any
predecessor of such Person, and whether or not arising out of any act, omission,
transaction, circumstance, sale of goods or service or otherwise.
"Litigation" has the meaning given that term in Section 3.9.
"Other Agreements" means the Subordinated Note, the Secured Note, the Real
Estate Purchase Agreement, the Assumption Agreements and the other agreements
and instruments of title, assignment or assumption hereunder.
"Owned Real Estate" has the meaning given that term in the second
introductory paragraph of this Agreement.
"Permits" has the meaning given that term in Section 3.11.
"Permitted Encumbrances" means liens for current taxes not yet due, and
with respect to the Real Estate, (i) easements, covenants or rights-of way that
do not or will not either individually or in the aggregate adversely affect the
value of the property encumbered or prohibit or interfere with the operations of
the Business; (ii) zoning restrictions; and (iii) other encumbrances or
restrictions of record identified on Schedule 1.1P.
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"Person" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, a Governmental Body and any
other legal entity.
"Purchase Price" has the meaning given that term in Section 2.6.
"Purchased Assets" has the meaning given that term in Section 2.1(d).
"Real Estate" means all Owned Real Estate and all Leased Real Estate,
collectively.
"Real Estate Purchase Agreement" means the Real Estate Purchase Agreement,
a copy of which is attached hereto as Exhibit B, governing the purchase by
Realty Corp. of the Owned Real Estate for $2 million.
"Realty Corp." has the meaning given that term in the third introductory
paragraph of this Agreement.
"Regulated Material" means any hazardous substance as defined by any
Environmental Law and any other material regulated by any applicable
Environmental Law, including petroleum, petroleum-related material, crude oil or
any fraction thereof, PCBs and friable asbestos.
"Related Party" means (i) Seller, (ii) any Affiliate of Seller, (iii) any
officer or director of any Person identified in clauses (i) or (ii) preceding,
and (iv) any spouse, sibling, ancestor or lineal descendant of any natural
Person identified in any one of the preceding clauses.
"Retained Assets" has the meaning given that term in Section 2.3.
"Retained Liabilities" has the meaning given that term in Section 2.4.
"Secured Note" means the $4.4 million Secured Promissory Note made by
Buyers to the order of Seller in the form attached as Exhibit C.
"Security Deposits" means the security deposits under the Tenant Leases.
"Seller" has the meaning given that term in the heading of this Agreement.
"Seller's Predecessor" means any predecessor in interest to Seller,
including B.C. Entertainment, L.P., a New Jersey limited partnership, whether by
merger, combination, reorganization or otherwise, from and after October 1,
1993.
"Seller Damages" has the meaning given that term in Section 7.3.
"Seller Group" means Seller and any corporation that may be aggregated with
Seller under Sections 414(b), (c), (m) or (o) of the Code.
"Seller Indemnitees" has the meaning given that term in Section 7.3.
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"Subordinated Note" means CCG's 12% Senior Subordinated Promissory Note
payable to Seller in the principal amount of $600,000 in the form attached
hereto as Exhibit D.
"Superfund" means the United States Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as
amended.
"Tax" means any domestic or foreign federal, state, county or local tax,
levy, impost or other charge of any kind whatsoever, including any interest or
penalty thereon or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
"Tenafly Buyer" has the meaning given that term in the heading of this
Agreement.
"Tenafly Cinema" has the meaning given that term in the first introductory
paragraph of this Agreement.
"Tenant Leases" means the leases identified under paragraph Nos. 3 and 4 of
Schedule 3.10.
1.2. Construction. As used herein, unless the context otherwise requires:
(i) references to "Article" or "Section" are to an article or section hereof;
(ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits and
Schedules attached hereto and are incorporated herein by reference and made a
part hereof; (iii) "include", "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
ARTICLE II.
THE TRANSACTION
2.1. Sale and Purchase of Assets. Except as otherwise provided in Sections
2.2 and 2.3:
(a) Tenafly Cinema Purchase. At the Closing, Seller shall sell and transfer
to Tenafly Buyer, and Tenafly Buyer shall purchase from Seller, all of Seller's
properties and goodwill and tangible assets of every kind, nature and
description existing on the Closing Date located at the Tenafly Cinema, whether
personal, in electronic form or otherwise, and whether or not any of such assets
have any value for accounting purposes or are carried or reflected on or
specifically referred to in its books or financial statements, free and clear of
all Encumbrances (collectively, the "Tenafly Purchased Assets").
(b) Bergenfield Cinema Purchase. At the Closing, Seller shall sell and
transfer to Bergenfield Buyer, and Bergenfield Buyer shall purchase from Seller,
all of Seller's properties
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and goodwill and tangible assets of every kind, nature and description existing
on the Closing Date located at the Bergenfield Cinema, whether personal, in
electronic form or otherwise, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements, free and clear of all
Encumbrances (collectively, the "Bergenfield Purchased Assets").
(c) Closter Cinema Purchase. At the Closing, Seller shall sell and transfer
to Closter Buyer, and Closter Buyer shall purchase from Seller, all of Seller's
properties and goodwill and tangible assets of every kind, nature and
description existing on the Closing Date located at the Closter Cinema, whether
personal, in electronic form or otherwise, and whether or not any of such assets
have any value for accounting purposes or are carried or reflected on or
specifically referred to in its books or financial statements, free and clear of
all Encumbrances (collectively, the "Closter Purchased Assets").
(d) Purchased Assets. Without limiting the foregoing, the Tenafly Purchased
Assets, the Bergenfield Purchased Assets and the Closter Purchased Assets
(collectively, the "Purchased Assets") shall include the following:
(i) With respect to the Closter Purchased Assets, all of Seller's
interest in the Leased Real Estate, including the Closter Lease, and, with
respect to the Tenafly Purchased Assets, all of Seller's interest in the
two Tenant Leases identified under paragraph No. 3 of Schedule 3.10 and
with respect to the Bergenfield Purchased Assets, all of Seller's interest
in the five Tenant Leases identified under paragraph No. 4 of Schedule
3.10;
(ii) All of Seller's tangible assets, including office furniture,
office equipment and supplies, computer hardware and software, projectors,
projector bulbs, ticketing machines, leasehold improvements on or related
to the Real Estate or related to the Business;
(iii) All of Seller's books, records, manuals, documents, books of
account, correspondence, sales reports, literature, brochures, advertising
material and the like related to the Business actually located on the Real
Estate on the Closing Date, specifically excluding all of such items not
located on the Real Estate as of the Closing Date;
(iv) All of Seller's inventory and supplies, including concession
products, candy items and paper goods for the Business;
(v) All of Seller's rights under leases for personal property, if any;
(vi) All of Seller's rights under the Permits and In-Touch Agreement;
(vii) All of Seller's goodwill and rights in and to the name "Tenafly
Cinema", "Bergenfield Cinema" and "Closter Cinema";
(viii) Seller's rights to the telephone numbers for each Cinema
location; and
(ix) The goodwill of the Business.
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2.2. Owned Real Estate; Cash; Etc. Notwithstanding the foregoing, the
Purchased Assets shall not include the Owned Real Estate. Seller and Buyers
acknowledge that the Owned Real Estate shall be transferred to Realty Corp. on
the Closing Date pursuant to the Real Estate Purchase Agreement. Each Buyer
shall purchase petty cash on hand at the Cinemas at the close of business on the
date immediately preceding the Closing Date, the purchase price of cash to be
face value, subject to a physical count of such cash by Buyers and Seller. At
Closing, Seller shall take all steps necessary to transfer to the Tenafly Buyer
and the Bergenfield Buyer, as the case may be, the Security Deposits for no
additional consideration. If the use by customers of the Cinemas of pre-sold
tickets sold by Seller shall exceed $100 in the aggregate, Seller shall promptly
pay to Buyers an amount equal to such use in excess of $100.
2.3. Retained Assets. Except for the Purchased Assets, Buyers are not
purchasing and Seller is not selling any of Seller's other assets, whether
tangible or intangible, real, personal or mixed, including without limitation
the name "Magic Cinemas", the right to use the name "Magic Cinemas" or any
variant or derivative of such name and all of Seller's other assets not located
at the Cinemas (collectively, the "Retained Assets"):
2.4. Assumption of Liabilities. At the Closing, each Buyer shall pursuant
to an Assumption Agreement substantially in the form of Exhibit E (the
"Assumption Agreements"), assume and agree to perform, pay or discharge, when
due, to the extent not theretofore performed, paid or discharged, those
obligations specified pursuant to the express terms of the Contracts, other than
for breach or nonperformance thereof, existing on the Closing Date with respect
to the applicable Cinema and only such obligations (collectively, the "Assumed
Liabilities").
2.5. Retained Liabilities. Except for the Assumed Liabilities, Buyers do
not hereby and shall not assume or in any way undertake to pay, perform, satisfy
or discharge any other Liability of Seller, whether existing on, before or after
the Closing Date or arising out of any transactions entered into, or any state
of facts existing on, prior to or after the Closing Date (the "Retained
Liabilities"), and Seller agrees to pay and satisfy when due all Retained
Liabilities. Without limiting the foregoing, except for the Assumed Liabilities,
the term "Retained Liabilities" shall include Liabilities:
(i) to any Related Party;
(ii) for or under and Benefit Plan;
(iii) for any Taxes, whether or not by reason of, or in connection
with, the transactions contemplated by this Agreement;
(iv) with respect to Seller's administrative and corporate operations;
and
(v) to any film distributor.
2.6. Purchase Price. The aggregate purchase price for all of the Purchased
Assets shall be $3 million, plus (i) the assumption of the Assumed Liabilities
and (ii) amounts payable
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for the inventory, as provided in this Section 2.6 below, and petty cash, as
provided in Section 2.2 (the "Purchase Price"). At the close of business on the
last business day prior to the Closing Date, Seller and Buyers shall take a
physical count of Seller's inventory being sold by Seller to Buyers under this
Agreement. Seller's inventory shall include concession products, candy items,
paper goods and other similar items, but shall not include projector bulbs which
shall be deemed to be equipment for purposes of this Agreement. Inventory shall
be valued at Seller's cost, determined on a first-in-first-out basis. Buyers
shall pay Seller for all inventory at the Closing, provided that such
inventories do not exceed amounts that would be expected as customary in the
ordinary course of business.
2.7. Closing. The consummation of the purchase and sale of the Purchased
Assets, the assumption of the Assumed Liabilities, and the consummation of the
other transactions contemplated hereby (the "Closing") shall take place at 11:00
a.m., local time, on December 13, 1996 at the offices of Orloff, Lowenbach,
Stifelman & Siegel, P.A., 101 Eisenhower Parkway, Roseland, NJ 07068-1082 or at
such other time, date or place as the parties agree (the "Closing Date").
Closing shall be effective at 12:01 a.m. on the Closing Date.
2.8. Payment of Purchase Price. At Closing, the Purchase Price shall be
paid by Buyers and CCG to Seller as follows:
(i) by delivery of the Secured Note and the Letter of Credit;
(ii) by Buyers' assumption of the Assumed Liabilities pursuant to the
Assumption Agreements; and
(iii) by delivery of the Subordinated Note.
Buyers acknowledge, agree and intend that the Secured Note is and be secured by
the Letter of Credit. Seller and Buyers acknowledge and agree that (A)
$1,850,000 of the principal amount of the Secured Note is allocable to the
purchase price for the Owned Real Estate pursuant to the Real Estate Purchase
Agreement, and Realty Corp. is a maker of the Secured Note for that purpose, (B)
the remainder of the principal amount of the Secured Note, $2,550,000, is
allocable to the Purchase Price for the Purchased Assets hereunder, and (C) CCG
is delivering the Subordinated Note for the remainder of the purchase price for
the Owned Real Estate pursuant to the Real Estate Purchase Agreement, $150,000,
and for the remainder of the Purchase Price for the Purchased Assets hereunder,
$450,000.
2.9. Allocation of Purchase Price. The Purchase Price shall be allocated
among the Buyers as follows: $1 million from Tenafly Buyer for the Tenafly
Purchased Assets, $1 million from Bergenfield Buyer for the Bergenfield
Purchased Assets and $1 million from Closter Buyer for the Closter Purchased
Assets, plus any Assumed Liabilities allocable to each Buyer. Such Purchase
Price allocation shall be further allocated among the respective Tenafly,
Closter and Bergenfield Purchased Assets as follows: $223,000 shall be allocated
to furniture and fixtures for the Tenafly Cinema, $157,000 shall be allocated to
furniture and fixtures for the Bergenfield Cinema, $152,000 shall be allocated
to furniture and fixtures for the Closter Cinema, and the remainder of the
Purchase Price thereof being allocated to other respective Tenafly, Closter and
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Bergenfield Purchased Assets (other than inventory which will be allocated in
accordance with Section 2.6) and goodwill. Buyers and Seller shall report the
federal, state and local income and other tax consequences of the purchase and
sale contemplated hereby in a manner consistent with such allocation and shall
not take any position inconsistent therewith upon examination of any Tax Return,
in any refund claim, in any litigation, or otherwise.
2.10. Title. Title to all Purchased Assets shall pass from Seller to Buyers
at Closing, subject to the terms and conditions of this Agreement. Buyers assume
no risk of loss to the Purchased Assets prior to Closing.
2.11. Certain Consents. Nothing in this Agreement shall be construed as an
attempt to assign any Contract or Permit included in the Purchased Assets which
is by its terms or in law nonassignable without the consent of the other party
or parties thereto, unless such consent shall have been given, or as to which
all the remedies for the enforcement thereof enjoyed by Seller would not, as a
matter of law, pass to Buyers as an incident of the assignments provided for by
this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyers and CCG to enter into this Agreement and
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyers and CCG as follows:
3.1. Organization. Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of New Jersey,
and has the power and authority to own or lease its properties, carry on the
Business as now conducted, enter into this Agreement and the Other Agreements to
which it is or is to become a party and perform its obligations hereunder and
thereunder.
3.2. Authorization; Enforceability. This Agreement and each Other Agreement
to which Seller is a party have been duly executed and delivered by and
constitute the legal, valid and binding obligations of Seller, enforceable
against it in accordance with their respective terms. Each Other Agreement to
which Seller is to become a party pursuant to the provisions hereof, when
executed and delivered by Seller, will constitute the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with the terms of
such Other Agreement. All actions contemplated by this Section have been duly
and validly authorized by all necessary proceedings by Seller.
3.3. No Violation of Laws or Agreements; Consents. Neither the execution
and delivery of this Agreement or any Other Agreement to which Seller is or is
to become a party, the consummation of the transactions contemplated hereby or
thereby nor the compliance with or fulfillment of the terms, conditions or
provisions hereof or thereof by Seller will: (i) contravene any provision of any
Governing Document of Seller, (ii) conflict with, result in a breach of,
constitute a default or an event of default (or an event that might, with the
passage of time or the giving of notice or both, constitute a default or event
of default) under any of the terms of, result in the termination of, result in
the loss of any right under, or give to any other Person the right to
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cause such a termination of or loss under, any Purchased Asset or any other
material contract, agreement or instrument to which Seller is a party or by
which any of its assets may be bound or affected, (iii) result in the creation,
maturation or acceleration of any Assumed Liability or any other Liability of
Seller (or give to any other Person the right to cause such a creation,
maturation or acceleration), (iv) violate any Law or violate any judgment or
order of any Governmental Body to which Seller is subject or by which any of the
Purchased Assets or any of its other assets may be bound or affected, or (v)
result in the creation or imposition of any Encumbrance upon any of the
Purchased Assets or give to any other Person any interest or right therein.
Except for the consent of the landlord under the Closter Lease, Valley National
Bank and Intouch Technologies (each of which consent shall be obtained prior to
Closing), no consent, approval or authorization of, or registration or filing
with, any Person is required in connection with the execution and delivery by
Seller of this Agreement or any of the Other Agreements to which it is or is to
become a party pursuant to the provisions hereof or the consummation by Seller
of the transactions contemplated hereby or thereby.
3.4. Cinema Income Statements. Attached hereto as Exhibit F are the income
statements for the Cinemas for the eleven month period ended November 30, 1996
(the "Income Statements"). Except for the failure to reflect allocated corporate
overhead and normal year-end adjustments, the Income Statements (i) have been
prepared in accordance with GAAP on a consistent basis, and (iii) fairly present
the results of operation of the Cinemas for the eleven month period then ended
in accordance with GAAP. Seller has no money due and owing to any film
distributor in connection with the Cinemas except for money owing in the normal
course of business for which an amount is not ascertainable to pay or which is
not due prior to Closing. The aggregate gross box office revenues for the
Cinemas for calendar year 1995 was $1,772,745 and for the period from January 1,
1996 through November 30, 1996 was $1,701,656. The aggregate gross concession
revenues for the Cinemas for calendar year 1995 was $504,905 and for the period
from January 1, 1996 through November 30, 1996 was $508,683.
3.5. No Changes. Since November 30, 1996, Seller has conducted the Business
only in the ordinary course. Without limiting the generality of the foregoing
sentence, since November 30, 1996, there has not been any: (i) material adverse
change in the Purchased Assets, Assumed Liabilities, Real Estate; (ii) damage or
destruction to any Purchased Asset or Real Estate, whether or not covered by
insurance; (iii) strike or other labor trouble at the Cinemas; (iv) increase in
the salary, wage or bonus of any employee of the Cinemas; or (v) agreement or
commitment to do any of the foregoing. Since November 25, 1996, Seller has not
made any material changes, substitutions or replacements to the equipment,
furniture or fixtures at the Cinemas.
3.6. Taxes. Seller, its Affiliates and Seller's Predecessor, have filed or
caused to be filed on a timely basis, or will file or cause to be filed on a
timely basis, all Tax Returns that are required to be filed by it prior to or on
the Closing Date, pursuant to the Law of each governmental authority with taxing
power over it. All such Tax Returns were or will be, as the case may be, correct
and complete. Seller and Seller's Predecessor has paid or will pay all Taxes
that have or will become due as shown on such Tax Returns or pursuant to any
assessment received as an adjustment to such Tax Returns. Seller and Seller's
Predecessor have withheld
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and paid all Taxes required to have been withheld in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party.
3.7. Undisclosed Liabilities. Except for the Assumed Liabilities, Seller
has no, and after Closing shall have no, Liabilities of any kind or nature
whatsoever that would attach to the Purchased Assets or for which any Buyer or
CCG may become liable.
3.8. Condition of Assets; Title; Business. Seller has good, marketable and
exclusive title to all of the Purchased Assets, except that Seller does not make
any representation as to the title with respect to the names "Tenafly Cinema",
"Bergenfield Cinema" or "Closter Cinema". The tangible Purchased Assets are in
operating condition suitable for the purposes for which they are used in the
Business. A new roof on the Closter Cinema was installed within the two year
period prior to the date hereof. A new roof on the Tenafly Cinema was installed
within the one year period prior to the date hereof. A new roof on one half of
the Bergenfield Cinema was installed within the one year period prior to the
date hereof, and a new roof on the remaining portion of the Bergenfield Cinema
is currently being installed. The warranties for the foregoing mentioned roofs
may not be included in the Purchased Assets. None of the Purchased Assets is
subject to any Encumbrance. Schedule 3.8 identifies any property located on the
Real Estate (other than on the portion of the Real Estate subject to the Tenant
Leases) that is not owned by Seller. The Purchased Assets do not contain any
shares of capital stock of or other equity interest in any Person. On the
Closing Date, the Purchased Assets will include (i) one functioning xenon
projector bulb for each auditorium in each Cinema, and (ii) one new, unused,
spare xenon projector bulb for each type of projector at each Cinema location.
3.9. No Pending Litigation or Proceedings. No action, suit, investigation,
claim or proceeding of any nature or kind whatsoever, whether civil, criminal or
administrative, by or before any Governmental Body or arbitrator ("Litigation")
is pending or, to the knowledge of Seller, threatened against or affecting
Seller, the Business, any of the Purchased Assets, the Assumed Liabilities, the
Real Estate, or any of the transactions contemplated by this Agreement or any
Other Agreement except for claims for personal injury and workers compensation.
There is presently no outstanding judgment, decree or order of any Governmental
Body against or affecting Seller, the Business, any of the Purchased Assets, the
Assumed Liabilities, the Real Estate, or any of the transactions contemplated by
this Agreement or any Other Agreement. Seller does not have pending any
Litigation against any third party related to the Business.
3.10. Contracts; Compliance. Disclosed on Schedule 3.10 is a list of each
written contract, lease or other agreement, that affects or is used in the
Business or the Real Estate (collectively, the "Contracts"). Each Contract is a
legal, valid and binding obligation of Seller and is in full force and effect.
Except as disclosed on Schedule 3.10, Seller and each other party to each
Contract has performed all obligations (but with respect to the Tenant Leases,
all material obligations) required to be performed by it thereunder and is not
in breach or default, and is not alleged to be in breach or default, in any
respect thereunder, and, to Seller's knowledge, no event has occurred and no
condition or state of facts exists (or would exist upon the giving of notice or
the lapse of time or both) that would become or cause a breach, default or event
of default thereunder, would give to any Person the right to cause such a
termination or would cause an
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acceleration of any obligation thereunder. Seller is not currently renegotiating
any Contract nor has Seller received any notice of non-renewal or price increase
with respect to any Contract.
3.11. Permits; Compliance with Law. Subject to Section 5.10, Seller holds
and the Purchased Assets include to the extent assignable all health department
and certificates of occupancy required under any applicable Law in connection
with the operation of the Business and use and occupancy of the Real Estate
("Permits"). Seller has received no notice of any violation of Law which has not
been remedied or rectified.
3.12. Real Estate. Schedule 3.12 discloses and summarizes all Owned Real
Estate and all Leased Real Estate. Seller has good and marketable fee simple
title to all Owned Real Estate shown as owned by it on Schedule 3.12, free and
clear of all Encumbrances other than Permitted Encumbrances. Seller has the
right to quiet enjoyment of all Leased Real Estate, including all renewal
rights, of the lease or similar agreement relating thereto. Copies of all title
insurance policies written in favor of Seller and all surveys relating to the
Real Estate owned by Seller have been delivered to Buyers. Seller has not
received any written or oral notice of assessments for public improvements
against any Real Estate or any written or oral notice or order by any
Governmental Body, any insurance company that has issued a policy with respect
to any of such properties or any board of fire underwriters or other body
exercising similar functions that relates to violations of building, safety or
fire ordinances or regulations, claims any defect or deficiency with respect to
any of such properties or requests the performance of any repairs, alterations
or other work to or in any of such properties or in the streets bounding the
same, which in each case has not been remedied or rectified. Each parcel of Real
Estate owned by Seller is considered a separate parcel of land for taxing and
conveyancing purposes. There is no pending condemnation, expropriation, eminent
domain or similar proceeding affecting all or any portion of the Real Estate.
Seller has not received any written notice of any proposed, planned or actual
curtailment of service of any utility supplied to the Real Estate. Except as
provided in the Tenant Leases, none of the Real Estate is leased to any person.
The Closter Lease and the Tenant Leases are in full force and effect in
accordance with their terms, and have not been modified or amended and, to
Seller's knowledge, no party thereto is in default under any of the terms
contained therein. Neither Seller nor Seller's Predecessor has deposited any
security deposit with the landlord of the Closter Lease. The amount of the
Security Deposits held by Seller are identified on Schedule 3.12.
3.13. Labor Relations. No employee of Seller is represented by any union or
other labor organization. No representation election, arbitration proceeding,
grievance, labor strike, dispute, slowdown, stoppage or other labor trouble is
pending or, to the knowledge of Seller, threatened against, involving, affecting
or potentially affecting Seller. No complaint against Seller or Seller's
Predecessor is pending or, to the knowledge of Seller, threatened before the
National Labor Relations Board, the Equal Employment Opportunity Commission or
any similar state or local agency, by or on behalf of any employee of Seller or
Seller's Predecessor. To Seller's knowledge, Seller has no Liability for any
occupational disease of any of its employees, former employees or others.
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3.14. Insurance. Schedule 3.14 discloses all insurance policies on an
"occurrence" basis with respect to which Seller or Seller's Predecessor is the
owner, insured or beneficiary.
3.15. Intellectual Property Rights. Seller neither owns nor is licensee to
any form of Intellectual Property Rights related to the Cinemas other than the
names "Tenafly Cinema", "Closter Cinema" and "Bergenfield Cinema" and the name
"Magic Cinemas", which is a Retained Asset, and rights to show films to the
public according to agreements which are Retained Assets and Retained
Liabilities and rights under the In-Touch Agreement. To the knowledge of Seller,
no other Person has any rights to the names "Tenafly Cinema", "Closter Cinema"
or "Bergenfield Cinema". To the knowledge of Seller, Seller is not infringing
upon the intellectual property rights of any other Person.
3.16. Employee Benefits. Except for medical and dental coverage, life
insurance, and long-term disability plans described on Schedule 3.16 for those
managers of the Cinemas identified on Schedule 3.16, Seller does not maintain
any Benefit Plan for any employees employed at the Cinemas. After the Closing,
no Buyer or CCG will have any Liability, with respect to any Benefit Plan of
Seller or any other member of the Seller Group, whether as a result of
delinquent contributions, distress terminations, fraudulent transfers, failure
to pay premiums to the PBGC, withdrawal Liability or otherwise. Schedule 3.16
identifies the names of all employees of Seller employed at the Cinemas,
including each listed employee's address, current compensation, vacation time to
which he or she is entitled and vacation time so far taken. Schedule 3.16 also
includes copies of Seller's payroll records for all persons currently employed
by Seller at the Cinemas. There are no written or oral agreements or
arrangements providing for the employment by Seller of any person at the Cinemas
other than "at will" agreements. All employees of Seller at the Cinemas are
employees at will. Seller does not provide a motor vehicle to any employee of
Seller at the Cinemas.
3.17. Environmental Matters. Except as disclosed in Schedule 3.17:
(a) Compliance; No Liability. Seller and Seller's Predecessor have operated
the Business and each parcel of Real Estate in material compliance with all
applicable Environmental Laws. To Seller's knowledge, Seller is not subject to
any Liability, penalty or expense (including legal fees) in connection with the
Business or ownership or leasing of the Real Estate by virtue of any violation
of any Environmental Law arising out of events occurring between October, 1993
and the Closing Date, any environmental activity conducted on or with respect to
any property arising out of events occurring between October, 1993 and the
Closing Date or any environmental condition existing on or with respect to any
property arising out of events occurring between October, 1993 and the Closing
Date, in each case whether or not Seller or Seller's Predecessors permitted or
participated in such act or omission.
(b) Treatment; CERCLIS. Neither Seller nor Seller's Predecessors have
treated, stored, recycled or disposed of any Regulated Material on any Real
Estate in violation of applicable Environmental Laws, and, to Seller's
knowledge, no other Person has treated, stored, recycled or disposed of any
Regulated Material on any part of the Real Estate in violation of applicable
Environmental Laws between October 1993 and the Closing Date. To Seller's
knowledge after due inquiry, there has been no release of any Regulated Material
at, on or under
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any Real Estate between October 1993 and the Closing Date. Neither Seller nor
Seller's Predecessors have transported or arranged for the transportation of any
Regulated Material from the Cinemas to any location that is listed or proposed
for listing on the National Priorities List pursuant to Superfund, on CERCLIS or
any other location that is the subject of federal, state or local enforcement
action or other investigation that may lead to claims against Seller or Seller's
Predecessor for cleanup costs, remedial action, damages to natural resources, to
other property or for personal injury including claims under Superfund.
(c) Notices; Existing Claims; Certain Regulated Materials; Storage Tanks.
Neither Seller nor Seller's Predecessors have received any request for
information, notice of claim, demand or other notification that it is or may be
potentially responsible with respect to any investigation, abatement or cleanup
of any threatened or actual release of any Regulated Material. To Seller's
knowledge, Seller is not required to place any notice or restriction relating to
the presence of any Regulated Material at any Real Estate or in any deed to any
Real Estate. There has been no past, and there is no pending or contemplated,
claim by Seller or Seller's Predecessor under any Environmental Law or Laws
based on actions of others that may have impacted on the Real Estate, and
neither Seller nor Seller's Predecessors has entered into any agreement with any
Person regarding any remedial action or existing environmental Liability or
expense with respect to any of the Real Property or any real property adjacent
to the Real Property. To Seller's knowledge, all storage tanks located on the
Real Estate, whether underground or aboveground, are disclosed on Schedule 3.17.
To Seller's knowledge, the landlord at the Closter Lease closed an underground
storage tank located at the Closter Cinema. Seller has not closed or caused to
be closed any underground storage tank on the Real Estate.
3.18. Finders' Fees. Neither Seller nor any of its officers, managers or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby or by any Other Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYERS
As an inducement to Seller to enter into this Agreement and consummate the
transactions contemplated hereby, Buyers and CCG jointly and severally represent
and warrant to Seller as follows:
4.1. Organization. Each Buyer and CCG is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has the corporate power and authority to own or lease its properties, carry
on its business, enter into this Agreement and the Other Agreements to which it
is or is to become a party and perform its obligations hereunder and thereunder.
4.2. Authorization and Enforceability. This Agreement and each Other
Agreement to which each Buyer and CCG is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of each
Buyer and CCG, enforceable against it in accordance with their respective terms.
Each Other Agreement to which each Buyer and CCG is
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to become a party pursuant to the provisions hereof, when executed and delivered
by each Buyer and CCG, will constitute the legal, valid and binding obligation
of each Buyer and CCG, enforceable against each Buyer and CCG in accordance with
the terms of such Other Agreement. All actions contemplated by this Section have
been duly and validly authorized by all necessary proceedings by each Buyer and
CCG.
4.3. No Violation of Laws; Consents. Neither the execution and delivery of
this Agreement or any Other Agreement to which each Buyer or CCG is or is to
become a party, the consummation of the transactions contemplated hereby or
thereby nor the compliance with or fulfillment of the terms, conditions or
provisions hereof or thereof by each Buyer or CCG will: (i) contravene any
provision of the Governing Documents of any Buyer or CCG, (ii) conflict with,
result in a breach of, constitute a default or an event of default (or an event
that might, with the passage of time or the giving of notice or both, constitute
a default or event of default) under any of the terms of, result in the
termination of, result in the loss of any right under, or give to any other
Person the right to cause such a termination of or loss under, any contract,
agreement or instrument to which any Buyer or CCG is a party or by which any of
their assets may be bound or affected, (iii) result in the creation, maturation
or acceleration of any Liability of any Buyer or CCG (or give to any other
Person the right to cause such a creation, maturation or acceleration), or (iv)
violate any Law or any judgment or order of any Governmental Body to which any
Buyer or CCG is subject or by which any of its assets may be bound or affected.
Except for the consent of Provident Bank, which will be obtained before Closing,
no consent, approval or authorization of, or registration or filing with, any
Person is required in connection with the execution or delivery by each Buyer or
CCG of this Agreement or any of the Other Agreements to which each Buyer or CCG
is or is to become a party pursuant to the provisions hereof or the consummation
by each Buyer or CCG of the transactions contemplated hereby or thereby.
4.4. No Pending Litigation or Proceedings. No Litigation is pending or, to
the knowledge of any Buyer or CCG, threatened against or affecting CCG or any
Affiliate of CCG in connection with any of the transactions contemplated by this
Agreement or any Other Agreement to which each Buyer and CCG is or is to become
a party or that would, to CCG's knowledge, have a material adverse effect on
CCG's business considered as a whole. There is presently no outstanding
judgment, decree or order of any Governmental Body against or affecting CCG or
any Affiliate of CCG in connection with the transactions contemplated by this
Agreement or any Other Agreement to which any Buyer or CCG is or is to become a
party or that would, to CCG's knowledge, have a material adverse effect on CCG's
business considered as a whole.
4.5. Finders' Fees. Neither Buyer, CCG nor any of their officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby.
4.6. CCG Financial Statements. Attached hereto as Exhibit G are CCG's
consolidated balance sheet and income statement at September 30, 1996 and for
the nine month period then ended. Subject to normal year-end adjustments, the
absence of footnotes, a potential reduction of CCG's stockholders' equity of up
to approximately $1 million (for reasons discussed with Seller) and possible
variations in depreciation and amortization methods, such balance sheet and
income statement fairly present in all material respects the consolidated
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financial position and consolidated results of operation of CCG as of September
30, 1996 and for the nine-month period then ended in accordance with GAAP. Since
September 30, 1996, to CCG's knowledge, no event or condition has occurred that
would have a material adverse effect on CCG and its subsidiaries considered as a
whole.
4.7. Stock Ownership. CCG owns all of the issued and outstanding capital
stock of the Buyers.
ARTICLE V.
CERTAIN COVENANTS
5.1. Conduct of Business Pending Closing. From and after the date hereof
and until the Closing Date, unless Buyers shall otherwise consent in writing,
Seller shall conduct its affairs as follows:
(a) Ordinary Course; Compliance. The Business shall be conducted only in
the ordinary course and consistent with past practice. Seller shall maintain the
Purchased Assets, the Real Estate and Assumed Liabilities consistent with past
practice and shall comply in a timely fashion with the provisions of all
Contracts and Permits and its other agreements and commitments. Seller shall use
its best efforts to keep the Business organization intact, keep available the
services of its present employees and preserve the goodwill of its suppliers,
patrons and others having business relations with it. Seller shall maintain in
full force and effect its policies of insurance, subject only to variations
required by the ordinary operations of the Business, or else shall obtain, prior
to the lapse of any such policy, substantially similar coverage with insurers of
recognized standing.
(b) Prohibited Transactions. Seller shall not: (i) amend or terminate any
Contract or Permit; (ii) fail to pay any Liability or charge when due, other
than Liabilities contested in good faith by appropriate proceedings; (iii) enter
into any employment or consulting contract or arrangement with any employee of
the Cinemas; (iii) take any action or omit to take any action that is reasonably
likely to result in the occurrence of any event described in Section 3.5; or
(vi) take any action or omit to take any action that will cause a breach or
termination of any Permit or Contract, other than termination by fulfillment of
the terms thereunder.
(c) Access, Information and Documents. Seller shall give to Buyers and to
Buyers' employees and representatives (including accountants, attorneys,
environmental consultants and engineers) access during normal business hours to
all of the properties, books, contracts, commitments, records, officers,
personnel and accountants (including independent public accountants and their
workpapers) of Seller solely as they relate to the Cinemas and shall furnish to
Buyers all such documents and copies of documents and all information with
respect to the properties, Liabilities and affairs of Seller (solely as they
relate to the Cinemas) as Buyers may reasonably request, including but not
limited to weekly reports of gross box office and concession receipts at the
Cinemas, at the same time such reports are available to Seller's management.
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5.2. Fulfillment of Agreements. Each party hereto shall use its best
efforts to cause all of those conditions to the obligations of the other under
Article VI that are not beyond its reasonable control to be satisfied on or
prior to the Closing and shall use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement. Seller shall, prior to Closing, obtain the consents referred to
in Section 3.3.
5.3. Employment, Severance and Termination Payments. Seller agrees to pay,
perform and discharge any and all severance payments, payroll and employment
related Liabilities with respect to employees of Seller at the Cinemas accruing
up to the close of business on the date immediately preceding the Closing Date
or which result from the transfer of the Purchased Assets hereunder and the
employment by Buyers of those employees and shall indemnify and hold harmless
Buyers and its directors, officers and Affiliates from and against any and all
losses, Liabilities, damages, costs and expenses, including reasonable legal
fees and disbursements, that any of the aforesaid may suffer or incur by reason
of or relating to any such Liabilities. Buyers shall be responsible for all
Liabilities first arising on the Closing Date related to the employment by
Buyers of such employees (other than Liabilities by virtue of agreements or
arrangements between such employees and Seller or by virtue of Seller's Benefit
Plans), and Buyers shall indemnify and hold harmless Seller and its members,
officers and Affiliates from and against any and all losses, Liabilities,
damages, costs and expenses, including reasonable legal fees and disbursements,
that any of the aforesaid may suffer or incur by reason of or relating to any
such Liabilities.
5.4. Seller's Employees. Buyers shall have the right, but not the
obligation to offer employment to Hank D. Jenkins, Bobby Krevet, Jonathon
Johnson and Brian Lundgren and any of the part-time employees of Seller who are
employed at the Cinemas. Buyers and CCG acknowledge that they shall not be
entitled to offer employment to John DeLuca ("DeLuca"), currently a manager at
the Bergenfield Cinema, who shall remain a full time employee of Seller;
provided, however, that for a period commencing on the Closing Date up to and
including January 31, 1997, Seller shall make DeLuca available to Buyers and CCG
to assist them during such transition period. In consideration for making DeLuca
available to Buyers and CCG, Buyers and CCG shall pay Seller $660 for each full
week that DeLuca performs services to Buyers or CCG. Such amount shall be
prorated for any partial week for which DeLuca provides services to Buyers or
CCG. Buyers shall have no obligation to compensate DeLuca for any such services.
At or prior to the Closing, Seller shall fully compensate all employees of
Seller at the Cinemas for all work performed through and including the Closing
Date. Seller does not guaranty that any of the employees to which Buyers or CCG
will offer employment will accept such offer of employment.
5.5. Workers' Compensation and Disability Claims.
(a) Seller's Liability. Seller shall remain liable for all Liability for
all workers' compensation, disability and occupational diseases of or with
respect to all of Seller's employees attributable to injuries, claims,
conditions, events and occurrences occurring on or before the Closing Date.
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(b) Buyers' Liability. Buyers shall be liable for all Liability for all
workers' compensation, disability and occupational diseases of or with respect
to all of employees of Seller hired by Buyers attributable to injuries, claims,
conditions, events and occurrences first occurring after the Closing Date.
5.6. Covenant Not to Compete.
(a) Restriction. For a period of five years from and after the Closing
Date, Seller shall not, directly or indirectly, own, manage, operate, join,
control or participate in the ownership, management, operation or control of, or
be employed or otherwise connected as an officer, employer, stockholder, partner
or otherwise with, any cinema within a five mile radius of any Cinema. Ownership
of not more than 2% of the outstanding stock of any publicly traded company
shall not be a violation of this Section.
(b) Enforcement. The restrictive covenant contained in this Section is a
covenant independent of any other provision of this Agreement and the existence
of any claim that Seller may allege against any other party to this Agreement,
whether based on this Agreement or otherwise, shall not prevent the enforcement
of this covenant. Seller agrees that Buyers' remedies at law for any breach or
threat of breach by Seller of the provisions of this Section will be inadequate,
and that Buyers shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Section and to enforce specifically the terms
and provisions hereof, in addition to any other remedy to which Buyers may be
entitled at law or equity. In the event of litigation regarding this covenant
not to compete, the prevailing party in such litigation shall, in addition to
any other remedies the prevailing party may obtain in such litigation, be
entitled to recover from the other party its reasonable legal fees and out of
pocket costs incurred by such party in enforcing or defending its rights
hereunder. The length of time for which this covenant not to compete shall be in
force shall not include any period of violation or any other period required for
litigation during which Buyers seek to enforce this covenant. Should any
provision of this Section be adjudged to any extent invalid by any competent
tribunal, such provision will be deemed modified to the extent necessary to make
it enforceable.
5.7. Publicity. Seller and Buyers shall not issue any press release or
otherwise make any announcements to the public or the employees of Seller with
respect to this Agreement prior to the Closing Date without the prior written
consent of the other, except as required by Law.
5.8. Transitional Matters. Seller shall cooperate with and assist Buyers
and its authorized representatives in order to provide, to the extent reasonably
requested by Buyers, an efficient transfer of control of the Purchased Assets
and the Real Estate and to avoid any undue interruption in the activities and
operations of the Business and the Real Estate following the Closing Date.
Seller shall not cause any utilities to be disconnected until the Buyers shall
have established an account for such utility in Buyers' own name. Seller shall
assist in transferring to each Buyer the telephone numbers for each Cinema
location. Buyers shall be liable to Seller for the utility payments for any
utility maintained by the Seller after the Closing Date. On or prior to the
180th day after the Closing Date, Buyers shall remove the name "Magic Cinemas"
and related logo from any place in or about the Cinemas it appears, including
without limitation all signs. Prior to Closing, Seller shall remove all of its
movie trailers from films at the Cinemas.
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5.9. Books and Records. Seller shall not destroy or dispose of any books,
records, and files relating to the Business to the extent that they pertain to
the Business prior to the Closing Date and to the extent such information is
reasonably necessary for CCG's audit of Seller's financial statements for the
Cinemas for 1995 and 1996 until CCG has completed such audit and for a period of
three years thereafter. Seller shall permit and cooperate and assist Buyers, at
Buyers' expense, in the preparation of an audit of Seller's financial statements
for the Cinemas for calendar years 1995 and 1996 or as required in connection
with a public offering of securities by CCG or any Affiliate of CCG. Seller
shall have no Liability or responsibility for such audit or such public
offering. Seller will, at Buyer's request, supply Buyers with film booking
statistics for the year preceding Closing.
5.10. Permits; N.J. ISRA. Seller shall use its best efforts to provide to
Buyers valid Permits for each Cinema prior to Closing. In the event that Seller
is unable to do so by Closing, then Seller shall provide Buyers with such
Permits within 30 days after Closing. Any Liability associated with such Permits
shall be the obligation of Buyers but shall be deemed to be Buyers Damages for
purposes of Article VII and shall count toward the Basket Amount. Seller shall
use its best efforts to obtain prior to Closing letters of Non-Applicability
with respect to the Real Estate under the New Jersey Industrial Site Recovery
Act (PL 1993, ch. 39). In the event that Seller is unable to do so by Closing,
then Seller shall use its best efforts to provide Buyers with such letters
within 30 days after Closing.
ARTICLE VI.
CONDITIONS TO CLOSING; TERMINATION
6.1. Conditions Precedent to Obligation of Buyers. The obligation of Buyers
and CCG to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Buyers or CCG at Buyers' or CCG's
sole option:
(a) Bringdown of Representations and Warranties; Covenants. Each of the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and warranties had been
made on, as of and with reference to the Closing Date. Seller shall have
performed in all respects all of the covenants and complied with all of the
provisions required by this Agreement to be performed or complied with by it at
or before the Closing.
(b) Litigation. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby or that would, after Closing, limit or adversely affect Buyers' ownership
of the Purchased Assets or the Owned Real Estate in a manner different from
Seller', and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any Governmental Body challenging the
lawfulness of or seeking to prevent or delay any of the transactions
contemplated by this Agreement or any of the Other Agreements or seeking
monetary or other relief by reason of the consummation of any of such
transactions.
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(c) No Material Adverse Change. Between the date hereof and the Closing
Date, there shall have been no material adverse change, regardless of insurance
coverage therefor, in the Business or any of the Purchased Assets, results of
operations, prospects or condition, of the Cinemas or the Real Estate.
(d) Closing Certificate.
If Closing occurs after the date hereof, Seller shall have delivered a
certificate, dated the Closing Date certifying to the fulfillment of the
conditions set forth in subparagraphs (a) and (c) of this Section. Such
certificate shall constitute a representation and warranty of Seller with regard
to the matters therein for purposes of this Agreement.
(e) Closing Documents. Buyers and CCG shall have received the other
documents referred to in Section 6.3(a). All agreements, certificates, opinions
and other documents delivered by Seller to Buyers and CCG hereunder shall be in
form and substance reasonably satisfactory to Buyers and CCG.
(f) Title Insurance. Buyers, at their sole cost and expense, shall have
obtained for all Real Estate final marked commitments to issue to Buyers ALTA
(1990-Form B with appropriate state endorsements) owner's policies of title
insurance in coverage amounts equal to the fair market values of the Real
Estate, insuring good and marketable fee simple title to the Owned Real Estate
and good title to the Leased Real Estate with mechanic's liens coverage and such
endorsements as Buyers may have reasonably requested and with exceptions only
for ALTA standard printed exceptions (other than mechanic's and materialmen's
liens and rights of possession), and Permitted Encumbrances.
(g) Certain Real Estate Deliveries. Buyers shall have received with respect
to the Owned Real Estate:
(i) at Buyers' sole expense, surveys of such property which conform to
the standards set forth in the ALTA/American Congress on Surveying and
Mapping Minimum Standard Detail Requirements for Land Title Surveys and
which disclose no state of facts inconsistent with the representations and
warranties of Seller set forth in Section 3.12 hereof and are otherwise
reasonably acceptable to Buyers;
(ii) an affidavit of Seller in the form of Exhibit H; and
(iii) a certificate, duly executed and acknowledged by an officer of
Seller under penalties of perjury, in the form prescribed by Treasury
Regulation ss. 1.1445-2(b)(2)(iii), stating Seller's name, address and
Federal tax identification number, and that it is not a "foreign person"
within the meaning of Section 1445 of the Code.
(h) Real Estate Purchase Agreement. Seller shall have closed under the Real
Estate Purchase Agreement.
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(i) Release or Termination of Mortgage and Other Encumbrances. Seller shall
have caused Valley National Bank's first mortgage on the Real Estate and all of
its other liens on the Purchased Assets to be released.
(j) Leased Real Estate Matters. Buyers shall have received from each lessor
of the Closter Lease consent to assignment of leasehold interest, consent to
leasehold mortgage, and estoppel certificates, nondisturbance agreements, and
other documents as shall be reasonably requested by Provident Bank, all in form
and substance satisfactory to Buyers and Provident Bank.
(k) Consents. Seller shall have received the other consents, approvals and
actions of the Persons identified in Section 3.3.
6.2. Conditions Precedent to Obligation of Seller. The obligation of Seller
to proceed with the Closing under this Agreement is subject to the fulfillment
prior to or at Closing of the following conditions, any one or more of which may
be waived in whole or in part by Seller at Seller's sole option:
(a) Bringdown of Representations and Warranties; Covenants. Each of the
representations and warranties of Buyers and CCG contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date.
Buyers and CCG shall have performed all of the covenants and complied in all
respects with all of the provisions required by this Agreement to be performed
or complied with by it at or before the Closing.
(b) Litigation. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any Governmental Body challenging the
lawfulness of or seeking to prevent or delay any of the transactions
contemplated by this Agreement or the Other Agreements or seeking monetary or
other relief by reason of the consummation of such transactions.
(c) Closing Certificate. If Closing occurs after the date hereof, Buyers
and CCG shall have delivered a certificate, dated the Closing Date certifying to
the fulfillment of the conditions set forth in subparagraphs (a) and (b) of this
Section 6.2. Such certificate shall constitute a representation and warranty of
Buyers with regard to the matters therein for purposes of this Agreement.
(d) Closing Documents. Seller shall also have received the other documents
referred to in Section 6.3(b). All agreements, certificates, opinions and other
documents delivered by Buyers to Seller hereunder shall be in form and substance
reasonably acceptable to counsel for Seller, in the exercise of such counsel's
reasonable professional judgment.
(e) Real Estate Purchase Agreement. Realty Corp. shall have closed under
the Real Estate Purchase Agreement.
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6.3. Deliveries and Proceedings at Closing.
(a) Deliveries by Seller. Seller shall deliver or cause to be delivered to
Buyers at the Closing:
(i) General warranty bills of sale and instrument of assignment to the
Purchased Assets in the form attached hereto as Exhibit I.
(ii) Assignments of all transferable or assignable licenses, Permits
and warranties relating to the Purchased Assets and of any Intellectual
Property included in the Purchased Assets, duly executed and in forms
acceptable to Buyers.
(iii) The Assumption Agreements.
(iv) An assignment of the Closter Lease in the form attached hereto as
Exhibit J.
(v) Certificates of the appropriate public officials to the effect
that Seller was a validly existing limited liability company in good
standing in its state of formation as of a date not more than 15 business
days prior to the Closing Date.
(vi) Incumbency and specimen signature certificates dated the Closing
Date, signed by the officers of Seller and certified by its Chief Executive
Officer or Executive Vice President.
(vii) True and correct copies of the Seller's Certificate of Formation
certified by its Chief Executive Officer as of the Closing Date.
(viii) Certificates of Seller (A) setting forth all resolutions of the
managers of Seller and, if necessary, the members of Seller authorizing the
execution and delivery of this Agreement and the Other Agreements and the
performance by Seller of the transactions contemplated hereby and thereby,
and (B) to the effect that the Certificate of Formation of Seller delivered
pursuant to Section 6.3(a)(vii) were in effect at the date of adoption of
such resolutions, the date of execution of this Agreement and the Closing
Date.
(ix) The opinion of Orloff, Lowenbach, Stifelman & Siegel, P.A. legal
counsel to Seller, in substantially the form of Exhibit K.
(x) Keys for each Cinema location.
(xi) All vendor warranties (which may include those for the roofs on
each Cinema) respecting the Purchased Assets.
(xii) Notices to all tenants under the Tenant Leases.
(xiii) The Security Deposits under the Tenant Leases.
(xiv) Such other agreements and documents as Buyers may reasonably
request.
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(b) Deliveries by Buyers. Buyers shall deliver or cause to be delivered to
Seller at the Closing:
(i) The Secured Note and the Letter of Credit.
(ii) The Assumption Agreements.
(iii) The Subordinated Note.
(iv) A certificate of the appropriate public official to the effect
that each Buyer and CCG is a validly existing corporation in the State of
Delaware as of a date not more than 15 business days prior to the Closing
Date.
(v) Incumbency and specimen signature certificates signed by the
officers of Buyers and CCG and certified by the Secretary of each Buyer and
CCG.
(vi) True and correct copies of the Certificates of Incorporation of
Buyers and CCG as of a date not more than 15 business days prior to the
Closing Date, certified by the Secretary of State of Delaware.
(vii) A certificate of the Secretary of each Buyer and CCG (A) setting
forth all resolutions of the Board of Directors of each Buyer and CCG
authorizing the execution and delivery of this Agreement and Other
Agreements and the performance by Buyers and CCG of the transactions
contemplated hereby and thereby, certified by the Secretary of each Buyer
and CCG and (B) to the effect that the Certificates of Incorporation of
Buyers delivered pursuant to Section 6.3(b)(vi) were in effect at the date
of adoption of such resolutions, the date of execution of this Agreement
and the Closing Date.
(viii) The opinion of Kirkpatrick & Lockhart LLP, counsel to Buyers
and CCG, in substantially the form of Exhibit L.
(ix) Such other agreements and documents as Seller may reasonably
request.
6.4. Termination.
(a) Mutual Consent; Failure of Conditions. Except as provided in Section
6.4(b), this Agreement may be terminated at any time prior to Closing by: (i)
mutual consent of Buyers, CCG and Seller; (ii) Buyers and CCG, if any of the
conditions specified in Section 6.1 hereof shall not have been fulfilled by
December 20, 1996 and shall not have been waived by Buyers and CCG; or (iii)
Seller, if any of the conditions specified in Section 6.2 hereof shall not have
been fulfilled by December 20, 1996 and shall not have been waived by Seller. In
the event of termination of this Agreement by either Buyers, CCG or Seller
pursuant to clause (ii) or (iii) of the immediately preceding sentence, Buyers
and CCG, on the one hand, and Seller on the other hand shall be liable to the
other for any breach hereof by such party, which breach led to such termination,
and the rights and obligations of the parties set forth in Sections 7.2, 7.3 and
8.1 shall survive such termination. Buyers, CCG and Seller shall also be
entitled to seek any other remedy to which it may be entitled at law or in
equity in the event of such termination, which
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remedies shall include injunctive relief and specific performance.
Notwithstanding the foregoing, in the event that this Agreement is terminated by
one party hereto pursuant to clause (ii) or (iii) of the first sentence of this
Section solely as a result of a breach by the other party hereto of a
representation or warranty of such other party as of a date after the date of
this Agreement, which breach could not have been reasonably anticipated by such
other party and was beyond the reasonable control of such other party, then the
remedy of the party terminating this Agreement shall be limited solely to
recovery of all of such party's costs and expenses incurred in connection
herewith.
(b) Casualty Damage. Notwithstanding anything else herein to the contrary,
if prior to Closing the Purchased Assets (or any portion thereof) are damaged by
fire or any other cause, the reasonable estimate of the immediate repair of
which would cost more than $50,000, Buyers at their option, which may be
exercised by written notice given to Seller within ten business days after
Buyers' receipt of notice of such loss, may declare this Agreement null and
void, or Buyers may Close subject to reduction of the Purchase Price by the
amount of any applicable insurance deductible which shall be paid by Buyers and
assignment to Buyers of the proceeds from any insurance carried by Seller
covering such loss. If prior to Closing the Purchased Assets (or any portion
thereof) are damaged by fire or any other cause, the reasonable estimate of the
repair of which would cost $50,000 or less, such event shall not excuse Buyers
from their obligations under this Agreement, but the Purchase Price shall be
reduced by an amount equal to the amount of such cost and Seller shall be
entitled to retain the net insurance proceeds collected or to be collected by
Seller.
ARTICLE VII.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1. Survival of Representations. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing; provided, however, that, representations and warranties hereunder
shall survive for a period of two years after the Closing Date, with the
exception of the representations and warranties contained in Section 3.6 and the
first sentence of Section 3.8, all of which shall survive for the period of the
applicable statute of limitations plus 90 days. All claims for damages made by
virtue of any representations, warranties and agreements herein shall be made
under, and subject to the limitations set forth in, this Article VII. The
representations and warranties set forth in Articles III and IV are cumulative,
and any limitation or qualification set forth in any one representation and
warranty therein shall not limit or qualify any other representation and
warranty therein. Except the representations and warranties of each party hereto
expressly contained in this Agreement or the Other Agreements, no party hereto
is making and specifically disclaims any representations or warranties of any
kind or character, express or implied.
7.2. Indemnification by Seller. Seller shall indemnify, defend, save and
hold Buyers, CCG and their officers, directors, employees, agents and Affiliates
(collectively, "Buyers Indemnitees") harmless from and against all demands,
claims, actions or causes of action, assessments, losses, damages, deficiencies,
Liabilities, costs and expenses (including reasonable legal fees, interest,
penalties, and all reasonable amounts paid in investigation, defense or
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settlement of any of the foregoing but excluding any Liability for lost profits;
collectively, "Buyers Damages") asserted against, imposed upon, resulting to,
required to be paid by, or incurred by any Buyers Indemnitees, directly or
indirectly, in connection with, arising out of, resulting from, or which would
not have occurred but for, (i) a breach of any representation or warranty made
by Seller in this Agreement, in any certificate or document furnished pursuant
hereto by Seller or any Other Agreement to which Seller is or is to become a
party, (ii) a breach or nonfulfillment of any covenant or agreement made by
Seller in or pursuant to this Agreement and in any Other Agreement to which
Seller is or is to become a party, (iii) any Retained Liability, (iv) any
successor liability (or Liabilities based on similar theories) arising out of
any facts or circumstances occurring prior to the Closing Date or Liability
arising out of or attaching by virtue of Seller being a member of a controlled
group or affiliated group of entities, and (v) the provisions of 29 U.S.C. ss.
1161-1168, as same may be amended from time to time, and the regulations and
rulings thereunder, with respect to the employees of Seller at the Cinemas.
7.3. Indemnification by Buyer. Buyers and CCG shall indemnify, defend, save
and hold Seller and its officers, directors, employees, Affiliates and agents
(collectively, "Seller Indemnitees") harmless from and against any and all
demands, claims, actions or causes of action, assessments, losses, damages,
deficiencies, Liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing but excluding any Liability for lost
profits; collectively, "Seller Damages") asserted against, imposed upon,
resulting to, required to be paid by, or incurred by any Seller Indemnitees,
directly or indirectly, in connection with, arising out of, resulting from, or
which would not have occurred but for, (i) a breach of any representation or
warranty made by Buyers or CCG in this Agreement or in any certificate or
document furnished pursuant hereto by Buyers or CCG or any Other Agreement to
which Buyers or CCG is or is to become a party, (ii) a breach or nonfulfillment
of any covenant or agreement made by any Buyer or CCG in or pursuant to this
Agreement and in any Other Agreement to which any Buyer or CCG is or is to
become a party, and (iii) any Assumed Liability.
7.4. Waiver of Statute of Limitations. Each party hereto waives any
applicable statute of limitations that may be applicable to Damages arising
under clauses (iii), (iv) and (v) of Section 7.2 and clause (iii) of Section
7.3.
7.5. Notice of Claims. If any Buyers Indemnitee or Seller Indemnitee (an
"Indemnified Party") believes that it has suffered or incurred or will suffer or
incur any Damages for which it is entitled to indemnification under this Article
VII, such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this Section shall not affect any of such party's rights under this
Article VII or otherwise except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnified Party.
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7.6. Third Party Claims. The Indemnifying Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnifying Party may compromise or settle
the same, provided that the Indemnifying Party shall give the Indemnified Party
advance notice of any proposed compromise or settlement. The Indemnifying Party
shall permit the Indemnified Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnified Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnified Party.
7.7. Limitation on Indemnification. No Indemnified Party shall be entitled
to make a claim for indemnification for inaccuracy in or breach of
representation or warranty pursuant to clause (i) of Section 7.2 until the
cumulative and aggregate amount of all Damages as a result of all matters
covered by clause (i) of Section 7.2 exceeds $30,000 (the "Basket Amount"). If
and when such damages do exceed the Basket Amount, then the Indemnified Party
shall be entitled to indemnification for all such damages in excess of the
Basket Amount; provided, however, that in calculating the Basket Amount, Buyers
Indemnitees shall be permitted to include the cost to the Bergenfield Buyer of
replacing the remainder of the roof at the Bergenfield Cinema and any
Liabilities associated with the Permits in accordance with Section 5.10. Any
indemnification payment under this Agreement shall take into account any
insurance proceeds or other third party reimbursement actually received (other
than the proceeds of any self insurance or, to the extent it is the economic
equivalent of self insurance, any insurance that is retrospectively rated).
Notwithstanding anything to the contrary contained in this Agreement, in no
event shall Seller be liable for Buyers Damages in excess of an amount equal to
the aggregate amount of cash payments of principal received by Seller under the
Secured Note and the Subordinated Note.
7.8. Payment. All indemnification payments under this Article VII shall be
made promptly in cash.
7.9. Exclusive Remedies. The indemnification set forth in this Section 7.2
and 7.3 shall be Buyers', CCG's and Seller's exclusive remedy for all matters
referred to therein in addition to Seller's rights of acceleration as expressly
set out in the Subordinated Note.
ARTICLE VIII.
MISCELLANEOUS
8.1. Costs and Expenses. Buyers and CCG, on the one hand, and Seller, on
the other hand, shall each pay its respective expenses, brokers' fees and
commissions and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including all accounting, legal and appraisal
fees and settlement charges. All transfer taxes incurred as a result of the
transfer of the Purchased Assets shall be paid by Seller.
8.2. Proration of Expenses. All accrued expenses associated with the Real
Estate included in the Purchased Assets, such as rents and other charges under
the Closter Lease and the Tenant Leases, electricity, gas, water, sewer,
telephone, property taxes, security services and similar items, shall be
prorated between Buyers and Seller as of the Closing Date. Buyers and Seller
shall settle such amounts within 30 days after Closing.
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8.3. Bulk Sales. The parties hereto waive compliance with the provisions of
any bulk sales law applicable to the transactions contemplated hereby, and,
notwithstanding anything else in this Agreement to the contrary, Seller shall
hold Buyers harmless from and against all claims asserted against the Purchased
Assets or the Buyers pursuant to such bulk sales laws. Seller agrees to pay
timely its account creditors with respect to liabilities not being assumed by
Buyers hereunder.
8.4. Further Assurances. Seller shall, at any time and from time to time on
and after the Closing Date, upon the reasonable request by Buyers and without
further consideration, take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments, documents, transfers, conveyances and assurances as may be
required or desirable for the better conveying, transferring, assigning,
delivering, assuring and confirming the Purchased Assets to Buyer.
8.5. Notices. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made (i) the fifth business day after the date of mailing, if delivered
by registered or certified mail, postage prepaid, (ii) upon delivery, if sent by
hand delivery, (iii) upon delivery, if sent by prepaid courier, with a record of
receipt, or (iv) the next day after the date of dispatch, if sent by cable,
telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested), to the parties at
the following addresses:
(i) if to Buyer, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, New Jersey 07940
Telecopy: (201) 377-4303
Attention: A. Dale Mayo, President
with a required copy to:
Warren H. Colodner, Esq.
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
45th Floor
New York, New York 10020
Telecopy: (212) 536-3901
(ii) if to Seller, to:
Magic Cinemas, L.L.C.
513 W. Mount Pleasant Avenue
Livingston, New Jersey 07039
Telecopy: (201) 535-1228
Attention: Jeffrey Davidson, CEO
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with a required copy to:
Stanley Schwartz, Esq.
Orloff, Lowenbach, Stifelman & Siegel, P.A.
101 Eisenhower Parkway
Roseland, New Jersey 07068-1082
Telecopy: (201) 622-3073
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
8.6. Currency. All currency references herein are to United States dollars.
8.7. Assignment; Governing Law. This Agreement and all the rights and
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective permitted successors and assigns. This Agreement and the
rights, interests and obligations hereunder may not be assigned by any party
hereto without the prior written consent of the other parties hereto, except
that Buyers or CCG may make such assignments to any Affiliate of Buyers or CCG
provided that Buyers or CCG remain liable hereunder, and, further, Buyers and
CCG may collaterally assign their rights hereunder to Provident Bank or other
commercial lending institution. This Agreement shall be governed by and
construed in accordance with the laws of New Jersey without regard to its
conflict of law doctrines.
8.8. Amendment and Waiver; Cumulative Effect. To be effective, any
amendment or waiver under this Agreement must be in writing and be signed by the
party against whom enforcement of the same is sought. Neither the failure of any
party hereto to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by any other party with its obligations
hereunder, nor any custom or practice of the parties at variance with the terms
hereof shall constitute a waiver by such party of its right to exercise any such
right, power or remedy or to demand such compliance. The rights and remedies of
the parties hereto are cumulative and not exclusive of the rights and remedies
that they otherwise might have now or hereafter, at law, in equity, by statute
or otherwise.
8.9. Entire Agreement; No Third Party Beneficiaries. This Agreement and the
Schedules and Exhibits set forth all of the promises, covenants, agreements,
conditions and undertakings between the parties hereto with respect to the
subject matter hereof, and supersede all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express or implied,
oral or written. This Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder, except the provisions
of Sections 7.2 and 7.3 relating to Buyers Indemnitees and Seller Indemnitees
and Section 8.10.
8.10. Third Party Beneficiary. Seller and Buyers acknowledge that the Owned
Real Estate is a critical component of the Business and that, after Closing,
Tenafly Buyer and Bergenfield Buyer intend to lease the Owned Real Estate from
Realty Corp. As a matter of convenience, a separate Real Estate Purchase
Agreement is being executed and delivered by Realty Corp. and Seller. Seller
acknowledges and agrees, however, that Realty Corp. is and shall
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be an intended third party beneficiary of this Agreement, including with respect
to the representations and warranties, conditions and indemnities herein.
8.11. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.12. Consent to Jurisdiction; Service of Process. Any lawsuit or similar
action arising out of or based on this Agreement or any agreement or instrument
contemplated by this Agreement or any Other Agreement, shall be brought only in
the state or federal courts of the State of New Jersey. In the event of a
lawsuit, the parties consent to personal jurisdiction and venue in any such
state or federal court and waive any defense based upon improper jurisdiction.
Delivery of any process by any of the methods which notices may be given under
this Agreement shall constitute lawful and valid service of process.
8.13. Access; Inspection; Reliance. Buyers and CCG acknowledge that they or
their agents have had access to, and have inspected, the Cinemas and have made
and are relying on both their own independent evaluation of the Cinemas, the
Business, the Purchased Assets and the Real Estate and the representations,
warranties and covenants of Seller herein and in the Other Agreements; provided,
however, that such acknowledgment shall not directly or indirectly limit in any
way the representations, warranties and covenants made by Seller, or the
remedies available to CCG and the Buyers, herein and in the Other Agreements.
8.14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CLEARVIEW CINEMA GROUP, INC.
By:______________________________
A. Dale Mayo
Title: President
By:______________________________
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Brett E. Marks
Title: Assistant Secretary
CCC TENAFLY CINEMA CORP.
By:______________________________
A. Dale Mayo
Title: President
By:______________________________
Brett E. Marks
Title: Assistant Secretary
CCC BERGENFIELD CINEMA
CORP.
By:______________________________
A. Dale Mayo
Title: President
By:______________________________
Brett E. Marks
Title: Assistant Secretary
CCC CLOSTER CINEMA CORP.
By:______________________________
A. Dale Mayo
Title: President
By:______________________________
Brett E. Marks
Title: Assistant Secretary
MAGIC CINEMAS L.L.C.
By:_____________________________
Jeffrey Davidson, CEO
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List of Schedules and Exhibits
Schedule 1.1P Permitted Encumbrances
Schedule 3.8 Property Owned by Others
Schedule 3.9 Litigation or Proceedings
Schedule 3.10 Contracts
Schedule 3.12 Real Estate
Schedule 3.14 Insurance
Schedule 3.16 Employee Benefits
Schedule 3.17 Environmental Matters
Exhibit A Letter of Credit
Exhibit B Real Estate Purchase Agreement
Exhibit C Secured Note
Exhibit D Subordinated Note
Exhibit E Assumption Agreements
Exhibit F Income Statement
Exhibit G CCG Financial Statements
Exhibit H Form of Affidavit of Seller
Exhibit I Bills of Sale
Exhibit J Assignment of the Closter Lease
Exhibit K Form of Opinion of Orloff, Lowenbach, Stifelman & Siegel, P.A.
Exhibit L Form of Opinion of Kirkpatrick & Lockhart LLP
Exhibit 21.01
SUBSIDIARIES OF CLEARVIEW CINEMA GROUP, INC.
COMPANY INCORPORATION
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Clearview Theater Group, Inc. New Jersey
CCC Madison Triple Cinema Corp. New Jersey
CCC Chester Twin Cinema Corporation New Jersey
CCC Manasquan Cinema Corporation New Jersey
CCC Summit Cinema Corp. New Jersey
CCC Grand Avenue Cinema Corp. Delaware
CCC Herricks Cinema Corp. Delaware
CCC Port Washington Corp. Delaware
CCC Allwood Cinema Corp. Delaware
CCC Emerson Cinema Corp. Delaware
CCC New City Cinema Corp. Delaware
CCC Washington Cinema Corp. Delaware
CCC Bedford Cinema Corp. Delaware
CCC Kisco Cinema Corp. Delaware
CCC B.C. Realty Corp. Delaware
CCC Bergenfield Cinema Corp. Delaware
CCC Closter Cinema Corp. Delaware
CCC Tenafly Cinema Corp. Delaware
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CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of our reports dated February 10, 1997
relating to the consolidated financial statements of Clearview Cinema Group,
Inc.; April 1, 1997 relating to the combined financial statements of the Nelson
Ferman Theaters at Emerson, New City, Allwood and Washington Township; and April
10, 1997 relating to the combined financial statements of Magic Cinemas
at Bergenfield, Tenafly and Closter, which appear in such Prospectus.
We also consent to reference to us under the headings "Experts" and "Summary
Consolidated Financial Data" which appear in such Prospectus. However, it should
be noted that Wiss and Company, LLP did not prepare or certify such "Summary
Consolidated Financial Data."
WISS & COMPANY, LLP
Woodbridge, New Jersey
May 23, 1997
