DRAFT 9/26/97
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/ X / QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
TRANSITION REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
----- -----
Commission file number 001-13187
CLEARVIEW CINEMA GROUP, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
Delaware 22-3338356
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
7 Waverly Place
Madison, New Jersey 07940
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(201) 377-4646
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes / / No / X /
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 2,108,800 shares of common
stock were outstanding as of September 15, 1997
Transitional Small Business Disclosure Format (check one): Yes / / No / X /
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
-------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 751,345 $ 758,237
Inventories 45,102 49,010
Other current assets 34,866 159,871
----------- -----------
Total current assets 831,313 967,118
----------- -----------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION 11,412,217 12,217,716
----------- -----------
OTHER ASSETS:
Intangible assets, less accumulated
amortization 2,711,518 2,581,536
Project acquisition costs 434,326 415,495
Escrow deposits 294,529 294,529
Deferred offering costs -- 163,285
Security deposits and other assets 76,641 94,703
----------- -----------
3,517,014 3,549,548
----------- -----------
$15,760,544 $16,734,382
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONT'D)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 835,650 $ 661,382
Current maturities of subordinated notes
payable:
Related parties 479,986 487,947
Accounts payable and accrued expenses 1,226,502 1,584,011
------------ ------------
Total current liabilities 2,542,138 2,733,340
------------ ------------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 7,742,611 10,118,474
Subordinated notes payable, less current
maturities:
Related parties 593,882 598,354
Other 600,000 600,000
------------ ------------
8,936,493 11,316,828
------------ ------------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK AT
REDEMPTION PRICE 2,132,294 2,875,608
------------ ------------
REDEEMABLE COMMON STOCK AT
REDEMPTION PRICE 357,305 357,305
------------ ------------
STOCKHOLDERS' EQUITY (DEFCIENCY):
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 832,800
shares 8,328 8,328
Additional paid-in capital 4,827,096 3,827,096
Accumulated deficit (553,519) (1,151,218)
Less: Redemption price of redeemable stock (2,489,599) (3,232,913)
------------ ------------
Total stockholders' equity (deficiency) 1,792,314 (548,699)
------------ ------------
$ 15,760,544 $ 16,734,382
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------
JUNE 30, JUNE 30, 1997
1996 1997 PRO FORMA
---------- ---------- (NOTE 3)
<S> <C> <C> <C>
THEATER REVENUES:
Box office $ 1,069,990 $ 1,996,644 $ 2,756,685
Concession 324,531 593,835 825,273
Other 13,820 91,396 150,004
----------- ----------- -----------
1,408,341 2,681,875 3,731,962
----------- ----------- -----------
OPERATING EXPENSES:
Film rental and booking fees 506,948 992,574 1,287,080
Cost of concession sales 54,122 106,029 152,936
Theater operating expenses 560,213 1,228,805 1,655,759
General and administrative
expenses 132,075 212,912 230,227
Depreciation and amortization 106,032 384,696 482,723
----------- ----------- -----------
1,359,390 2,925,016 3,808,725
----------- ----------- -----------
OPERATING INCOME (LOSS) 48,951 (243,141) (76,763)
INTEREST EXPENSE 115,598 365,180 426,297
----------- ----------- -----------
NET LOSS $ (66,647) $ (608,321) $ (503,060)
=========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
SHARES AND EQUIVALENTS
OUTSTANDING 1,797,000 1,797,000 2,731,300
=========== =========== ===========
NET LOSS PER COMMON SHARE $ (.04) $ (.34) $ (.18)
============ ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------------------------
JUNE 30, JUNE 30, 1997
1996 1997 PRO FORMA
---------- ---------- (NOTE 3)
<S> <C> <C> <C>
THEATER REVENUES:
Box office $ 1,851,063 $ 4,708,854 $ 6,430,082
Concession 550,956 1,337,821 1,848,082
Other 19,325 141,135 238,981
----------- ----------- -----------
2,421,344 6,187,810 8,517,145
----------- ----------- -----------
OPERATING EXPENSES:
Film rental and booking fees 852,359 2,188,700 2,965,784
Cost of concession sales 87,219 221,278 304,835
Theater operating expenses 1,023,237 2,448,960 3,353,262
General and administrative
expenses 227,600 404,718 441,923
Depreciation and amortization 141,906 797,707 990,876
----------- ----------- -----------
2,332,321 6,061,363 8,056,680
----------- ----------- -----------
OPERATING INCOME 89,023 126,477 460,465
INTEREST EXPENSE 170,064 724,146 864,263
----------- ----------- -----------
NET LOSS $ (81,041) $ (597,699) $ (403,798)
=========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
SHARES AND EQUIVALENTS
OUTSTANDING 1,797,000 1,797,000 2,731,300
=========== =========== ===========
NET LOSS PER COMMON SHARE $ (.05) $ (.33) $ (.15)
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED STOCK COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
-------- --------- --------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES,
JANUARY 1, 1997 779 $8 832,800 $8,328 $4,827,096 $(553,519)
SIX MONTHS ENDED
JUNE 30, 1997:
Repurchase of warrants
held by lender (1,000,000)
Net loss -- -- -- -- -- (597,699)
----- ------ -------- ------ --------- -----------
BALANCES, JUNE 30, 1997 779 $8 832,800 $8,328 $ 3,827,096 $(1,151,218)
==== ======= ======== ====== ========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------
1996 1997
----------- ---------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (81,041) $ (597,699)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization 141,906 797,707
Amortization of debt discount 7,022 87,649
Changes in operating assets and
liabilities:
Inventories (17,537) (3,908)
Other current assets 1,759 (125,005)
Security deposits and other assets (19,433) 769
Accounts payable and accrued
liabilities 417,487 378,013
----------- -----------
Net cash flows from operating
activities 450,163 537,526
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (370,763) (1,392,692)
Purchase of property and equipment upon
acquisition of theaters
(4,800,000) --
Purchase of intangible assets (200,000) (101,036)
----------- -----------
Net cash flows from investing
activities (5,370,763) (1,493,728)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from long term debt 3,553,104 1,550,000
Payments on long term debt (10,000) (423,621)
Proceeds from issuance of preferred stock 1,750,000 --
Payments on option (80,000) --
Costs related to issuance of preferred
stock (154,911) --
Deferred offering costs -- (163,285)
Dividends paid (10,000) --
----------- -----------
Net cash flows from financing
activities 5,048,193 963,094
----------- -----------
NET CHANGE IN CASH 127,593 6,892
CASH, BEGINNING OF PERIOD 176,203 751,345
----------- -----------
CASH, END OF PERIOD $ 303,796 $ 758,237
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1997
----------- ------------
(UNAUDITED)
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 170,064 $ 577,080
============== ==========
Income taxes paid $ 2,814 $ 1,871
============== ==========
Non-cash investing and financing activities:
Conversion of subordinated note
payable - related party into common stock $ 80,000 $ --
============== ==========
Common stock issued for purchase of assets $ 1,110,00 $ --
============== ==========
Warrants repurchased through issuance
of debt $ -- $1,000,000
============== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION:
The balance sheet at December 31, 1996 has been derived from the audited
balance sheet contained in the Registration Statement on Form SB-2 (File No.
333-27819) (as amended, the " Form SB-2") of Clearview Cinema Group, Inc. (the
"Company") which became effective on August 12, 1997 and is presented for
comparative purposes. All other financial statements are unaudited. In the
opinion of management, all adjustments, which include only normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows for all periods presented, have been made. Results of
operations for interim periods are not necessarily indicative of the operating
results for a full year.
Footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. The financial statements in this report should be read in
conjunction with the financial statements and notes thereto included in the Form
SB-2.
NOTE 2--STOCKHOLDERS' EQUITY:
STOCK SPLIT - In May 1997, the Company's Board of Directors approved a 600
to 1 stock split which was subsequently effected in August 1997. Such stock
split has been retroactively reflected in the accompanying consolidated
financial statements.
REDEMPTION RIGHTS - A certain common stockholder had the right to sell its
shares of the Company's Common Stock, $.01 par value (the "Common Stock"), to
the Company for a 30-day period commencing in 2002 at a redemption price based
upon a formula. If such stockholder did not exercise that right, the Company had
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. Such stockholder and the Company agreed to
terminate those rights upon consummation of the Company's initial public
offering (the "Offering"), which occurred in August 1997.
The holder of the outstanding shares of the Company's Class A Convertible
Preferred Stock, $.01 par value (the "Class A Preferred Stock"), had 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 had been converted at a redemption
price determined in accordance with a specified formula. Such holder agreed to
terminate this right upon consummation of the Offering.
The Company reports this redeemable stock at the current redemption value
separately between
9
<PAGE>
liabilities and stockholders' equity, since redemption is outside of the
Company's control. A corresponding reduction is made to stockholders' equity, as
the equivalent of treasury stock. The per share redemption value of the Class A
Preferred Stock is based on the greater of gross revenues (as defined) or six
times theater operating income before general and administrative expenses,
interest and taxes for the preceding twelve months divided by the number of
shares of Common Stock issued and, as if converted or exercised, all convertible
securities, options, warrants and similar instruments. The redemption value of
the Common Stock is based on book value per share computed on a fully diluted
basis.
The termination of these two redemption rights upon consummation of the
Offering will result in a reclassification of the respective redemption values
to stockholders' equity. On a pro-forma basis at June 30, 1997, the effect of
such terminations would have been an increase in stockholders' equity of
$3,232,913 to $2,684,214.
NOTE 3--SUBSEQUENT EVENTS:
INITIAL PUBLIC OFFERING - On August 22, 1997, the Offering was consummated
and the Company sold 1,000,000 shares of Common Stock. Gross proceeds totaled
$8,000,000 and net proceeds to the Company, after expenses of the Offering,
totaled approximately $6,300,000. Subsequently, the Company's underwriters
exercised their over-allotment option to purchase 150,000 additional shares of
Common Stock, resulting in additional gross and net proceeds to the Company of
$1,200,000 and $1,074,000, respectively.
CREDIT AGREEMENT - The Company entered into an amended and restated credit
agreement (the "Credit Facility") with The Provident Bank on September 12, 1997.
The Credit Facility consists of a $1.0 million revolving credit facility, a term
loan facility of $14.0 million used to refinance existing term loans of $10.4
million and for $3.6 million of new term loans of which $1.95 million was used
to finance part of the purchase price for five theaters acquired from United
Artists Theatre Circuit, Inc. ("United Artists"), and a term loan facility of up
to $15.0 million to finance future capital expenditures and acquisitions. The
interest rate on all loans under the Credit Facility is 1/2% to 1% over that
lender's prime rate depending upon certain financial ratios of the Company.
Principal is to be paid quarterly and interest is payable monthly in arrears.
The final maturity of all term loans will be on the fifth anniversary of the
Credit Facility. The loans under the Credit Facility are collateralized by
substantially all of the assets of the Company and its subsidiaries.
ACQUIRED THEATERS - On September 12, 1997, the Company completed the
acquisition of five theaters from United Artists (the "UA Acquisition") for a
purchase price of $8.65 million in cash, which was provided by the proceeds of
the Offering and under the Credit Facility. The completion of this transaction
raises the Company's total number of theaters to 22 and its screen count to 83.
The Company believes that its capital needs for the acquisition,
renovation and development of additional theaters for the next 12 to 18 months
will be met by means of the Credit Facility, from internally- generated cash
flow and from the net proceeds from possible future debt or equity offerings.
10
<PAGE>
The unaudited pro forma results of operations included in this report have
been prepared as if the Company's 1996 and 1997 acquisitions occurred as of the
beginning of the respective periods after giving effect to certain adjustments,
including increased depreciation expense and increased interest expense on
acquisition debt. The pro forma results have been prepared for informational
purposes only and do not purport to indicate the results of operations (i) that
actually would have occurred had the acquisitions been consummated on the dates
indicated or (ii) that may occur in the future. The pro forma results of
operations (unaudited) for the six and three months ended June 30, 1997 are
presented on the face of the Statements of Operations, together with the
respective historical results of operations.
Unaudited condensed pro forma results of operations for the six months
ended June 30, 1996 are summarized below:
JUNE 30, 1996
-------------
(UNAUDITED)
Revenues $ 8,389,864
=========
Net loss $ 564,235
=========
Net loss per share $ (.21)
=====
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF THE COMPANY'S RESULTS OF
OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH THE
INFORMATION SET FORTH IN THE UNAUDITED FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED ELSEWHERE HEREIN AND THE AUDITED FINANCIAL STATEMENTS AND THE NOTES
THERETO INCLUDED IN THE SB-2, WHICH BECAME EFFECTIVE ON AUGUST 12, 1997.
OVERVIEW
The Company has achieved significant growth in theaters and screens since
its formation in December 1994. From inception, when the Company acquired the
right to operate four theaters with eight screens, through September 12, 1997
the Company has acquired the right to operate 18 theaters with 69 screens and
has added six screens to two existing theaters. The Company expects that its
future revenue growth will be derived primarily from the operation of additional
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 a 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.
11
<PAGE>
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
benefits 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 the right to operate three
theaters with 11 screens in Nassau County, New York in an all-cash transaction.
In May 1996, the Company purchased the leaseholds of four theaters with 19
screens in New York and New Jersey for a combination of stock and cash. In July
1996, Clearview purchased the leaseholds of two theaters with seven screens in
Westchester County, New York for cash. In December 1996, Clearview acquired two
more theaters with the underlying real estate and the leasehold of another
theater with a total of 13 screens in Bergen County, New Jersey for cash. In
September 1997, Clearview acquired three theaters with the underlying real
estate and the leaseholds of two additional theaters. These five theaters have a
total of 14 screens and are located in Wayne, New Jersey and Bronxville,
Larchmont, Mamaroneck and New City, New York. The total purchase price of $8.65
million was paid using the proceeds from the Offering and financing from the
Credit Facility.
COMPARATIVE QUARTERLY RESULTS
TOTAL REVENUES. Total revenues for the six and three months ended June 30,
1997 were $6,187,810 and $2,681,875, respectively, as compared to $2,421,344 and
$1,408,341 for the six and three months ended June 30, 1996, respectively. The
increases in revenues of 155.6% and 90.4%, respectively, are principally
attributable to an increase in attendance to 891,553 attendees in the six months
ended June 30, 1997 from 347,621 attendees in the six months ended June 30,
1996, and an increase in attendance to 351,805 attendees in the three months
ended June 30, 1997 from 197,500 attendees in the three months ended June 30,
1996. The increase in attendance occurred principally because of the addition of
39 screens during 1996.
FILM RENTAL AND BOOKING FEES. Film rental and booking fees increased by
156.8% and 95.8% to $2,188,700 and $992,574 for the six and three months ended
June 30, 1997, respectively, from $852,359 and $506,948 for the six and three
months ended June 30, 1996, respectively. As a percentage of box office
receipts, film rentals and booking fees were 46.5% for the six months ended June
30, 1997 as compared to 49.7% for the six months ended June 30, 1996. Such costs
were 49.5% of box office receipts for the three months ended June 30, 1997, as
compared to 47.4% for the same 1996 period. See "Operating Income (Loss)" below
for additional information.
COST OF CONCESSION SALES. Cost of concession sales increased by 153.7% and
95.9% to $221,278 and $106,029 for the six and three months ended June 30, 1997,
respectively, from $87,219 and $54,122 for the six and three months ended June
30, 1996, respectively. As a percentage of concession revenues, the cost of
concession sales were 16.5% and 17.9% for the six and three months ended June
30, 1997, respectively, compared to 15.8% and 16.7% for the six and three months
ended June 30, 1996, respectively.
12
<PAGE>
THEATER OPERATING EXPENSES. Theater operating expenses increased by
139.3% and 119.3% to $2,448,960 and $1,228,805 for the six and three months
ended June 30, 1997, respectively, from $1,023,237 and $560,213 for the six and
three months ended June 30, 1996, respectively. This increase is attributable
solely to the nine theaters acquired in 1996, which acquisitions occurred during
the second, third and fourth quarters of 1996. As a percentage of total
revenues, theater operating expenses decreased to 39.6% and increased to 45.8%
for the six and three months ended June 30, 1997, respectively, compared to
42.3% and 39.8% for the six and three months ended June 30, 1996, respectively.
The decrease for the six-month period, as a percentage of total revenues, is
primarily due to the Company's efficient management of its variable 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.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased by 77.8% and 61.2% to $404,718 and $212,912 for the six and three
months ended June 30, 1997, respectively, from $227,600 and $132,075 for the six
and three months ended June 30, 1996, respectively. The 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 6.5% and 7.9% for the six and three months ended June 30, 1997,
respectively, from 9.4% for the six and three months ended June 30, 1996. The
decrease, as a percentage of total revenues is due primarily 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
increased by 462.1% and 262.8% to $797,707 and $384,696 for the six and three
months ended June 30, 1997, respectively, from $141,906 and $106,032 for the six
and three months ended June 30, 1996, respectively. The increase was primarily a
result of the acquisition of the nine theaters acquired in the second, third and
fourth quarters of 1996, which significantly increased the Company's depreciable
and amortizable assets.
OPERATING INCOME (LOSS) - Operating income increased for the six months
ended June 30, 1997 by 42.1% to $126,477 and decreased for the three months
ended June 30, 1997 by 596.7% to an operating loss of $243,141. Operating income
was $89,023 and $48,951 for the six and three months ended June 30, 1996,
respectively. As a percentage of total revenues, operating income (loss) was
2.0% and (9.1)% for the six and three months ended June 30, 1997 and 3.7% and
3.5% for the six and three months ended June 30, 1996, respectively. The
fluctuations were primarily a result of the films available for exhibition
during the three-month period ended June 30, 1997.
As discussed above, film rental and booking fees (as a percentage of box
office receipts) for the three months ended June 30, 1997 increased to 49.7%
from 47.4% in the similar 1996 period. Such increase in costs and related
decrease in operating income is attributable to the selection of films released
during the second quarter of 1997. A number of films released during the second
quarter of 1997 experienced successful opening weekends but were unable to
sustain the popularity to generate significant box office receipts thereafter.
As film exhibitors incur much greater film rental fees for the opening weeks of
a film's release when compared to the fees incurred for later weeks, this trend
resulted in the increase in film cost for the Company and the entire motion
picture exhibition industry.
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<PAGE>
INTEREST EXPENSE. Interest expense increased by 325.8% and 215.9% to
$724,146 and $365,180 for the six and three months ended June 30, 1997,
respectively, from $170,064 and $115,598 for the six and three months ended June
30, 1996, respectively. The increase was attributable to the significant
increase in the Company's total debt during the second, third and fourth
quarters of 1996, which was primarily incurred in connection with the Company's
acquisitions during that year.
NET LOSS. Net loss increased to $597,699 and $608,321 for the six and
three months ended June 30, 1997, respectively, from $81,041 and $66,647 for the
six and three months ended June 30, 1996, respectively. The increase in the net
loss was primarily a result of the films available for exhibition during the two
periods, as discussed above.
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. The
Company's most significant operating expenses, film rental and booking fees, are
not typically paid to distributors until 30 to 45 days following the receipt of
the applicable cash ticket payments. In addition, most of the rest of the
Company's other operating expenses, such as theater payroll and theater rent,
are paid bi-weekly or monthly, respectively. The periods between the receipt of
cash from operations and use of that cash to pay the related expenses provide
certain operating capital to the Company.
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 $1,766,222 at June 30,
1997.
The Company has historically financed its day-to-day operations
principally from the cash flow generated by its operating activities. Such cash
flow from operations totaled $537,526 for the six months ended June 30, 1997, as
compared to $450,163 for the similar 1996 period. The difference between the
Company's net loss and its cash flow from operating activities is principally
due to the Company's depreciation and amortization expenses of $797,707 for the
six months ended June 30, 1997 and $141,906 for the similar 1996 period, which
are non-cash expenses, and an increase in accounts payable. The Company's cash
flow generated by its operating activities was a negative $242,929 and a
positive $527,255 for the three months ended June 30, 1997 and 1996,
respectively. The difference between the Company's net income or loss and its
cash flow from operating activities for the three months ended June 30, 1997 and
1996 is principally due to the Company's depreciation and amortization expenses
of $384,696 and $106,032 for the three months ended June 30, 1997 and 1996,
respectively, which are non-cash expenses, and an increase in accounts payable
of $513,143 for the 1996 three-month period.
The Company's capital requirements during 1997 arose principally in
connection with the renovation of existing theaters, the development of new
theaters and the addition of screens to an existing theater. Such capital
expenditures were financed principally with bank borrowings and
internally-generated cash. Capital expenditures, exclusive of theater
acquisitions, totaled approximately $1,393,000 during the first six months of
1997. 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
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of gross proceeds from the sale of shares of Class A Preferred Stock and $1.1
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 to purchase theaters with
their underlying real estate or to purchase properties for development as
theaters 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 in 1997, including
acquisitions, will be approximately $25.0 million. Of this amount, $500,000 was
used to add four screens to the Company's theater in Chester, New Jersey,
$900,000 used to convert a part of a building into a theater in Summit, New
Jersey, and $8,650,000 was used to consummate the UA Acquisition.
LIQUIDITY
INITIAL PUBLIC OFFERING - On August 22, 1997, the Offering was consummated
and the Company sold 1,000,000 shares of Common Stock. Gross proceeds totaled
$8,000,000 and net proceeds to the Company, after expenses of the Offering,
totaled approximately $6,300,000. Subsequently, the Company's underwriters
exercised their over-allotment option to purchase 150,000 additional shares of
Common Stock, resulting in additional gross and net proceeds to the Company of
$1,200,000 and $1,074,000, respectively.
CREDIT AGREEMENT - The Credit Facility consists of a $1.0 million
revolving credit facility, a term loan facility of $14.0 million used to
refinance existing term loans of $10.4 million and for $3.6 million of new term
loans of which $1.95 million was used to finance part of the purchase price for
five theaters acquired from United Artists, and a term loan facility of up to
$15.0 million to finance future capital expenditures and acquisitions. The
interest rate on all loans under the Credit Facility is 1/2% to 1% over that
lender's prime rate depending upon certain financial ratios of the Company.
Principal is to be paid quarterly and interest is payable monthly in arrears.
The final maturity of all term loans will be on the fifth anniversary of the
Credit Facility. The loans under the Credit Facility are collateralized by
substantially all of the assets of the Company and its subsidiaries.
ACQUIRED THEATERS - The purchase price for the UA Acquisition was $8.65
million, which was paid by the proceeds of the Offering and under the Credit
Facility. The completion of this transaction raises the Company's total number
of theaters to 22 and its screen count to 83.
QUARTERLY RESULTS AND SEASONALITY
Historically, the most successful films have been released during the
summer months (July and August) 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 picure exhibition revenues 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.
EFFECTS OF INFLATION
Inflation has not had a significant impact on the Company's operations to
date.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The registration statement on Form SB-2 (File No. 333-27819) relating to
the public offering of up to 1,150,000 shares of Common Stock was filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, on May 27, 1997 and amended on July 18, 1997, August 4, 1997, August
11, 1997, and August 12, 1997 (the "Registration Statement"). The Registration
Statement was declared effective by the Securities and Exchange Commission on
August 12, 1997. The Offering commenced on August 19, 1997 and terminated on
September 15, 1997, after the sale of all 1,150,000 shares. One hundred and
fifty thousand shares were purchased from the Company by its underwriters, for
whom Prime Charter Ltd. ("Prime Charter") was acting as the representative,
solely for the purpose of covering over-allotments.
The aggregate offering price of the shares of Common Stock sold in
the Offering is $9,200,000. As of June 30, 1997, the Company paid $100,000 to
Prime Charter for expenses and incurred an estimated $63,285 for other expenses
in connection with the Offering. Since June 30, 1997, the Company has incurred
expenses in connection with the Offering estimated at $1,716,000 through
September 15, 1997. A description of those expenses will be provided in the
Company's next quarterly report on Form 10-QSB.
The estimated net proceeds of the Offering, after deducting the expenses
paid as of June 30, 1997 and the estimated expenses incurred in connection with
the Offering from June 30, 1997 through September 15, 1997, are $7,320,715.
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The proceeds of the Offering have been used to retire a Senior
Subordinated Note (principal amount $600,000) issued by the Company to Magic
Cinemas LLC on December 13, 1996 and to pay a substantial portion of the
purchase price for the UA Acquisition which was consummated in accordance with
an Agreement of Purchase and Sale by and among United Artists Theatre Circuit,
Inc., United Artists Properties I Corp., Mamaroneck Playhouse Holding Corp.
(collectively, the "Seller"), the Company and CCC Bronxville Cinema Corp., CCC
Mamaroneck Cinema Corp., CCC Wayne Cinema Corp., CCC Cinema 304 Corp., CCC
Larchmont Cinema Corp. and CCC BC Realty Corp.(collectively, the
"Subsidiaries"), dated July 21, 1997 (the "Purchase Agreement"). The
Subsidiaries are wholly-owned subsidiaries of the Company.
The use of the proceeds of the Offering by the Company is in accordance
with the description of the use of proceeds appearing on page 13 of the
prospectus included in the Registration Statement. As the Offering occurred
after June 30, 1997, the use of the proceeds of the Offering will be more
specifically described in the Company's next quarterly report on Form 10-QSB.
ITEM 5. OTHER INFORMATION
Pursuant to the Purchase Agreement, the Subsidiaries purchased (i) three
parcels of real property, together with the improvements located thereon and
certain personal property used in the operation of or in connection with three
motion picture theaters, located in New York, and (ii) two leasehold interests
and certain personal property used in the operation of two motion picture
theaters, one in New York and one in New Jersey.
The aggregate purchase price for the UA Acquisition was $8.65 million. The
aggregate purchase price was determined by arm's-length negotiations between
the Seller and the Company. A portion of the purchase price ($6.7 million) was
paid from the net proceeds of the Offering. The balance of the purchase price
($1.95 million) was paid with funds borrowed by the Company and its wholly-owned
subsidiaries pursuant to the Credit Facility.
The leasehold interests, personal property and real property and the
improvements thereon that were purchased by the Subsidiaries were used by the
Seller in the operation of or in connection with four motion picture theaters
located in New York and one motion picture theater located in New Jersey. The
Subsidiaries intend to continue to use the purchased assets in the operation of
five motion picture theaters. No material relationship exists between the Seller
and the Company or any affiliates of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibits are attached hereto or incorporated by reference as
part of this report.
METHOD
EXHIBIT DESCRIPTION OF FILING
2.01 Agreement of Purchase and Sale by and among Incorporated
United Artists Theatre Circuit, Inc., United by reference
Artists Properties I Corp., Mamaroneck Playhouse from Exhibit
Statement Holding Corp., Clearview Cinema Group, 2.01 to the
CCC Bronxville Cinema Corp., CCC Mamaroneck Cinema SB-2 Regist-
Inc., thereto on August 4, 1997 Corp., CCC Wayne ration filed
Cinema Corp., CCC Cinema 304 Corp., CCC Larchmont with Amend-
Cinema Corp., and CCC BC Realty Corp., dated ment No. 2
July 21, 1997 on August 4,
1997
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3.01 Amended and Restated Certificate of Incorporation Filed herewith
of Clearview Cinema Group, Inc.
3.02 Amended and Restated By-laws of Clearview Cinema Filed herewith
10.01 Amended and Restated Credit Agreement, by and Filed herewith
among Clearview Cinema Group, Inc., its
wholly-owned subsidiaries and The Provident Bank,
dated September 12, 1997
10.02 Agreement, dated as of September 1, 1997, by and Filed herewith
among Clearview Cinema Group, Inc., First New
York Realty Co. Inc. and Brett E. Marks
11.01 Statement re: computation of per share earnings Filed herewith
27.01 Financial Data Schedule Filed herewith
No reports on Form 8-K were filed by the Company during this reporting
period.
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SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CLEARVIEW CINEMA GROUP, INC.
September 26, 1997 /s/ A. DALE MAYO
----------------
A. Dale Mayo
Chairman of the Board, President and
Chief Executive Officer
September 26, 1997 /s/ JOAN M. ROMINE
------------------
Joan M. Romine
Treasurer and Chief Financial Officer
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EXHIBIT INDEX
METHOD
EXHIBIT DESCRIPTION OF FILING
2.01 Agreement of Purchase and Sale by and among Incorporated
United Artists Theatre Circuit, Inc., United by reference
Artists Properties I Corp., Mamaroneck Playhouse from Exhibit
Statement Holding Corp., Clearview Cinema Group, 2.01 to the
CCC Bronxville Cinema Corp., CCC Mamaroneck Cinema SB-2 Regist-
Inc., thereto on August 4, 1997 Corp., CCC Wayne ration filed
Cinema Corp., CCC Cinema 304 Corp., CCC Larchmont with Amend-
Cinema Corp., and CCC BC Realty Corp., dated ment No. 2
July 21, 1997 on August 4,
1997
3.01 Amended and Restated Certificate of Incorporation Filed herewith
of Clearview Cinema Group, Inc.
3.02 Amended and Restated By-laws of Clearview Cinema Filed herewith
10.01 Amended and Restated Credit Agreement, by and Filed herewith
among Clearview Cinema Group, Inc., its
wholly-owned subsidiaries and The Provident Bank,
dated September 12, 1997
10.02 Agreement, dated as of September 1, 1997, by and Filed herewith
among Clearview Cinema Group, Inc., First New
York Realty Co. Inc. and Brett E. Marks
11.01 Statement re: computation of per share earnings Filed herewith
27.01 Financial Data Schedule Filed herewith
18
EXHIBIT 3.01
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 certificate of incorporation of the corporation, as
previously amended and restated, is hereby amended and restated to read in its
entirety 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
1. The total number of shares of capital stock that the corporation shall
have authority to issue is 12,500,000 shares consisting of (a) 10,000,000 shares
of Common Stock, with a par value of one cent ($.01) per share (the "Common
Stock"); and (b) 2,500,000 shares of Preferred Stock, with a par value of one
cent ($.01) per share (the "Preferred Stock").
2. Shares of the capital stock of the corporation may be issued by the
corporation from time to time for such legally sufficient consideration as may
be fixed from time to time by the Board of Directors of the corporation (the
"Board of Directors"). Except for and subject to the rights expressly granted to
the holders of shares of Preferred Stock (a) in this Amended and Restated
Certificate of Incorporation, (b) pursuant to the authority vested by this
Amended and Restated Certificate of Incorporation in the Board of Directors, or
(c) by the laws of the State of Delaware, the holders of shares of Common Stock
shall have exclusively all rights of stockholders.
3. Subject to the rights, if any, of the holders of shares of any class or
series of Preferred Stock and to the requirements of the laws of the State of
Delaware, authority is hereby expressly vested in the Board of Directors at any
time and from time to time by resolution to divide
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the Preferred Stock into one or more classes or series, to determine for any
such class or series its designation and the number of shares of Preferred Stock
of such class or series and the voting powers, preferences, optional and other
special rights, if any, of the shares of Preferred Stock of such class or series
and the restrictions or qualifications thereof, and to issue such Preferred
Stock.
4. As of the date of this Amended and Restated Certificate of
Incorporation, there is a class of Preferred Stock outstanding with the
following terms:
(a) DESIGNATION. This class of Preferred Stock shall consist of 1,303
shares and shall be designated as the "Class A Convertible Preferred Stock" (the
"Class A Convertible Preferred Stock").
(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 (i) the per share dividend amount
declared from time to time (and not revoked), in cash or property, on the Common
Stock multiplied by (ii) the number of shares of Common Stock into which each
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 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 capital 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 the Common Stock or on any other shares of capital
stock of the corporation ranking junior to the Class A Convertible Preferred
Stock as to dividends or the distribution of assets upon liquidation ("Junior
Stock") and no Common Stock or Junior Stock 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 voting
power of the shares of capital stock or other ownership interests having
ordinary voting power (including capital stock or 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 is at the
time owned, directly or indirectly, through one or more intermediaries, by the
corporation (each, a "Subsidiary" and collectively, "Subsidiaries"), other than
by exchange therefor of shares of Common Stock or Junior Stock, or out of the
proceeds of the substantially concurrent sale of shares of Common Stock or
Junior Stock, unless all dividends on the Class A Convertible Preferred Stock
shall have been paid.
Subject to the above limitation and any limitations contained
elsewhere herein, dividends may be paid on the Common Stock or Junior Stock 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 shares 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 Junior Stock. If, upon such Liquidation Event, the
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assets distributable to the holders of shares 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 (i)
pay a dividend on the Class A Convertible Preferred Stock in shares of Class A
Convertible Preferred Stock, (ii) subdivide the outstanding shares of Class A
Convertible Preferred Stock, or (ii) combine the outstanding shares of Class A
Convertible Preferred Stock into a smaller number of shares, the Liquidation
Value in effect immediately prior thereto shall be proportionately adjusted so
that the aggregate Liquidation Value of the Class A Convertible Preferred Stock
immediately after such event shall equal the aggregate Liquidation Value of the
Class A Convertible Preferred Stock immediately prior thereto. An adjustment
made pursuant to this paragraph shall become effective (x) upon the effective
date in the case of a subdivision or combination or (y) upon the record date in
the case of a dividend of shares.
After payment in full of the aggregate Liquidation Value and
dividends, as set forth above, to the holders of shares 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
the Common Stock and any Junior Stock.
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 the
holders of voting securities of the corporation having more than fifty percent
(50%) of the voting power of the outstanding voting securities of the
corporation (which includes for all purposes of this Amended and Restated
Certificate of Incorporation, other than the election of directors, the Class A
Convertible Preferred Stock) hold, immediately after such transaction, voting
securities of the surviving entity having more than fifty percent (50%) of the
voting power of the outstanding voting securities 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.
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(d) VOTING RIGHTS.
(i) GENERAL. Holders of shares 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 share of Class A Convertible Preferred Stock shall be convertible on the
relevant record date (calculated to the nearest 1/100th of a share), voting as a
single class with the holders of shares of Common Stock at all meetings of
stockholders, 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 shares of Class A Convertible Preferred Stock and Common Stock have
separate voting rights as provided elsewhere in this Amended and Restated
Certificate of Incorporation (including the election of directors) or as
required by Delaware law. Notwithstanding anything to the contrary set forth
herein, if the holders of the Class A Convertible Preferred Stock are no longer
entitled, voting separately as a single class, to elect one or more directors of
the corporation in accordance with Section (d)(ii), then, from and after such
time, the holders of shares 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 share of
Class A Convertible Preferred Stock shall be convertible on the relevant record
date (calculated to the nearest 1/100th of a share), voting as a single class
with the holders of shares of Common Stock at all meetings of stockholders, upon
the election of directors.
(ii) ELECTION OF DIRECTORS. So long as the outstanding shares of
Class A Convertible Preferred Stock have in the aggregate at least fifteen
percent (15%) of the voting power of the outstanding voting securities of the
corporation, the holders of the Class A Convertible Preferred Stock, voting
separately as a single class, shall be entitled to elect up to two directors of
the corporation. So long as the outstanding shares of Class A Convertible
Preferred Stock have in the aggregate less than fifteen percent (15%) but at
least five percent (5%) of the voting power of the outstanding voting securities
of the corporation, the holders of the Class A Convertible Preferred Stock,
voting separately as a single class, shall be entitled to elect up to one
director of the corporation. If the outstanding shares of Class A Convertible
Preferred Stock have in the aggregate less than fifteen percent (15%) but at
least five percent (5%) of the voting power of the outstanding voting securities
of the corporation and as of said date there are two directors of the
corporation who had been elected by the holders thereof, then such directors may
both remain in office only until the next meeting held for the purpose of
electing directors and shall be treated as having resigned at such meeting
regardless of whether the holders of the Class A Convertible Preferred Stock
vote to elect a director at such meeting. If the outstanding shares of Class A
Convertible Preferred Stock have in the aggregate less than five percent (5%) of
the voting power of the outstanding voting securities of the corporation, the
holders of the Class A Convertible Preferred Stock shall not be entitled, voting
separately as a single class, to elect any directors of the corporation and any
director as of said date who had been so elected by the holders of the Class A
Convertible Preferred Stock shall be treated as having immediately resigned
without the necessity of such person taking any action. Any directors to be
elected by the holders of the Class A Convertible Preferred Stock shall be
elected annually. At any meeting held for the purpose of electing directors, the
presence in person or by proxy of the holders of more than fifty percent (50%)
of the shares of Class A Convertible Preferred Stock then outstanding shall
constitute a quorum of the Class A Convertible Preferred Stock for the election
of directors to be elected solely by the holders of the Class A Convertible
Preferred Stock. In lieu of an election at a meeting, the holders of not less
than the minimum number of shares of Class A Convertible Preferred Stock
necessary to take action by written consent under applicable law may elect the
directors or director to be elected solely by the holders of the Class A
Convertible Preferred Stock by executing one or more written consents setting
forth the action so taken. A vacancy in any directorship elected solely by the
holders of the Class A Convertible Preferred Stock shall be filled only by the
vote or
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written consent of holders of shares of Class A Convertible Preferred Stock.
(iii) CERTAIN CORPORATE ACTIONS. The affirmative vote of the holders
of more than fifty percent (50%) of the outstanding shares of Class A
Convertible Preferred Stock, voting separately as a single class, shall be
required to authorize any of the following transactions: (x) any amendment to
this Amended and Restated Certificate of Incorporation if such amendment would
alter the aggregate number of authorized shares, or the par value, of the Class
A Convertible Preferred Stock or would adversely affect the powers, preferences
or rights of the Class A Convertible Preferred Stock; (y) any issuance by the
corporation of capital stock having a dividend or liquidation preference senior
to the Class A Convertible Preferred Stock; or (z) any issuance by the
corporation of capital stock having a dividend or liquidation preference on a
parity with the Class A Convertible Preferred Stock; provided, however, that the
right of the holders of the Class A Convertible Preferred Stock to vote
separately as a class with respect to any event of the type described in this
clause (z) shall immediately terminate when the outstanding shares of Class A
Convertible Preferred Stock have in the aggregate less than five percent (5%) of
the voting power of the outstanding voting securities of the corporation.
(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, 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) as is obtained by
dividing the Liquidation Value at the time of conversion, plus all accrued and
unpaid dividends thereon, by $2,558.85 (the "Conversion Price"); provided,
however, that the Conversion Price shall be adjusted 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 rights of the holders of the
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 only the
Common Stock authorized at the time of the original issuance of the Class A
Convertible Preferred Stock and capital 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 formulas 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 occurrence 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, plus all accrued and 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) as is obtained by dividing the Liquidation Value at
the time of conversion, plus all accrued and unpaid dividends thereon, by the
Conversion Price then in effect.
(2) As used herein, a "Qualifying Liquidity Event" shall mean
the first to
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occur of any of the following events:
(x) Following the receipt by all of the holders of shares of
Class A Convertible Preferred Stock of a binding, unconditional written offer to
purchase all of the shares of Common Stock into which such shares are then
convertible for a cash purchase price equal to or greater than the Minimum
Purchase Price (as defined herein) 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 (A) the date
upon which a specific, written rejection notice is delivered to such offeror by
the holder declining such offer, or (B) if no such rejection notice is
delivered, the date thirty (30) days after the date of receipt of such written
offer by such holder.
(y) Following the receipt by all of the holders of shares 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 then 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 date of the successful closing of such
underwritten public offering.
(z) Following the listing by the corporation of shares of
Common Stock on the New York Stock Exchange or the American Stock Exchange or
with 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 the shares of Class A Convertible Preferred
Stock held by a holder are convertible become freely transferable pursuant to
Securities and Exchange Commission Rule 144 (or any successor rule or
regulation) as then in effect and may be disposed of by such holder in a single
transaction in compliance with the volume limitations of such Rule 144;
provided, that the daily Common Stock Market Prices (as defined herein) for each
of the one hundred and twenty (120) consecutive Trading Days (as defined herein)
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" shall
mean 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 Trading Day shall mean (x) if the Common Stock is listed or admitted for
trading on the New York Stock Exchange (or any successor to such exchange) or
any other 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 traded, or (y) if not
listed or traded as described in clause (x), the last sale price of the Common
Stock quoted on the National Market System of NASDAQ, or any similar system of
automated dissemination of quotations of securities prices then in common use,
if so quoted, or (z) if not listed or traded as described in clause (x) or
quoted as described in clause (y), 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 at least five of the ten preceding
Trading Days. If the Common Stock is quoted on a national
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securities or central market system in lieu of any market or quotation system
described above, then the Common Stock Market Price shall be determined in the
manner set forth in clause (x) of the preceding sentence if actual transactions
are reported and in the manner set forth in clause (z) 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 (v) any
day on which the New York Stock Exchange (or any successor to such exchange) is
open for the transaction of business, or (w) 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 day upon which the principal national or regional
securities exchange on which the Common Stock is listed or admitted for trading
is open for the transaction of business, or (x) if not listed or admitted for
trading as described in clause (v) or (w), and if at such time the sale price of
the Common Stock is quoted on the National Market System of NASDAQ or any
similar system of automated dissemination of quotations of securities prices
then in common use, any day for which such system provides quotations with
respect to securities upon which it reports, or (y) if not so listed or admitted
for trading or quoted, and if at such time bid and asked quotations for the
Common Stock are reported by the National Quotation Bureau Incorporated, any day
for which the National Quotation Bureau Incorporated provides bid and asked
quotations with respect to securities upon which it reports, or (z) if not so
listed or admitted for trading or 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
Common Stock, (2) subdivide the outstanding shares of Common Stock, (3) combine
the outstanding shares of Common Stock into a smaller number of shares, or (4)
issue by reclassification of the shares of Common Stock any capital stock of the
corporation, the Conversion Price in effect immediately prior thereto shall be
appropriately adjusted so that the aggregate Conversion Price of the Class A
Convertible Preferred Stock immediately after such event shall equal the
aggregate Conversion Price of the Class A Convertible Preferred Stock
immediately prior thereto. An adjustment made pursuant to this subparagraph (A)
shall become effective (x) upon the effective date in the case of a subdivision,
combination or reclassification or (y) upon the record date in the case of a
dividend.
(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 such issuance 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 (1) 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
issuance or sale, multiplied by the Conversion Price in effect immediately prior
to such issuance or sale, and (y) the aggregate amount of the consideration
received by the corporation upon such issuance or sale by (2) the total number
of shares of Common Stock outstanding or deemed to be outstanding pursuant to
subparagraph (ii)(C) below immediately after such issuance 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, pursuant to the formula set forth
in subparagraph (ii)(B) above, based on a price per share of Common Stock equal
to the sum of (1)(x) the price paid for any such instrument divided by (y) the
number of shares of Common Stock for which such instrument is exercisable, and
(2) the exercise price per share of Common Stock set forth in such instrument if
such total is less than the
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Conversion Price in effect immediately prior to such issuance or sale and
assuming the exercise of all such options, rights or warrants.
(D) In case the corporation shall issue or sell any other security
or instrument directly or indirectly convertible into or exchangeable for shares
of Common Stock (each, a "Convertible Security"), the Conversion Price shall be
adjusted on the date of such issuance or sale, pursuant to the formula set forth
in subparagraph (ii)(B) above, based on a price per share of Common Stock equal
to the sum of (1)(x) the price paid for any such Convertible Security divided by
(y) the number of shares of Common Stock into which such Convertible Security is
convertible or for which such Convertible Security is exchangeable and (2) the
additional amount per share of Common Stock, if any, payable in connection with
any such conversion or exchange if such total is less than the Conversion Price
in effect immediately prior to such issuance or sale and assuming the conversion
or exchange of all such Convertible Securities.
(E) Notwithstanding any of the other provisions contained in this
Section (e)(ii), in no event shall there be an adjustment of the Conversion
Price as a result of (1) the exercise of any options, rights, warrants or
conversion privileges that were outstanding as of the date of the initial
issuance of shares of Class A Convertible Preferred Stock, or (2) the exercise
of any options, rights or warrants issued or sold after such date for which
adjustment has already been made pursuant to subparagraph (ii)(C) above or which
were issued or sold without adjustment in accordance with the terms of such
subparagraph (ii)(C).
(F) If any options, rights 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 amount of
additional consideration payable to the corporation upon the exercise,
conversion or exchange thereof, the Conversion Price then applicable shall,
forthwith upon any such increase or decrease becoming effective, be
appropriately readjusted to reflect such increase or decrease in such amount.
If any options, rights or warrants or Convertible Securities on
account of which an adjustment has been previously made pursuant to this Section
(e)(ii) shall expire or be redeemed, repurchased or paid without having been
exercised, converted or exchanged, then the Conversion Price shall forthwith be
appropriately adjusted to the Conversion Price that would have been in effect
had no adjustment been made on account of such options, rights or warrants or
Convertible Securities.
(G) No adjustment in the Conversion Price need be made under this
Section (e)(ii) unless the adjustment would result in an increase or decrease of
at least one percent (1%) in the number of shares of Common Stock into which
each share of Class A Convertible Preferred Stock would have been converted at
the time such adjustment is otherwise required to be made; provided, however,
that such adjustment shall be carried forward and made at the time of and
together with any subsequent adjustment which, together with such adjustment and
any other adjustment 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 Conversion Price need be made under this
Section (e)(ii) for any change in the par value of the Common Stock. If an
adjustment is made in the Conversion Price as of a record date for a
distribution in accordance with this Section (e)(ii) and if such distribution is
subsequently canceled, then the Conversion Price then in effect shall be
readjusted, effective as of the date when the Board of Directors determines to
cancel such distribution, to the
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Conversion Price that would have been in effect if such record date had not been
fixed. No adjustment need be made under this Section (e)(ii) if the corporation
issues or distributes to each holder of shares of Class A Convertible Preferred
Stock the shares of Common Stock, options, rights or warrants which such holder
would have been entitled to receive had all the Class A Convertible Preferred
Stock been converted into Common Stock immediately prior to the record date for
such issuance or distribution or, if there is no such record date, immediately
prior to such issuance or distribution.
(iii) 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 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
distributable to the holders of the Common Stock;
which, in each such case, does not constitute a Liquidation Event, each share of
Class A Convertible Preferred Stock then outstanding shall thereafter be
convertible into the number and class of shares or other securities or property
of the corporation or of the entity resulting from such consolidation or merger
or with which such statutory share exchange or to which such sale, transfer or
other disposition shall have been made, to which the shares of 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, sale, transfer or other
disposition if outstanding at the time thereof. In any such case, appropriate
adjustments shall be made in the application of the provisions 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
other securities or property thereafter issuable or deliverable upon the
conversion of shares 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, sale, transfer or other disposition so that
the conversion rights of the holders of the Class A Convertible Preferred Stock
shall be protected and preserved in accordance with the provisions of this
paragraph (iii). The provisions of this paragraph (iii) shall similarly apply to
successive capital reorganizations, consolidations, mergers, statutory share
exchanges, sales, transfers or other dispositions of property as aforesaid.
(iv) NOTICE OF ADJUSTMENTS. Whenever the Conversion Price shall be
adjusted as provided in Section (e)(ii), 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 shares of Class A Convertible Preferred Stock
and/or securities which by their terms are exercisable for shares of Class A
Convertible Preferred Stock, stating the adjusted Conversion Price determined as
provided in Section (e)(ii) 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 any adjustment of the 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
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holders of the Class A Convertible Preferred Stock. Any adjustment to the
Conversion Price which is 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 securities which by their terms are exercisable for shares of Class
A Convertible Preferred Stock.
(v) NOTICE OF CORPORATE ACTION. In case the corporation shall
propose to:
(A) pay any dividend in shares of capital stock upon the Common
Stock or make any other distribution (other than the payment of cash dividends)
to the holders of the Common Stock; or
(B) offer to the holders of the Common Stock rights to subscribe for
any shares of any class of capital stock of the corporation or any other rights
or options; or
(C) effect any reclassification of the Common Stock (other than a
reclassification involving merely the subdivision or combination of the
outstanding shares of Common Stock) or capital reorganization, consolidate with
or merge into another corporation, engage in any statutory share exchange
requiring the approval of its stockholders or 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 the
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 the 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 offer
of such rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, statutory share exchange, sale, transfer,
disposition or Liquidation Event shall take place, as the case may be, and the
date of participation therein by the holders of the 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 such facts with respect
thereto as shall be reasonably necessary to inform the holders of the Class A
Convertible Preferred Stock as to the effect of such action upon their
conversion rights.
(vi) Surrender of Certificate Upon Conversion. In order to convert
shares of Class A Convertible Preferred Stock into shares of 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
corporation 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, give written notice to the corporation at said office
that such holder elects to convert such shares, and state therein the name or
names (with addresses) in which such holder wishes the certificate or
certificates for such shares of Common Stock to be issued. Shares of Class A
Convertible Preferred Stock shall be deemed to have been converted as of the
date of the surrender of the certificate or certificates for such shares for
conversion as provided above, and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock as of
such date. As soon as practicable on or after the date of conversion as
aforesaid, the corporation will
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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 (viii) provided, to the person or
persons entitled to receive the same.
(vii) CANCELLATION. All shares of Class A Convertible Preferred
Stock converted into shares of Common Stock shall have the status of authorized
and unissued shares of Preferred Stock undesignated as to class or series and
shall not be reissued as shares of Class A Convertible Preferred Stock.
(viii) 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 a 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.
(ix) 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.
(x) FULLY PAID AND NONASSESSABLE SHARES. The corporation warrants
that all shares of Common Stock issued upon conversion of shares of Class A
Convertible Preferred Stock will, upon issuance, be fully paid and
non-assessable by the corporation and free from original issue taxes.
5. All actions that are required by the General Corporation Law of the
State of Delaware to be taken at an annual or special meeting of stockholders or
that may be taken at such a meeting must be taken at such a meeting and no such
action may be taken by means of signed consents in accordance with Section 228
of the General Corporation Law of the State of Delaware other than by the
holders of the Class A Convertible Preferred Stock in accordance with Sections
4(d)(ii) and 4(d)(iii) of this Article IV or by the holders of any other class
or series of Preferred Stock hereafter established with respect to any matters
on which such class or series vote separately as a single class.
ARTICLE V
The corporation is to have perpetual existence.
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ARTICLE VI
The directors of the corporation to be elected by the holders of the
outstanding shares of capital stock of the corporation entitled to vote
generally for the election of directors (the "Common Directors") shall be
divided into three classes: Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the whole number of
Common Directors. The initial Class I, II and III Common Directors shall be
those elected and designated to serve as such pursuant to the written consent of
the stockholders of the corporation dated as of August 11, 1997 (the
"Stockholders Consent"). Such Class I Common Directors shall hold office for a
term to expire at the first annual meeting of the stockholders after the
Stockholders Consent; such Class II Common Directors shall hold office for a
term to expire at the second annual meeting of the stockholders after the
Stockholders Consent; and such Class III Common Directors shall hold office for
a term to expire at the third annual meeting of the stockholders after the
Stockholders Consent, subject, in the case of each such Common Director, to his
or her earlier death, resignation or removal. At each election of Common
Directors, the Common Directors elected to succeed those whose terms have
expired shall be identified as being of the same class as the Common Directors
they succeed and shall be elected to hold office for a term to expire at the
third annual meeting of the stockholders after their election or until their
respective successors are duly elected and qualified or until their earlier
death, resignation or removal. If the number of Common Directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
all classes as equal in number as possible, and any additional Common Director
elected to any class shall hold office for a term which shall coincide with the
terms of the other Common Directors in such class or until his or her successor
is duly elected and qualified or until his or her earlier death, resignation or
removal. No decrease in the number of directors of the corporation shall shorten
the term of any incumbent Common Director.
Subject to the rights of the holders of shares of any class or
series of Preferred Stock then outstanding, any director or directors may be
removed from office by vote of the stockholders entitled to vote thereon only
for cause at a special meeting of the stockholders called for such purpose. In
case any one or more directors are so removed, new directors may be elected at
the same meeting. The repeal of a provision of this Amended and Restated
Certificate of Incorporation or the By-laws of the corporation prohibiting, or
the addition of a provision to this Amended and Restated Certificate of
Incorporation or the By-laws of the corporation permitting, the removal by the
stockholders of a director or directors without assigning any cause shall not
apply to any incumbent director during the balance of the term for which he or
she was elected.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
1. To adopt, alter or repeal By-laws of the corporation in the manner and
to the extent permitted in those By-laws.
2. To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.
3. To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
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4. By a majority of the directors in office, to establish one or more
committees, each committee to consist of one or more directors. The Board of
Directors may appoint one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
such committee. The By-laws of the corporation may provide that, in the absence
or disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
she or they constitute a quorum, may by unanimous action appoint another
director to act at such meeting in the place of any such absent or disqualified
member. Any committee, to the extent provided in a resolution of the Board of
Directors or in the By-laws of the corporation, shall have and may exercise all
of the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, except to the extent prohibited by law.
To the extent a resolution of the Board of Directors or the By-laws of the
corporation expressly so provide, any such committee may have the power and
authority to declare a dividend or to authorize the issuance of shares of
capital stock of the corporation.
ARTICLE VIII
Meetings of the stockholders may be held within or without the State
of Delaware, as the By-laws of the corporation 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.
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ARTICLE IX
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 or
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 General Corporation Law of the State of Delaware,
or (iv) for any transaction from which such director derived an improper
personal benefit. The rights conferred by this Article IX shall be presumed to
have been relied upon by directors 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 the directors of the
corporation may otherwise be entitled. The corporation may enter into contracts
to provide the directors of the corporation with rights to indemnification to
the maximum extent permitted by the General Corporation Law of the State of
Delaware. The corporation may create trust funds, grant security interests in
the assets of the corporation, 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 IX, the By-laws of the corporation or any such
contract. The rights conferred by this Article IX shall continue as to any
person who has ceased to be a director of the corporation and shall inure to the
benefit of the heirs, executors and administrators of such person. 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.
ARTICLE X
In addition to the requirements of law and any other provision of
this Amended and Restated Certificate of Incorporation, the affirmative vote of
the holders of at least two-thirds of the voting power of the outstanding voting
securities of the corporation shall be required to delete, amend or supplement
any term or provision of this Article X, Article VI or Article IX or paragraph 5
of Article IV.
ARTICLE XI
The corporation reserves the right to amend, supplement 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.
THIRD. The foregoing amendment and restatement of the
Certificate of Incorporation has been approved by the Board of Directors.
FOURTH. The foregoing amendment and restatement of the
Certificate of Incorporation has been duly adopted in accordance with the
provisions of Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, Clearview Cinema Group, Inc. has caused this
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Amended and Restated Certificate of Incorporation to be signed and attested this
____ day of __________, 1997.
Attest: CLEARVIEW CINEMA GROUP, INC.
By: /s/ Sueanne Hall Mayo By: /s/ A. Dale Mayo
------------------------ -------------------------------
Sueanne Hall Mayo A. Dale Mayo
Vice President-Management Chairman of the Board, President
Information Systems and Secretary and Chief Executive Officer
-15-
EXHIBIT 3.02
AMENDED AND RESTATED
BY-LAWS
OF
CLEARVIEW CINEMA GROUP, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I MEETINGS OF STOCKHOLDERS
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. Quorum; Adjournments ..................................... 1
Section 1.6. Advance Notice of Stockholder Proposals .................. 2
Section 1.7. Advance Notice of Stockholder Nominations ................ 3
Section 1.8. Voting.................................................... 4
Section 1.9. Presence at Meeting....................................... 5
ARTICLE II DIRECTORS
Section 2.1. Powers of Directors ...................................... 5
Section 2.2. Number, Qualifications, Election and Term of
Office ................................................... 5
Section 2.3. Vacancies ................................................ 6
Section 2.4. Removal of Directors ..................................... 6
Section 2.5. Annual Meeting; Other Regular Meetings ................... 6
Section 2.6. Special Meetings ......................................... 7
Section 2.7. Quorum ................................................... 7
Section 2.8. Informal Action........................................... 7
Section 2.9. Telephone Participation in Meetings....................... 7
Section 2.10. Compensation of Directors................................. 8
ARTICLE III COMMITTEES OF DIRECTORS
Section 3.1. Appointment and Powers.................................... 8
Section 3.2. Appointment by Committees of Substitute
Members................................................... 8
Section 3.3. Procedure ................................................ 8
ARTICLE IV OFFICERS
Section 4.1. Enumeration................................................8
Section 4.2. Chairman of the Board .....................................9
Section 4.3. Chief Executive Officer....................................9
Section 4.4. President..................................................9
Section 4.5. Vice President.............................................9
Section 4.6. Secretary..................................................9
Section 4.7. Treasurer.................................................10
Section 4.8. Other Officers and Assistant Officers.....................10
Section 4.9. Compensation..............................................10
Section 4.10. Additional Duties of Officers.............................10
<PAGE>
ARTICLE V INDEMNIFICATION
Section 5.1. Indemnification in Actions, Suits or
Proceedings Other Than Those by or in the
Right of the Corporation ................................ 11
Section 5.2. Indemnification in Actions, Suits or
Proceedings by or in the Right of the
Corporation ............................................ 11
Section 5.3. Authorization of Indemnification ........................ 12
Section 5.4. Reliance ................................................ 12
Section 5.5. Indemnification by a Court .............................. 13
Section 5.6. Expenses Payable in Advance ............................. 13
Section 5.7. Non-exclusiveness ....................................... 13
Section 5.8. Effectiveness ........................................... 14
Section 5.9. Insurance ............................................... 14
Section 5.10. Indemnification Expenditures ............................ 14
Section 5.11. Certain Definitions ..................................... 14
Section 5.12. Survival of Indemnification and
Advancement of Expenses.................................. 15
Section 5.13. Limitation on Indemnification ........................... 15
Section 5.14. Repeal or Modification .................................. 15
Section 5.15. Indemnification of Employees and Agents ................. 15
ARTICLE VI SHARES OF CAPITAL STOCK
Section 6.1. Issuance of Shares ..................................... 15
Section 6.2. Shares Certificates...................................... 15
Section 6.3. Transfer of Shares ...................................... 16
Section 6.4. Lost, Stolen, Destroyed or Mutilated
Certificates .............................................16
Section 6.5. Regulations ............................................. 16
Section 6.6. Holders of Record ........................................16
Section 6.7. Record Date.............................................. 17
Section 6.8. Restriction on Transfer ................................. 17
ARTICLE VII GENERAL PROVISIONS
Section 7.1. Corporate Seal .......................................... 17
Section 7.2. Fiscal Year ............................................. 17
Section 7.3. Authorization ............................................18
Section 7.4. Financial Reports ........................................18
Section 7.5. Effect of By-laws ........................................18
ARTICLE VIII AMENDMENTS
Section 8.1. General ................................................. 18
<PAGE>
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. Each 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 on the third
Thursday of May of each year, at 10:00 a.m., prevailing time, or on such other
date and at such other time as shall be designated by the Board of Directors. If
the day fixed for an annual meeting is a legal holiday, the meeting shall be
held at the same hour on the next succeeding full business day or as soon
thereafter as practicable.
Section 1.3. SPECIAL MEETINGS. Special meetings may be called at any
time only by the Chairman of the Board, the Chief Executive Officer, the
President or a majority of the directors then in office; provided, however, that
the holders of more than fifty percent (50%) of the outstanding shares of Class
A Convertible Preferred Stock, $.01 par value (the "Class A Preferred Stock"),
of the Corporation may call a special meeting of the holders of the outstanding
shares of Class A Preferred Stock to vote on any matter upon which such holders
have the right to vote separately as a class. The only business to be transacted
at a special meeting of stockholders shall be the business stated in the notice
provided pursuant to Section 1.4 of these By-laws.
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, at such
address as appears upon the records of the Corporation, 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. QUORUM; ADJOURNMENTS. The presence, in person or by
proxy, of the holders of at least fifty percent (50%) of the outstanding shares
of capital stock entitled to vote on any matter shall constitute a quorum with
respect to such matter unless the affirmative vote of the holders of a greater
percentage of such outstanding shares is required in order to approve such
matter, in which case such percentage shall constitute a quorum with respect to
such matter. The stockholders present at a duly authorized meeting can continue
to do business until adjournment if a quorum
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was initially present, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum; provided, however, that such ability to conduct
business shall not affect the vote required to take any particular action. If a
meeting cannot be organized or a particular matter cannot be voted upon because
a quorum is not present, those present may, except as otherwise provided by law,
adjourn the meeting to such date, time and place as they may determine. In the
case of any meeting called for the election of directors, those who attend the
reconvening of an adjourned meeting, although they are the holders of less than
fifty percent (50%) of the outstanding shares of capital stock of the
Corporation entitled to vote generally for the election of directors, shall
nevertheless constitute a quorum for the purpose of electing those directors.
When a meeting is adjourned, it shall not be necessary to give any notice of the
date on and time and place at which such meeting shall be reconvened or of the
business to be transacted at a reconvened meeting other than by announcement at
the meeting at which such adjournment is taken, unless, after the adjournment is
taken, a new record date is fixed for the reconvening of such meeting, in which
case, a notice of the reconvening of such meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 1.6. ADVANCE NOTICE OF STOCKHOLDER PROPOSALS. At any annual
meeting of the stockholders, only such business shall be conducted as shall have
been brought before such meeting (i) by or at the direction of the Board of
Directors or (ii) by any stockholder of the Corporation who complies with the
notice procedure set forth in this Section 1.6. For business to be properly
brought before any annual meeting of the stockholders by a stockholder, such
stockholder must be entitled under Delaware law to present such business and
such stockholder must give timely notice of such stockholder's intent to make
such presentation. To be timely, a stockholder's notice must be received by the
Secretary not less than sixty (60) days nor more than ninety (90) days in
advance of the first anniversary of the previous year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
changed by more than thirty (30) days from such anniversary date, notice by the
stockholder to be timely must be received no later than the close of business on
the fifth day following the day on which public announcement of the date of such
meeting is first made. Each such notice shall set forth: (a) a brief description
of each item of business desired to be brought before the meeting and the
reasons for conducting such business at the meeting; (b) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business; (c) a representation by the stockholder proposing such business that
such stockholder will be a holder of record of shares of capital stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at such meeting; (d) the class and number of shares of capital stock of
the Corporation that are beneficially owned by such stockholder; and
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(e) as to each item of business the stockholder proposes to bring before the
meeting, any material interest of the stockholder in such business other than as
a stockholder of the Corporation. In addition, the stockholder submitting such
proposal shall promptly provide any other information reasonably requested by
the Corporation.
Only such business shall be conducted at any annual meeting of
stockholders as shall have been brought before such meeting in accordance with
the requirements set forth in this Section 1.6. A stockholder must also comply
with all applicable requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations thereunder with
respect to the matters set forth in this Section 1.6 in order to bring business
before any annual meeting, including, without limitation, Rule 14a-8 under the
Exchange Act. Except as otherwise required by law, the chairman of any annual
meeting of stockholders shall have the power and duty (x) to determine whether
any business proposed to be brought before the meeting was brought in accordance
with the requirements set forth in this Section 1.6 and (y) if any proposed
business was not brought in compliance with this Section 1.6, to declare that
such defective proposal shall be disregarded. For purposes of this Section 1.6
and Section 1.7: "public announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, the Associated Press or any comparable
national news service or in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of
the Exchange Act.
Section 1.7. ADVANCE NOTICE OF STOCKHOLDER NOMINATIONS. Nominations
for the election of directors to be elected by the holders of the outstanding
shares of capital stock of the Corporation entitled to vote generally for the
election of directors (the "Common Directors") may be made by the Board of
Directors or by any stockholder entitled to vote generally for the election of
directors; provided, however, that a stockholder may nominate a person for
election as a Common Director at a meeting only if timely notice of such
stockholder's intent to make such nomination has been given to the Secretary. To
be timely, a stockholder's notice must be received by the Secretary (i) in the
case of an annual meeting, not less than sixty (60) days nor more than ninety
(90) days in advance of the first anniversary of the previous year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is changed by more than thirty (30) days from such anniversary date,
notice by the stockholder to be timely must be received no later than the close
of business on the fifth day following the day on which public announcement of
the date of such meeting is first made; and (ii) in the case of a special
meeting at which any Common Directors are to be elected, no later than the close
of business on the fifth day following the day on which public announcement of
the date of such meeting is first made. Each such notice shall set forth: (a)
the
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name and address, as they appear on the Corporation's books, of the stockholder
who intends to make the nomination and the name or names and address or
addresses of the person or persons to be nominated; (b) a representation that
the stockholder proposing such nomination will be a holder of record of shares
of capital stock of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at such meeting and nominate the person or
persons specified in such notice; (c) the class and number of shares of capital
stock of the Corporation that are beneficially owned by such stockholder; (d) a
description of all arrangements or understandings between such stockholder and
each of his, her or its nominees and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by such stockholder; (e) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had such nominee been nominated, or intended to be nominated, by the
Board of Directors; and (f) the consent of each such nominee to serve as a
director of the Corporation, if so elected. In addition, the stockholder making
such nomination shall promptly provide any other information reasonably
requested by the Corporation. No person shall be eligible for election as a
Common Director unless nominated in accordance with the procedures set forth in
this Section 1.7. A stockholder must also comply with all applicable
requirements of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 1.7 in order to nominate any
person as a Common Director.
Except as otherwise required by law, the chairman of any meeting of
stockholders shall have the power and duty (x) to determine whether a nomination
was made in accordance with the requirements set forth in this Section 1.7 and
(y) if any proposed nomination was not made in compliance with this Section 1.7,
to declare that such defective nomination shall be disregarded.
Section 1.8. VOTING. Except to the extent otherwise provided by law,
the Amended and Restated Certificate of Incorporation of the Corporation, as it
may be subsequently amended (the "Certificate of Incorporation"), or these
By-laws, every stockholder of record shall have the right at every meeting of
stockholders to one (1) vote for every share of capital stock of the Corporation
standing in such stockholder's name on the books of the Corporation. A majority
of the votes cast shall decide every question or matter submitted to the
stockholders, except to the extent otherwise provided by law, the Certificate of
Incorporation or these By-laws. The vote upon any matter submitted to the
stockholders may be taken viva voce; provided, however, that the vote upon any
question shall be by ballot if demand for the same is made by any stockholder or
it is so directed by the chairman of the relevant meeting.
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Section 1.9. PRESENCE AT MEETING. A stockholder may participate in a
meeting of the stockholders only if such stockholder or such stockholder's duly
authorized proxy is physically present in person at the meeting. A stockholder
or a proxy may not participate in a meeting of the stockholders by means of
conference telephone or similar communications equipment.
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. All powers that may be exercised or performed by the Corporation
shall be exercised or performed by or under the authority of the Board of
Directors, except as otherwise provided by law, the Certificate of Incorporation
or these By-laws.
Section 2.2. NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE.
Subject to the rights, if any, of the holders of shares of any class or series
of Preferred Stock, $.01 par value (the "Preferred Stock"), of the Corporation
then outstanding, the number of directors to manage the business and affairs of
the Corporation shall be as determined by the Board of Directors from time to
time, but shall not be less than three (3). Directors need not be stockholders
of the Corporation nor residents of the State of Delaware. Each Common Director
shall be elected by the holders of the outstanding shares of capital stock of
the Corporation entitled to vote therefor at the annual meeting or any special
meeting called for such purpose. Each Common Director shall be elected to serve
until his or her successor is duly elected and qualified or until his or her
earlier death, resignation or removal.
The Common Directors shall be divided into three classes: Class I,
Class II and Class III. Each class shall consist, as nearly as may be possible,
of one-third of the whole number of Common Directors. The initial Class I, II
and III Common Directors shall be those elected and designated to serve as such
pursuant to the written consent of the stockholders of the Corporation dated as
of May ___, 1997 (the "Stockholders Consent"). Such Class I Common Directors
shall hold office for a term to expire at the first annual meeting of the
stockholders after the Stockholders Consent; such Class II Common Directors
shall hold office for a term to expire at the second annual meeting of the
stockholders after the Stockholders Consent; and such Class III Common Directors
shall hold office for a term to expire at the third annual meeting of the
stockholders after the Stockholders Consent, subject, in the case of each such
Common Director, to his or her earlier death, resignation or removal. At each
election of Common Directors, the Common Directors elected to succeed those
whose terms have expired
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shall be identified as being of the same class as the Common Directors they
succeed and shall be elected to hold office for a term to expire at the third
annual meeting of the stockholders after their election or until their
respective successors are duly elected and qualified or until their earlier
death, resignation or removal. If the number of Common Directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
all classes as equal in number as possible, and any additional Common Director
elected to any class shall hold office for a term which shall coincide with the
terms of the other Common Directors in such class or until his or her successor
is duly elected and qualified or until his or her earlier death, resignation or
removal. No decrease in the number of directors of the Corporation shall shorten
the term of any incumbent Common Director.
Section 2.3. VACANCIES. Subject to the rights of the holders of
shares of any class or series of Preferred Stock then outstanding: Vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority vote of the Common Directors then in
office, although less than a quorum, or by a sole remaining Common Director. The
occurrence of a vacancy which is not filled by action of the Board of Directors
within ninety (90) days of the occurrence of such vacancy shall constitute a
determination by the Board of Directors that the number of Common Directors is
to be reduced so as to eliminate such vacancy, unless the Board of Directors
shall specify otherwise. When one or more Common Directors shall resign from the
Board of Directors, effective at a future date, a majority of the Common
Directors then in office, including those who have so resigned, shall have the
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective.
Section 2.4. REMOVAL OF DIRECTORS. Subject to the rights of the
holders of shares of any class or series of Preferred Stock then outstanding,
any director or directors may be removed from office by vote of the stockholders
entitled to vote thereon only for cause at a special meeting of the stockholders
called for such purpose. In case any one or more directors are so removed, new
directors may be elected at the same meeting. The repeal of a provision of the
Certificate of Incorporation or these By-laws prohibiting, or the addition of a
provision to the Certificate of Incorporation or these By-laws permitting, the
removal by stockholders of a director or directors without assigning any cause
shall not apply to any incumbent director during the balance of the term for
which he or she was then elected.
Section 2.5. ANNUAL MEETING; OTHER REGULAR MEETINGS. An
annual meeting of the Board of Directors shall be held each year as soon as
practicable after the annual meeting of stockholders, at the place where such
meeting of stockholders was held or at such
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other place as the Board of Directors may determine, for the purposes of
organization, election or appointment of officers and the transaction of such
other business as shall come before such annual meeting. No notice of the annual
meeting of the Board of Directors need be given. Other regular meetings of the
Board of Directors shall be held on such dates and at such times and places as
the Board of Directors may from time to time by resolution appoint; and no
notice shall be required to be given of any such regular meeting. No minimum
number of regular meetings and no more than one annual meeting of the Board of
Directors need be called in any year.
Section 2.6. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the Chief Executive
Officer, the President or a majority of the directors then in office, to be held
on such date and at such time (as will permit the giving of notice as provided
in this Section 2.6) and at such place as may be designated by the person or
persons calling the meeting. Notice of the place, date and hour of any such
special meeting shall be given to each director by the Secretary (i) by written
notice deposited in the United States mail not later than during the third full
business day preceding the date of such meeting, or (ii) by telephone, telex,
facsimile transmission or other oral, written or electronic means received not
later than 24 hours before the time set for such meeting. Such notice need not
refer to the business to be transacted at such meeting except action under
Article V of these By-laws. No minimum number of special meetings of the Board
of Directors need be called in any year.
Section 2.7. QUORUM. More than fifty percent (50%) of the directors
then in office shall constitute a quorum for the transaction of business and
action may be taken by a majority of the directors present at any meeting at
which a quorum is present; unless the consent of a different percentage of the
directors is required with respect to any matter as provided by law, the
Certificate of Incorporation, these By-laws or any resolution of the Board of
Directors or the stockholders; in which case such percentage shall constitute a
quorum and the necessary vote for such matter.
Section 2.8. 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 of Directors or such
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of the proceedings of the Board of Directors
or such committee.
Section 2.9. TELEPHONE PARTICIPATION IN MEETINGS. Members of the
Board of Directors or any committee thereof may participate in a meeting of the
Board of Directors or such
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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 2.9 shall constitute
presence in person at such meeting.
Section 2.10 COMPENSATION OF DIRECTORS. Each director of the
Corporation, who is not a salaried officer or employee of the Corporation or of
a subsidiary of the Corporation, shall receive such compensation (whether in
cash or other property) and reimbursement of expenses for serving as a director
and for attendance at meetings of the Board of Directors or any committee
thereof as the Board of Directors may from time to time determine.
ARTICLE III
COMMITTEES OF DIRECTORS
Section 3.1. APPOINTMENT AND POWERS. The Board of Directors may, by
resolution adopted by a majority of the directors in office, establish one or
more committees, each of which shall consist of one or more of the directors of
the Corporation. To the extent provided in the resolution establishing any
committee, such committee shall have and may exercise all of the powers and
authority of the Board of Directors, except to the extent prohibited by law or
the Certificate of Incorporation.
Section 3.2 APPOINTMENT BY COMMITTEES OF SUBSTITUTE MEMBERS. In the
absence or disqualification of any member of any such committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or she or they constitute a quorum, may by unanimous action appoint
another director to act at such meeting in the place of any such absent or
disqualified member.
Section 3.3 PROCEDURE. The Board of Directors may establish
reasonable rules and regulations for the conduct of the proceedings of any such
committee and may appoint a chairman of such committee who shall be a member
thereof and a secretary of such committee who need not be a member thereof. To
the extent that the Board of Directors does not exercise such powers, they may
be exercised by such committee.
ARTICLE IV
OFFICERS
Section 4.1. ENUMERATION. The officers of the Corporation shall be
elected by the Board of Directors and shall consist of a Chairman of the Board,
a Chief Executive Officer, a
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President, such number of Vice Presidents (if any) as 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 choose and appoint or
elect.
Section 4.2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
be a Common Director and 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.
Section 4.3. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall have general charge and control over the affairs of the Corporation,
subject to the Board of Directors. The Chief Executive Officer shall sign
certificates for shares of capital stock of the Corporation and may execute on
behalf of the Corporation any contract which has been authorized by the Board of
Directors. If there shall be no Chairman of the Board, or in his or her absence
or during his or her incapacitation, the Chief Executive Officer shall preside
at meetings of the stockholders. In the absence of the President or if the Board
of Directors has not elected a person holding the title of "President," the
Chief Executive Officer shall also perform the duties and have the powers that
are incident to the office of the president of a corporation under Delaware law.
Section 4.4 PRESIDENT. In the absence of the Chief Executive Officer
or if the Board of Directors has not appointed a person holding the title of
"Chief Executive Officer," the President shall perform the duties and exercise
the powers of a chief executive officer of the Corporation, and shall report to
the Board of Directors. The President shall perform such other duties and have
such other powers as are incident to the office of the president of a
corporation under Delaware law, except to the extent such duties and powers have
been delegated to the Chief Executive Officer, or as may from time to time be
prescribed by the Board of Directors. If there shall be no Chairman of the Board
or Chief Executive Officer, or in their absence or during their incapacitation,
the President shall preside at meetings of the stockholders.
Section 4.5. VICE PRESIDENT. The Vice President or, if there shall
be more than one, the Vice Presidents, in the order determined by the Board of
Directors, shall have all of the powers and perform all of the duties of the
President in the absence or during the incapacitation of the President. Each
Vice President shall perform such other duties and have such other powers as may
from time to time be prescribed by, or pursuant to authority delegated by, the
Board of Directors.
Section 4.6. SECRETARY. The Secretary shall keep a record of the
proceedings of the meetings of the stockholders and
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directors and shall give notice as required by law 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
be in possession thereof by resolution of the Board of Directors. The Secretary
shall countersign certificates for shares of the capital stock of the
Corporation. The Secretary shall perform such other duties and have such other
powers as are incident to the office of the secretary of a corporation under
Delaware law or as may from time to time be prescribed by, or pursuant to
authority delegated by, the Board of Directors.
Section 4.7. 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 banks and
depositories as the Board of Directors shall designate, and shall perform such
other duties and have such other powers as are incident to the office of the
treasurer of a corporation under Delaware law or as may from time to time be
prescribed by, or pursuant to authority delegated by, the Board of Directors.
Section 4.8. 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 prescribed 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 whom he or she is an assistant, and
shall perform the duties and have the powers of such officer in the absence or
during the incapacitation of such officer.
Section 4.9. COMPENSATION. The salaries and other compensation of
all officers shall be fixed by, or pursuant to authority delegated by, the Board
of Directors from time to time.
Section 4.10. ADDITIONAL DUTIES OF OFFICERS. The Board of Directors
may from time to time by resolution increase or decrease the duties and powers
of the Chairman of the Board, the Chief Executive Officer, the President, one or
more Vice Presidents, the Secretary, the Treasurer or any other officer.
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ARTICLE V
INDEMNIFICATION
Section 5.1. INDEMNIFICATION IN ACTIONS, SUITS OR PROCEEDINGS OTHER
THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 5.3, 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
or she 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 or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she 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 or her 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 itself, create a
presumption that a person did not act in good faith and in a manner which he or
she 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 or her conduct was unlawful.
Section 5.2. INDEMNIFICATION IN ACTIONS, SUITS OR PROCEEDINGS BY OR
IN THE RIGHT OF THE CORPORATION. Subject to Section 5.3, 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 or
she 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 or her in
connection with the defense or settlement of such action or suit if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation; except that no
indemnification under this Section 5.2 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
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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 5.3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification
under Sections 5.1 and 5.2 (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 or she has met the applicable standard of conduct set forth in
Section 5.1 or 5.2, 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 stockholders. 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 5.1
or 5.2, or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith, without the necessity of
authorization in the specific case.
Section 5.4. RELIANCE. For purpose of any determination under
Section 5.3, a person shall be deemed to have acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his or her conduct was
unlawful, if his or her actions were based on the records or books of account of
the Corporation or Another Enterprise (as defined below), on information
supplied to him or her 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. Notwithstanding the foregoing, the fact
that such person's actions were not so based on any of the foregoing shall not
result in it being deemed that, and shall not be considered when making a
determination whether, he or she did not act in good faith or in a manner he or
she 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 or she had
reasonable cause to believe his or her conduct was unlawful. The term "Another
Enterprise" as used in this Section 5.4 shall mean any corporation (other than
the Corporation), partnership, joint venture, trust or other
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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 5.4 are not exclusive and do not limit in any way the manner in which a
person may have met the applicable standard of conduct set forth in Section 5.1
or 5.2, as the case may be.
Section 5.5. INDEMNIFICATION BY A COURT. Notwithstanding any
contrary determination in the specific case under Section 5.3 or 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 5.1 and 5.2. 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 or she has met the applicable standard of conduct set forth in
Section 5.1 or 5.2, as the case may be. Neither a contrary determination in the
specific case under Section 5.3 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 5.5 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 5.5 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.
Section 5.6. 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 or she is not entitled to be
indemnified by the Corporation as authorized in this Article V if such an
undertaking is required at the time by the General Corporation Law of the State
of Delaware.
Section 5.7. NON-EXCLUSIVENESS. The indemnification and advancement
of expenses provided by, or granted pursuant to, this Article V shall not be
exclusive of any other rights to which any person seeking indemnification or
advancement of expenses may be entitled under any other by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
his or her official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that
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<PAGE>
indemnification of the persons specified in Sections 5.1 and 5.2 shall be made
to the fullest extent permitted by law. The provisions of this Article V shall
not be deemed to preclude the indemnification of any person who is not specified
in Section 5.1 or 5.2 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 5.8. EFFECTIVENESS. A finding that any provision of this
Article V is invalid or of limited application shall not affect any other
provision of this Article V nor shall a finding that any portion of any
provision of this Article V is invalid or of limited application affect the
balance of such provision.
Section 5.9. 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 or her and incurred by him or her in any such capacity, or arising out of
his or her status as such, whether or not the Corporation would have the power
or the obligation to indemnify him or her against such liability under the
provisions of this Article V.
Section 5.10. 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 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 V.
Section 5.11. CERTAIN DEFINITIONS. For purposes of this Article V,
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 or she
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
V.
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<PAGE>
Section 5.12. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article V 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 person.
Section 5.13. 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 5.5), 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 5.14. REPEAL OR MODIFICATION. Any repeal or modification of
this Article V 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 V with respect to any acts or omissions occurring prior
to such repeal or modification.
Section 5.15. 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 V on directors and officers of the Corporation.
ARTICLE VI
SHARES OF CAPITAL STOCK
Section 6.1. ISSUANCE OF SHARES. Shares of capital stock of any
class now or hereafter authorized, securities convertible into or exchangeable
for such shares, or options or other rights to purchase such shares or
securities may be issued or granted only in accordance with the authority
granted by resolution of the Board of Directors.
Section 6.2. SHARE 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 Chief Executive Officer or the President and
by the Secretary or Assistant Secretary, and may be sealed with the seal of the
Corporation. Where any such certificate is signed by a registrar other than the
Corporation or its employee, the signatures thereon of any officer of the
Corporation and, where authorized by the
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<PAGE>
Board of Directors, any transfer agent, may be facsimiles. All such certificates
shall be numbered consecutively; and the name of the person owning the shares
represented thereby, the number of such shares and the date of issue shall be
stated on each certificate and entered on the books of the Corporation. In case
any officer, transfer agent or registrar who has executed, by facsimile or
otherwise, any share certificate shall have ceased to be such officer, transfer
agent or registrar by reason of death, resignation or removal before the
certificate is issued, it may be issued by the Corporation with the same effect
as if such officer, transfer agent or registrar had not ceased to be such at the
date of its issue.
Section 6.3. TRANSFER OF SHARES. Shares of capital stock of the
Corporation shall be transferred on the books of the Corporation only by the
holder of record thereof in person or by such 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 6.4. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. New
share 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, if appropriate, the giving of a satisfactory
bond of indemnity, as the Board of Directors or as one or more of the officers
of the Corporation, as delegated to by the Board of Directors, from time to time
may determine.
Section 6.5. 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. The Board of Directors may
appoint one or more transfer agents or assistant transfer agents and one or more
registrars of transfer and may require all share certificates to bear the
signature of a transfer agent or assistant transfer agent and a registrar of
transfer. The Board of Directors may at any time terminate the appointment of
any transfer agent or any assistant transfer agent or any registrar of transfer.
Section 6.6. 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 Delaware law.
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<PAGE>
Section 6.7. RECORD DATE. In order to determine the stockholders
entitled to notice of or to vote at any meeting of stockholders 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) days
nor less than ten (10) days before the date of such meeting, nor more than sixty
(60) days prior to any other action. Only stockholders of record on the date
fixed shall be so entitled notwithstanding any transfer of shares on the books
of the Corporation after any record date fixed as provided herein. The Board of
Directors may similarly fix a record date for the determination of stockholders
of record for any other purpose. If no record date is fixed by the Board of
Directors: (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 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 or dissent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the close
of business or the day on which the first written consent or dissent is filed
with the Secretary. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any reconvening of
such meeting if it is adjourned; provided, however, that the Board of Directors
may fix a new record date for the reconvened meeting.
Section 6.8. RESTRICTION ON TRANSFER. A restriction on the
hypothecation, transfer or registration of transfer of shares of capital stock
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 shares of capital stock
of the Corporation issued prior to the adoption of the restriction unless the
holders of such shares parties to such agreement or voted in favor of such
restriction.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. CORPORATE SEAL. The Corporation may adopt a corporate
seal in such form as the Board of Directors shall from time to time determine.
Section 7.2. FISCAL YEAR. The fiscal year of the Corporation shall
be as designated by the Board of Directors from time to time.
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<PAGE>
Section 7.3. 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 7.4. FINANCIAL REPORTS. Subject to the requirements of
applicable law, 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 7.5. EFFECT OF BY-LAWS. No provision in these By-laws shall
vest any property right in any stockholder.
ARTICLE VIII
AMENDMENTS
Section 8.1. GENERAL. 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 of the stockholders to adopt, amend
or repeal By-laws by the affirmative vote of the holders of at least two-thirds
of the outstanding shares of capital stock of the Corporation generally entitled
to vote together (including the Class A Preferred Stock). Any change in the
By-laws shall take effect when adopted unless otherwise provided in the
resolution effecting the change.
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EXHIBIT 10.01
AMENDED AND RESTATED CREDIT AGREEMENT
BY AND AMONG
CLEARVIEW CINEMA GROUP, INC.,
CLEARVIEW THEATRE GROUP, INC.,
CCC ALLWOOD CINEMA CORP.,
CCC B.C. REALTY CORP.,
CCC BAYONNE CINEMA CORP.
CCC BEDFORD CINEMA CORP.,
CCC BERGENFIELD CINEMA CORP.,
CCC BRONXVILLE CINEMA CORP.
CCC CHESTER TWIN CINEMA CORPORATION,
CCC CINEMA 304 CORP.
CCC CLOSTER CINEMA CORP.,
CCC EMERSON CINEMA CORP.,
CCC GRAND AVENUE CINEMA CORP.,
CCC HERRICKS CINEMA CORP.,
CCC KISCO CINEMA CORP.,
CCC LARCHMONT CINEMA CORP.
CCC MADISON TRIPLE CINEMA CORP.,
CCC MAMARONECK CINEMA CORP.
CCC MANASQUAN CINEMA CORP.,
CCC MARBORO CINEMA CORP.
CCC NEW CITY CINEMA CORP.,
CCC PORT WASHINGTON CINEMA CORP.,
CCC SUMMIT CINEMA CORP.,
CCC TENAFLY CINEMA CORP.,
CCC WASHINGTON CINEMA CORP., and
CCC WAYNE CINEMA CORP.
Borrowers,
THE PROVIDENT BANK,
Agent
AND
VARIOUS LENDERS DESCRIBED ON SCHEDULE 1 HERETO
September 12, 1997
<PAGE>
SCHEDULES
ANNEX I
SCHEDULES
1 Lenders
3.1 Mortgaged Property and Leasehold Interests
4.2(e) Post-Closing Requirements from Original Credit Agreement
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
5.21UCC Filing Offices
8.9(h) Liens
<PAGE>
EXHIBITS
Exhibit B Form of Assignment of Option and Operating Agreements
Exhibit C Form of Assignment of Patents
Exhibit D Form of Assignment of Trademarks
Exhibit E Form of Blocked Account Agreement
Exhibit F Form of Compliance Certificate
Exhibit G Form of Environmental Indemnity Agreement
Exhibit H Form of Joinder Agreement
Exhibit I Form of Leasehold Mortgage
Exhibit J Form of Mortgage
Exhibit K Form of Pledge Agreement
Exhibit L-1 Form of Revolving Promissory Note
Exhibit K-2 Form of Term Loan A Promissory Note
Exhibit K-3 Form of Term Loan B Promissory Note
Exhibit K-4 Form of Term B Note Supplement
Exhibit L Subordination Agreement
Exhibit M Form of Borrower's Counsel Opinion Letter
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTERPRETATION..................................................2
Section 1.1 Provisions Pertaining to Definitions............................2
Section 1.2 Definitions.....................................................2
ARTICLE 2. THE LOANS......................................................23
Section 2.1 Commitments....................................................23
Section 2.2 Making the Loans...............................................23
(a) Revolving Credit Loan....................................23
(b) Term Loan A..............................................23
(c) Term Loan B..............................................24
Section 2.3 Draws, Advances and Settlement of Payments and Advances.......24
Section 2.4 The Notes......................................................25
Section 2.5 Interest Payable on the Loans..................................25
(a) Determination of Interest Rate...........................25
(b) Monthly Installments.....................................25
(c) Interest on Overdue Payments; Default Interest Rate......26
Section 2.6 Repayments and Prepayments of Principal........................26
(a) Payments on the Term Loan A..............................26
(b) Payments on the Term Loan B..............................26
(c) Repayments on the Revolving Credit Loan..................26
(d) Revolving Credit Loan Overadvance........................27
(e) Prepayments from Extraordinary Dispositions..............27
(f) Prepayments for Excess Cash Flow.........................27
(g) Prepayment from Equity Offerings.........................27
(h) Prepayment from Key Man Insurance........................28
(i) Payments Relative to Closed Operations...................28
(j) Maturity.................................................28
(k) Application of Proceeds..................................28
(l) Prepayment Fees..........................................28
Section 2.7 Payments and Computations......................................29
Section 2.8 Payments to be Free of Deductions..............................30
Section 2.9 Use of Proceeds................................................31
Section 2.10 Additional Costs, Etc..........................................31
Section 2.11 Agent and Lender Statements....................................31
Section 2.12 Letters of Credit..............................................32
Section 2.13 Allocation of Liability........................................34
ARTICLE 3. SECURITY AGREEMENT.............................................34
Section 3.1 Security Interest..............................................34
Section 3.2 Mortgages and Liens on Real Property...........................35
Section 3.3 Pledge of Stock................................................35
Section 3.4 Financing Statements; Additional Documents.....................36
Section 3.5 Accounts; Chattel Paper; Lease Agreements......................36
Section 3.6 Release of Collateral..........................................37
<PAGE>
ii
ARTICLE 4. CONDITIONS PRECEDENT TO DISBURSEMENTS..........................37
Section 4.1 Conditions Precedent to Initial Closing........................37
Section 4.2 Conditions Precedent to Subsequent Loans.......................41
Section 4.3 Conditions Precedent to Subsequent Lending under the
Term B Loan....................................................41
ARTICLE 5. GENERAL REPRESENTATIONS AND WARRANTIES.........................43
Section 5.1 Existence, Etc.................................................43
Section 5.2 Authority, Etc.................................................44
Section 5.3 Binding Effect of Documents, Etc...............................45
Section 5.4 No Events of Default, Etc......................................45
Section 5.5 Financial Statements...........................................46
Section 5.6 Changes; None Adverse.........................................46
Section 5.7 Title to Assets; Material Leases...............................46
Section 5.8 Intellectual Property..........................................46
Section 5.9 Subordinated Debt and Indebtedness for Borrowed Money. ........47
Section 5.10 Litigation.....................................................47
Section 5.11 No Materially Adverse Contracts................................47
Section 5.12 Taxes and Tax Returns, Etc.....................................47
Section 5.13 Contracts with Affiliates, Etc.................................48
Section 5.14 Employee Benefit Plans.........................................48
Section 5.15 Governmental Regulation........................................48
Section 5.16 Securities Activities..........................................49
Section 5.17 Disclosure.....................................................49
Section 5.18 No Material Default............................................49
Section 5.19 Environmental Conditions.......................................49
Section 5.20 Licenses and Permits...........................................50
Section 5.21 General Collateral Representation..............................50
ARTICLE 6. AFFIRMATIVE COVENANTS OF BORROWER..............................51
Section 6.1 Reports and Other Information..................................51
Section 6.2 Maintenance of Property; Authorization; Insurance..............56
Section 6.3 Key Man Life Insurance.........................................56
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...........................................57
Section 6.8 Notice of Other Events.........................................58
Section 6.9 Communication with Accountants.................................58
Section 6.10 Payment of Indebtedness........................................58
Section 6.11 Performance of Obligations Under Certain Documents.............58
Section 6.12 Governmental Consents and Approvals............................58
Section 6.13 Employee Benefit Plans and Guaranteed Pension Plans............59
Section 6.14 Further Assurances.............................................59
Section 6.15 Interest Rate Risk Management..................................60
Section 6.16 Borrower's Depository Accounts.................................60
<PAGE>
iii
Section 6.17 Use of Proceeds................................................60
Section 6.18 Subsidiaries...................................................60
ARTICLE 7. FINANCIAL COVENANTS............................................60
Section 7.1 Interest Coverage Ratio........................................60
Section 7.2 Debt Service Coverage..........................................61
Section 7.3 Minimum Net Worth..............................................61
Section 7.4 Debt to EBITDA.................................................61
Section 7.5 Senior Debt to EBITDA..........................................61
Section 7.6 Limitation on Capital Expenditures.............................61
ARTICLE 8. NEGATIVE COVENANTS OF BORROWER.................................61
Section 8.1 Limitation on Nature of Business...............................61
Section 8.2 Limitation on Fundamental Changes..............................62
Section 8.3 Restricted Payments............................................62
Section 8.4 Lease Obligations..............................................62
Section 8.5 Management Compensation........................................62
Section 8.6 Limitation on Disposition of Assets............................63
Section 8.7 Limitation on Investments......................................64
Section 8.8 Acquisition of Margin Securities...............................64
Section 8.9 Limitation on Mortgages, Liens and Encumbrances................64
Section 8.10 No Additional Negative Pledges.................................65
Section 8.11 No Restrictions on Subsidiary Distributions to Borrowers.......65
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....................................66
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.................................67
Section 9.1 Events of Default..............................................67
(a) Principal and Interest...................................67
(b) Representation and Warranties............................67
(c) Certain Covenants........................................67
(d) Other Covenants..........................................67
(e) Loan Documents...........................................67
(f) Litigation ..............................................67
(g) Default by Borrowers under other Agreements..............68
(h) Insolvency...............................................68
(i) Judgment.................................................68
(j) ERISA....................................................68
(k) Change of Control........................................69
(l) Material Adverse Change..................................69
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
iv
<PAGE>
ARTICLE 10. 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..........................................74
Section 10.7 Reliance by the Agent..........................................74
Section 10.8 Exculpatory Provisions.........................................75
Section 10.9 Action by the Agent............................................75
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.....................................77
Section 10.17 Lender Credit Decisions........................................78
Section 10.18 Resignation of Agent...........................................78
Section 10.19 Assignment of Notes; Participation.............................78
ARTICLE 11. 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
Section 11.13 Headings.......................................................83
Section 11.14 Counterparts...................................................84
Section 11.15 Severability...................................................84
Section 11.16 One General Obligation.........................................84
<PAGE>
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 12, 1997
("Amended and Restated Credit Agreement") is by and among CLEARVIEW CINEMA
GROUP, INC., a Delaware corporation, (Holdings"), CLEARVIEW THEATRE GROUP, INC.,
a New Jersey corporation, CCC ALLWOOD CINEMA CORP., a Delaware corporation, CCC
B.C. REALTY CORP., a Delaware corporation, CCC BAYONNE CINEMA CORP., a Delaware
corporation, CCC BEDFORD CINEMA CORP., a Delaware corporation, CCC BERGENFIELD
CINEMA CORP., a Delaware corporation, CCC BRONXVILLE CINEMA CORP., a Delaware
corporation, CCC CHESTER TWIN CINEMA CORPORATION, a New Jersey corporation, CCC
CINEMA 304 CORP., a Delaware corporation, CCC CLOSTER CINEMA CORP., a Delaware
corporation, CCC EMERSON CINEMA CORP., a Delaware corporation, CCC GRAND AVENUE
CINEMA CORP., a Delaware corporation, CCC HERRICKS CINEMA CORP., a Delaware
corporation, CCC KISCO CINEMA CORP., a Delaware corporation, CCC LARCHMONT
CINEMA CORP., a Delaware corporation, CCC MADISON TRIPLE CINEMA CORP., a New
Jersey corporation, CCC MAMARONECK CINEMA CORP., a Delaware corporation, CCC
MANASQUAN CINEMA CORPORATION, a New Jersey corporation, CCC MARBORO CINEMA
CORP., a Delaware corporation, CCC NEW CITY CINEMA CORP., a Delaware
corporation, CCC PORT WASHINGTON CINEMA CORP., a Delaware corporation, CCC
SUMMIT CINEMA CORP. (formerly known as 343-349 Springfield Avenue Corp.), a New
Jersey corporation, CCC TENAFLY CINEMA CORP., a Delaware corporation, CCC
WASHINGTON CINEMA CORP., a Delaware corporation, and CCC WAYNE CINEMA CORP., a
Delaware 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").
BACKGROUND
This Amended and Restated Agreement amends and restates the Credit
Agreement dated as of May 29, 1996 (the "Original Credit Agreement") by and
among Original Borrowers, the banks and lending institutions set forth on
Schedule 1 thereto and Agent, as amended by a First Amendment dated as of
December 13, 1996 (the "First Amendment"), as amended by Second Amendment dated
as of March 27, 1997 (the "Second Amendment") as further amended by a Third
Amendment dated June 30, 1997 (the "Third Amendment").
CCC Bedford Cinema Corp and CCC Kisco Cinema Corp. were joined as
Borrowers to the Credit Agreement by that certain Joinder Agreement dated as
of July 19, 1996, and CCC Closter Cinema Corp., CCC Bergenfield Cinema Corp.,
CCC Tenafly Cinema Corp. and CCC B.C. Realty Corp. were joined as Borrowers
by the First Amendment. CCC Bayonne Cinema Corp. CCC Bronxville Cinema
Corp., CCC Cinema 304 Corp., CCC Larchmont Cinema Corp., CCC Mamaroneck
Cinema Corp., CCC Marboro Cinema Corp. and CCC Wayne Cinema Corp. are joined
under the Amended and Restated Credit Agreement.
<PAGE>
2
ARTICLE 1.
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 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:
"ACCOUNTANTS" mean Wiss & Company, LLP, 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 (i) 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; (ii) unpaid
seller's rights (including rescission, replevin, reclamation and stopping in
transit) relating to the foregoing or arising therefrom; (iii) rights to any
goods represented by any of the foregoing, including returned or repossessed
goods; (iv) reserves and credit balances held by such Person with respect to any
such accounts receivable or account debtors; (v) guarantees or collateral for
any of the foregoing; and (vi) insurance policies or rights relating to any of
the foregoing.
<PAGE>
3
"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(e)
hereof.
"AGENT DISBURSEMENT ACCOUNT" has the meaning set forth in Section
2.3(b) hereof.
"AGREEMENT" or "CREDIT AGREEMENT" means this Credit Agreement and any
amendments, extensions, riders, supplements, schedules, or modifications to or
in connection with this Credit Agreement, including any Joinder Agreements.
"APPLICABLE MARGIN" shall initially mean one and one-half percent (1.5%);
PROVIDED, HOWEVER that after January 15, 1998, the Applicable Margin shall mean
the amount set forth below, as a percentage, to be added to the Prime Rate, as
the case may be, and used in calculating the rate of interest for the applicable
Loan at any time:
==================================================================
MARGIN RATIO APPLICABLE MARGIN
------------------------------------------------------------------
Greater than or equal to 3.25 1.50%
to 1.00
Greater than or equal to 3.00 1.25%
to 1.00
but less than 3.25 to 1.00
Greater than or equal to 2.75 1.00%
to 1.00
but less than 3.00 to 1.00
Greater than or equal to 2.50 .75%
to 1.00
but less than 2.75 to 1.00
Less than 2.50 to 1.00 .50%
==================================================================
<PAGE>
4
The determination of Applicable Margin hereunder as of any Interest Adjustment
Date shall be based on unaudited quarterly Compliance Certificates required to
be delivered pursuant to Section 6.1(b) hereof, PROVIDED that in the event of
any discrepancy between computations based upon any compliance certificate and
the related audited financial statements furnished pursuant to Section 6.1(b),
the computation based upon the audited financial statements shall govern
(retroactive to the Interest Adjustment Date as to which such adjustment
applies). In the event of a retroactive correction of the determinations of the
Applicable Margin in favor of the Lenders, the amount of interest thereby
overdue and payable by the Borrowers shall be paid to the Lenders within five
(5) days after the date of such retroactive correction. In the event of a
retroactive correction of the determinations of the Applicable Margin in favor
of the Borrowers, the amount of interest overpaid by the Borrowers shall be
applied by the Lender as a credit against any fees, charges and interest or
principal payments then due hereunder or to become due hereunder to Lenders. No
downward adjustment of the Applicable Margin shall occur if, at the time such
downward adjustment would otherwise be made, there shall exist any Default or
Event of Default, PROVIDED that such downward adjustment shall be made on the
first day of the first month after the date on which any Default or Event of
Default shall have been waived or cease to exist.
"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 Theater, (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 hereto, and
(iii) any Assignment of Option and Operating Agreement required by Agent
relative to a Permitted Acquisition.
"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.
"AVERAGE DAILY LOAN BALANCE" means the sum of the unpaid balances of the
Revolving Credit Loan owing by Borrowers to Lenders at the end of each day for
the immediately preceding four (4) fiscal quarters ending on the relevant
Computation Date, divided by 365 or 366, as applicable; PROVIDED, HOWEVER, that
during the first Loan Year, such amount shall be calculated from the Closing
Date through the date of such calculation as the sum of the unpaid balances of
the Revolving Credit Loans owing by Borrowers to Lender for each day since the
Closing Date divided by the actual number of days elapsed since the Closing
Date.
<PAGE>
5
"BERGEN COUNTY TRANSACTION" means the acquisition by Holdings of the
assets of Magic Cinemas L.L.C.
"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 hereto.
"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 excluding, however, amounts paid or incurred in connection
with theater acquisitions and related costs and the initial renovation of
acquired theaters, addition of screens to acquired and existing theaters or
greenfield development of theaters.
"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 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.
"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.
"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 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
counterparty to repurchase such obligations not later than
<PAGE>
6
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 OF CONTROL" means the occurrence of any one of the following
events: (i) any Person or group entitled to file on Schedule 13G pursuant to
Rule 13d-1 under the Exchange Act (other than the Control Group) becomes, or
files a Schedule 13-D or 14D-1 (or any successor schedule, form or report under
the Exchange Act) disclosing that such Person or group has become, the
beneficial owner (as defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) 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 the lesser of twenty
percent (20%), or such lesser amount if such Person or group has the power to
control the Board of Directors or management of Holdings; or (ii) there shall be
consummated any consolidation or merger of any Borrower or Holdings pursuant to
which any Borrower's or Holdings' 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 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 Holdings' capital stock immediately prior to such merger or other
than a merger of any Borrower, other than Holdings, into Holdings, or (iii) all
or substantially all
<PAGE>
7
of Holdings' 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 (iv) A. Dale Mayo shall cease to perform his duties
as a senior executive manager of Holdings other than as a result of death or
disability.
"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.
"CHESTER LEASE" means Lease dated May 12, 1997, by and between
Ramco-Gershenson Properties, L.P., a Delaware limited partnership, as landlord,
and CCC Chester Twin Cinema Corporation, a New Jersey corporation, as tenant.
"CLOSING DATE" means the date the loans are made pursuant to the Amended
and Restated Credit 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
Exhibit E hereto, 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
<PAGE>
8
of another Person if the primary purpose or intent thereof 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.
"CONTROL GROUP" means CMNY, MidMark, A. Dale Mayo and members of his
family, and Management Shareholders and Affiliates (or a group controlled by
such group).
"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 on Schedule 1 hereto and (ii) the
amount with respect to the Term Loans to be loaned by such Lender to Borrowers
as set forth on Schedule 1 hereto.
"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.
<PAGE>
9
"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 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; PLUS (vii) premiums on life insurance purchased pursuant to Section
6.3 of this Agreement; PLUS (viii) options payments approved by Agent made with
respect to acquisitions of theater locations; PLUS (ix) advisory fees paid to
MidMark not in violation of this Agreement; provided, that in calculating EBITDA
with respect to newly-acquired or developed theaters, actual historical
financial data of newly-acquired theaters prior to their acquisition by Holdings
shall be included in the determination of EBITDA and pro forma financial
projections for developed theaters, determined in a manner approved by Agent,
shall be included in the determination of EBITDA for periods in which
calculations of actual financial data are not available.
"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 Exhibit F hereto, and any amendments, modifications, supplements or
restatements thereto.
"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.
<PAGE>
10
"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).
"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.
"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,
<PAGE>
11
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 States of America in effect from
time to time, consistently applied.
"GUARANTEED LEASE" shall initially mean the Chester Lease and the Marboro
Lease and thereafter any lease where Holdings is the guarantor of a Borrower's
lease obligations and such lease has been designated as a Guaranteed Lease by
Agent in its sole discretion.
"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").
"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, subject to the provisions stated hereinafter, 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
<PAGE>
12
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 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.
PROVIDED, HOWEVER, that the foregoing definition of
Indebtedness shall not include any guaranties by holdings with respect to
a Guaranteed Lease.
"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, set forth on
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,
<PAGE>
13
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 ADJUSTMENT DATE" means the first day of the first month after
the date on which each of the quarterly Compliance Certificates (together with
monthly unaudited financial statements for each fiscal month during such
quarter) are required to be delivered under Section 6.1(b) with respect to the
most recent fiscal month.
"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 the sum of
the Prime Rate plus the Applicable Margin.
"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).
"ISSUING BANK" means Provident or such other Lender as shall issue any
Letter of Credit hereunder.
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14
"JOINDER AGREEMENTS" mean collectively, any agreement executed by a Person
whereby such Person is joined as a Borrower under the Credit Agreement and all
Loan Documents which is substantially in the form of Exhibit G hereto.
"LEASEHOLD MORTGAGES" the Leasehold Mortgages granted from time to time by
a Borrower to Agent to secure the Loans in the form of Exhibit H hereto 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.
"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.
"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.
"LETTER OF CREDIT FEE" means the fee charged by the Lender for the
issuance of a Letter of Credit pursuant to Section 2.12(g) hereof.
"LETTERS OF CREDIT" means the letters of credit issued by Lender at any
time pursuant to Section 2.4 hereof.
"LOAN DOCUMENTS" mean this Agreement, the Notes, the Letters of Credit,
the Security Documents, the Subordination Agreements, the Joinder Agreements 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, including any
Security Document, Joinder Agreements and other agreements, instruments,
certificates or documents executed in connection with a Permitted Acquisition.
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15
"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 those shareholders of Holdings who are
management employees of Holdings or any other Borrower on the Closing Date.
"MARBORO LEASE" means lease dated February 14, 1997 by and between
Bradenton Realty Corp, as landlord, and CCC Marboro Cinema Corp., a Delaware
corporation, as tenant.
"MARGIN RATIO" means, as of any date, the ratio of (a) the Average Daily
Loan Balance, PLUS the outstanding balance under the Term Loans as of the date
of determination, PLUS Capital Leases to (b) EBITDA for the twelve (12) month
period prior to the date for which such calculation is made, calculated for the
four (4) fiscal quarters ending on the Computation Date on or immediately
preceding the date for which such ratio is calculated.
"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.
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16
"MAXIMUM REVOLVING COMMITMENT" means One Million and 00/100 Dollars
($1,000,000.00).
"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 I hereto, 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. "Note" shall mean any one of the Notes,
unless specifically identified.
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17
"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.
"ORIGINAL BORROWERS" mean 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 CCC
Summit Cinema Corp. (formerly known as 343-349 Springfield Avenue Corp.), a New
Jersey corporation.
"ORIGINAL CLOSING DATE" means the day on which the original Loans are made
pursuant to this Agreement.
"ORIGINAL 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.
"PARTICIPATION PERCENTAGE" means, in relation to each Lender, the
percentage set forth with respect to such Lender set forth on Schedule 1 hereto
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 ACQUISITION" means an acquisition by Holdings or any other
Borrower of the stock or all or a portion of the assets of a company which meets
the following minimum criteria: (i) such company is engaged in the same business
as Borrowers; and (ii) Agent and the Lenders shall received and approved of the
purchase agreement, all underlying and related documents with respect to such
acquisition, and the any financial statements of such company as Agent requests;
and (iii) immediately prior to, and after giving effect to the pro forma effect
of such acquisition, no Default or an Event of Default has occurred or will
occur; and (iv) Agent has reviewed the
<PAGE>
18
documents referenced in Section 4.3 hereof and in its sole discretion has
approved of such acquisition.
"PERMITTED FIRST LIENS" means those Liens identified in Sections 8.9(a),
8.9(d), and those Liens set forth on Schedule 8.9(g).
"PERMITTED LIENS" means those Liens and encumbrances permitted hereunder
pursuant to Section 8.9.
"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 J hereto.
"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.
"PRINCIPAL PAYMENT DATE" means each January 1, April 1, July 1 and October
1 of each Loan Year until the Termination Date.
"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 Holdings' 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 Holdings' historical financial
<PAGE>
19
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.
"PROSPECTUS" means the Prospectus dated August 18, 1997 relating to the
offering of One Million (1,000,000) shares of common stock, $0.01 par value per
share, of Holdings.
"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.
"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.
"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 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
<PAGE>
20
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 K-1 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, and each
individually a "Security Document."
"SELLER GROUP" with respect to a Permitted Acquisition, means collectively
and individually the seller of assets being purchased by a Borrower in
connection with such Permitted Acquisition.
"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.
"SUBORDINATED CREDITORS" means those Persons listed on Schedule 5.9
hereto, and each such Person is individually a "Subordinated Creditor."
"SUBORDINATED DEBT" means the Subordinated Promissory Notes (the
"Subordinated Promissory Notes") executed by a Borrower to a Subordinated
Creditor.
"SUBORDINATION AGREEMENTS" means the Subordination Agreements executed by
the Subordinated Creditors substantially in the form of Exhibit L hereto.
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21
"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) September 12, 2002; (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.
"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 B NOTE SUPPLEMENTS" mean, collectively, supplements to the Term Loan
B Notes, in or substantially in the form of K-4 hereto . Term B Note Supplement
shall mean any one of the Term B Note Supplements.
"TERM LOAN A" means the loan made pursuant to Section 2.2(b) hereof.
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22
"TERM LOAN A NOTES" means, with respect to the Term Loan A, the promissory
notes 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 K-2 hereto, and
each individually a Term Loan A Note.
"TERM LOAN B" means the loan made pursuant to Section 2.2(c) hereof.
"TERM LOAN B COMMITMENT" shall initially mean Seventeen Million and 00/100
Dollars ($17,000,000.00) plus any amounts available pursuant to Section 2.2(c)
hereof.
"TERM LOAN B NOTE" shall mean any one of the Term Loan B Notes.
"TERM LOAN B NOTES" means, collectively, with respect to the Term Loan B,
(i) 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 K-3 hereto, and (ii) the Term B Note Supplements.
"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.
"UA ACQUISITION" means the transaction contemplated by an agreement
between Holdings and United Artists Theatre Circuit, Inc., under which Holdings
has the right, but not the obligation, to acquire three theaters and the
underlying real estate and the leaseholds of two additional theaters (the "UA
Agreement").
"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.
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23
"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.
"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 Original 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, the Original Seller Group and CMNY.
ARTICLE 2.
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, 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 4.3 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(l) hereof.
(b) TERM LOAN A. Subject to the terms and conditions of this
Agreement and in reliance upon the representations 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
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of the Term Loan A shall be Twelve Million and 00/100 Dollars ($12,000,000.00).
Amounts borrowed under this subsection 2.2(b) 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 its
Participation Percentage of the Term Loan B. The aggregate amount of Term Loan B
shall be Seventeen Million and 00/100 Dollars ($17,000,000.00). During the First
Loan Year, amounts borrowed under this subsection 2.2(c) and repaid or prepaid
may be reborrowed subject to the conditions precedent set forth in Sections 4.1
and 4.2 hereof. During the Second Loan Year and thereafter, amounts borrowed
under this subsection 2.2(c) and repaid or prepaid may not be reborrowed;
provided, however, that if such borrowing is deemed to be made only as a result
of the issuances of a Letter of Credit and no Reimbursement Obligation has
arisen with respect to such Letter of Credit, the amount of such Letter of
Credit may be borrowed upon cancellation or expiration of the Letter of Credit.
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
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) All advances or disbursements of the Term Loan B proceeds shall
be effectuated at Borrowers' request, shall be subject to the conditions set
forth in Section 4.3 hereof.
(d) 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
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25
hereunder, the Agent shall disburse such funds by depositing them into the Agent
Disbursement Account.
(e) 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 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, as and to the extent
supplemented by each Term B Note Supplement, 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).
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.
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26
(b) MONTHLY INSTALLMENTS. Except as provided in Section 2.6(b)
hereof, 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 commencing 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, and
Borrowers hereby authorize Agent to charge the respective accounts of Borrowers
maintained with Agent, commencing on April 1, 1998 and on each Principal Payment
Date thereafter, quarterly installments of principal in the amount of Six
Hundred Thousand and 00/100 Dollars ($600,000.00) (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, plus
accrued interest thereon, of the Term Loan A.
(b) 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
the Term Loan B, monthly in arrears on the first Business Day of each month
commencing with the month following the month of the Closing Date, interest on
the outstanding principal amount of the Term Loan B at the annual rate equal to
the Interest Rate applicable thereto. Principal payments on the Term Loan B
shall be the aggregate amount of principal payments under all Term B Note
Supplements; PROVIDED, HOWEVER, that no principal payment under any Term B Note
Supplement shall be required prior to October 1, 1998. Borrowers shall pay to
Agent, and Borrowers hereby authorize Agent to charge the respective accounts of
Borrowers maintained with Agent, quarterly installments of principal in
accordance with the aggregate payments required pursuant to the terms of each
Term B Note Supplement; 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, plus accrued interest thereon, of the Term Loan
B.
(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(l) and the termination of the
Lenders' Commitments hereunder.
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27
(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(k). 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 (i) 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 (ii) 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(e)), 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(k).
(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, 1998, 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(k). Concurrently with the making of any such payment, Borrowers shall
deliver to Agent a certificate of Holdings' chief executive 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: (i) 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; (ii) 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; (iii)
proceeds constituting equity contributions
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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(k).
(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(h)
shall be applied to the Loans in accordance with subsection 2.6(k).
(i) PAYMENTS RELATIVE TO CLOSED OPERATIONS. In the event that
operations are terminated in a theater operating under a Guaranteed Lease, (i)
if Term Loan B has been fully drawn, the Agent shall have the option to require
a prepayment of Term Loan B in an amount equal to the maximum liability of
Borrowers with respect to such Guaranteed Lease, and (ii) if Term Loan B has not
been fully drawn, the Agent shall have the option to reduce the undrawn
availability on Term Loan B in an amount equal to the maximum liability of
Borrowers with respect to such Guaranteed Lease; however, if the maximum
liability exceeds the undrawn availability, Agent shall have the option to
reduce the undrawn availability and require a prepayment of Term Loan B.
(j) 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, the Term Loan A 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 September 12, 2002, the date of the final
maturity of such Notes.
(k) 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 to the payment
of the remaining installments on the Term Loan A, and thereafter such payments
shall be applied in repayment of the Revolving Credit Loan.
(l) PREPAYMENT FEES. If Borrowers voluntarily prepay the Term Loans
in full prior to the second 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 sum of the Maximum Revolving Commitment
and the outstanding
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balances of the Term Loans TIMES (y) one percent (1%) upon prepayment during
either the first Loan Year or the second 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(d), 2.6(e), 2.6(f), 2.6(g) 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(e) 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: (a) 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; (b) 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; (c) third, to the
payment of such amount of principal of the Term Loan B Notes that is then
due in accordance with each Lender's Pro Rata Share; (d) 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; (e) fifth, to the
payment of principal of the Revolving Credit Loan Notes in accordance with
each Lender's Pro Rata Share; and (f) 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: (a) 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
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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
(b) 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 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
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31
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 (i)
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 (ii) 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 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
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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 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: (i) 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 (ii) any of the conditions precedent for the 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 than the earlier of thirty (30) days after
the date of the issuance thereof or the Termination Date.
(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
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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.
(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.
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34
Section 2.13 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 (i) the dissolution or
insolvency of any Borrower, (ii) the inability of any Borrower to pay its debts
as they become due, (iii) an assignment by any Borrower for the benefit of its
creditors, or (iv) 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 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 3.
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
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35
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 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
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36
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, 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
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37
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 4.
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 (i) 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 (ii) the 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 (i) 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; (ii) its performance of all of its obligations under each of such
documents; and (iii) 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 (i) 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 (ii) to give notices and to take other action on behalf of such
Borrower under the Loan Documents.
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(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. (i) 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; (ii) executed
originals of each of the Notes shall have been delivered to each Lender in
accordance with their respective Credit Commitments, and (iii) 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. In
addition, Borrowers will deliver to Agent the additional documents identified on
Schedule 4.1(e) hereto.
(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 that insurance complying with such Section has
been obtained and is in full force and effect.
(h) MORTGAGE AND TITLE INSURANCE. The following documents each of
which shall be executed (and, where appropriate, acknowledged) by Persons
satisfactory to the Agent:
(i) each of the Mortgages and Leasehold Mortgages, in each
case duly executed and delivered by Borrower (and where appropriate by the
trustee thereunder) in recordable form, 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;
(ii) with respect to the Real Estate covered by the Mortgages,
title evidence satisfactory to each Lender that the respective Borrower
has a good, marketable fee simple estate in the Real Estate.
(iii) with respect to the Real Estate covered by the Leasehold
Mortgages, 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.
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39
(iv) with respect to the Real Estate covered by the Mortgages,
if requested by Agent, an as-built survey of recent date prepared by a
registered land surveyor or engineer, duly licensed in the state where the
Real Estate is located certified to a Title Company in full ALTA form.
(v) an Environmental Indemnity Agreement duly executed and
delivered by each of the Borrowers.
(vi) with respect to the Leasehold Mortgages, and as required
by Agent, consents of the respective landlords consenting to the
mortgaging of the respective Borrower's leasehold estate.
(vii) with respect to the Leasehold Mortgages, and as required
by Agent, 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 ("Real Estate Fees").
(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 (i) 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
Original Closing Date or the Closing Date; or (ii) for Borrower to perform any
of its agreements or obligations under any of the Loan Documents to which it is
a party on the Original Closing Date or 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 Original Closing Date or 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.
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(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 M hereto 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 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, the sum of (i) Borrowers'
cash on hand, and (ii) unborrowed amounts of the Revolving Credit Loan, shall be
at least Five Hundred Thousand Dollars ($500,000.00) and Holdings shall have
delivered to Agent a certificate as of the Closing Date demonstrating such
excess availability.
(q) UA ACQUISITION. On the Closing Date, Borrowers shall have
closed, or be prepared to close the UA Acquisition on terms and conditions
reasonably satisfactory to Agent and Agent and each Lender shall have received
satisfactory evidence such acquisition.
(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 set forth 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
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in the assets, liabilities, financial condition, business, operations or
prospects of Borrowers which, individually or in the aggregate, are materially
adverse to Borrowers.
(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) 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 (PROVIDED HOWEVER, that any
disbursement of Term Loan B is further subject to the conditions precedent in
Section 4.3 hereto):
(a) LEGALITY OF TRANSACTIONS. It shall not be unlawful (i) 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 (ii) 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 (a) shall be true and correct in all
material respects when made and (b) 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, as affected
by 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) ADDITIONAL REQUIREMENTS. Compliance with the Post-Closing
Requirements from the Original Credit Agreement set forth on Schedule 4.2(e)
hereto.
Section 4.3 CONDITIONS PRECEDENT TO SUBSEQUENT LENDING UNDER THE TERM B
LOAN. Advances under the Term Loan B shall be subject to the discretion of
Agent, are subject to the
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conditions precedent in Sections 4.2 hereof, and the proceeds thereof shall be
used solely for such purposes as Agent may from time to time approve and are
further subject to the satisfaction, prior thereto or concurrently therewith, of
each of the following conditions precedent:
(a) Disbursements under the Term B Loan shall be made only in
connection with a Permitted Acquisition.
(b) Disbursements under the Term B Loan shall be made prior to
October 1, 2000.
(c) Agent and each Lender shall have received certified copies of
the purchase agreement and all underlying and related documents with respect to
such Permitted Acquisition;
(d) Agent and each Lender shall have received updates of such
corporate documents more fully described in Sections 4.1(a) through 4.1(d) as
Agent in its sole discretion may require.
(e) immediately prior to, and after giving effect to the pro forma
effect of such acquisition, no Default or an Event of Default has occurred or
will occur;
(f) Upon completion of such Permitted Acquisition, on a pro forma
basis, acceptable to Agent, and adjusted, among others, for all non-recurring
items, Borrower will be in compliance with the terms of this Credit Agreement,
including, but not limited to, the provisions in Article 7, and Sections 6.17,
8.1, 8.7.
(g) Prior to, and after giving consideration to the acquisition on a
pro forma basis, Borrowers are and shall be in compliance with all loan
covenants;
(h) The ratio of Consolidated Senior Indebtedness for Borrowed Money
outstanding after such proposed funding to Consolidated EBITDA, determined on a
proforma basis taking into account such transaction using historical proforma
adjustments acceptable to Agent, shall not exceed 3.7 to 1.
(i) Each Borrower has executed and delivered to Agent a Term B Note
Supplement and such Loan Documents as Agent requires pursuant to the Permitted
Acquisition.
(j) Agent shall have received evidence in form and substance
satisfactory to it that all filings, recordings, registrations and other
actions, including without limitation, the recording of any Leasehold Mortgages,
or any Mortgages, and 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.
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(k) Agent shall have received such updated information required by
this Credit Agreement, including but not limited to the searches provided by
Section 4.1(s), proof of insurance and revised Schedules to the Credit
Agreement.
(l) REAL PROPERTY. Where required by Agent, Agent and Lenders shall
have received any or all of the following, and such documents as Agent deems
necessary relative to the Permitted Acquisition, substantially in the form
required under, and as more fully described in Section 4.1, hereto:
(i) Environmental Assessment;
(ii) Mortgages, Leasehold Mortgages and Title Evidence;
(iii) Environmental Indemnity Agreement or an amendment
thereto;
(iv) Consents of the respective landlords consenting to the
mortgaging of the respective Borrower's leasehold
estate;
(v) Non-disturbance and attornment agreements.
(m) NEW SUBSIDIARY Any new Subsidiary created, capitalized or
acquired relative to a Permitted Acquisition are subject to the provisions of
Section 8.1 hereof.
(n) ADDITIONAL CONDITIONS PRECEDENT. In the Agent's sole discretion,
Borrower will provide to Agent and Lenders further documentation including, but
not limited to conditions precedent set forth in Sections 4.1 and 4.2.
(o) Borrowers shall pay all of Agent's costs and expenses incurred,
including, but not limited to, all legal fees, filing fees for UCC financing
statements, search fees and Real Estate Fees (as defined in Section 4.1(h)
hereof).
ARTICLE 5.
GENERAL REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Agent and each Lender as follows:
Section 5.1 EXISTENCE, ETC.
(a) Each Borrower (i) is duly organized, validly existing and in
good standing under the laws of the State of its incorporation; and (ii) 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
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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) 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 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) 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 (i)
contravene any provision of such Borrower's charter documents or by-laws (each
as in effect from time to time); (ii) 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; (iii) violate or
contravene any provision of any law, rule or regulation
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45
(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 to which it is a party or (ii)
would have a Material Adverse Effect; (iv) 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 Original Closing Date or 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.
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46
(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 dated December 31,
1996 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 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 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 since the date of the
Prospectus.
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 on
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 set forth on said Schedule 5.8 and
all registrations set forth on Schedule 5.8 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 set forth on Schedule 5.8 hereto; (ii)
no Borrower is infringing in any respect upon any Patent or Trademark of any
other Person; (iii) no proceedings have been instituted
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47
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 SUBORDINATED DEBT AND 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 with respect to the whole or any part of such
Borrower's properties or assets, present or future, except for Permitted Liens.
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 materially 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.
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48
(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.
(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 8.14 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
<PAGE>
49
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.
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 material
necessary permits, licenses, variances, clearances and all other material
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.
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50
(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, 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 material 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 material
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 material 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 material compliance with the
foregoing without any known conflict with the valid rights of others except
where the failure so to comply would not have a Material Adverse Effect. 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.
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51
(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 (i) by any Borrower in favor of Agent pursuant to this
Agreement, or (ii) in respect of the items of Collateral subject to the
Permitted Liens.
(c) The provisions of this Agreement are sufficient to create in
favor of the Agent, as of the Original Closing Date, a valid and continuing lien
on, and first security interest in (subject to the Permitted 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 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 set forth 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 6.
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
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52
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 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. 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 forty-five (45) 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 7 and Sections 8.9 and
8.12 hereof; provided, however, that delivery of Form 10-Q to Agent shall
satisfy the requirements of this Section, so long as Holdings is a reporting
company under the Securities Exchange Act of 1934, as amended. Together with the
delivery of such financial statements of
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53
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 one hundred twenty (120) 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,
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;
provided, however, that delivery of Form 10-K to Agent shall satisfy the
requirements of this Section, so long as Holdings is a reporting company under
the Securities Exchange Act of 1934, as amended. 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(b), or 6.1(c), Borrowers will deliver a
management report: (1) 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); (2) 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.
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54
(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.
(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 (1) to terminate, cancel or rescind any Loan Document, or (2) 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.
(i) 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;
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55
(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;
(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.
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56
(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 (i) 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, (ii)
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 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
$2,500,000 and Holdings shall maintain such insurance in full force and effect
until the Loans have been paid in full and all
<PAGE>
57
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 in the state of its incorporation as of the Closing Date
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 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.
<PAGE>
58
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 (i)
the business failure, insolvency or bankruptcy of any Borrower; (ii) the
rescission, cancellation or termination, or the creation or adoption, of any
material agreement or contract to which any Borrower is a party; (iii) 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 (iv) 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 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;
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59
(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 (a) 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, (b) make full payment when due of all amounts which,
under the provisions of Employee Benefit Plans or under applicable law, are
required to be paid as contributions thereto, (c) not permit to exist any
accumulated funding deficiency, whether or not waived, (d) 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, (e) make any payments to
Multiemployer Plans required to be made under any agreement relating to such
Multiemployer Plans, or under any law pertaining thereto, (f) 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, (g) 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 (h) 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, acknowledgment 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, acknowledgment and delivery or completion, any and all
documents or actions in connection with the Post-Closing Requirements set forth
on Schedule 4.2(e) hereto.
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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.
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 7.
FINANCIAL COVENANTS
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), PROVIDED, HOWEVER,
that for the purposes of financial calculations under this Article 7,
calculations for any Reference Period shall be made using actual historical
financial data of any property acquired during said Reference Period, including
without limitation, the Bergen Transaction, the UA Acquisition and any Permitted
Acquisition, to the extent applicable for such period:
Section 7.1 INTEREST COVERAGE RATIO. Holdings shall not permit the ratio
of Consolidated EBITDA to Consolidated 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
--------------------------------------------------------
Prior to December 31, 1997 2.0 to 1.0
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========================================================
COMPUTATION DATE RATIO
--------------------------------------------------------
December 31, 1997 and 2.5 to 1.0
thereafter
========================================================
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.
Section 7.3 MINIMUM NET WORTH. Holdings shall not permit its
Consolidated Net Worth at any time while the Loans are outstanding to be less
than Eight Million and 00/100 Dollars ($8,000,000.00).
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 4.2 to 1.0.
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.
Section 7.6 LIMITATION ON CAPITAL EXPENDITURES. Borrowers shall not
make or incur any Capital Expenditures in the aggregate during any fiscal year
in excess of One Million Dollars ($1,000,000.00).
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 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 8.
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,
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62
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 Amended and Restated 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
Permitted Liens.
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 except to Holdings or another Borrower. 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;
(b) 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 respective Subordination Agreement; PROVIDED, HOWEVER, that Borrower
shall be entitled to pay in full at maturity the obligations listed on Schedule
8.3(b) hereto;
(c) 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
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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:
(1) 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;
(2) the consideration received is at least equal to the
fair market value of such assets;
(3) 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;
(4) the Net Proceeds of such Asset Disposition are
applied as required by subsection 2.6(e);
(5) 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 7, 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
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64
(6) 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, Borrowers will not and will not
permit any of their 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.
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;
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65
(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 set
forth on Schedule 5.7 annexed to this Agreement;
(f) Liens created in connection with the incurrence of purchase
money Indebtedness not prohibited hereby, so long as such Lien encumbers only
the asset purchased, is in favor only of the Seller thereof, and does not secure
any other Indebtedness of any Borrower.
(g) Liens granted to Agent for the benefit of Lenders;
(h) The additional existing mortgages, Liens and encumbrances of
Borrowers, listed and described, but only to the extent indicated on Schedule
8.9(h) annexed to this Agreement; and
(i) 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.
Section 8.10 NO ADDITIONAL NEGATIVE PLEDGES. No Borrower will create
or otherwise cause or suffer to exist or become effective, directly or
indirectly, (a) 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 (b) 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
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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:
(1) 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; (2) subject
to subordination provisions, pay any indebtedness owed to a Borrower or any
other Subsidiary; (3) make loans or advances to Borrower or any other
Subsidiary; or (4) 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 Subordinated Debt; and
(d) Indebtedness of Holdings as a guarantor of a lease PROVIDED
that Agent in its sole discretion has designated such lease as a Guaranteed
Lease.
(e) Indebtedness representing the refinancing of 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 (i) 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 (1) the issuance
of notes and or debentures in connection therewith, (2) the payment of all
insurance costs, commissions, discounts, redemption premiums, and other fees and
charges associated therewith, (3) the use of proceeds thereof and (4) the
redemption, repayment, or retirement of all Indebtedness of the Borrowers to be
redeemed, repaid, or retired in connection therewith; and (ii) 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 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.
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ARTICLE 9.
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 6.2(b), 6.4, 6.8, 6.10 or 2.9, Article 7 or
Article 8 and such failure or breach shall continue for more than thirty (30)
days from the date Borrower learns of such failure to comply;
(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 thirty
(30) 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 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;
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(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
One Hundred Thousand Dollars ($100,000) 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 Twenty Thousand Dollars ($20,000) 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 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
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incurred a withdrawal liability requiring a payment in an amount exceeding
Twenty Thousand Dollars ($20,000);
(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 Section 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 Even 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 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;
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(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; (ii) demand that monies due or to become due
be paid directly to Agent for the account of Lenders; (iii) open any Borrower's
mail and collect any and all amounts due Borrowers from account debtors; (iv)
enforce payment of the accounts receivable or chattel paper by legal proceedings
or otherwise; (v) exercise all of Borrowers' rights and remedies with respect to
the collection of the accounts receivable or chattel paper; (vi) settle, adjust,
compromise, modify, extend or renew the accounts receivable or chattel paper;
(vii) settle, adjust or compromise any legal proceedings brought to collect the
accounts receivable or chattel paper; (viii) 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;
(ix) 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; (x) take control, in any manner, of any item of payment or
proceeds from any account debtor; (xi) prepare, file, and sign any Borrower's
name on any proof of claim in Bankruptcy or similar document against any account
debtor; (xii) 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; (xiii) 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; (xiv) 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 debtors; and (xv) 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
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(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 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
or privilege 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.
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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 10.
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 (i) 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 (ii) 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 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.
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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 (i) upon
termination of the Credit Commitments and payment and satisfaction of all
Obligations; or (ii) 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 (iii)
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).
(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
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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 (i) 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 (ii) 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.
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,
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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.
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
<PAGE>
76
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 (i)
a change in the Maximum Revolving Commitment; (ii) a change in any Lender's
Credit Commitment; (iii) a reduction in the interest rates or reduction of the
principal set forth in the Notes; (iv) the extension of the maturity date on the
Notes; (v) a change in the payment schedule or scheduled date for the payment of
or amount of any interest or principal; (vi) any change in Article 7; (vii) 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; (viii) a change in the obligations and liabilities of Agent; (ix) a
change which increases the obligations of any Lender; or (x) 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, 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,
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77
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, 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.
<PAGE>
78
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 Amended and Restated Credit Agreement and the Notes;
PROVIDED that (i) 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 (ii) 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 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
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79
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 (i) such Lenders' obligations under the Loan Documents
(including, without limitation, its Credit Commitment to Borrowers hereunder)
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Note for all purposes of the Loan Documents,
(iv) the participating banks or other entities shall be entitled to the cost
protection provisions of Sections 2.10 and 11.5 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, (v) 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 (vi) 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 11.
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.
(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:
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80
(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
<PAGE>
81
received by the addressee; or (ii) if sent by first class mail, postage 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 10.10 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 (i) 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 (ii) 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
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82
whatsoever except for claims arising out of or related to the gross 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 (i) 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 (ii) 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 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
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83
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, (a) consents, waivers and modifications which may
hereafter be executed, (b) documents received by the Agent or any Lender at the
closing or otherwise, and (c) 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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84
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.]
<PAGE>
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:
CLEARVIEW CINEMA GROUP, INC.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CLEARVIEW THEATRE GROUP, INC.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC ALLWOOD CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC B.C. REALTY CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC BAYONNE CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
<PAGE>
CCC BEDFORD CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC BERGENFIELD CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC BRONXVILLE CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC CHESTER TWIN CINEMA CORPORATION
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC CINEMA 304 CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC CLOSTER CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
<PAGE>
CCC EMERSON CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
Title: President
CCC GRAND AVENUE CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC HERRICKS CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC KISCO CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC LARCHMONT CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC MADISON TRIPLE CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
<PAGE>
CCC MAMARONECK CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC MANASQUAN CINEMA CORPORATION
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC MARBORO CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC NEW CITY CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC PORT WASHINGTON CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC SUMMIT CINEMA CORP. (formerly known
as 343-349 Springfield Avenue Corp.)
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
<PAGE>
CCC TENAFLY CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC WASHINGTON CINEMA CORP.
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
CCC WAYNE CINEMA CORP
By: /s/ A. Dale Mayo
- ------------------------------- -----------------------------------
Name: A. Dale Mayo
- ------------------------------- Title: President
THE LENDERS:
THE PROVIDENT BANK
By: /s/ Christopher B. Gribble
- ------------------------------- -----------------------------------
Name: Christopher B. Gribble
- ------------------------------- Title: Assistant Vice President
AGENT:
THE PROVIDENT BANK, as Agent
By: /s/ Christopher B. Gribble
- ------------------------------- -----------------------------------
Name: Christopher B. Gribble
- ------------------------------- Title: Assistant Vice President
EXHIBIT 10.02
AGREEMENT, dated as of September 1, 1997, by and among Clearview
Cinema Group, Inc., a Delaware corporation ("Clearview"), First New York Realty
Co. Inc., a New York corporation ("First New York"), and Brett E. Marks, an
individual resident of the State of New York ("Marks").
WHEREAS, from its formation until May 31, 1997, Marks was the Vice
President-Development of Clearview and, as such, among other things, sought to
identify movie theaters that could be suitable acquisition candidates for
Clearview and to identify locations in appropriate communities that could be
developed as movie theaters to be operated by Clearview; and
WHEREAS, effective as of June 1, 1997, Marks resigned as the Vice
President-Development of Clearview and executed a consulting and confidentiality
agreement (the "Consulting Agreement") with Clearview pursuant to which, among
other things, Marks as a consultant has been retained to continue to seek to
identify suitable theaters and locations; and
WHEREAS, First New York is a New York City-based realty brokerage
firm that represents buyers, sellers, lessors and lessees of real property in
New York and New Jersey; and
WHEREAS, generally, First New York is paid a commission by the
seller or lessor of a property when First New York has represented a party
involved in the sale or lease of such property, regardless of whom First New
York represented in such transaction; and
WHEREAS, Marks is a licensed real estate salesman with and executive
vice president of First New York and, as such, is involved in the representation
of parties in real estate transactions; and
WHEREAS, the parties hereto have agreed that it is desirable and
appropriate to set forth their mutual understanding of the circumstances, if
any, in which First New York may be entitled to be paid a commission with
respect to a transaction to which Clearview is a party.
NOW, THEREFORE, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, agree as follows.
1. ACKNOWLEDGMENT OF PRIOR COMMISSIONS. Clearview hereby
acknowledges and agrees that, if such transactions are consummated, First New
York will be entitled to commissions (payable by the seller/landlord thereof)
with respect to Clearview's acquisition of the fee or leasehold interests in the
real properties currently owned or operated by United Artists Theatre Circuit,
Inc. a Maryland corporation ("UA"), or one of its subsidiaries and known as the
Marboro Cinema 4 in Brooklyn, New York, the Bronxville Theatre in Bronxville,
New York, the Larchmont Theatre in Larchmont, New York, the Mamaroneck Playhouse
in Mamaroneck, New
<PAGE>
York, the New City Cinema 304 in New City, New York and the Wayne Theatre in
Passaic, New Jersey. Clearview also hereby acknowledges and agrees, that, if
such transactions are consummated, Marks will be entitled to commissions payable
by First New York.
2. ACKNOWLEDGMENT OF NO COMMISSION. First New York hereby
acknowledges and agrees that, with respect to each acquisition by Clearview or
any of its subsidiaries of any interest in any real property prior to the date
hereof, it is not entitled to any fee or commission of any kind from any party
thereto regardless of whether Marks was involved on Clearview's behalf with
respect thereto. In addition, First New York hereby acknowledges and agrees
that, absent an agreement in writing with Clearview to the contrary, it shall
not be entitled to any fee or commission from Clearview with respect to any
transaction of any type regardless of the activities of Marks with respect
thereto. Finally, First New York hereby acknowledges and agrees that UA and
Clearview had a relationship prior to the negotiation of the agreements for the
transactions referred to above in Section 1, that representatives of UA and
Clearview have been, are and, in the future, may be discussing one or more
possible transactions other than those referred to above in Section 1 and that,
subject to Section 4, First New York will be entitled to a commission or fee
with respect to any such transaction to the extent, but only to the extent,
agreed to in writing by UA or its duly authorized representative.
3. MARKS' COMMISSIONS ON FUTURE TRANSACTIONS. Marks shall
disclose in writing to Clearview, at the time he identifies a theater or
location as a possible target/opportunity to Clearview or as promptly as
practicable thereafter if he does not know the information at such time, if
First New York pursuant to an agreement with the seller/landlord thereof or with
an agent of such person could be entitled to a fee or commission therefrom if
Clearview were to acquire the relevant fee or leasehold interest. Marks
acknowledges and agrees that he shall not be entitled to any commission or fee
from First New York with respect to any such transaction without the prior
written consent of Clearview, which may be withheld in its sole discretion.
4. FIRST NEW YORK'S COMMISSIONS ON FUTURE TRANSACTIONS. First
New York shall disclose in writing to Clearview, prior to the time that
Clearview executes any agreement to acquire a fee or leasehold interest in any
real property, if First New York believes, for any reason, that it may be
entitled to a commission or fee from the seller/landlord of such property with
respect to such transaction and the maximum amount thereof. First New York
acknowledges and agrees that it shall not be entitled to any commission or fee
with respect to any such transaction if such prior disclosure is not made and
shall only be entitled to any commission or fee with respect to any such
transaction to the extent, if any, that Clearview consents thereto in writing
prior to the execution of any such agreement. Clearview's determination with
respect to First New York's right to receive any such commission or fee shall be
solely within its discretion and may be withheld for any reason or no reason at
all.
5. REPRESENTATIONS AND WARRANTIES.
2
<PAGE>
a. Marks represents and warrants to Clearview and First
New York as follows:
(i) Marks is an individual resident of the State of
New York and is over twenty-one years old.
(ii) Neither this Agreement nor any of the
transactions contemplated hereby conflicts with or violates (x) any agreement by
which Marks is bound or (y) any federal, state or local law, rule or regulation
or judicial order to which Marks is subject.
b. First New York represents and warrants to Clearview
and Marks as follows:
(i) First New York is a corporation duly organized
and existing in good standing under the laws of the State of New York.
(ii) This Agreement and the transactions contemplated
hereby have been duly authorized by all necessary corporate and stockholder
action of First New York. Neither this Agreement nor any of the transactions
contemplated hereby conflicts with or violates (x) any provision of the
Certificate of Incorporation or By-laws of First New York; (y) any agreement by
which First New York, any subsidiary of First New York or any of its or their
respective properties is bound in any manner that, individually or in the
aggregate, could have a material adverse effect on the business, assets,
financial condition or results of operations of First New York and its
subsidiaries taken as a whole; or (z) any federal, state or local law, rule or
regulation or judicial order, in any manner that, individually or in the
aggregate, could have a material adverse effect on the business, assets,
financial condition or results of operations of First New York and its
subsidiaries taken as a whole. This Agreement is binding on First New York and
enforceable against First New York in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, moratorium, fraudulent transfer,
preference and other laws and equitable principles affecting the scope and
enforcement of creditors' rights generally.
(iii) No consent, approval or authorization of, or
filing, registration or qualification with, any governmental authority or any
other person on the part of First New York is required in connection with the
execution, delivery and performance of this Agreement.
c. Clearview represents and warrants to First New York and
Marks as follows:
(i) Clearview is a corporation duly organized and
existing in good standing under the laws of the State of Delaware.
(ii) This Agreement and the transactions contemplated
hereby have been duly authorized by all necessary corporate and stockholder
action of Clearview. Neither this Agreement nor any of the transactions
contemplated hereby conflicts with or violates
3
<PAGE>
(x) any provision of the Certificate of Incorporation or By-laws of Clearview;
(y) any agreement by which Clearview, any subsidiary of Clearview or any of its
or their respective properties is bound in any manner that, individually or in
the aggregate, could have a material adverse effect on the business, assets,
financial condition or results of operations of Clearview and its subsidiaries
taken as a whole; or (z) any federal, state or local law, rule or regulation or
judicial order, in any manner that, individually or in the aggregate, could have
a material adverse effect on the business, assets, financial condition or
results of operations of Clearview and its subsidiaries taken as a whole. This
Agreement is binding on Clearview and enforceable against Clearview in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, moratorium, fraudulent transfer, preference and other laws and
equitable principles affecting the scope and enforcement of creditors' rights
generally.
(iii) No consent, approval or authorization of, or
filing, registration or qualification with, any governmental authority or any
other person on the part of Clearview is required in connection with the
execution, delivery and performance of this Agreement.
6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof. Any changes
in or additions to this Agreement may be made only upon the written consent of
all parties hereto.
7. SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
8. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York without regard to any of its
principles of conflicts of laws.
9. COUNTERPARTS. This Agreement 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 instrument.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.
CLEARVIEW CINEMA GROUP, INC.
By:
-----------------------------
A. Dale Mayo
President
FIRST NEW YORK REALTY CO. INC.
By:
-----------------------------
Mitchell A. Marks
President
--------------------------------
Brett E. Marks
5
EXHIBIT 11.01
Statement Regarding Earnings per Share
A summary of Shares of Common Stock and equivalents treated as outstanding
for the purposes of calculating net income (loss) per Common Share for all
reported periods herein is as follows:
Shares of Common Stock outstanding 832,800
Shares of Common Stock issuable upon:(1)
Conversion of 779 shares of Class A
Preferred Stock 467,400
Exercise of Warrants--
200 A/B Warrants 120,000
157 Provident Warrants 94,200(2)
Class A Warrants 282,600
------------
1,797,000
(1) Reference should be made to the Company's accounting policy as disclosed in
the consolidated financial statements included in Form SB-2.
(2) Such warrants were repurchased by the Company on June 30, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CLEARVIEW CINEMA GROUP, INC. JUNE 30, 1997 CONSOLIDATED FINANCIAL STATEMENTS
AND IS QUANTIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001038754
<NAME> CLEARVIEW CINEMA GROUP, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 758
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 49
<CURRENT-ASSETS> 967
<PP&E> 13,514
<DEPRECIATION> (1,296)
<TOTAL-ASSETS> 16,734
<CURRENT-LIABILITIES> 3,333
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (549)
<TOTAL-LIABILITY-AND-EQUITY> 16,734
<SALES> 6,188
<TOTAL-REVENUES> 6,188
<CGS> 0
<TOTAL-COSTS> 6,061
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 724
<INCOME-PRETAX> (598)
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<NET-INCOME> (598)
<EPS-PRIMARY> (.33)
<EPS-DILUTED> (.33)
</TABLE>
