SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): November 21, 1997
Clearview Cinema Group, Inc.
(Exact name of registrant as specified in charter)
Delaware 001-13187 22-3338356
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
7 Waverly Place 07940
Madison, New Jersey (Zip code)
(Address of principal executive
offices)
Registrant's telephone number,
including area code: (201) 377-4646
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Item 2. Acquisition or Disposition of Assets.
On November 21, 1997, Clearview Cinema Group, Inc. (the "Company"),
together with its subsidiaries CCC Succasunna Cinema Corp. and CCC Parsippany
Cinema Corp. (together, the "Subsidiaries"), purchased certain assets from F&N
Cinema, Inc. and Roxbury Cinema, Inc. (together, the "Sellers"), comprising the
operations of two multi-plex theatres with a total of 22 screens located in
Morris County, New Jersey. The Company intends to continue to use the purchased
assets in the operation of multi-plex theatres.
Pursuant to an Asset Purchase Agreement dated as of November 21, 1997 (the
"Asset Purchase Agreement") among the Company, the Subsidiaries, the Sellers and
John Nelson, Pamela Ferman and Seth Ferman (the "Stockholders"), the
Subsidiaries purchased two leasehold interests and certain furniture, fixtures,
equipment and personal property related to the operation of the two theatres,
and assumed certain liabilities relating to the leases of the theatres. The
Asset Purchase Agreement is attached hereto as Exhibit 2.01 and incorporated by
reference herein in its entirety.
The aggregate purchase price payable under the Asset Purchase Agreement
was $18.5 million and was paid in consideration consisting of: (i) $11.6 million
in cash; (ii) a Subordinated Promissory Note of the Company in the amount of
$4.0 million; (iii) a Subordinated Promissory Note of the Company in the amount
of $2.0 million; (iv) shares of the Company's Common Stock, par value $.01 per
share ("Company Common Stock"), with an aggregate average market value of
$500,000 for the ten trading days preceding November 21, 1997; and (v) $400,000
to be held in escrow to satisfy certain obligations of the Sellers under a
leasehold mortgage. The Subordinated Promissory Note in the amount of $4.0
million bears interest at the annual rate of 10 1/2%, payable monthly in
arrears. Principal on such note is payable on the earliest to occur of (i) the
fifth anniversary of the note, (ii) the closing of the issuance by the Company
of certain debt securities, and (iii) the issuance in an underwritten public
offering by the Company of additional equity securities or the issuance of debt
securities to institutional investors, in each case with an aggregate offering
price of at least $10.0 million. The Subordinated Promissory Note in the amount
of $2.0 million bears interest at the annual rate of 10 1/2%, which is payable
monthly in arrears. Principal on such note is payable upon the earliest to occur
of (i) the closing of the issuance by the Company of certain debt securities,
(ii) the issuance in an underwritten offering by the Company of additional
equity securities or the issuance of debt securities to institutional investors,
in each case with an aggregate offering price of at least $10.0 million, (iii)
upon demand if a valid building permit is not issued for the Mansfield Theatre
(as defined below) by June 1, 1998, (iv) the date 120 days after the date a
valid certificate of occupancy is issued for the Mansfield Theatre, and (v)
January 15, 1999. The aggregate purchase price under the Asset Purchase
Agreement was determined by arms' length negotiations among the Company and the
Sellers.
In connection with the closing of the Asset Purchase Agreement, the
Sellers entered into a Voting Trust Agreement dated as of November 21, 1997 (the
"Voting Trust") with A. Dale Mayo, the Chairman, President and Chief Executive
Officer of the Company, acting as Trustee (the "Trustee"), relating to the
shares of Common Stock issued to the Sellers as consideration
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under the Asset Purchase Agreement. Pursuant to the Voting Trust, the Trustee
has the power to vote such shares and all dividends and distributions with
respect to such shares will be remitted by the Trustee to the Sellers. A copy of
the Voting Trust is attached hereto as Exhibit 9.01 and is incorporated by
reference herein in its entirety.
The Company also entered into a Registration Rights Agreement dated
November 21, 1997 (the "Registration Rights Agreement") with the Sellers.
Pursuant to the Registration Rights Agreement, the Company granted the Sellers
incidental registration rights to participate and sell the shares of Company
Common Stock received by the Sellers pursuant to the Asset Purchase Agreement in
a registered offering being conducted by the Company, with the costs and
expenses of such registration to be borne by the Company. A copy of the
Registration Rights Agreement is attached hereto as Exhibit 10.03 and is
incorporated by reference herein in its entirety.
On November 21, 1997, the Company also entered into a merger agreement
with CCC Mansfield Cinema Corp. ("CCC Acquisition"), Warren County Cinemas, Inc.
("Mansfield"), and the Stockholders and Martin Drescher (the "Merger
Agreement"), which provides for the merger of Mansfield into CCC Acquisition, a
subsidiary of the Company, subject to the satisfaction of certain closing
conditions. Mansfield holds a leasehold interest in certain real property on
which a multi-plex theatre development in Warren County, New Jersey (the
"Mansfield Theatre") is contemplated to be built. The closing under the Merger
Agreement is scheduled to occur within ten business days after a construction
permit to build the Mansfield Theatre has been issued, but in no event later
than January 15, 1999, subject to certain exceptions if the permit is not
issued. The Merger Agreement is attached hereto as Exhibit 2.02 and is
incorporated by reference herein in its entirety.
The purchase price payable under the Merger Agreement is $1.0 million,
which is to be paid in shares of Company Common Stock with an aggregate average
market value of $1.0 million for the ten trading days preceding the closing;
provided, however, that the number of shares of Company Common Stock to be
issued shall not exceed 90,909 or be less than 76,923. The Merger Agreement
further provides that the Company will enter into a voting trust agreement and
registration rights agreement with respect to the shares of Company Common Stock
to be issued as consideration under the Merger Agreement. The Merger Agreement
also provides for a deferred purchase price to be paid to the Stockholders in an
amount equal to the excess over $2.5 million (up to a maximum of $500,000) of
the total average revenue that CCC Acquisition generates during the two-year
period after the closing date of the Merger Agreement.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The Company intends to file the financial statements required within
60 days of the initial filing of this report.
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(b) Pro forma financial information.
The Company intends to file the pro forma financial information
required within 60 days of the initial filing of this report.
(c) Exhibits.
2.01 Asset Purchase Agreement dated as of November 21, 1997 by and
among Clearview Cinema Group, Inc., CCC Succasunna Cinema
Corp., CCC Parsippany Cinema Corp., F&N Cinema, Inc., Roxbury
Cinema, Inc., John Nelson, Pamela Ferman and Seth Ferman.
2.02 Merger Agreement dated as of November 21, 1997 by and among
Clearview Cinema Group, Inc., CCC Mansfield Cinema Corp.,
Warren County Cinemas, Inc., John Nelson, Pamela Ferman and
Seth Ferman.
9.01 Voting Trust Agreement dated as of November 21, 1997 by and
among F&N Cinema, Inc., Roxbury Cinema, Inc. and A. Dale Mayo,
as Trustee.
10.01 Subordinated Promissory Note dated as of November 21, 1997 in
the amount of $4.0 million.
10.02 Subordinated Promissory Note dated as of November 21, 1997 in
the amount of $2.0 million.
10.03 Registration Rights Agreement dated as of November 21, 1997 by
and among Clearview Cinema Group, Inc., F&N Cinema, Inc. and
Roxbury Cinema, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLEARVIEW CINEMA GROUP, INC.
By: /s/ A. Dale Mayo
---------------------------------
A. Dale Mayo
Title: Chairman of the Board,
President and Chief Executive
Officer
Date: December 5, 1997
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Exhibit Index
SEQUENTIAL
EXHIBIT NO. DOCUMENT PAGE NO.
2.01 Asset Purchase Agreement dated as of
November 21, 1997 by and among Clearview
Cinema Group, Inc., CCC Succasunna
Cinema Corp., CCC Parsippany Cinema
Corp., F&N Cinema, Inc., Roxbury Cinema,
Inc., John Nelson, Pamela Ferman and
Seth Ferman.
2.02 Merger Agreement dated as of November
21, 1997 by and among Clearview Cinema
Group, Inc., CCC Mansfield Cinema Corp.,
Warren County Cinemas, Inc., John
Nelson, Pamela Ferman and Seth Ferman.
9.01 Voting Trust Agreement dated as of
November 21, 1997 by and among F&N
Cinema, Inc., Roxbury Cinema, Inc. and
A. Dale Mayo, as Trustee.
10.01 Subordinated Promissory Note dated as of
November 21, 1997 in the amount of $4.0
million.
10.02 Subordinated Promissory Note dated as of
November 21, 1997 in the amount of $2.0
million.
10.03 Registration Rights Agreement dated as
of November 21, 1997 by and among
Clearview Cinema Group, Inc., F&N
Cinema, Inc. and Roxbury Cinema, Inc.
ASSET PURCHASE AGREEMENT
This Agreement (this "AGREEMENT") is dated as of November 21, 1997, by and
among Clearview Cinema Group, Inc., a Delaware Corporation ("CCG"); CCC
Succasunna Cinema Corp., a Delaware corporation ("SUCCASUNNA PURCHASER"); CCC
Parsippany Cinema Corp., a Delaware corporation ("PARSIPPANY PURCHASER";
Parsippany Purchaser and Succasunna Purchaser collectively, the "Purchasers");
F&N Cinema, Inc., a New Jersey corporation ("PARSIPPANY Seller"); Roxbury
Cinema, Inc., a New Jersey corporation, ("SUCCASUNNA SELLER"; Parsippany Seller
and Succasunna Seller collectively, the "Sellers"); and John Nelson, Pamela
Ferman and Seth Ferman (collectively, the "STOCKHOLDERS").
The Sellers currently own and operate the Theaters, as hereinafter
defined.
The Sellers desire to sell to the Purchasers, and the Purchasers desire to
purchase from the Sellers, substantially all of the assets (including the Leases
(as hereinafter defined)) owned or held by the Sellers and utilized in the
operation of the Theaters, upon the terms and subject to the conditions set
forth below.
In consideration of the representations, warranties, covenants, and
agreements contained in this Agreement, the parties, each intending to be
legally bound hereby, agree as set forth below:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
1.1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings specified in this Section. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
"12-31-96 BALANCE SHEET" has the meaning given that term in Section 3.4.
"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"AGREEMENT" means this Agreement, as it may be amended from time to time.
"ASSUMED LIABILITIES" has the meaning given that term in Section 2.4.
"BENEFIT PLAN" has the meaning given that term in Section 3.19(a).
"BUSINESS" means business of the operation of the Theaters conducted by
Sellers.
"CCG" has the meaning given that term in the heading of this Agreement.
"CCG SHARES" means the shares of Common Stock of CCG being delivered by
Purchasers to Sellers pursuant to this Agreement.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List pursuant to Superfund.
"CLOSING" has the meaning given that term in Section 2.8.
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"CLOSING DATE" has the meaning given that term in Section 2.8.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
"CONTRACT" and "CONTRACTS" have the respective meanings given those terms
in Section 3.10.
"DAMAGES" has the meaning given that term in Section 7.5.
"DEFINED BENEFIT PLAN" has the meaning given that term in Section 3.19(e).
"ENCUMBRANCE" means any mortgage, deed of trust, pledge, security
interest, encumbrance, option, right of first refusal, agreement of sale,
adverse claim, easement, lien, lease, assessment, restrictive covenant,
encroachment, right-of-way, burden or charge of any kind or nature whatsoever or
any item similar or related to the foregoing.
"ENVIRONMENTAL LAW" means any applicable Law relating to public health and
safety or protection of the environment, including common law nuisance, property
damage and similar common law theories.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the applicable rulings and regulations thereunder.
"FINANCIAL STATEMENTS" has the meaning given that term in Section 3.4.
"GAAP" means United States generally accepted accounting principles.
"GOVERNING DOCUMENTS" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter documents or
organization or governing documents or instruments of such Person.
"GOVERNMENTAL BODY" means any court, government (federal, state, local or
foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality.
"INDEMNIFICATION ESCROW AGREEMENT" means the indemnification escrow
agreement attached as Exhibit A.
"INDEMNIFICATION ESCROW FUND" has the meaning given that term in Section
2.6.
"INDEMNIFIED PARTY" has the meaning given that term in Section 7.5.
"INDEMNIFYING PARTY" has the meaning given that term in Section 7.5.
"INTELLECTUAL PROPERTY" has the meaning given that term in Section 3.18.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" as to any person means, as to a natural person, the actual
knowledge of such person and, as to any other person, the actual knowledge of an
executive officer of such person.
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"LANDLORDS' CONSENTS" means the consent of the respective landlords as
provided for in the Succasunna Lease and the Parsippany Lease.
"LAW" means any applicable federal, state, municipal, local or foreign
statute, law, ordinance, rule, regulation, judgment or order of any kind or
nature whatsoever including any public policy, judgment or order of any
Governmental Body or principle of common law.
"LEASES" means the Succasunna Lease and the Parsippany Lease,
collectively.
"LIABILITIES" with respect to any Person, means all debts, liabilities and
obligations of such Person of any nature or kind whatsoever, whether or not due
or to become due, accrued, fixed, absolute, matured, determined, determinable or
contingent and whether or not incurred directly by such Person or by any
predecessor of such Person, and whether or not arising out of any act, omission,
transaction, circumstance, sale of goods or service or otherwise.
"LITIGATION" has the meaning given that term in Section 3.9.
"MULTIEMPLOYER PLAN" has the meaning given that term in Section 3.19(f).
"OTHER AGREEMENTS" means each other agreement or document to be executed
and delivered in connection with the transactions contemplated by this Agreement
on or before Closing, including the Promissory Notes.
"PARSIPPANY BALANCE SHEET" means the balance sheet of Parsippany Seller
dated 9-30-97 attached as "Exhibit B".
"PARSIPPANY CONTRACTS" has the meaning given that term in Section 2.2(b).
"PARSIPPANY LEASE" means the lease agreement attached as "Exhibit C".
"PARSIPPANY PURCHASED ASSETS" has the meaning given that term in
Section 2.2.
"PARSIPPANY PURCHASER" has the meaning given that term in the heading
of this Agreement.
"PARSIPPANY SECURITY DEPOSIT" means the limited Guarantee of Lease
executed and delivered by John Nelson and Robert Ferman in accordance with
paragraph 19 of the Parsippany Lease.
"PARSIPPANY SELLER" has the meaning given that term in the heading of this
Agreement.
"PARSIPPANY THEATER" means the 12 screen movie theater operated by
Parsippany Seller at the location set forth in the Parsippany Lease.
"PERMIT" and "PERMITS" have the respective meanings given those terms
in Section 3.11.
"PERMITTED ENCUMBRANCES" means (i) liens for current taxes not yet due,
and (ii) Encumbrances that do not or will not either individually or in the
aggregate adversely affect the value of the property encumbered or prohibit or
interfere with the operations of the Business, and (iii) with respect to the
Succasunna Lease the R.C. Leasehold Mortgage.
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"PERSON" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any other legal entity, or
a Governmental Body.
"PROMISSORY NOTE A" means the $4 million 10 1/2 % Promissory Note of the
Purchasers in substantially the form of "Exhibit D".
"PROMISSORY NOTE B" means the $2 million 10 1/2 % Promissory Note of the
Purchasers in substantially the form of "Exhibit E".
"PROMISSORY NOTES" means the Promissory Note A and the Promissory Note B,
collectively.
"PURCHASE PRICE" has the meaning given that term in Section 2.5.
"PURCHASED ASSETS" means the Succasunna Purchased Assets and the
Parsippany Purchased Assets, collectively.
"PURCHASERS" has the meaning given that term in the heading of this
Agreement.
"PURCHASERS DAMAGES" has the meaning given that term in Section 7.2.
"PURCHASERS INDEMNITEES" has the meaning given that term in Section 7.2.
"QUALIFIED PLAN" has the meaning given that term in Section 3.19(d).
"REAL PROPERTY" has the meaning given that term in Section 3.12.
"R.C. LEASEHOLD MORTGAGE" means that Leasehold Mortgage made by Cinema 10,
Inc. to Robert Ferman, Harold Taylor and Louis Allerhand dated July 1, 1969,
recorded August 18, 1970 in the Morris County Clerk's Office in Mortgage Book
1286 page 854 as modified by various amendments and agreements including but not
limited to that certain Agreement dated June 28, 1985 between the Succasunna
Seller and Robert Ferman, Harold Taylor and Louis Allerhand.
"REGULATED MATERIAL" means any hazardous substance as defined by any
Environmental Law and any other material regulated by any applicable
Environmental Law, including petroleum, petroleum-related material, crude oil or
any fraction thereof, polychlorinated biphenyls, and any friable asbestos.
"RELATED PARTY" means (i) Sellers, (ii) any Affiliate of Sellers, (iii)
any officer or director of any Person identified in clauses (i) or (ii)
preceding, and (iv) any spouse, sibling, ancestor or lineal descendant of any
natural Person identified in any one of the preceding clauses.
"RETAINED ASSETS" has the meaning given that term in Section 2.3.
"RETAINED LIABILITIES" has the meaning given that term in Section 2.4.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SELLERS" has the meaning given that term in the heading of this
Agreement.
"SELLERS DAMAGES" has the meaning given that term in Section 7.3.
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"SELLERS GROUP" has the meaning given that term in Section 3.19(b).
"SELLERS INDEMNITEES" has the meaning given that term in Section 7.3.
"SELLER PLAN" has the meaning given that term in Section 3.19(a).
"SOLD TICKETS" has the meaning given that term in Section 2.5.
"STOCKHOLDERS" has the meaning given that term in the heading of this
Agreement.
"SUCCASUNNA BALANCE SHEET" means the balance sheet of Succasunna Seller
attached as "Exhibit F".
"SUCCASUNNA CONTRACTS" has the meaning given that term in Section 2.1(b).
"SUCCASUNNA LEASE" means the lease agreement attached as "Exhibit G".
"SUCCASUNNA PURCHASED ASSETS" has the meaning given that term in Section
2.1.
"SUCCASUNNA PURCHASER" has the meaning given that term in the heading of
this Agreement.
"SUCCASUNNA SELLER" has the meaning given that term in the heading of this
Agreement.
"SUCCASUNNA THEATER" means the 10 screen movie theater operated by
Succasunna Seller at the location set forth in the Succasunna Lease.
"SUPERFUND" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as amended.
"TAX" means any domestic or foreign federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
"TCI" has the meaning given that term in Section 6.1(h).
"THEATERS" means the Parsippany Theater and the Succasunna Theater,
collectively.
"VOTING TRUST AGREEMENT" means the Voting Trust Agreement in the form of
"Exhibit H".
1.2. CONSTRUCTION. As used herein, unless the context otherwise requires:
(i) references to "Article" or "Section" are to an article or section hereof;
(ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits and
Schedules attached hereto and are incorporated herein by reference and made a
part hereof; (iii) "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
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ARTICLE II.
PURCHASE AND SALE
2.1. PURCHASE AND SALE OF SUCCASUNNA ASSETS. At the Closing, Succasunna
Seller shall sell, convey and transfer to Succasunna Purchaser, and Succasunna
Purchaser shall purchase from Succasunna Seller, all of Succasunna Seller's
properties and business as a going concern and goodwill and assets of every
kind, nature and description existing on the Closing Date, wherever such assets
are located and whether real, personal or mixed, tangible or intangible, in
electronic form or otherwise, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements, except those assets
specifically excluded pursuant to Section 2.3, free and clear of all
Encumbrances other than Permitted Encumbrances. Except as excluded pursuant to
Section 2.3, the properties, business, goodwill and assets of Succasunna Seller
to be transferred hereunder (collectively, the "SUCCASUNNA PURCHASED ASSETS")
shall include but not be limited to the following:
(a) All of Succasunna Seller's furniture, fixtures, equipment, and
concession stands, including the items listed on Schedule 2.1(a);
(b) All of Succasunna Seller's rights under the Succasunna Lease and all
of Succasunna Seller's rights under all other leases, contracts, agreements and
purchase and sale orders (collectively, the "SUCCASUNNA CONTRACTS") including
any and all of Succasunna Seller's rights in and to the telephone numbers
currently used for the Succasunna Theater;
(c) All of Succasunna Seller's goodwill and rights in and to the name of
the Succasunna Theater and in any other tradename, trademark, fictitious name or
service mark, or any variant of any of them, and any applications therefor or
registrations thereof, and any other forms of Intellectual Property; and
(d) To the extent not described above, all of the assets reflected on the
Succasunna Balance Sheet.
2.2. PURCHASE AND SALE OF PARSIPPANY ASSETS. At the Closing, Parsippany
Seller shall sell, convey and transfer to Parsippany Purchaser, and Parsippany
Purchaser shall purchase from Parsippany Seller, all of Parsippany Seller's
properties and business as a going concern and goodwill and assets of every
kind, nature and description existing on the Closing Date, wherever such assets
are located and whether real, personal or mixed, tangible or intangible, in
electronic form or otherwise, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements, except those assets
specifically excluded pursuant to Section 2.3, free and clear of all
Encumbrances other than Permitted Encumbrances. Except as excluded pursuant to
Section 2.3, the properties, business, goodwill and assets of Parsippany Seller
to be transferred hereunder (collectively, the "PARSIPPANY PURCHASED ASSETS")
shall include but not be limited to the following:
(a) All of Parsippany Seller's furniture, fixtures, equipment and
concession stands, including the items listed on Schedule 3.1(a);
(b) All of Parsippany Seller's rights under the Parsippany Lease and all
of Parsippany Seller's rights under all other leases, contracts, agreements and
purchase and sale orders (collectively, the "PARSIPPANY CONTRACTS") including
any and all of Parsippany Seller's rights in and to the telephone numbers
currently used for the Parsippany Theater;
(c) All of Parsippany Seller's goodwill and rights in and to the name of
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the Parsippany Theater and in any other tradename, trademark, fictitious name or
service mark, or any variant of any of them, and any applications therefor or
registrations thereof, and any other forms of Intellectual Property; and
(d) To the extent not described above, all of the assets reflected on the
Parsippany Balance Sheet.
2.3. RETAINED ASSETS. Sellers shall retain and the Purchased Assets shall
not include the following assets: (i) the consideration to be delivered to
Sellers pursuant to this Agreement, (ii) Sellers' other rights hereunder, (iii)
Sellers' respective minute book, stock book and seal, (iv) all claims, choses in
action, causes of action and judgments in respect of any litigation matter and
with respect to any other Retained Liability, and (v) all of Sellers' cash in
banks, cash equivalents, bank and mutual fund accounts, trade and other notes
and accounts receivable, deposits, investments, securities, advance payments,
prepaid items and expenses, deferred charges, rights of offset and credits and
claims for refund (collectively, the "RETAINED ASSETS").
2.4. ASSUMPTION OF CERTAIN OBLIGATIONS; RETAINED LIABILITIES. At the
Closing, Succasunna Purchaser shall assume from Succasunna Seller the
liabilities and obligations of arising from the Succasunna Lease and the
Succasunna Contracts and the R.L. Leasehold Mortgage subject to the provisions
of the Indemnification Escrow Agreement. At the Closing, Parsippany Purchaser
shall assume from Parsippany Seller the liabilities and obligations of arising
from the Parsippany Lease, including the obligations under the Parsippany
Security Deposit and the Parsippany Contracts. All of the foregoing named
obligations assumed by Purchasers are referred to herein as the "ASSUMED
LIABILITIES". Except as expressly provided in this Section, the Purchasers do
not and shall not assume or in any way undertake to pay, perform, satisfy or
discharge any other liabilities or obligations of the Sellers (the "RETAINED
LIABILITIES") and the Sellers shall pay and satisfy when due all Retained
Liabilities.
2.5. PURCHASE PRICE; CASH; ETC. The aggregate purchase price for all of
the Purchased Assets shall be $18,500,000, plus the assumption of the Assumed
Liabilities (the "PURCHASE PRICE"). Each Purchaser shall purchase petty cash on
hand at the Theaters at the close of business on the date immediately preceding
the Closing Date, the purchase price of cash to be face value, subject to a
physical count of such cash by each Purchaser and each Seller. Purchasers shall
honor all season passes and presold tickets through December 31, 1997 sold or
distributed by Sellers to non-charities prior to Closing, and Purchasers shall
honor all season passes and presold tickets through March 31, 1998 sold or
distributed by Sellers to charities prior to Closing. If Sellers received any
compensation for any such tickets ("SOLD TICKETS"), Sellers shall reimburse
Purchasers for all Sold Tickets used at the Theaters after the Closing Date
through December 31, 1997 for Sold Tickets used by non-charities and after the
Closing Date through March 31, 1998 for Sold Tickets used by charities. Such
reimbursement shall occur by January 31, 1998 and April 30, 1998, respectively,
upon an accounting thereof by Purchasers.
2.6. PAYMENT OF PURCHASE PRICE. At Closing, the Purchase Price shall be
paid by Purchasers to Sellers as follows:
(i) wire transfer of federal funds in the amount of $400,000 to be held in
Escrow (the "INDEMNIFICATION ESCROW FUND") by Alter Bartfeld & Mantel LLP, as
Escrow Agent pursuant to the Indemnification Escrow Agreement;
(ii) by Purchasers' delivery to Sellers immediately available funds equal
to $11,600,000;
(iii) by Purchasers' delivery to Sellers of CCG's Promissory Note A and
Promissory Note B;
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(iv) by Purchasers' delivery to A. Dale Mayo, as trustee of the Voting
Trust Agreement, of the CCG Shares, as determined in Section 2.7; and
(v) by Purchasers' assumption of the Assumed Liabilities pursuant to the
Assumption Agreement.
2.7. CCG SHARES. The CCG Shares to be delivered hereunder shall equal that
number of shares of CCG Common Stock equal to the result obtained by dividing
$500,000 by the average closing price of the CCG Shares for the ten most recent
trading days immediately prior to the Closing Date as reported by the American
Stock Exchange; provided, however, that in no event shall the number of CCG
Shares delivered pursuant hereto be greater than 45,455 or less than 38,461. The
CCG Shares being delivered pursuant hereto shall not be registered under the
Securities Act and shall be subject to the Voting Trust Agreement. The Sellers
covenant that they will not sell or dispose of the CCG Shares except in
accordance with the rules set forth in Rule 144 issued by the Securities and
Exchange Commission under the Securities Act and shall not sell, transfer or
pledge the CCG Shares in the absence of a registration under the Securities Act
or unless CCG receives an opinion of counsel (which may be counsel for CCG)
reasonably acceptable to it stating that such sale or transfer is exempt from
the registration and prospectus delivery requirements of the Securities Act. The
Sellers agree and consent that the certificates representing the CCG Share shall
contain the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS CLEARVIEW CINEMA GROUP, INC. RECEIVES AN
OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR CLEARVIEW CINEMA GROUP, INC.)
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT AND
THAT SUCH SALE OR TRANSFER IS MADE IN ACCORDANCE WITH THE RULE SET FORTH
IN RULE 144 ISSUED BY THE SECURITIES EXCHANGE COMMISSION UNDER SAID ACT.
2.8. CLOSING. The transfer of the Purchased Assets and the assumption of
the Assumed Liabilities contemplated hereby is taking place at a closing (the
"CLOSING") at the offices of Kirkpatrick & Lockhart LLP, 1251 Avenue of the
Americas, 45th Floor, New York, New York 10020 on the date hereof ("CLOSING
DATE").
2.9. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets as follows: $500,000 (payable in cash) shall be
allocated to furniture, fixtures and equipment for the Succasunna Theater, and
$7,000,000 shall be allocated to the remaining assets of the Succasunna Theater;
and $3,900,000 (payable in cash) shall be allocated to furniture, fixtures,
equipment, and leasehold improvements for the Parsippany Theater, and $7,100,000
shall be allocated to the remaining assets of the Parsippany Theater. Purchasers
and Sellers shall report the federal, state and local income and other tax
consequences of the purchase and sale contemplated hereby in a manner consistent
with such allocation and shall not take any position inconsistent therewith upon
examination of any Tax Return, in any refund claim, in any litigation, or
otherwise.
2.10. PRORATION OF EXPENSES. All accrued expenses associated with the
Leases included in the Purchased Assets, such as electricity, gas, water, sewer,
telephone, property taxes, security services and similar items, shall be
prorated between Purchasers and Sellers as of the Closing Date. Purchasers and
Sellers shall settle such amounts on or before forty-five days after
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the Closing Date.
2.11. PASSAGE OF TITLE. Title to all Purchased Assets shall pass from the
Sellers to Purchasers at Closing, subject to the terms and conditions of this
Agreement. Purchasers assume no risk of loss to the Purchased Assets prior to
Closing.
2.12. CERTAIN CONSENTS. Nothing in this Agreement shall be construed as an
attempt to assign any contract, agreement, Permit, franchise, or claim included
in the Purchased Assets which is by its terms or in law nonassignable without
the consent of the other party or parties thereto, unless such consent shall
have been given, or as to which all the remedies for the enforcement thereof
enjoyed by Sellers would not, as a matter of law, pass to Purchasers as an
incident of the assignments provided for by this Agreement. In order, however,
to provide Purchasers with the full realization and value of every contract,
agreement, Permit, franchise and claim of the character described in the
immediately preceding sentence and under the circumstances described in the
immediately preceding sentence, Sellers agrees that on and after the Closing,
they will, provided that Purchasers and Sellers split equally any out of pocket
expenses at the request and under the direction of Purchasers, in the name of
Sellers or otherwise as Purchasers shall specify take all reasonable action
(including without limitation the appointment of the appropriate Purchasers as
attorney-in-fact for Sellers) and do or cause to be done all such things as
shall in the opinion of Purchasers or their counsel be necessary or proper (i)
to assure that the rights of Sellers under such contracts, agreements, Permits,
franchises and claims shall be preserved for the benefit of Purchasers and (ii)
to facilitate receipt of the consideration to be received by Sellers in and
under every such contract, agreement, Permit, franchise and claim, which
consideration shall be held for the benefit of, and shall be delivered to,
Purchasers. Nothing in this Section shall in any way diminish Sellers'
obligations hereunder to obtain all consents and approvals and to take all such
other actions prior to or at Closing as are necessary to enable Sellers to
convey or assign valid title to all the Purchased Assets to Purchasers.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers and the Stockholders represent and warrant, jointly and
severally, to the Purchasers as follows:
3.1. ORGANIZATION, QUALIFICATION; CAPITALIZATION. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has the corporate power and authority
to own or lease its properties, and carry on the Business as now conducted, and
each Seller has the power and authority to enter into this Agreement and the
Other Agreements to which it is or is to become a party and perform its
obligations hereunder and thereunder.
3.2. AUTHORIZATION; ENFORCEABILITY. This Agreement and each Other
Agreement to which the Sellers are a party have been duly executed and delivered
by and constitute the legal, valid and binding obligations of the Sellers,
enforceable against the Sellers in accordance with their respective terms and
each Other Agreement to which the Sellers are to become a party pursuant to the
provisions hereof, when executed and delivered by the Sellers, will constitute
the legal, valid and binding obligation of the Sellers, enforceable against the
Sellers in accordance with the terms of such Other Agreement, except as may be
limited by applicable bankruptcy, insolvency, moratorium, fraudulent transfer,
preference and other laws and equitable principles affecting the scope and
enforcement to creditors' rights generally, and are also limited by Purchasers'
implied covenants of good faith, fair dealing and commercially reasonable
conduct, and by the effects of judicial discretion on the availability of
remedies and realization of benefits under and enforceability of this Agreement
and the Other Agreements in all respects as written.
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All actions contemplated by this Agreement have been duly and validly authorized
by all necessary proceedings by the Sellers.
3.3. NO VIOLATION OF LAWS OR AGREEMENTS; CONSENTS. Neither the execution
and delivery of this Agreement or any Other Agreement to which the Sellers are
or are to become a party, the consummation of the transactions contemplated
hereby or thereby nor the compliance with or fulfillment of the terms,
conditions or provisions hereof or thereof by Sellers will: (i) contravene any
provision of any Governing Document of the Sellers, (ii) conflict with, result
in a breach of, constitute a default or an event of default (or an event that
might, with the passage of time or the giving of notice or both, constitute a
default or event of default) under any of the terms of, result in the
termination of, result in the loss of any right under, or give to any other
Person the right to cause such a termination of or loss under, any Purchased
Asset or any other contract, agreement or instrument to which the Sellers is a
party or by which any of its assets may be bound or affected, (iii) result in
the creation, maturation or acceleration of any Assumed Liability or any other
Liability of the Sellers (or give to any other Person the right to cause such a
creation, maturation or acceleration), (iv) violate any Law or violate any
judgment or order of any Governmental Body to which the Sellers is subject or by
which any of the Purchased Assets or any of its other assets may be bound or
affected, or (v) result in the creation or imposition of any Encumbrance upon
any of the Purchased Assets or give to any other Person any interest or right
therein. Except for the Landlord Consents, the provisions of the R.C. Leasehold
Mortgage and as set forth on Schedule 3.3, no consent, approval or authorization
of, or registration or filing with, any Person is required in connection with
the execution and delivery by the Sellers of this Agreement or any of the Other
Agreements to which the Sellers is or is to become a party pursuant to the
provisions hereof or the consummation by the Sellers of the transactions
contemplated hereby or thereby.
3.4. FINANCIAL INFORMATION. The Sellers have previously provided to the
Purchasers a balance sheet, income statement and statement of cash flows for
each Seller at December 31, 1996 and for the year then ended, and income
statements and statements of cash flows for the Sellers at December 31, 1995 and
December 31, 1996 and for the years then ended (collectively, the "FINANCIAL
STATEMENTS"). The Financial Statements: (i) have been prepared in accordance
with GAAP on a consistent basis throughout the indicated periods, and (ii)
fairly present the financial condition, assets and liabilities and results of
operation of Sellers at the dates and for the relevant periods indicated in
GAAP. All references in this Agreement to Sellers' "12-31-96 BALANCE SHEET" mean
Sellers' balance sheet dated 12-31-96. The combined earnings before interest,
taxes, depreciation and amortization for the Theaters for the one-year period
ended September 30, 1997 is not less than $2.8 million (calculated as if
concession revenues and expenses were determined without regard to the agreement
with TCI).
3.5. UNDISCLOSED LIABILITIES. The Sellers have no debt, obligation or
liability, absolute, fixed, contingent or otherwise, of any nature whatsoever,
whether due or to become due, including any unasserted claim, whether incurred
directly or by any predecessor thereto, and whether arising out of any act,
omission, transaction, circumstance, sale of goods or services, state of facts
or other condition, except: (i) those reflected or reserved against on the
12-31-96 Balance Sheet in the amounts shown therein; (ii) those not required
under GAAP to be reflected or reserved against in the 12-31-96 Balance Sheet
that are expressly quantified and set forth in the Contracts identified pursuant
to Section 3.15; (iii) those disclosed on Schedule 3.5; and (iv) those of the
same nature as those set forth on the 12-31-96 Balance Sheet that have arisen in
the ordinary course of business of the Company after December 31, 1996 through
the date hereof, all of which have been consistent in amount and character with
past practice and experience, and none of which, individually or in the
aggregate, has had or will have an adverse effect on the business, financial
condition or prospects of the Sellers and none of which is a liability for
breach of contract or warranty or has arisen out of tort, infringement of any
intellectual property rights, or violation of Law or is claimed in any pending
or threatened legal proceeding.
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3.6. NO CHANGES. Since December 31, 1996, the Sellers have conducted the
Business only in the ordinary course. Without limiting the generality of the
foregoing sentence, since December 31, 1996, except as set forth on Schedule
3.6, there has not been any: i) adverse change in the assets, Liabilities,
earning power, Business or prospects of the Sellers; ii) damage or destruction
to or loss of any asset of the Sellers, whether or not covered by insurance;
iii) strike or other labor trouble at the Sellers; iv) creation of any
Encumbrance on any asset of the Sellers other than any Permitted Encumbrance; v)
increase in the salary, wage or bonus of any employee of any Seller; vi) asset
acquisition in excess of $1000 for any individual acquisition, including capital
expenditure, other than the purchase of inventory in the ordinary course of
business; vii) disposition of any asset (other than inventory in the ordinary
course of business) for less than fair market value; viii) any failure to pay
any Liability when due; ix) creation, termination or amendment of, or waiver of
any right under, any material agreement of the Sellers; or x) agreement or
commitment to do any of the foregoing.
3.7. TAXES. The Sellers have filed or caused to be filed on a timely
basis, or will file or cause to be filed on a timely basis or within a
timely-obtained extension, all Tax Returns that are required to be filed by it
prior to or on the Closing Date, pursuant to the Law of each governmental
authority with taxing power over it. The Sellers have no Liability for any Tax
except Taxes disclosed on Schedule 3.7.
3.8. CONDITION OF ASSETS; TITLE; BUSINESS. The Sellers are engaged in the
Business and no other business. The Purchased Assets have been professionally
maintained and are in good working order and are suitable for the purposes for
which they are used in the Business. The Sellers have good, marketable and
exclusive title to all of the Purchased Assets; the Purchased Assets include all
assets that are necessary for use in and operation of the Business subject to
the terms of the Leases; and none of the Purchased Assets is subject to any
Encumbrance or impairment, whether due to its condition, utility, collectability
or otherwise, other than Permitted Encumbrances. The concession stands located
at the Theaters are currently owned by Theaters Confections, Inc., but shall be
purchased by Sellers on or before Closing, free of any Encumbrance, and shall be
included in the Purchased Assets.
3.9. NO PENDING LITIGATION OR PROCEEDINGS. Except as disclosed on Schedule
3.9, and except for "slip and fall" cases fully covered by insurance, no action,
suit, investigation, claim or proceeding of any nature or kind whatsoever,
whether civil, criminal or administrative, by or before any Governmental Body or
arbitrator ("LITIGATION") is pending or, to the knowledge of the Sellers,
threatened against or affecting the Sellers, the Business, any of the Purchased
Assets, the Assumed Liabilities, or any of the transactions contemplated by this
Agreement or any Other Agreement, and there is no basis for any such Litigation.
There is presently no outstanding judgment, decree or order of any Governmental
Body against or affecting the Sellers, the Business, any of the Purchased
Assets, the Assumed Liabilities, or any of the transactions contemplated by this
Agreement or any Other Agreement. Sellers have no pending Litigation against any
third party.
3.10. CONTRACTS; COMPLIANCE. Disclosed on Schedule 3.10 and 3.12 is a
brief description of each material contract, lease, indenture, mortgage,
instrument, commitment or other agreement, arrangement or understanding, oral or
written, formal or informal, that is included in the Purchased Assets (each, a
"CONTRACT" and collectively, the "CONTRACTS"). Each Contract is the legal, valid
and binding obligation of each Seller and is in full force and effect. The
Sellers have performed all obligations required to be performed by them under
each Contract and are not in breach or default, and are not alleged to be in
breach or default, in any respect thereunder, and no event has occurred and no
condition or state of facts exists (or would exist upon the giving of notice or
the lapse of time or both) that would become or cause a breach, default or event
of default thereunder, would give to any Person the right to cause such a
termination or would cause an acceleration of any obligation thereunder. Sellers
are not
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currently renegotiating any Contract nor has the Sellers received any notice of
non-renewal or price increase or sales or production allocation with respect to
any Contract.
3.11. PERMITS; COMPLIANCE WITH LAW. Schedule 3.11 sets forth the permits,
certificates, licenses, franchises, privileges, approvals, registrations and
authorizations held by the Sellers (each, a "PERMIT" and collectively,
"PERMITS"). The Permits are all such permits required under any applicable Law
or otherwise advisable in connection with the operation of the Purchased Assets
and Business. Each Permit is valid, subsisting and in full force and effect. The
Sellers are in compliance with and has fulfilled and performed its obligations
under each Permit held by them, and no event or condition or state of facts
exists (or would exist upon the giving of notice or lapse of time or both) that
could constitute a breach or default under any Permit. Sellers are not currently
in violation of any Law nor have Sellers received any notice of any violation of
Law, and no event has occurred or condition or state of facts exists that could
give rise to any such violation. Sellers have not received any notice of
non-renewal of any Permit.
3.12. REAL PROPERTY. Schedule 3.12 identifies the real estate subject to
the Leases (collectively, the "REAL PROPERTY") and identifies the record title
holder of all of the Real Property. The Sellers have the right to quiet
enjoyment of all Real Property in which they hold a leasehold interest for the
full term, including all renewal rights, of the lease or similar agreement
relating thereto. The use and operation of all Real Property conform to all
applicable building, zoning, safety and subdivision Laws, Environmental Laws and
other Laws, and all restrictive covenants and restrictions and conditions
affecting title. The Sellers have not received any written or oral notice of
assessments for public improvements against any Real Property or any written or
oral notice or order by any Governmental Body, any insurance company that has
issued a policy with respect to any of such properties or any board of fire
underwriters or other body exercising similar functions that i) relates to
violations of building, safety or fire ordinances or regulations, ii) claims any
defect or deficiency with respect to any of such properties or iii) requests the
performance of any repairs, alterations or other work to or in any of such
properties or in the streets bounding the same. Such public utilities are all
connected pursuant to valid permits, are all in good working order and are
adequate to service the operations of such facilities as currently conducted and
permit full compliance with all requirements of Law. Sellers have not received
any written notice of any proposed, planned or actual curtailment of service of
any utility supplied to any facility of the Sellers.
3.13. ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 3.13:
(a) COMPLIANCE; NO LIABILITY. The Sellers have operated the Business and
each parcel of Real Property in compliance with all applicable Environmental
Laws. Sellers are not subject to any Liability, penalty or expense (including
legal fees), and no Purchasers will suffer or incur any loss, Liability, penalty
or expense (including legal fees) by virtue of any violation of any
Environmental Law occurring prior to the Closing, any environmental activity
conducted on or with respect to any property at or prior to the Closing or any
environmental condition existing on or with respect to any property at or prior
to the Closing, in each case whether or not any Seller permitted or participated
in such act or omission.
(b) TREATMENT; CERCLIS. Sellers have not treated, stored, generated,
recycled or disposed of any Regulated Material on any real property, and no
other Person has treated, stored, recycled or disposed of any Regulated Material
on any part of the Real Property. There has been no release of any Regulated
Material at, on or under any Real Property. Sellers have not transported any
Regulated Material or arranged for the transportation of any Regulated Material
to any location that is listed or proposed for listing on the National
Priorities List pursuant to Superfund, on CERCLIS or any other location that is
the subject of federal, state or local enforcement action or other investigation
that may lead to claims against such Sellers for cleanup costs, remedial action,
damages to natural resources, to other property or for personal injury
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including claims under Superfund. None of the Real Property is listed or, to the
knowledge of the Sellers, proposed for listing on the National Priorities List
pursuant to Superfund, CERCLIS or any state or local list of sites requiring
investigation or cleanup.
(c) NOTICES; EXISTING CLAIMS; CERTAIN REGULATED MATERIALS; STORAGE TANKS.
Sellers have not received any request for information, notice of claim, demand
or other notification that it is or may be potentially responsible with respect
to any investigation, abatement or cleanup of any threatened or actual release
of any Regulated Material. Sellers are not required to place any notice or
restriction relating to the presence of any Regulated Material at any Real
Property or in any deed to any Real Property. Schedule 3.13(c) sets forth a list
of all sites to which Sellers transported any Regulated Material for recycling,
treatment, disposal, other handling or otherwise. There has been no past, and
there is no pending or contemplated, claim by Sellers under any Environmental
Law or Laws based on actions of others that may have impacted on the Real
Property, and Sellers have not entered into any agreement with any Person
regarding any Environmental Law, remedial action or other environmental
Liability or expense. There are no storage tanks located on the Real Property,
whether underground or aboveground.
3.14. CUSTOMER RELATIONS. There exists no condition or state of facts or
circumstances involving Sellers' customers, suppliers, distributors or
representatives that Sellers can reasonably foresee could adversely affect the
Business or the Purchased Assets after the Closing Date.
3.15. TRANSACTIONS WITH RELATED PARTIES. No Related Party has any claim of
any nature, including any inchoate claim, against any of the Purchased Assets or
the Business. Except as expressly provided herein or in any Other Agreement or
as otherwise may be mutually agreed after Closing, (i) no Related Party will at
any time after Closing for any reason, directly or indirectly, be or become
entitled to receive any payment or transfer of money or other property of any
kind from Purchasers, and (ii) Purchasers will not at any time after Closing for
any reason, directly or indirectly, be or become subject to any obligation to
any Related Party; provided, however, that nothing in this Section 3.15 shall
prohibit any post-closing transactions between Related Parties that do not
affect the Purchasers, the Purchased Assets or the Business.
3.16. LABOR RELATIONS. The relations of the Sellers with their employees
are good. No employee of the Sellers is represented by any union or other labor
organization other than IATSE Local #642, IATSE Local #645 and IATSE Local #362,
and a copy of the collective bargaining agreement for such union employees has
been delivered to Sellers. No representation election, arbitration proceeding,
grievance, labor strike, dispute, slowdown, stoppage or other labor trouble is
pending or, to the knowledge of the Sellers, threatened against, involving,
affecting or potentially affecting the Sellers. No complaint against the Sellers
is pending or, to the knowledge of the Sellers, threatened before the National
Labor Relations Board, the Equal Employment Opportunity Commission or any
similar state or local agency, by or on behalf of any employee of the Sellers.
The Seller have no Liability for any occupational disease of any of its
employees, former employees or others.
3.17. INSURANCE. The Purchasers have been provided with a copy of each
insurance policy as to which the Sellers are the owner, insured or beneficiary,
whether on an "occurrence" or a "claims made" basis, together with a summary of
such policies and copies of certificates of insurance executed by each insurer
or its authorized agent evidencing such insurance.
3.18. INTELLECTUAL PROPERTY RIGHTS. Schedule 3.18 contains a complete list
and description of all of the trademark and service mark rights, applications
and registrations, trade names, fictitious names, service marks, logos and brand
names, copyrights, copyright applications, letters patent, patent applications
and licenses of any of the foregoing owned or used by the Sellers in or
applicable to the Business. The Sellers have the entire right, title and
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interest in and to, or has the exclusive perpetual royalty-free right to use,
the intellectual property rights disclosed on Schedule 3.18 and all other
processes, know-how, show-how, formulae, trade secrets, inventions, discoveries,
improvements, blueprints, specifications, drawings, designs, and other
proprietary rights necessary or applicable to or advisable for use in the
Business ("INTELLECTUAL PROPERTY"), free and clear of all Encumbrances. Schedule
3.18 separately discloses all Intellectual Property under license. The
Intellectual Property is valid and not the subject of any interference,
opposition, reexamination or cancellation. To the knowledge of the Sellers, no
Person is infringing upon nor has any Person misappropriated any Intellectual
Property. No Sellers are infringing upon the intellectual property rights of any
other Person.
3.19. EMPLOYEE BENEFITS.
(a) BENEFIT PLANS; SELLER PLAN. Schedule 3.19 discloses all written and
unwritten "employee benefit plans" within the meaning of Section 3(3) of ERISA,
and any other written and unwritten profit sharing, pension, savings, deferred
compensation, fringe benefit, insurance, medical, medical reimbursement, life,
disability, accident, post-retirement health or welfare benefit, stock option,
stock purchase, sick pay, vacation, employment, severance, termination or other
plan, agreement, contract, policy, trust fund or arrangement (each, a "BENEFIT
PLAN"), whether or not funded and whether or not terminated, (i) maintained or
sponsored by the Sellers, or (ii) with respect to which the Sellers have or may
have Liability or is obligated to contribute, or (iii) that otherwise covers any
of the current or former employees of the Sellers or their beneficiaries, or
(iv) as to which any such current or former employees or their beneficiaries
participated or were entitled to participate or accrue or have accrued any
rights thereunder (each, a "SELLER PLAN").
(b) SELLERS GROUP MATTERS; FUNDING. Neither the Sellers nor any
corporation that may be aggregated with the Sellers under Sections 414(b), (c),
(m) or (o) of the Code (the "SELLERS GROUP") has any obligation to contribute to
or any Liability under or with respect to any Benefit Plan of the type described
in Sections 4063 and 4064 of ERISA or Section 413(c) of the Code. The Sellers
have no Liability, and after the Closing, no Purchasers will have any Liability,
with respect to any Benefit Plan of any other member of the Sellers Group,
whether as a result of delinquent contributions, distress terminations,
fraudulent transfers, failure to pay premiums to the PBGC, withdrawal Liability
or otherwise. No accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code) exists nor has any funding waiver from the
IRS been received or requested with respect to any Seller Plan or any Benefit
Plan of any member of the Sellers Group, and no excise or other Tax is due or
owing because of any failure to comply with the minimum funding standards of the
Code or ERISA with respect to any of such plans.
(c) COMPLIANCE. Each Seller Plan and all related trusts, insurance
contracts and funds have been created, maintained, funded and administered in
all respects in compliance with all applicable Laws and in compliance with the
plan document, trust agreement, insurance policy or other writing creating the
same or applicable thereto. No Seller Plan is or is proposed to be under audit
or investigation, and no completed audit of any Seller Plan has resulted in the
imposition of any Tax, fine or penalty.
(d) QUALIFIED PLANS. Schedule 3.19 discloses each Seller Plan that
purports to be a qualified plan under Section 401(a) of the Code and exempt from
United States federal income tax under Section 501(a) of the Code (a "QUALIFIED
PLAN"). With respect to each Qualified Plan, a determination letter (or opinion
or notification letter, if applicable) has been received from the IRS that such
plan is qualified under Section 401(a) of the Code and exempt from federal
income tax under Section 501(a) of the Code. No Qualified Plan has been amended
since the date of the most recent such letter. No member of the Sellers Group,
nor any fiduciary of any Qualified
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Plan, nor any agent of any of the foregoing, has done anything that would
adversely affect the qualified status of a Qualified Plan or the qualified
status of any related trust.
(e) NO DEFINED BENEFIT PLANS. No Seller Plan is a defined benefit plan
within the meaning of Section 3(35) of ERISA (a "DEFINED BENEFIT Plan"). No
Defined Benefit Plan sponsored or maintained by any member of the Sellers Group
has been terminated or partially terminated after September 1, 1974, except as
set forth on Schedule 3.19. Each Defined Benefit Plan listed as terminated on
Schedule 3.19 has met the requirement for standard termination of
single-employer plans contained in Section 4041(b) of ERISA. During the
five-year period ending on the Closing Date, no member of the Sellers Group has
transferred a Defined Benefit Plan to a corporation that was not, at the time of
transfer, related to the Sellers in any manner described in Sections 414(b),
(c), (m) or (o) of the Code.
(f) MULTIEMPLOYER PLANS. Except as set forth on Schedule 3.19 hereto, no
Seller Plan is a multiemployer plan within the meaning of Section 3(37) or
Section 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN"). No member of the Sellers
Group has withdrawn from any Multiemployer Plan or incurred any withdrawal
Liability to or under any Multiemployer Plan. No Seller Plan covers any
employees of any member of the Sellers Group in any foreign country or
territory.
(g) PROHIBITED TRANSACTIONS; FIDUCIARY DUTIES; POST-RETIREMENT BENEFITS.
No prohibited transaction (within the meaning of Section 406 of ERISA and
Section 4975 of the Code) with respect to any Seller Plan exists or has occurred
that could subject the Sellers to any Liability or Tax under Part 5 of Title I
of ERISA or Section 4975 of the Code. No member of the Sellers Group, nor any
administrator or fiduciary of any Seller Plan, nor any agent of any of the
foregoing, has engaged in any transaction or acted or failed to act in a manner
that will subject the Sellers to any Liability for a breach of fiduciary or
other duty under ERISA or any other applicable Law. With the exception of the
requirements of Section 4980B of the Code, no post-retirement benefits are
provided under any Seller Plan that is a welfare benefit plan as described in
ERISA Section 3(1).
3.20. SUBSIDIARIES AND INVESTMENTS. The Purchased Assets do not contain
any shares of capital stock of or other equity interest in any corporation,
partnership, joint venture or other entity.
3.21. ADDITIONAL THEATERS. Neither Seller nor the Stockholders have any
knowledge of the intention by any person to construct or open any movie theater
within a five-mile radius of the Theaters.
3.22. FINDERS FEES. Neither the Sellers nor any of its officers, directors
or employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby or by any Other Agreement.
3.23. SECURITIES MATTERS. Sellers and Stockholders acknowledge that they
and their representatives have received and reviewed all of the documents filed
by CCG through the date hereof (and on the Closing Date, through the Closing)
with the Securities and Exchange Commission. Sellers and Stockholders and their
representatives have had, at their discretion, an opportunity to meet with the
officers CCG to discuss CCG's business. Sellers and Stockholders are each
acquiring the CCG Shares for his or its own account with the intention of
holding the CCG Shares for purposes of investment, and not as a nominee or agent
for any other party, and not with a view to the resale or distribution of any of
the CCG Shares, and no Seller or Stockholder or has any intention of selling the
CCG Shares or any interest therein in violation of
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the federal securities laws or any applicable state securities laws. Sellers and
Stockholders understand that the CCG Shares are not registered under the
Securities Act of 1933, as amended (the "1933 Act"), or under any state
securities laws. Each of the Sellers and Stockholders is an "accredited
investor" within the meaning of that term as set forth in Rule 501 issued by the
Securities and Exchange Commission under the 1933 Act.
3.24. HART-SCOTT-RODINO. Neither Sellers, Stockholders nor their
affiliated entities have in excess of $100 million in assets or $100 in annual
revenues.
3.25. DISCLOSURE. None of the representations or warranties of the Sellers
contained herein and none of the information contained in the Schedules referred
to herein or the other information or documents furnished or to be furnished to
CCG or any of its representatives by the Sellers expressly pursuant to the terms
of this Agreement is false or misleading in any material respect or omits to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As an inducement to the Sellers to enter into this Agreement and
consummate the transactions contemplated hereby, the Purchasers, jointly and
severally, represent and warrant to the Sellers and the Stockholders as follows:
4.1. ORGANIZATION. Each Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to own or lease its
properties, carry on its business, enter into this Agreement and the Other
Agreements to which it is or is to become a party and perform its obligations
hereunder and thereunder.
4.2. AUTHORIZATION; ENFORCEABILITY. This Agreement and each Other
Agreement to which each Purchaser is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of such
Purchasers, enforceable against it in accordance with their respective terms and
each Other Agreement to which such Purchasers are to become a party pursuant to
the provisions hereof, when executed and delivered by such Purchasers, will
constitute the legal, valid and binding obligation of such Purchasers,
enforceable against such Purchasers in accordance with the terms of such Other
Agreement except as may be limited by applicable bankruptcy, insolvency,
moratorium, fraudulent transfer, preference and other laws and equitable
principles affecting the scope and enforcement to creditors' rights generally,
and are also limited by Sellers' implied covenants of good faith, fair dealing
and commercially reasonable conduct, and by the effects of judicial discretion
on the availability of remedies and realization of benefits under and
enforceability of this Agreement and the Other Agreements in all respects as
written. All actions contemplated by this Agreement have been duly and validly
authorized by all necessary proceedings by such Purchasers.
4.3. NO VIOLATION OF LAWS; CONSENTS. Neither the execution and delivery of
this Agreement or any Other Agreement to which any Purchaser is or is to become
a party, the consummation of the transactions contemplated hereby or thereby nor
the compliance with or fulfillment of the terms, conditions or provisions hereof
or thereof by such Purchasers will: i) contravene any provision of any Governing
Document of such Purchasers, or ii) violate any Law or any judgment or order of
any Governmental Body to which such Purchasers is subject or by which any of its
assets may be bound or affected. Except as set forth on Schedule 4.3 no consent,
approval or authorization of, or registration or filing with, any Person is
required in connection with the execution and delivery by such Purchasers of
this Agreement or any of the Other Agreements to which such Purchasers is or is
to become a party pursuant to the provisions
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hereof or the consummation by such Purchasers of the transactions contemplated
hereby or thereby.
4.4. NO PENDING LITIGATION OR PROCEEDINGS. No Litigation is pending or, to
the knowledge of any Purchasers, threatened against or affecting any Purchasers
in connection with any of the transactions contemplated by this Agreement or any
Other Agreement to which any Purchasers is or is to become a party.
4.5. FINDERS' FEES. No Purchasers nor any of its officers, directors or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby.
4.6. CCG SHARES. At Closing, the CCG Shares shall be duly authorized,
validly issued and fully paid and non-assessable.
4.7. CCG FINANCIAL STATEMENTS.
CCG's historical financial statements contained in the reports filed by
it with the Securities Exchange Commission are true and correct in all material
respects.
ARTICLE V.
CERTAIN COVENANTS
5.1. CONDUCT OF BUSINESS PENDING CLOSING. From and after the date hereof
and until the Closing Date or earlier termination hereof, unless the Purchasers
shall otherwise consent in writing, the Sellers shall conduct their affairs as
follows:
(a) ORDINARY COURSE; COMPLIANCE. The Business shall be conducted only in
the ordinary course and consistent with past practice. Each of the Sellers shall
professionally maintain their respective Purchased Assets and Assumed
Liabilities in good condition and shall comply in a timely fashion with the
provisions of all Contracts and Permits and its other agreements and
commitments. Each of the Sellers shall preserve its Business organization
intact, keep available the services of its present employees and preserve the
goodwill of its suppliers, customers and others having business relations with
it. Each of the Sellers shall maintain in full force and effect their policies
of insurance, subject only to variations required by the ordinary operations of
the Business, or else shall obtain, prior to the lapse of any such policy,
substantially similar coverage with insurers of recognized standing.
(b) TRANSACTIONS. The Sellers shall not: (i) transfer or dispose of any
asset except in the ordinary course of business; (ii) enter into any contract or
commitment the performance of which may extend beyond the Closing, except those
made in the ordinary course of business, the terms of which are consistent with
past practice; (iii) enter into any employment or consulting contract or
arrangement that is not terminable at will and without penalty or continuing
obligation; (iv) fail to pay any Liability or charge when due, other than
Liabilities contested in good faith by appropriate proceedings; or (v) take any
action or omit to take any action that will cause a breach or termination of any
Permit or Contract, other than termination by fulfillment of the terms
thereunder; or take any other actions that would cause the representations and
warranties in this Agreement not to be true in any material respect on the
Closing Date.
(c) ACCESS, INFORMATION AND DOCUMENTS. The Sellers shall give to
Purchasers and to Purchasers' employees and representatives (including
accountants, actuaries, attorneys, environmental consultants and engineers)
access during normal business hours to all of the properties, books, Tax
Returns, contracts, commitments, records, officers, personnel and accountants
(including independent public accountants and their workpapers concerning
Sellers)
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of Sellers and shall furnish to Purchasers all such documents and copies of
documents and all information with respect to the properties, Liabilities and
affairs of Sellers as Purchasers may reasonably request, including but not
limited to weekly reports of gross box office and concession receipts, at the
same time such reports are available to Sellers' management.
5.2. ACQUISITION PROPOSALS. The Sellers and the Stockholders shall not
(nor shall they permit any of their affiliates to) directly or indirectly,
solicit, initiate or encourage any inquiries or the making of any proposals
from, engage or participate in any negotiations or discussions with, provide any
confidential information or data to, or enter into (or authorize) any agreement
or agreement in principle with any person or announce any intention to do any of
the foregoing, with respect to any offer or proposal to acquire all or any part
of the Sellers' assets, properties, or Business whether by merger, purchase of
capital stock or assets or otherwise.
5.3. FULFILLMENT OF AGREEMENTS. The Purchasers and Sellers shall use
commercially reasonable efforts to cause all of those conditions to the
obligations of the other under Article VI that are not beyond its reasonable
control to be satisfied on or prior to the Closing and shall use its
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement. Without
limiting the foregoing, the Sellers shall, prior to Closing, obtain the Landlord
Consents and the Consents identified in Schedule 3.3.
5.4. CERTAIN TRANSITIONAL MATTERS. The Sellers shall cooperate with and
assist Purchasers and their authorized representatives in order to provide, to
the extent reasonably requested by any Purchasers, an efficient transfer of
control of the Purchased Assets and to avoid any undue interruption in the
activities and operations of the Business following the Closing Date.
5.5. SELLERS' EMPLOYEES. Purchasers shall have the right, but not the
obligation on or after the Closing Date to employ any or all of the employees of
Sellers.
5.6. COVENANT AGAINST COMPETITION AND DISCLOSURE. To accord to Purchasers
the full value of their purchase, Sellers and the Stockholders shall not,
directly or indirectly, (i) for a period of five years after the Closing Date,
directly or indirectly, engage or become interested in (as owner, stockholder,
partner or otherwise) the operation of any movie theater within a five mile
radius of the Leased Property, (ii) for a period of two years after the Closing
Date, directly or indirectly, engage or become interested in (as owner,
stockholder, partner or otherwise) the operation of any movie theater within a
five mile radius of any theater owned directly or indirectly by CCG on the date
immediately following the Closing Date, or (iii) disclose to anyone, or use in
competition with any Purchasers, any information with respect to any
confidential or secret aspect of the operations of the Business. It is
acknowledged that stockholders, officers, and/or directors of the Sellers
currently operate certain movie theaters and nothing in subsection (ii) of the
previous sentence shall prohibit the Sellers from operating such theaters. The
Sellers and the Stockholders acknowledge that the remedy at law for breach of
the provisions of this Section 5.7 will be inadequate and that, in addition to
any other remedy Purchasers may have, they will be entitled to an injunction
restraining any such breach or threatened breach, without any bond or other
security being required. If any court construes the covenant in this Section 5.7
or any part thereof, to be unenforceable because of its duration or the area
covered thereby, the court shall have the power to reduce the duration or area
to the extent necessary so that such provision is enforceable. Until the third
anniversary of the Closing Date, the Sellers and the Stockholders shall not
directly or indirectly solicit or offer employment to any person (other than
William Andrew Nelson) who is then an employee of any Purchasers or was an
employee of any Purchasers at any time after the Closing to engage in any
business similar to or in competition with the business of any Seller as it has
been conducted prior to Closing.
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5.7. BOOKS AND RECORDS. The Sellers shall not destroy or dispose of any
books, records, and files relating to the business, properties, assets or
operations of the Sellers to the extent that they pertain to the operations of
the Sellers prior to the Closing Date for a period of five years from the
Closing Date or for the applicable statute of limitations for any tax liability.
5.8. PERFORMANCE OF LEASE OBLIGATIONS. From and after the Closing Date the
Purchasers shall perform the obligations of the tenant under the terms of the
Leases, and CCG will use its best efforts to remove Sellers and Stockholders
from any post-Closing obligations under the Leases.
5.9. BULBS. On the Closing Date, the Purchased Assets will include at a
minimum (i) one functioning xenon projector bulb for each auditorium in the
Theater, and (ii) six new, unused, spare xenon projector bulbs for the
Parsippany Theater and five new, unused, spare xenon projector bulbs for the
Succasunna Theater and Sellers shall reimburse Purchasers after Closing for the
cost of any missing or non-functioning bulbs on the Closing Date.
5.10. OFFICE SPACE. Succasunna Purchaser shall permit Stockholders to use
rent free the office located on the mezzanine level of the Succasunna Theater
for six months commencing on the Closing Date. Stockholders shall be responsible
for all telephone charges related to their activities at such office.
Stockholders shall not remove the office furniture in such office (which shall
be property of Succasunna Purchaser) but may remove the file cabinets in such
office.
ARTICLE VI.
CONDITIONS TO CLOSING; TERMINATION
6.1. CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASERS. The obligation of
Purchasers to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Purchasers at Purchasers' sole
option:
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
representations and warranties of the Sellers contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and warranties had been
made on, as of and with reference to the Closing Date. The Sellers shall have
performed in all respects all of the covenants and complied with all of the
provisions required by this Agreement to be performed or complied with by it at
or before the Closing.
(b) LITIGATION. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby or that would limit or adversely affect Purchasers' ownership of the
Purchased Assets or assumption of the Assumed Liabilities, and except with
respect to the R.C. Leasehold Mortgage there shall not have been threatened, nor
shall there be pending, any action or proceeding challenging the lawfulness of
or seeking to prevent or delay any of the transactions contemplated by this
Agreement or any of the Other Agreements or seeking monetary or other relief by
reason of the consummation of any of such transactions.
(c) NO MATERIAL ADVERSE CHANGE. Between the date hereof and the Closing
Date, there shall have been no material adverse change, regardless of insurance
coverage therefor, in the Business or any of the assets, results of operations,
Liabilities, prospects or condition, financial or otherwise, of the Sellers.
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(d) CLOSING CERTIFICATE. The Sellers shall have delivered a certificate,
dated the Closing Date, in the form of "Exhibit I" hereto, certifying to the
fulfillment of the conditions set forth in subparagraphs (a), (b) and (c) of
this Section. Such certificate shall constitute a representation and warranty of
the Sellers with regard to the matters therein for purposes of this Agreement.
(e) CLOSING DOCUMENTS. Purchasers shall have received the documents
referred to in Section 6.3(a). All agreements, certificates, opinions and other
documents delivered by Sellers to Purchasers hereunder shall be in form and
substance satisfactory to Purchasers.
(f) DOCUMENTS CONCERNING LEASEHOLD INTERESTS. Purchasers shall have
received from each lessor of each leasehold estate included in the Purchased
Assets consents to assignment of leasehold interest, consents to leasehold
mortgage, and estoppel certificates, and from each existing mortgagee with
respect to Real Property all consents, nondisturbance agreements, and other
documents as the Sellers may be entitled to under the terms of the Parsippany
Lease and the Succasunna Lease.
(g) CONSENTS. The Sellers shall have received the consents, approvals and
actions of the Persons referred to in Schedule 3.3, including the Landlords'
Consents.
(h) CONCESSIONAIRE AGREEMENTS. Each Seller shall have terminated, on or
prior to the Closing Date, any and all concessionaire or other agreements
between such Sellers and Theaters Confections, Inc. ("TCI"), and shall have
delivered to Purchasers a release granted by TCI to each of the respective
Sellers from any liability under such concessionaire or other agreements.
6.2. CONDITIONS PRECEDENT TO OBLIGATION OF SELLERS. The obligation of
Sellers to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Sellers at Sellers' sole option:
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
representations and warranties of Purchasers contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and warranties had been
made on, as of and with reference to the Closing Date. Each Purchaser shall have
performed all of the covenants and complied in all respects with all of the
provisions required by this Agreement to be performed or complied with by it at
or before the Closing.
(b) LITIGATION. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any Governmental Body challenging the
lawfulness of or seeking to prevent or delay any of the transactions
contemplated by this Agreement or the Other Agreements or seeking monetary or
other relief by reason of the consummation of such transactions.
(c) CLOSING CERTIFICATE. Each Purchaser shall have delivered a
certificate, dated the Closing Date, in the form of "Exhibit J", certifying to
the fulfillment of the conditions set forth in subparagraphs (a) and (b) of this
Section. Such certificate shall constitute a representation and warranty of such
Purchasers with regard to the matters therein for purposes of this Agreement.
(d) CLOSING DOCUMENTS. Sellers shall have received the documents referred
to in Section 6.3(b). All agreements, certificates, opinions and other documents
delivered by
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Purchasers to Sellers hereunder shall be in form and substance satisfactory to
Sellers.
6.3. DELIVERIES AND PROCEEDINGS AT CLOSING.
(a) DELIVERIES BY SELLERS. Sellers shall deliver or cause to be delivered
to Purchasers at the Closing:
i) For each Seller, a general warranty bill of sale and instrument
of assignment to the Purchased Assets in the form of Exhibit K annexed hereto,
duly executed by such Sellers.
ii) The Assignment and Assumption of the Leases in the form of
Exhibit L.
iii) Assignments of all transferable or assignable licenses,
Permits and warranties relating to the Purchased Assets and of any trademarks,
trade names, patents and other Intellectual Property, duly executed and in form
reasonably acceptable to Purchasers.
iv) Certificates of the appropriate public officials to the effect
that each Seller was a validly existing corporation in good standing in its
state of incorporation as of a date not more than 30 days prior to the Closing
Date.
v) Incumbency and specimen signature certificates dated the Closing
Date, signed by the officers of each Seller and certified by their respective
Secretaries.
vi) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Seller as of a date not more than 30 days prior to the
Closing Date, certified by the Secretaries of State of their respective states
of incorporation and (B) the bylaws of each Seller as of the Closing Date,
certified by their respective Secretaries.
vii) Certificates of the respective Secretaries of Sellers (A)
setting forth resolutions of the Board of Directors of each Seller and, if
required by applicable law, the stockholders of each Seller authorizing the
execution and delivery of this Agreement and the performance by such Sellers of
the transactions contemplated hereby, and (B) to the effect that the Governing
Documents of Sellers delivered pursuant to Section 6.3(a)(v) were in effect at
the date of adoption of such resolutions, the date of execution of this
Agreement and the Closing Date.
viii) The Voting Trust Agreement executed by each Seller.
ix) The opinion of Alter Bartfeld & Mantel LLP, legal counsel to
Sellers, in substantially the form of "Exhibit M".
x) For each Seller, a completed New Theater Transition Form, in
the form attached hereto as "Exhibit N".
xi) Such other agreements and documents as Purchasers may
reasonably request.
(b) DELIVERIES BY PURCHASERS. Purchasers shall deliver or cause to be
delivered to Sellers at the Closing:
i) Delivery by the Escrow Agent of the CCG Shares and a wire
transfer of federal funds in accordance with Section 2.5 pursuant to complete
wire transfer instructions delivered by Sellers to Purchasers in writing at
least five days prior to Closing.
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ii) Certificates of the appropriate public official to the effect
that each Purchaser was a validly existing corporation in its state of
incorporation as of a date not more than 30 days prior to the Closing Date.
iii) Incumbency and specimen signature certificates dated the
Closing Date signed by the officers of each Purchaser and certified by their
respective Secretaries.
iv) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Purchaser as of a date not more than 30 days prior to
the Closing Date, certified by the Secretary of State of their respective states
of incorporation and (B) the bylaws of each Purchaser as of the Closing Date,
certified by their respective Secretaries.
v) Certificate of the respective Secretaries of the Purchasers (A)
setting forth resolutions of the Board of Directors of each Purchaser
authorizing the execution and delivery of this Agreement and the performance by
such Purchasers of the transactions contemplated hereby, certified by the
Secretary of such Purchasers and (B) to the effect that the Governing Documents
of Purchasers delivered pursuant to Section 6.3(b)(iv) were in effect at the
date of adoption of such resolutions, the date of execution of this Agreement
and the Closing Date.
vi) The opinion of Kirkpatrick & Lockhart LLP, Purchasers' legal
counsel, in substantially the form of "Exhibit O".
vii) A Registration Rights Agreement in substantially the form of
Exhibit P.
viii) Such other agreements and documents as Sellers may
reasonably request.
6.4. TERMINATION.
(a) MUTUAL CONSENT; FAILURE OF CONDITIONS. Except as provided in Section
6.4(b), this Agreement may be terminated at any time prior to Closing by: (i)
mutual consent of Purchasers and Sellers; (ii) Purchasers, if any of the
conditions specified in Section 6.1 hereof shall not have been fulfilled by
December 15, 1997 and shall not have been waived by Purchasers; or (iii)
Sellers, if any of the conditions specified in Section 6.2 hereof shall not have
been fulfilled by December 15, 1997 and shall not have been waived by Sellers.
(b) LIQUIDATED DAMAGES. In the event of termination of this Agreement by
either party hereto as a consequence of a material breach hereof by the other
party hereto, then such party shall be entitled to payment in lieu of damages in
an amount equal to $50,000, the nature of this transaction being such as will
not permit any exact determination of the damage that may be suffered by Sellers
under such circumstances. The failure of any party hereto to satisfy any
condition to Close hereunder not within the control of such party (such as the
Landlord Consents) shall not be deemed a material breach by such party.
ARTICLE VII.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1. SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing, but all claims for damages made by virtue of such representations,
warranties and agreements shall be made under, and subject to the limitations
set forth in, this Article VII, except that the representation and warranty
contained in Section 4.7 shall not survive Closing.
7.2. INDEMNIFICATION BY SELLERS AND STOCKHOLDERS. Sellers and
Stockholders, jointly
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and severally, shall indemnify, defend, save and hold Purchasers and their
officers, directors, employees, agents and Affiliates (collectively, "PURCHASERS
INDEMNITEES") harmless from and against all demands, claims, allegations,
assertions, actions or causes of action, assessments, losses, damages,
deficiencies, Liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing) and whether or not any such demands,
claims, allegations, etc., of third parties are meritorious (collectively,
"PURCHASERS DAMAGES") asserted against, imposed upon, resulting to, required to
be paid by, or incurred by any Purchasers Indemnitees, directly or indirectly,
in connection with, arising out of, that could result in, or which would not
have occurred but for i) a breach of any representation or warranty made by any
Seller in this Agreement, in any certificate or document furnished pursuant
hereto by Sellers or any Other Agreement to which any Seller is or is to become
a party, ii) a breach or nonfulfillment of any covenant or agreement made by any
Seller in or pursuant to this Agreement and in any Other Agreement to which any
Seller is or is to become a party, iii) any Retained Liability and (iv) any
matter disclosed on Schedule 3.9.
7.3. INDEMNIFICATION BY PURCHASERS. Purchasers and CCG shall indemnify,
defend, save and hold Sellers and Stockholders and their officers, directors,
employees, Affiliates and agents (collectively, "SELLERS INDEMNITEES") harmless
from and against any and all demands, claims, actions or causes of action,
assessments, losses, damages, deficiencies, Liabilities, costs and expenses
(including reasonable legal fees, interest, penalties, and all reasonable
amounts paid in investigation, defense or settlement of any of the foregoing)
and whether or not any such demands, claims, allegations, etc., of third parties
are meritorious (collectively, "SELLERS DAMAGES") asserted against, imposed
upon, resulting to, required to be paid by, or incurred by any Sellers
Indemnitees, directly or indirectly, in connection with, arising out of, that
could result in, or which would not have occurred but for i) a breach of any
representation or warranty made by any Purchasers in this Agreement or in any
certificate or document furnished pursuant hereto by any Purchasers or any Other
Agreement to which any Purchasers is a party, ii) a breach or nonfulfillment of
any covenant or agreement made by any Purchasers in or pursuant to this
Agreement and in any Other Agreement to which any Purchasers is a party, and
iii) any Assumed Liability.
7.4. LIMITATIONS.
(a) TIME PERIOD. Sellers shall be obligated to indemnify Purchasers
Indemnitees and Purchasers shall be obligated to indemnify Sellers Indemnitees
only for those Purchasers Damages or Sellers Damages (as the case may be) as to
which any Purchasers or Sellers have given the other written notice thereof
within one year after the Closing Date. Notwithstanding the foregoing limitation
shall be inapplicable to Purchasers obligation to indemnify Sellers Indemnitees
as a result of the Purchasers' failure to perform its obligations under the
Assignment and Assumption of Leases which obligations shall remain in full force
and effect until the sooner of the delivery of a release of Seller's Indemnities
from any further liability under the Leases or the expiration of the Leases.
(b) CAP. Notwithstanding anything else herein to the contrary, Sellers'
obligation to indemnify Purchasers Indemnitees for any Purchasers Damages shall
not exceed $750,000.
(c) BASKET. Except with regard to any Purchasers Damages in connection
with, arising out of, that could result in, or which would not have occurred but
for a breach of the representations and warranties set forth in Section 3.8
hereof which Purchasers Damages shall not be subject to the limitation set forth
in this Section 7.4(c), Sellers shall not be obligated to indemnify any
Purchasers Indemnitee against any Purchasers Damages until the aggregate amount
of the Purchasers Damages thereunder exceeds $12,500 and then only to the extent
of such excess.
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(d) OTHER. The limitations set forth in this Section 7.4 shall not apply
to Sellers Damages or Purchasers Damages arising out of fraud, Retained
Liabilities, Assumed Liabilities, any breach of a representation and warranty
relating to taxes or title, any matter addressed in Section 5.6 or the matters
involving the Indemnification Escrow Fund.
7.5. NOTICE OF CLAIMS. If any Purchasers Indemnitee or Sellers Indemnitee
(an "INDEMNIFIED PARTY") believes that it has suffered or incurred or will
suffer or incur any Purchasers Damages or Sellers Damages, as the case may be
("DAMAGES") for which it is entitled to indemnification under this Article VII,
such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "INDEMNIFYING PARTY") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this Section shall not affect any of such party's rights under this
Article VII or otherwise except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnified Party.
7.6. THIRD PARTY CLAIMS. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to undertake, conduct
and control the conduct and settlement of such action or suit, i) the
Indemnifying Party shall not thereby permit to exist any Encumbrance upon any
asset of the Indemnified Party; ii) the Indemnifying Party shall not consent to
any settlement that does not include as an unconditional term thereof the giving
of a complete release from liability with respect to such action or suit to the
Indemnified Party; iii) the Indemnifying Party shall permit the Indemnified
Party to participate in such conduct or settlement through counsel chosen by the
Indemnified Party; and iv) the Indemnifying Party shall agree promptly to
reimburse the Indemnified Party for the full amount of any Damages including
fees and expenses of counsel for the Indemnified Party incurred after giving the
foregoing notice to the Indemnifying Party and prior to the assumption of the
conduct and control of such action or suit by the Indemnifying Party.
ARTICLE VIII.
MISCELLANEOUS
8.1. COSTS AND EXPENSES. Purchasers, on the one hand, and Sellers and
Stockholders, on the other hand, shall each pay its respective expenses,
brokers' fees and commissions, and Sellers shall pay all of the pre-Closing
expenses of Sellers incurred in connection with this Agreement and the
transactions contemplated hereby, including all accounting, legal and appraisal
fees and settlement charges. All transfer taxes incurred as a result of the
transfer of the Purchased Assets shall be paid by Sellers.
8.2. FURTHER ASSURANCES. Sellers shall, at any time and from time to time
on and after the Closing Date, upon request by Purchasers and without further
consideration, take or cause to be taken such actions and execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
instruments, documents, transfers, conveyances and assurances as may be required
or desirable for the better conveying, transferring, assigning, delivering,
assuring and confirming the Purchased Assets to Purchasers.
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8.3. NOTICES. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made i) the second business day after the date of mailing, if delivered
by registered or certified mail, postage prepaid, ii) upon delivery, if sent by
hand delivery, iii) upon delivery, if sent by prepaid courier, with a record of
receipt, or iv) the next day after the date of dispatch, if sent by cable,
telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested), to the parties at
the following addresses:
(a) if to Purchasers, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
Attention: A. Dale Mayo, President
with a required copy to:
David L. Forney, Esq.
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Telecopy: (412) 355-6501
(b) if to Sellers, to:
John Nelson
93 Hope Road
Blairstown, New Jersey 07825
with a required copy to:
Arthur S. Mantel, Esq.
Alter Bartfeld & Mantel LLP
90 Park Avenue
New York, NY 10016
Telecopy: (212) 953-5061
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
8.4. OFFSET; ASSIGNMENT; GOVERNING LAW. Purchasers shall be entitled to
offset or recoup from any amounts due to Sellers from Purchasers hereunder or
under any Other Agreement (including in respect of the Promissory Notes) against
any obligation of Sellers to Purchasers hereunder or under any Other Agreement.
This Agreement and all the rights and powers granted hereby shall bind and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns. This Agreement and the rights, interests and obligations hereunder
may not be assigned by any party hereto without the prior written consent of the
other parties hereto, except that Purchasers may make such assignments to any
Affiliate of Purchasers provided that Purchasers remains liable hereunder. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey without regard to its conflict of law doctrines.
8.5. AMENDMENT AND WAIVER; CUMULATIVE EFFECT. To be effective, any
amendment
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or waiver under this Agreement must be in writing and be signed by the party
against whom enforcement of the same is sought. Neither the failure of any party
hereto to exercise any right, power or remedy provided under this Agreement or
to insist upon compliance by any other party with its obligations hereunder, nor
any custom or practice of the parties at variance with the terms hereof shall
constitute a waiver by such party of its right to exercise any such right, power
or remedy or to demand such compliance. Except as provided in Section 6.4, the
rights and remedies of the parties hereto are cumulative and not exclusive of
the rights and remedies that they otherwise might have now or hereafter, at law,
in equity, by statute or otherwise.
8.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except as set forth
in this Section 8.6, this Agreement and the Schedules and Exhibits set forth all
of the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersede all
prior or contemporaneous agreements and understandings, negotiations,
inducements or conditions, express or implied, oral or written. This Agreement
is not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder, except the provisions of Sections 7.2 and 7.3
relating to Purchasers Indemnitees and Sellers Indemnitees.
8.7. SEVERABILITY. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PURCHASERS:
CLEARVIEW CINEMA GROUP, INC.
By:/s/ A. Dale Mayo
------------------------------------
A. Dale Mayo
Title: President
CCC SUCCASUNNA CINEMA CORP.
By:/s/ A. Dale Mayo
------------------------------------
A. Dale Mayo
Title: President
CCC PARSIPPANY CINEMA CORP.
By:/s/ A. Dale Mayo
------------------------------------
A. Dale Mayo
Title: President
SELLERS:
F&N CINEMA, INC.
By: /s/ John Nelson
------------------------------------
Title: President
ROXBURY CINEMA, INC.
By:/s/ John Nelson
------------------------------------
Title: President
/s/ Pamela Ferman
--------------------------------------
Pamela Ferman
/s/ Seth Ferman
--------------------------------------
Seth Ferman
STOCKHOLDERS:
/s/ John Nelson
--------------------------------------
John Nelson
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/s/ Pamela Ferman
--------------------------------------
Pamela Ferman
STOCKHOLDERS:
/s/ John Nelson
--------------------------------------
John Nelson
28
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SCHEDULES
SCHEDULE 2.1(a) - Succasunna Purchased Assets
SCHEDULE 2.2(a) - Parsippany Purchased Assets
SCHEDULE 3.3 - Consents
SCHEDULE 3.5 - Undisclosed Liabilities
SCHEDULE 3.6 - No Changes
SCHEDULE 3.7 - Taxes
SCHEDULE 3.9 - Litigation
SCHEDULE 3.10 - Description of Contracts
SCHEDULE 3.11 - Permits
SCHEDULE 3.12 - Description of Real Property
SCHEDULE 3.13 - Environmental Matters
SCHEDULE 3.14 - Regulated Material
SCHEDULE 3.18 - Intellectual Property Rights
SCHEDULE 3.19 - Benefit Plans; Seller Plan
SCHEDULE 4.3 - Consents
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EXHIBITS
EXHIBIT A - Indemnification Escrow Agreement
EXHIBIT B - Parsippany Balance Sheet
EXHIBIT C - Parsippany Lease
EXHIBIT D - Form of Promissory Note A
EXHIBIT E - Form of Promissory Note B
EXHIBIT F - Succasunna Balance Sheet
EXHIBIT G - Succasunna Lease
EXHIBIT H - Form of Voting Trust Agreement
EXHIBIT I - Form of Sellers Closing Certificate
EXHIBIT J - Form of Purchaser Closing Certificate
EXHIBIT K- Form of Bill of Sale
EXHIBIT L - Form of Assignment and Assumption of Leases
EXHIBIT M - Form of Opinion of Alter Bartfeld & Mantel LLP
EXHIBIT N - Form of New Theater Transition Form
EXHIBIT O - Form of Opinion of Kirkpatrick & Lockhart LLP
EXHIBIT P - Form of Registration Rights Agreement
[Schedules and Exhibits will be provided upon request.]
30
MERGER AGREEMENT
This Merger Agreement (this "AGREEMENT") is dated as of November 21, 1997,
by and among Clearview Cinema Group, Inc., a Delaware Corporation ("CCG"); CCC
Mansfield Cinema Corp., a Delaware corporation ("ACQUISITION"); Warren County
Cinemas, Inc., a New Jersey corporation, ("MANSFIELD"); and John Nelson, Pamela
Ferman and Seth Ferman (the "STOCKHOLDERS") and Martin Drescher.
Mansfield holds a leasehold interest in certain Real Property (as defined
below) on which a movie theater is contemplated to be built. The parties hereto
desire that Mansfield merge with and into Acquisition, with Acquisition
surviving, upon the terms and subject to the conditions set forth below. This
transaction is intended to be a tax-free reorganization within the meaning of
Section 368(a) of the Code (as defined below).
In consideration of the representations, warranties, covenants, and
agreements contained in this Agreement, the parties, each intending to be
legally bound hereby, agree as set forth below:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
1.1. DEFINITIONS. As used in this Agreement, the following terms have
the meanings specified in this Section.
"ACQUISITION" has the meaning given that term in the heading of this
Agreement.
"ACQUISITION DAMAGES" has the meaning given that term in Section 7.2.
"ACQUISITION INDEMNITEES" has the meaning given that term in Section 7.2.
"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"AGREEMENT" means this Agreement, as it may be amended from time to time.
"BENEFIT PLAN" means any written and unwritten "employee benefit plans"
within the meaning of Section 3(3) of ERISA, and any other written and unwritten
profit sharing, pension, savings, deferred compensation, fringe benefit,
insurance, medical, medical reimbursement, life, disability, accident,
post-retirement health or welfare benefit, stock option, stock purchase, sick
pay, vacation, employment, severance, termination or other plan, agreement,
contract, policy, trust fund or arrangement.
"CCG" has the meaning given that term in the heading of this Agreement.
"CCG SHARES" means the shares of Common Stock of CCG being delivered by
Acquisition to Mansfield pursuant to this Agreement.
<PAGE>
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List pursuant to Superfund.
"CLOSING" has the meaning given that term in Section 2.12.
"CLOSING DATE" has the meaning given that term in Section 2.12.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
"DAMAGES" has the meaning given that term in Section 7.4.
"DEFERRED MERGER CONSIDERATION" has the meaning given that term in Section
2.7(b).
"DGCL" has the meaning given that term in Section 2.1.
"EFFECTIVE TIME" has the meaning given that term in Section 2.2.
"ENCUMBRANCE" means any mortgage, deed of trust, pledge, security
interest, encumbrance, option, right of first refusal, agreement of sale,
adverse claim, easement, lien, lease, assessment, restrictive covenant,
encroachment, right-of-way, burden or charge of any kind or nature whatsoever or
any item similar or related to the foregoing.
"ENVIRONMENTAL LAW" means any applicable Law relating to public health and
safety or protection of the environment, including common law nuisance, property
damage and similar common law theories.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the applicable rulings and regulations thereunder.
"GOVERNING DOCUMENTS" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter documents or
organization or governing documents or instruments of such Person.
"GOVERNMENTAL BODY" means any court, government (federal, state, local or
foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality.
"INDEMNIFIED PARTY" has the meaning given that term in Section 7.4.
"INDEMNIFYING PARTY" has the meaning given that term in Section 7.4.
"INSTRUMENTS OF MERGER" has the meaning given that term in Section 2.2.
"LAW" means any applicable federal, state, municipal, local or foreign
statute, law, ordinance, rule, regulation, judgment or order of any kind or
nature whatsoever including any public policy, judgment or order of any
Governmental Body or principle of common law.
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<PAGE>
"LIABILITIES" with respect to any Person, means all debts, liabilities and
obligations of such Person of any nature or kind whatsoever, whether or not due
or to become due, accrued, fixed, absolute, matured, determined, determinable or
contingent and whether or not incurred directly by such Person or by any
predecessor of such Person, and whether or not arising out of any act, omission,
transaction, circumstance, sale of goods or service or otherwise.
"LITIGATION" has the meaning given that term in Section 3.8.
"LEASE" means the lease agreement attached as "Exhibit A".
"MANSFIELD" has the meaning given that term in the heading of this
Agreement.
"MANSFIELD DAMAGES" has the meaning given that term in Section 7.3.
"MANSFIELD INDEMNITEES" has the meaning given that term in Section 7.3.
"MANSFIELD SHARES" means the outstanding shares of capital stock of
Mansfield, as identified on Schedule 3.5.
"MERGER" has the meaning given that term in Section 2.1.
"MERGER CONSIDERATION" has the meaning given that term in Section 2.7(b).
"PERMIT" means a valid construction permit issued by Mansfield Township,
New Jersey or the State of New Jersey to build a 12 screen movie theater on the
Real Property in accordance with plans prepared by Johannes Hoffman Architects,
P.C. and Maser Sosinski and Associates as called for in the Lease.
"PERSON" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any other legal entity, or
a Governmental Body.
"REAL PROPERTY" has the meaning given that term in Section 3.10.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
substantially in the form of Exhibit B.
"REGULATED MATERIAL" means any hazardous substance as defined by any
Environmental Law and any other material regulated by any applicable
Environmental Law, including petroleum, petroleum-related material, crude oil or
any fraction thereof, polychlorinated biphenyls, and any friable asbestos.
"RELATED PARTY" means (i) Mansfield, (ii) any Affiliate of Mansfield,
(iii) any officer or director of any Person identified in clauses (i) or (ii)
preceding, and (iv) any spouse, sibling, ancestor or lineal descendant of any
natural Person identified in any one of the preceding clauses.
"SECURITY RIGHT" means, with respect to any security, any option, warrant,
subscription right, preemptive right, other right, proxy, put, call, demand,
plan, commitment, agreement, understanding or arrangement of any kind relating
to such security, whether issued or unissued,
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<PAGE>
or any other security convertible into or exchangeable for any such security.
"SECURITY RIGHT" includes any right relating to issuance, sale, assignment,
transfer, purchase, redemption, conversion, exchange, registration or voting and
includes rights conferred by statute, by the issuer's Governing Documents or by
agreement.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SURVIVING CORPORATION" has the meaning given that term in Section 2.1.
"STOCKHOLDERS" has the meaning given that term in the heading of this
Agreement.
"SUPERFUND" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as amended.
"TAX" means any domestic or foreign federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
"VOTING TRUST AGREEMENT" means the Voting Trust Agreement in the form of
"Exhibit C".
1.2. CONSTRUCTION. As used herein, unless the context otherwise requires:
(i) references to "Article" or "Section" are to an article or section hereof;
(ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits and
Schedules attached hereto and are incorporated herein by reference and made a
part hereof; (iii) "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
ARTICLE II.
PURCHASE AND SALE
2.1. THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, Mansfield shall merge with and into
Acquisition, and Acquisition shall be the surviving corporation to such merger
(the "SURVIVING CORPORATION"), and the separate corporate existence of Mansfield
shall thereupon cease (the "MERGER"). The Surviving Corporation shall continue
to be governed by the laws of the State of Delaware and the separate corporate
existence of the Surviving Corporation with all rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. The Merger shall
have the effects specified in the Delaware General Corporation Law (the "DGCL"),
the Business Corporation Act of New Jersey and this Agreement.
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2.2. EFFECTIVE TIME. Prior to the Closing Date, and provided that this
Agreement has not been terminated and abandoned pursuant to Section 6.4, each of
Acquisition and Mansfield shall execute the state law instruments of merger
effecting the Merger in accordance with the terms of this Agreement
("INSTRUMENTS OF MERGER"). Such Instruments of Merger shall be filed with the
Secretary of State of the State of New Jersey and the Secretary of State of the
State of Delaware simultaneously with the Closing. The Merger shall become
effective at the time the last of the applicable Instruments of Merger shall
have been duly filed with the Secretary of State of the State of New Jersey and
the Secretary of State of the State of Delaware, and such time is referred to
herein as the "EFFECTIVE TIME".
2.3. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Acquisition in effect immediately prior to the Effective Time shall thereafter
continue to be the Certificate of Incorporation of the Surviving Corporation
until duly amended further in accordance with the terms thereof and the DGCL.
2.4. BY-LAWS. The By-laws of Acquisition in effect immediately prior to
the Effective Time shall thereafter continue to be the By-Laws of the Surviving
Corporation until duly amended further in accordance with the terms thereof, the
Certificate of Incorporation of the Surviving Corporation and the DGCL.
2.5. DIRECTORS. The directors of Acquisition immediately prior to the
Effective Time shall thereafter continue to be the directors of the Surviving
Corporation from and after the Effective Time to serve until their respective
successors shall have been duly elected and qualified in the manner provided in
the Certificate of Incorporation and By-laws of the Surviving Corporation or as
otherwise provided by law.
2.6 OFFICERS. The officers of Acquisition immediately prior to the
Effective Time shall thereafter be the officers of the Surviving Corporation
from and after the Effective Time and until their respective successors shall
have been duly elected and qualified in the manner provided in the Certificate
of Incorporation and By-laws of the Surviving Corporation or as otherwise
provided by law.
2.7. MANNER OF CONVERTING SHARES. At the Effective Time, each of the
following transactions shall be deemed to occur simultaneously:
(a) ACQUISITION. By virtue of the Merger and without any action on the
part of Stockholders, each then issued and outstanding share, and each share
then held in the treasury, of Common Stock, par value $.01 per share, of
Acquisition shall automatically be converted into one share of Common Stock, par
value $.01 per share, of the Surviving Corporation.
(b) MANSFIELD. By virtue of the Merger and without any action on the part
of Stockholders, each then issued and outstanding share, and each share then
held in the treasury, of Common Stock of Mansfield shall be automatically
canceled, and Stockholders shall be entitled to receive, in the aggregate, that
number of shares of CCG Common Stock equal to the result obtained by dividing
$1,000,000 million by the average closing price of CCG Common Stock for the ten
most recent trading days immediately prior to the Closing Date as reported by
the American Stock Exchange; provided, however, that in no event shall the
number of CCG Shares
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<PAGE>
to be delivered pursuant to this sentence be greater than 90,909 or less than
76,923 (the "MERGER CONSIDERATION"). In addition, within 90 days after the
second anniversary of Closing, CCG shall deliver to Stockholders an amount of
cash equal to the total average annual revenue for the two-year period
commencing on the Closing Date that the Surviving Corporation generates in
excess of $2.5 million (the "DEFERRED MERGER CONSIDERATION"). Notwithstanding
the foregoing, the Deferred Merger Consideration shall not exceed $500,000 and
may be paid, at CCG's option, in shares of CCG's common stock valued at the
average closing price of CCG Common Stock for the ten most recent trading days
immediately prior to such 90th day. Merger Consideration and Deferred Merger
Consideration hereunder shall be delivered to the Stockholders in the following
proportions: John Nelson 50/120; Seth Ferman 25/120; Pam Ferman 25/120; and
Martin Drescher 20/120; provided that such individuals may assign any part of
their interests in the Deferred Merger Consideration to any one or more of the
other individuals upon written notice to CCG.
2.8. CCG SHARES. All CCG Shares being delivered pursuant hereto shall not
be registered under the Securities Act and shall be subject to the Voting Trust
Agreement and Stockholders shall have the benefit of the Registration Rights
Agreement with respect to such Shares. Stockholders covenant that they will not
sell or dispose of the CCG Shares except in accordance with the rules set forth
in Rule 144 issued by the Securities and Exchange Commission under the
Securities Act and shall not sell, transfer or pledge the CCG Shares in the
absence of a registration under the Securities Act or unless CCG receives an
opinion of counsel (which may be counsel for CCG) reasonably acceptable to it
stating that such sale or transfer is exempt from the registration and
prospectus delivery requirements of the Securities Act. Stockholders agree and
consent that the certificates representing the CCG Share shall contain the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS CLEARVIEW CINEMA GROUP, INC. RECEIVES AN
OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR CLEARVIEW CINEMA GROUP, INC.)
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT AND
THAT SUCH SALE OR TRANSFER IS MADE IN ACCORDANCE WITH THE RULE SET FORTH
IN RULE 144 ISSUED BY THE SECURITIES EXCHANGE COMMISSION UNDER SAID ACT.
2.9. PAYMENT OF MERGER CONSIDERATION. The Merger Consideration (and the
Deferred Merger Consideration if CCG Shares are used in payment thereof) shall
be delivered after Closing to A. Dale Mayo, trustee under the Voting Trust
Agreement upon presentment of the certificates then formerly representing the
applicable Mansfield Shares.
2.10. CERTIFICATES REPRESENTING MANSFIELD SHARES. Until surrendered at the
Closing, the certificate or certificates that, immediately prior to the
Effective Time, shall have represented issued and outstanding Mansfield Shares,
at the Effective Time, shall represent for all purposes
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solely the right to receive the applicable Merger Consideration and Deferred
Merger Consideration. After the date hereof, no Mansfield Shares shall be
transferred to any person for any reason, and after the Effective Time, no
certificates formerly representing Mansfield Shares shall be transferred to any
person for any reason.
2.11. DIVIDENDS. All dividends at the Effective Time on or with respect to
Mansfield Shares declared at any time prior to the Effective Time and remaining
unpaid at the Effective Time and all other Securities Rights relating to the
Mansfield Shares or other shares of capital stock of Mansfield shall be deemed
to have been canceled at the Effective Time.
2.12. CLOSING. Subject to the terms and conditions of this Agreement, the
consummation of the Merger and other transactions contemplated hereby shall take
place at a closing (the "CLOSING") at the offices of Kirkpatrick & Lockhart LLP,
1251 Avenue of the Americas, 45th Floor, New York, New York 10020 within ten
business days after issuance of the Permit at such time or on such date as
Mansfield and Acquisition may mutually agree (the day on which the Closing takes
place being the "CLOSING DATE"), but in no event later than January 15, 1999.
2.13. RENT; EXPENSES. Mansfield shall be liable for all rent under the
Lease up to the date that the Permit is issued. Acquisition shall reimburse
Stockholders for all architect fees and other expenses incurred in obtaining the
Permit and developing the Real Property for the construction of the Theater
contemplated by the Lease, provided that such fees and expenses were incurred
after October 31, 1997.
2.14. STOCKHOLDERS' OPTION NOT TO CLOSE. If the Permit is not issued by
June 1, 1998, then Stockholders and Mansfield may at their sole discretion
choose not to Close hereunder upon written notice to CCG provided that such
notice is delivered to CCG prior to January 15, 1999. If Stockholders do not
deliver such notice to CCG by January 15, 1999, then neither CCG nor Acquisition
shall have an obligation to Close hereunder. In either such event, no party
hereto shall have any continuing liability hereunder to any other party hereto
except as provided in Section 6.4.
2.15. CCG'S OPTION TO PURCHASE IF THERE IS NO CLOSING. In the event that
three is no Closing hereunder under the circumstance described in Section 2.14,
then CCG shall have the right upon written notice to Stockholders to purchase
all of the assets of Mansfield (the "OPTION"). The Option may be exercised
during the 60 day period commencing on the 90th day after the second anniversary
of the issuance of the certificate of occupancy for the theater to be
constructed by Mansfield on the Real Property (the "NEW THEATER"). The purchase
price for such assets shall be equal to the greater of (i) six times such
theater's annual average earnings before interest, taxes, depreciation and
amortization (exclusive of extraordinary items) determined in accordance with
generally accepted accounting principles for the first two years of operation,
and (ii) $2 million plus the cost of development and construction of such
theater. Such purchase price shall be payable in cash at the closing of such
purchase and sale. Closing under the Option shall occur within 60 days after the
exercise of the Option and shall be subject the due diligence investigation of
CCG and the consent of the landlord to the Lease. During such 60 day period,
Mansfield shall provide to CCG and its representative complete access to the New
Theater and Mansfield's books and records. The other terms of such purchase
shall be
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substantially upon the terms set forth in that certain Asset Purchase Agreement
dated the date hereof, by and among CCG, CCC Succasunna Cinema Corp., Inc., a
Delaware corporation, CCC Parsippany Cinema Corp., Inc., a Delaware corporation,
F&N Cinema, Inc., a New Jersey corporation; Roxbury Cinema, Inc., a New Jersey
corporation, and Stockholders (the "ASSET PURCHASE AGREEMENT") except that the
liability cap on indemnification of representations and warranties shall be in
the same proportion to the purchase price for the New Theater as the liability
cap set forth in Section 7.4(b) of the Asset Purchase Agreement bears to the
purchase price for the theaters purchased pursuant to the Asset Purchase
Agreement. Neither Stockholders nor Mansfield shall sell all or substantially
all of the assets of Mansfield to any other person, enter into or effect any
merger, consolidation, division, reorganization or sale of a majority of the
capital stock of Mansfield or enter into any other transaction or take any other
act that would frustrate the purpose of this Section 2.15 prior to the
expiration of such 60 day period. The rights hereunder of CCG may be assigned by
CCG to any wholly owned subsidiary of CCG. The Option shall terminate upon any
material default by CCG or its affiliates under this Agreement or the Asset
Purchase Agreement or under any Other Agreement (as such term is defined under
this Agreement and the Asset Purchase Agreement), which default results in a
material out-of-pocket liability to the Mansfield or its affiliates and which
default is not waived or substantially cured within 30 days after CCG has notice
of such default, or on event of default under the Promissory Notes (as defined
in the Asset Purchase Agreement). The Option shall also expire if CCG or its
affiliates acquire or build a movie theater within a five mile radius of the
Real Property.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF
MANSFIELD AND STOCKHOLDERS
Mansfield and Stockholders represent and warrant, jointly and severally,
to Acquisition and CCG as set forth in this Article III and Martin Drescher
represents and warrants to Acquisition and CCG the matters set forth in Sections
3.2 and 3.3, the second sentence of Section 3.5, Section 3.17 and Section 3.18
as if Martin Drescher were included within the definition of "Stockholder"
therein.
3.1. ORGANIZATION, QUALIFICATION; CAPITALIZATION. Mansfield is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has the corporate power and authority
to own or lease its properties and enter into this Agreement and perform its
obligations hereunder.
3.2. AUTHORIZATION; ENFORCEABILITY. This Agreement have been duly executed
and delivered by and constitute the legal, valid and binding obligations of
Mansfield, enforceable against Mansfield in accordance with their terms, except
as may be limited by applicable bankruptcy, insolvency, moratorium, fraudulent
transfer, preference and other laws and equitable principles affecting the scope
and enforcement to creditors' rights generally, and are also limited by
Acquisition's implied covenants of good faith, fair dealing and commercially
reasonable conduct, and by the effects of judicial discretion on the
availability of remedies and realization of benefits under and enforceability of
this Agreement in all respects as written. The Merger and all actions
contemplated by this Agreement have been duly and validly authorized by all
necessary proceedings by Mansfield.
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3.3. NO VIOLATION OF LAWS OR AGREEMENTS; CONSENTS. Neither the execution
and delivery of this Agreement, the consummation of the Merger and other
transactions contemplated hereby nor the compliance with or fulfillment of the
terms, conditions or provisions hereof by Mansfield will: (i) contravene any
provision of any Governing Document of Mansfield, (ii) conflict with, result in
a breach of, constitute a default or an event of default (or an event that
might, with the passage of time or the giving of notice or both, constitute a
default or event of default) under any of the terms of, result in the
termination of, result in the loss of any right under, or give to any other
Person the right to cause such a termination of or loss under, any Purchased
Asset or any other contract, agreement or instrument to which Mansfield or any
Stockholder is a party or by which any of its assets may be bound or affected,
(iii) violate any Law or violate any judgment or order of any Governmental Body
to which Mansfield is subject or by which any of its assets may be bound or
affected. Except as set forth on Schedule 3.3 and the filing of the Instruments
of Merger, no consent, approval or authorization of, or registration or filing
with, any Person is required in connection with the execution and delivery by
Mansfield of this Agreement or the consummation by Mansfield of the Merger or
the other transactions contemplated hereby or thereby.
3.4. UNDISCLOSED LIABILITIES. Mansfield has no Liabilities except as
set forth in the Lease and as shown on Schedule 3.4.
3.5. MANSFIELD SHARES. The issued and outstanding Mansfield Shares are
identified on Schedule 3.5. There exists no Security Rights with respect to the
Mansfield Shares.
3.6. CORPORATE PURPOSE. Mansfield was incorporated on June 26, 1996 for
the sole and limited intention of negotiating and holding the Lease and
constructing and operating a movie theater on the Real Property. Mansfield has
conducted no business of any kind whatsoever other than the negotiation of the
Lease and retention of an architect to draft plans for the construction of a
movie theater. Mansfield owns no assets other than the Lease and plans to
develop the Real Property.
3.7. TAXES. Mansfield has filed or caused to be filed on a timely basis,
or will file or cause to be filed on a timely basis or within a timely-obtained
extension, all Tax Returns that are required to be filed by it prior to or on
the Closing Date, pursuant to the Law of each governmental authority with taxing
power over it. Mansfield has no Liability for any Tax.
3.8. NO PENDING LITIGATION OR PROCEEDINGS. No action, suit, investigation,
claim or proceeding of any nature or kind whatsoever, whether civil, criminal or
administrative, by or before any Governmental Body or arbitrator ("LITIGATION")
is pending or, to the knowledge of Mansfield, threatened against or affecting
Mansfield, the Lease or any of the transactions contemplated by this Agreement,
and there is no basis for any such Litigation. There is presently no outstanding
judgment, decree or order of any Governmental Body against or affecting
Mansfield, any of its assets or liabilities, or any of the transactions
contemplated by this Agreement. Mansfield has no pending Litigation against any
third party.
3.9. LEASE. Except for the Lease, Mansfield is not a party to any
contract, lease, indenture, mortgage, instrument, commitment or other agreement,
arrangement or understanding, oral or written, formal or informal. The Lease is
the legal, valid and binding obligation
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of Mansfield and is in full force and effect. Mansfield has performed all
obligations required to be performed by it under the Lease and is not in breach
or default, and are not alleged to be in breach or default, in any respect
thereunder, and no event has occurred and no condition or state of facts exists
(or would exist upon the giving of notice or the lapse of time or both) that
would become or cause a breach, default or event of default thereunder, would
give to any Person the right to cause such a termination or would cause an
acceleration of any obligation thereunder.
3.10. REAL PROPERTY. Schedule 3.10 identifies the real estate subject to
the Lease (the "REAL PROPERTY") and identifies the record title holder of the
Real Property. Mansfield has the right to quiet enjoyment of the Real Property
for the full term, including all renewal rights, of the lease or similar
agreement relating thereto. The proposed use and operation of the Real Property
under the Lease conform to all applicable building, zoning, safety and
subdivision Laws, Environmental Laws and other Laws, and all restrictive
covenants and restrictions and conditions affecting title. Mansfield has not
received any written or oral notice of assessments for public improvements
against the Real Property or any written or oral notice or order by any
Governmental Body, any insurance company that has issued a policy with respect
to any of such properties or any board of fire underwriters or other body
exercising similar functions that i) claims any defect or deficiency with
respect to any of such properties or ii) requests the performance of any
repairs, alterations or other work to or in any of the Real Property or in the
streets bounding the same. Such public utilities are all available for
connection and will be adequate to service the operations of such facilities.
Mansfield has not received any written notice of any proposed, planned or actual
curtailment of service of any utility supplied to any facility of Mansfield.
3.11. ENVIRONMENTAL MATTERS. Mansfield is not subject to any Liability,
penalty or expense (including legal fees), and Acquisition will not suffer or
incur any loss, Liability, penalty or expense (including legal fees) by virtue
of any violation of any Environmental Law occurring prior to the Closing, any
environmental activity conducted on or with respect to any property at or prior
to the Closing or any environmental condition existing on or with respect to any
property at or prior to the Closing, in each case whether or not Mansfield
permitted or participated in such act or omission. None of the Real Property is
listed or, to the knowledge of Mansfield, proposed for listing on the National
Priorities List pursuant to Superfund, CERCLIS or any state or local list of
sites requiring investigation or cleanup.
3.12. TRANSACTIONS WITH RELATED PARTIES. No Related Party has any claim of
any nature, including any inchoate claim, against any of the assets of
Mansfield. No Related Party will at any time after Closing for any reason,
directly or indirectly, be or become entitled to receive any payment or transfer
of money or other property of any kind from Mansfield, and Mansfield will not at
any time after Closing for any reason, directly or indirectly, be or become
subject to any obligation to any Related Party; provided, however, that nothing
in this Section 3.12 shall prohibit any post-closing transactions between
Related Parties.
3.13. EMPLOYEES. Mansfield has no employees and never had any employees.
3.14. EMPLOYEE BENEFITS. Mansfield has no Employee Benefit Plans and never
had any Employee Benefit plans.
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3.15. SUBSIDIARIES AND INVESTMENTS. Mansfield does not own any shares of
capital stock of or other equity interest in any corporation, partnership, joint
venture or other entity.
Neither Mansfield nor any of its officers, directors or employees has
employed any broker or finder or incurred any Liability for any brokerage fee,
commission or finders' fee in connection with any of the transactions
contemplated hereby.
3.17. SECURITIES MATTERS. Stockholders acknowledge that they and their
representatives have received and reviewed all of the documents filed by CCG
through the date hereof (and on the Closing Date, through the Closing) with the
Securities and Exchange Commission. Stockholders and their representatives have
had, at their discretion, an opportunity to meet with the officers CCG to
discuss CCG's business. Stockholders are each acquiring the CCG Shares for his
or its own account with the intention of holding the CCG Shares for purposes of
investment, and not as a nominee or agent for any other party, and not with a
view to the resale or distribution of any of the CCG Shares, and no Stockholder
or has any intention of selling the CCG Shares or any interest therein in
violation of the federal securities laws or any applicable state securities
laws. Stockholders understand that the CCG Shares are not registered under the
Securities Act of 1933, as amended (the "1933 Act"), or under any state
securities laws. Each of the Stockholders is an "accredited investor" within the
meaning of that term as set forth in Rule 501 issued by the Securities and
Exchange Commission under the 1933 Act.
3.18. DISCLOSURE. None of the representations or warranties of Mansfield
or Stockholders contained herein and none of the information contained in the
Schedules referred to herein or the other information or documents furnished or
to be furnished to CCG or any of its representatives by Mansfield or
Stockholders expressly pursuant to the terms of this Agreement is false or
misleading in any material respect or omits to state a fact herein or therein
necessary to make the statements herein or therein not misleading in any
material respect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
ACQUISITION AND CCG
As an inducement to Mansfield and Stockholders to enter into this
Agreement and consummate the transactions contemplated hereby, Acquisition and
CCG jointly and severally represent and warrant to Mansfield and Stockholders as
follows:
4.1. ORGANIZATION. Each of Acquisition and CCG is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the corporate power and authority to own
or lease its properties, carry on its business, enter into this Agreement and
its obligations hereunder.
4.2. AUTHORIZATION; ENFORCEABILITY. This Agreement constitutes the legal,
valid and binding obligations of Acquisition, enforceable against it in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium, fraudulent transfer, preference and other laws and
equitable principles affecting the scope and enforcement to creditors' rights
generally, and are also limited by Mansfield's and Stockholders' implied
covenants of good faith, fair dealing and commercially reasonable conduct, and
by the effects of judicial discretion
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on the availability of remedies and realization of benefits under and
enforceability of this Agreement in all respects as written. All actions
contemplated by this Agreement have been duly and validly authorized by all
necessary proceedings by Acquisition.
4.3. NO VIOLATION OF LAWS; CONSENTS. Neither the execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby nor the
compliance with or fulfillment of the terms, conditions or provisions hereof by
Acquisition or CCG will: i) contravene any provision of any Governing Document
of Acquisition, or ii) violate any Law or any judgment or order of any
Governmental Body to which Acquisition is subject or by which any of its assets
may be bound or affected. Except as set forth on Schedule 4.3 and the filing of
the Instruments of Merger, no consent, approval or authorization of, or
registration or filing with, any Person is required in connection with the
execution and delivery by Acquisition of this Agreement or the consummation by
Acquisition of the transactions contemplated hereby.
4.4. NO PENDING LITIGATION OR PROCEEDINGS. No Litigation is pending or, to
the knowledge of Acquisition, threatened against or affecting Acquisition or CCG
in connection with any of the transactions contemplated by this Agreement.
4.5. FINDERS' FEES. Neither Acquisition, CCG nor any of their officers,
directors or employees has employed any broker or finder or incurred any
Liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby.
4.6. CCG SHARES. At Closing and upon issuance of the Deferred Merger
Consideration, the CCG Shares shall be duly authorized, validly issued and fully
paid and non-assessable.
4.7. CCG FINANCIAL STATEMENTS. CCG's historical financial statements
contained in the reports filed by it with the Securities Exchange Commission are
true and correct in all material respects.
ARTICLE V.
CERTAIN COVENANTS
5.1. CONDUCT OF BUSINESS PENDING CLOSING. From and after the date hereof
and until the Closing Date or earlier termination hereof, (i) Mansfield and
Stockholders shall use its commercially reasonable efforts to obtain the Permit;
(ii) Mansfield shall not engage in any other business or activity except
activities related to obtaining the Permit; (iii) Mansfield shall not change its
Organization Documents, merge dissolve, liquidate, issue or redeem any capital
stock, declare any dividend or engage in any other fundamental corporate
transaction; (iv) Mansfield shall give to Acquisition and to Acquisition's
employees and representatives (including accountants, actuaries, attorneys,
environmental consultants and engineers) access during normal business hours to
the Real Property.
5.2. ACQUISITION PROPOSALS. Mansfield and Stockholders shall not (nor
shall they permit any of their affiliates to) directly or indirectly, solicit,
initiate or encourage any inquiries or the making of any proposals from, engage
or participate in any negotiations or discussions with, provide any confidential
information or data to, or enter into (or authorize) any agreement
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or agreement in principle with any person or announce any intention to do any of
the foregoing, with respect to any offer or proposal to acquire all or any part
of Mansfield's assets, properties, or Business whether by merger, purchase of
capital stock or assets or otherwise.
5.3. FULFILLMENT OF AGREEMENTS. Acquisition and Mansfield shall use
commercially reasonable efforts to cause all of those conditions to the
obligations of the other under Article VI that are not beyond its reasonable
control to be satisfied on or prior to the Closing and shall use its
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.4. PERFORMANCE OF LEASE OBLIGATIONS. From and after the Closing Date
Acquisition shall perform the obligations of the tenant under the terms of the
Lease.
5.5. TAXES; OTHER LIABILITIES. Stockholders shall be liable for filing all
Tax Returns for Mansfield with respect to any taxable period ending prior to the
Closing Date and shall be liable for all Taxes and, except as provided in
Section 2.13, all other Liabilities incurred by Mansfield prior to the Closing
Date.
5.6. COVENANT AGAINST COMPETITION AND DISCLOSURE. To accord to Acquisition
and CCG the full value of the Merger, Stockholders shall not, directly or
indirectly, (i) for a period of five years after the date hereof, directly or
indirectly, engage or become interested in (as owner, stockholder, partner or
otherwise) the operation of any movie theater within a five mile radius of the
Real Property, (ii) for a period of five years after the date hereof, directly
or indirectly, engage or become interested in (as owner, stockholder, partner or
otherwise) the operation of any movie theater within a five mile radius of any
theater owned directly or indirectly by CCG on the date immediately following
the Closing Date, or (iii) disclose to anyone, or use in competition with
Acquisition, any information with respect to any confidential or secret aspect
of the operations of Acquisition's business. It is acknowledged that
Stockholders currently operate certain movie theaters and nothing in subsection
(ii) of the previous sentence shall prohibit the Sellers from operating such
theaters. Stockholders acknowledge that the remedy at law for breach of the
provisions of this Section 5.6 will be inadequate and that, in addition to any
other remedy CCG may have, they will be entitled to an injunction restraining
any such breach or threatened breach, without any bond or other security being
required. If any court construes the covenant in this Section 5.6 or any part
thereof, to be unenforceable because of its duration or the area covered
thereby, the court shall have the power to reduce the duration or area to the
extent necessary so that such provision is enforceable.
ARTICLE VI.
CONDITIONS TO CLOSING; TERMINATION
6.1. CONDITIONS PRECEDENT TO OBLIGATION OF ACQUISITION. The obligation of
Acquisition to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Acquisition at Acquisition's sole
option:
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(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
representations and warranties of Mansfield contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and warranties had been
made on, as of and with reference to the Closing Date. Mansfield shall have
performed in all respects all of the covenants and complied with all of the
provisions required by this Agreement and the Asset Purchase Agreement to be
performed or complied with by it at or before the Closing.
(b) LITIGATION. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby or that would limit or adversely affect Acquisition's ability to operate
under the Lease as contemplated thereunder, and nor shall there be pending, any
action or proceeding challenging the lawfulness of or seeking to prevent or
delay any of the transactions contemplated by this Agreement or seeking monetary
or other relief by reason of the consummation of any of such transactions.
(c) NO MATERIAL ADVERSE CHANGE. Between the date hereof and the Closing
Date, there shall have been no material adverse change, regardless of insurance
coverage therefor, in the Lease or the Liabilities, prospects or condition,
financial or otherwise, of Mansfield or the theater to be constructed on the
Real Property.
(d) CLOSING CERTIFICATE. Mansfield shall have delivered a certificate,
dated the Closing Date, in the form of "Exhibit D" hereto, certifying to the
fulfillment of the conditions set forth in subparagraphs (a), (b) and (c) of
this Section. Such certificate shall constitute a representation and warranty of
Mansfield with regard to the matters therein for purposes of this Agreement.
(e) CLOSING DOCUMENTS. Acquisition shall have received the documents
referred to in Section 6.3(a). All agreements, certificates, opinions and other
documents delivered by Mansfield to Acquisition hereunder shall be in form and
substance satisfactory to Acquisition.
(f) LEASEHOLD. Acquisition shall have received from the Lessor consents to
leasehold mortgage, and estoppel certificates and from each existing mortgagee
with respect to the Real Property all consents, nondisturbance agreements, and
other documents as Mansfield may be entitled to under the terms of Lease.
(g) PERMIT. Mansfield shall have obtained the Permit.
(h) RENT. All rent due under the Lease Agreement accruing through the date
of the issuance of the Permit shall have been paid in full.
(i) PRIVATE PLACEMENT. CCG shall be satisfied in its sole discretion that
the issuance of the CCG Shares pursuant hereto are exempt from registration
under the Securities Act.
(j) LEASE AMENDMENT. The Lease shall have been amended to include terms no
less favorable than as set forth in "Exhibit H".
6.2. CONDITIONS PRECEDENT TO OBLIGATION OF MANSFIELD. The obligation of
Mansfield to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at
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Closing of the following conditions, any one or more of which may be waived in
whole or in part by Mansfield at Mansfield's sole option:
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
representations and warranties of Acquisition and CCG contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date.
Acquisition and CCG shall have performed all of the covenants and complied in
all respects with all of the provisions required by this Agreement and the Asset
Purchase Agreement to be performed or complied with by it at or before the
Closing.
(b) LITIGATION. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any Governmental Body challenging the
lawfulness of or seeking to prevent or delay any of the transactions
contemplated by this Agreement or seeking monetary or other relief by reason of
the consummation of such transactions.
(c) CLOSING CERTIFICATE. Acquisition shall have delivered a certificate,
dated the Closing Date, in the form of "Exhibit E", certifying to the
fulfillment of the conditions set forth in subparagraphs (a) and (b) of this
Section. Such certificate shall constitute a representation and warranty of
Acquisition with regard to the matters therein for purposes of this Agreement.
(d) PERMIT. Mansfield shall have obtained the Permit.
(e) CLOSING DOCUMENTS. Mansfield shall have received the documents
referred to in Section 6.3(b). All agreements, certificates, opinions and other
documents delivered by Acquisition to Mansfield hereunder shall be in form and
substance satisfactory to Mansfield.
(f) LEASE AMENDMENT. The Lease shall have been amended to include terms no
less favorable than as set forth in "Exhibit H".
6.3. DELIVERIES AND PROCEEDINGS AT CLOSING.
(a) DELIVERIES BY MANSFIELD. Mansfield shall deliver or cause to be
delivered to Acquisition at the Closing:
i) Certificates of the appropriate public officials to the
effect that Mansfield was a validly existing corporation in good standing in its
state of incorporation as of a date not more than 30 days prior to the Closing
Date.
ii) Certificates formerly representing all the Mansfield Shares.
iii) Incumbency and specimen signature certificates dated the
Closing Date, signed by the officers of Mansfield and certified by their
respective Secretaries.
iv) True and correct copies of (A) the Governing Documents (other
than the bylaws) of Mansfield as of a date not more than 30 days prior to the
Closing Date, certified by
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the Secretary of State of New Jersey and (B) the bylaws of Mansfield as of the
Closing Date, certified by its Secretary.
v) Certificates of the Secretary of Mansfield (A) setting forth
resolutions of the Board of Directors of Mansfield and Stockholders (qua
stockholders) of Mansfield authorizing the execution and delivery of this
Agreement and the performance by Mansfield of the transactions contemplated
hereby, and (B) to the effect that the Governing Documents of Mansfield
delivered pursuant to Section 6.3(a)(iv) were in effect at the date of adoption
of such resolutions, the date of execution of this Agreement and the Closing
Date.
vi) The Voting Trust Agreement executed by Stockholders.
vii) The Registration Rights Agreement executed by Stockholders.
viii) The minute books, stock ledgers and corporate seal of
Mansfield.
ix) The opinion of Alter Bartfeld & Mantel LLP, legal counsel to
Mansfield, in substantially the form of "Exhibit F".
x) Such other agreements and documents as Acquisition may
reasonably request.
(B) DELIVERIES BY ACQUISITION. Acquisition shall deliver or cause to be
delivered to Mansfield at the Closing:
i) Certificates of the appropriate public official to the effect
that each of Acquisition and CCG was a validly existing corporation in its state
of incorporation as of a date not more than 30 days prior to the Closing Date.
ii) Incumbency and specimen signature certificates dated the
Closing Date signed by the officers of Acquisition and CCG and certified by
their Secretaries.
iii) True and correct copies of (A) the Governing Documents (other
than the bylaws) of Acquisition as of a date not more than 30 days prior to the
Closing Date, certified by the Secretary of State of Delaware and (B) the bylaws
of Acquisition and CCG as of the Closing Date, certified by their Secretaries.
iv) Certificate of the Secretary of Acquisition (A) setting forth
resolutions of the Board of Directors of Acquisition authorizing the execution
and delivery of this Agreement and the performance by Acquisition of the
transactions contemplated hereby, certified by the Secretary of Acquisition and
(B) to the effect that the Governing Documents of Acquisition delivered pursuant
to Section 6.3(b)(iii) were in effect at the date of adoption of such
resolutions, the date of execution of this Agreement and the Closing Date.
v) The opinion of Kirkpatrick & Lockhart LLP, Acquisition's and
CCG's legal counsel, in substantially the form of "Exhibit G".
vi) Such other agreements and documents as Mansfield may reasonably
request.
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6.4. TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to Closing by: (i) mutual consent of Acquisition and
Mansfield; (ii) Acquisition, if any of the conditions specified in Section 6.1
hereof shall not have been fulfilled by January 15, 1999 and shall not have been
waived by Acquisition; or (iii) Mansfield, if any of the conditions specified in
Section 6.2 hereof shall not have been fulfilled by January 15, 1999 and shall
not have been waived by Mansfield. The failure of any party hereto to satisfy
any condition to Close hereunder not within the control of such party (such as
failure to obtain the Permit) shall not be deemed a material breach by such
party. Subject to Section 2.14, any party in material breach hereof shall be
liable to the other parties for any breach which breach led to termination
hereof. Only the rights and obligations of the parties set forth in this Section
6.4 and Sections 2.14, 2.15, 5.2, 7.2, 7.3 and 8.1 shall survive a termination
of this Agreement in the event there is no Closing, and Section 5.2 shall
survive termination hereof so long as the Option remains outstanding. Any party
hereto shall also be entitled to seek any other remedy to which it may be
entitled at law or in equity in the event of such termination, which remedies
shall include injunctive relief and specific performance.
ARTICLE VII.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1. SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing, but all claims for damages made by virtue of such representations,
warranties and agreements shall be made under, and subject to the limitations
set forth in, this Article VII, except that the representation and warranty
contained in Section 4.7 shall not survive Closing.
7.2. INDEMNIFICATION BY MANSFIELD AND STOCKHOLDERS. Stockholders, jointly
and severally, and Martin Drescher severally and not jointly, shall indemnify,
defend, save and hold Acquisition and their officers, directors, employees,
agents and Affiliates (collectively, "ACQUISITION INDEMNITEES") harmless from
and against all demands, claims, allegations, assertions, actions or causes of
action, assessments, losses, damages, deficiencies, Liabilities, costs and
expenses (including reasonable legal fees, interest, penalties, and all
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing) and whether or not any such demands, claims, allegations, etc., of
third parties are meritorious (collectively, "ACQUISITION DAMAGES") asserted
against, imposed upon, resulting to, required to be paid by, or incurred by
Acquisition Indemnitees, directly or indirectly, in connection with, arising out
of, that could result in, or which would not have occurred but for i) a breach
of any representation or warranty made by Mansfield or any Stockholder or Martin
Drescher in this Agreement, in any certificate or document furnished pursuant
hereto by Mansfield, and ii) a breach or nonfulfillment of any covenant or
agreement made by Mansfield or any Stockholder in or pursuant to this Agreement.
7.3. INDEMNIFICATION BY ACQUISITION. Acquisition and CCG shall indemnify,
defend, save and hold Mansfield and Stockholders and their officers, directors,
employees, Affiliates and agents (collectively, "MANSFIELD INDEMNITEES")
harmless from and against any and all demands, claims, actions or causes of
action, assessments, losses, damages, deficiencies, Liabilities, costs and
expenses (including reasonable legal fees, interest, penalties, and all
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing) and whether or not any such
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demands, claims, allegations, etc., of third parties are meritorious
(collectively, "MANSFIELD DAMAGES") asserted against, imposed upon, resulting
to, required to be paid by, or incurred by Mansfield Indemnitees, directly or
indirectly, in connection with, arising out of, that could result in, or which
would not have occurred but for i) a breach of any representation or warranty
made by Acquisition in this Agreement or in any certificate or document
furnished pursuant hereto by Acquisition, and ii) a breach or nonfulfillment of
any covenant or agreement made by Acquisition in or pursuant to this Agreement.
7.4. NOTICE OF CLAIMS. If Acquisition Indemnitee or Mansfield Indemnitee
(an "INDEMNIFIED PARTY") believes that it has suffered or incurred or will
suffer or incur Acquisition Damages or Mansfield Damages, as the case may be
("DAMAGES") for which it is entitled to indemnification under this Article VII,
such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "INDEMNIFYING PARTY") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this Section shall not affect any of such party's rights under this
Article VII or otherwise except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnified Party.
7.5. THIRD PARTY CLAIMS. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to undertake, conduct
and control the conduct and settlement of such action or suit, i) the
Indemnifying Party shall not thereby permit to exist any Encumbrance upon any
asset of the Indemnified Party; ii) the Indemnifying Party shall not consent to
any settlement that does not include as an unconditional term thereof the giving
of a complete release from liability with respect to such action or suit to the
Indemnified Party; iii) the Indemnifying Party shall permit the Indemnified
Party to participate in such conduct or settlement through counsel chosen by the
Indemnified Party; and iv) the Indemnifying Party shall agree promptly to
reimburse the Indemnified Party for the full amount of any Damages including
fees and expenses of counsel for the Indemnified Party incurred after giving the
foregoing notice to the Indemnifying Party and prior to the assumption of the
conduct and control of such action or suit by the Indemnifying Party.
ARTICLE VIII.
MISCELLANEOUS
8.1. COSTS AND EXPENSES. Acquisition and CCG, on the one hand, and
Mansfield and Stockholders, on the other hand, shall each pay its respective
expenses, brokers' fees and commissions, and Stockholders shall pay all of the
pre-Closing expenses of Mansfield incurred in connection with this Agreement and
the transactions contemplated hereby,
18
<PAGE>
including all accounting, legal and appraisal fees and settlement charges.
8.2. FURTHER ASSURANCES. Mansfield shall, at any time and from time to
time on and after the Closing Date, upon request by Acquisition and without
further consideration, take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments, documents, transfers, conveyances and assurances as may be
required or desirable for the better conveying, transferring, assigning,
delivering, assuring and confirming the Mansfield's assets to Acquisition.
8.3. NOTICES. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made i) the second business day after the date of mailing, if delivered
by registered or certified mail, postage prepaid, ii) upon delivery, if sent by
hand delivery, iii) upon delivery, if sent by prepaid courier, with a record of
receipt, or iv) the next day after the date of dispatch, if sent by cable,
telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested), to the parties at
the following addresses:
(a) if to Acquisition to CCG, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
Attention: A. Dale Mayo, President
with a required copy to:
David L. Forney, Esq.
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Telecopy: (412) 355-6501
(b) if to Mansfield or Stockholders, to:
John Nelson
93 Hope Road
Blairstown, New Jersey 07825
with a required copy to:
Arthur S. Mantel, Esq.
Alter Bartfeld & Mantel LLP
90 Park Avenue
New York, NY 10016
Telecopy: (212) 953-5061
19
<PAGE>
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
8.4. OFFSET; ASSIGNMENT; GOVERNING LAW. Acquisition shall be entitled to
offset or recoup from any amounts due to Mansfield from Acquisition hereunder
(including in respect the Deferred Merger Consideration) against any obligation
of Mansfield to Acquisition hereunder. This Agreement and all the rights and
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective permitted successors and assigns. This Agreement and the
rights, interests and obligations hereunder may not be assigned by any party
hereto without the prior written consent of the other parties hereto, except
that Acquisition may make such assignments to any Affiliate of Acquisition
provided that Acquisition remains liable hereunder. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
except to the extent that the laws of the Delaware General Corporation Law
apply.
8.5. AMENDMENT AND WAIVER; CUMULATIVE EFFECT. To be effective, any
amendment or waiver under this Agreement must be in writing and be signed by the
party against whom enforcement of the same is sought. Neither the failure of any
party hereto to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by any other party with its obligations
hereunder, nor any custom or practice of the parties at variance with the terms
hereof shall constitute a waiver by such party of its right to exercise any such
right, power or remedy or to demand such compliance. Except as provided in
Section 6.4, the rights and remedies of the parties hereto are cumulative and
not exclusive of the rights and remedies that they otherwise might have now or
hereafter, at law, in equity, by statute or otherwise.
8.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the Schedules and Exhibits set forth all of the promises, covenants, agreements,
conditions and undertakings between the parties hereto with respect to the
subject matter hereof, and supersede all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express or implied,
oral or written. This Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder, except the provisions
of Sections 7.2 and 7.3 relating to Acquisition Indemnitees and Mansfield
Indemnitees.
8.7. SEVERABILITY. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
20
<PAGE>
8.9. MARTIN DRESCHER. Martin Drescher, a stockholder of Mansfield, hereby
consents to the Merger and has voted in favor of the Merger, qua a stockholder
of Mansfield, and consents, acknowledges and agrees to the provisions of this
Agreement set forth in Article II, Article VII and Article VIII.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CLEARVIEW CINEMA GROUP, INC.
By:/s/ A. Dale Mayo
-----------------------------------
A. Dale Mayo
Title: President
CCC MANSFIELD CINEMA CORP.
By:/s/ A. Dale Mayo
-----------------------------------
Title: President
WARREN COUNTY CINEMAS, INC.
By:/s/ John Nelson
-----------------------------------
John Nelson
Title: President
STOCKHOLDERS:
/s/ John Nelson
--------------------------------------
John Nelson
/s/ Pamela Ferman
--------------------------------------
Pamela Ferman
/s/ Seth Ferman
--------------------------------------
Seth Ferman
/s/ Martin Drescher
--------------------------------------
Martin Drescher
22
<PAGE>
SCHEDULES
SCHEDULE 3.3 - Consents
SCHEDULE 3.4 - Undisclosed Liabilities
SCHEDULE 3.5 - Mansfield Shares
SCHEDULE 3.10 - Description of Real Property
SCHEDULE 4.3 - Consents
23
<PAGE>
EXHIBITS
EXHIBIT A - Lease
EXHIBIT B - Form of Registration Rights Agreement
EXHIBIT C - Form of Voting Trust Agreement
EXHIBIT D - Form of Mansfield Closing Certificate
EXHIBIT E - Form of Acquisition Closing Certificate
EXHIBIT F - Form of Opinion of Alter Bartfeld & Mantel LLP
EXHIBIT G - Form of Opinion of Kirkpatrick & Lockhart LLP
EXHIBIT H - Form of Lease Amendment
[Schedules and Exhibits will be provided upon request.]
24
EXHIBIT H
VOTING TRUST AGREEMENT
November 21, 1997
This VOTING TRUST AGREEMENT (this "Trust Agreement") is made by and
between the undersigned ("Stockholder") and A. Dale Mayo (the "Trustee").
Stockholder owns in the aggregate 41,797 shares (the "Stock") of
the common stock of Clearview Cinema Group, Inc., a Delaware Corporation (the
"Company").
In accordance with Section 218 of the General Corporation Law of the
State of Delaware, the Stockholder desires to enter into this Voting Trust
Agreement with respect to the Stock, and the Trustee is willing to accept the
voting rights in respect of the Stock and to serve as the voting trustee under
the terms and conditions hereof.
The parties hereto, intending to be legally bound hereby, agree as
follows:
1. Simultaneously with the execution and delivery hereof, the
Stockholder shall deliver the certificates representing the Stock, duly executed
for transfer, to Trustee to be held under this Trust Agreement.
2. (A) Promptly after the delivery required by paragraph 1, the
Trustee shall deliver the certificates representing the Stock to the Company for
transfer and shall cause the shares represented thereby to be transferred to his
name as Trustee under this Trust Agreement. The new certificates representing
the Stock registered in the name of the Trustee shall be delivered to the
Trustee by the Company, and the Trustee shall hold those certificates in his
custody.
(B) The Trustee shall hold the shares of the Stock transferred
to him hereunder, and all other shares of the common stock that the Stockholder
shall transfer to him, in trust for the purposes and subject to the terms and
conditions of the Agreement.
3. At the same time as the delivery by the Trustee of the
certificates to the Company in accordance with the provisions of paragraph 2,
the Trustee shall issue to the Stockholder a Voting Trust Certificate for the
number of shares of the Stock deposited by the Stockholder, which Voting Trust
Certificate shall be in substantially the following form:
<PAGE>
[Front Side]
CLEARVIEW CINEMA GROUP, INC.
(a Delaware corporation)
Certificate No. _____ _____ Shares
VOTING TRUST CERTIFICATE
THIS IS TO CERTIFY that, subject to the provisions hereof and
of the Trust Agreement as hereinafter defined,_________________, or
registered assigns, will be entitled to receive upon the termination of
the Trust Agreement, but only upon surrender of this certificate, a
certificate or certificates for _____ shares of common stock of Clearview
Cinema Group, Inc., a Delaware corporation (hereinafter called the
"Company"), or of any other corporation into which shares of common stock
of the Company shall have been reclassified or converted, or for which
they shall have been exchanged.
Until the expiration or termination of the Trust Agreement,
the undersigned Trustee shall pay or deliver all cash dividends, and
certain other distributions mentioned in the Trust Agreement, on or in
respect of the common stock from time to time held by the undersigned
Trustee thereunder, to the person who, on the record date for the
determination of stockholders entitled to receive the dividends and other
distributions, was the registered owner of this Voting Trust Certificate.
This certificate has been issued under and pursuant to the
provisions of a Voting Trust Agreement (the "Trust Agreement"), by and
between _____________, as a stockholder of the Company and A. Dale Mayo,
as Trustee, dated as of ___________, 1997, as the same may be amended from
time to time. The Trust Agreement more fully defines and sets forth the
rights and obligations of the owner and holder of this certificate and of
the Trustee and is incorporated in and made a part of this Voting Trust
Certificate with the same effect as if set forth in full.
Subject to any restriction contained on the reverse side of
this certificate, this Voting Trust Certificate is transferable by its
registered owner, in person or by duly authorized attorney, on the books
to be maintained for that purpose by the undersigned Trustee, upon the
terms and conditions provided in the Trust Agreement.
WITNESS THE DUE EXECUTION HEREOF on this ______ day of
____________, 199_.
________________________________(SEAL)
A. Dale Mayo
Trustee under Voting Trust
Agreement, dated _______________, 1997.
2
<PAGE>
[Reverse side]
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any
state Blue Sky or securities laws. These securities cannot be resold
without registration under such Act or applicable state securities
laws or an exemption therefrom.
4. The Voting Trust Certificate issued under this Trust Agreement
shall be transferable in the same manner, with the same effect, and subject to
the same restrictions as certificates for shares of the Stock. The Voting Trust
Certificate shall be transferable only at the principal executive office of the
Company or at any other place that the Company may maintain for its corporate
books and records.
5. The Trustee has no authority to sell or otherwise dispose of or
encumber any of the Stock.
6. The Trustee shall possess and be entitled, subject to the
provisions of this Agreement, to exercise all the rights and powers of an
absolute owner of all the shares of Stock deposited under this Trust Agreement,
including without limitation the right to receive dividends on the Stock
(subject to paragraph 7 below) and the right to vote, consent in writing, or
otherwise act with respect to any corporate or stockholders' action, to increase
or reduce the capital stock of the Company, to classify or reclassify any of the
shares as now or hereafter authorized into preferred or common stock or other
classes of stock with or without par value, to amend the Certificate of
Incorporation or by-laws of the Company, to merge or consolidate the Company
with other corporations, to sell all or any part of its assets, to create any
mortgage lien on any of its property, or for any other corporate act or purpose.
Except as otherwise provided herein, no voting right shall pass to others by or
under the Voting Trust Certificate or by or under this Trust Agreement or by or
under any agreement express or implied. All shares of Stock shall be voted as
directed by the Trustee and shall be deemed to be represented for the purposes
of determining a quorum.
7. (A) All dividends paid on the Stock from time to time held
under this Trust Agreement, except stock dividends, shall be remitted by the
Trustee, promptly upon receipt, to the person or persons who, on the record date
for the determination of stockholders entitled to receive the dividends, were
the record owners of the Voting Trust Certificates representing the shares on
which the dividends were declared.
(B) Dividends paid in shares of common stock of the Company
shall be retained by the Trustee and added to the Stock held under this Trust
Agreement. The Trustee shall promptly issue to the appropriate persons Voting
Trust Certificates representing any Stock that the Trustee shall receive as a
dividend and retain in accordance with the provisions of this paragraph 7. Those
Voting Trust Certificates shall be in the form as set forth in this Trust
Agreement, with any changes that are appropriate.
(C) All warrants or rights to subscribe to any class of voting
stock of the Company ("Warrants") that shall be received by the Trustee in
respect or on account of the Stock held under this Trust Agreement shall be
distributed by the Trustee to the holders of the Voting Trust Certificates in
the same manner as he is required to distribute cash dividends under this Trust
Agreement. If any voting stock is purchased by the Stockholder pursuant to the
Warrants, the Stockholder shall immediately deliver the certificates
representing all the shares of stock so purchased, duly executed for transfer,
to the Trustee to be added to the Stock held under
3
<PAGE>
the Trust Agreement. The Trustee shall promptly issue to the Stockholder Voting
Trust Certificates representing any Stock that shall be so delivered to and held
by the Trustee in accordance with the provisions of this paragraph 7. The Voting
Trust Certificates shall be in the form as set forth in this Trust Agreement,
with any changes that are appropriate. No sale or other transfer of any of the
Warrants shall be made without first offering the Company a prior opportunity to
purchase the Warrants for a reasonable amount.
8. The Stockholder, at any time from and after the date of this
Trust Agreement, must deposit any additional capital stock of the Company
purchased or owned by him (but not specifically described within the Trust
Agreement) with the Trustee and such Additional shares of Stock so deposited
shall become subject to all the terms and conditions of this Trust Agreement to
the same extent as if it were originally deposited under this Trust Agreement;
provided, however, that any shares of capital stock of the Company purchased by
such stockholder in a public market shall not be subject to this Voting Trust
Agreement.
9. (A) If, as the result of any split-up, combination or
reclassification of any Stock held by the Trustee under this Trust Agreement, or
as the result of any merger, consolidation, reorganization or sale of assets to
which the Company shall be a party, the Stock held by the Trustee under this
Trust Agreement shall be reclassified, converted into or become exchangeable for
any other securities, either of the Company or of any other corporation, the
Trustee shall exchange or surrender the Stock held by it for those other
securities and shall deliver the certificates evidencing the same to the Company
or other appropriate agency in exchange or surrender. The Trustee shall hold the
securities received upon the exchange or surrender for the purposes and upon the
same conditions as are provided in this Trust Agreement in respect of the shares
of the Stock.
(B) Upon any exchange or surrender, the Trustee may, if he
considers it to be advisable, issue new Voting Trust Certificates in lieu of and
in exchange for the outstanding Voting Trust Certificates. The Voting Trust
Certificates shall be in the form set forth in this Trust Agreement, with any
changes that are appropriate.
10. (A) The Trustee may serve as a director or officer of the
Company or any successor corporation, and he or any firm of which he may be a
member, or any corporation of which he may be a stockholder, director or
officer, may contract with the Company or any successor corporation, or be
pecuniarily interested in any transaction to which the Company or any successor
corporation may be a party, or in which it may be interested, as fully as though
he were not a Trustee.
(B) The Trustee shall not be liable to any stockholder or the
registered owner or holder of any Voting Trust Certificate for any error of
judgment or for any neglect, default, negligence (including gross negligence)
except for his own willful and deliberate malfeasance.
(C) The Trustee shall not receive any compensation for his
services as Trustee, and he shall not be required to give any bond or security
for the discharge of his duties as Trustee.
(D) The Trustee hereby accepts the trust hereunder, subject to
all the terms and conditions contained in this Trust Agreement, and he agrees to
exercise the powers and perform the duties of Trustee as set forth in this Trust
Agreement.
11. (A) The trust created by this Trust Agreement is expressly
declared to be irrevocable.
4
<PAGE>
(B) (i) This Trust Agreement shall terminate with respect only
to the shares of Stock that are sold by the Stockholder (a) pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended, or (b) pursuant to the
registration rights granted to the Stockholder in the Registration Rights
Agreement. A termination of this Trust Agreement as to any shares of Stock sold
pursuant to clauses (a) or (b) of the preceding sentence shall not affect any
shares of Stock continuing to be owned by the Stockholder (the "Remaining
Shares"), and this Trust Agreement shall continue in force with respect to the
Remaining Shares until terminated pursuant to Paragraph 11(B)(ii).
(ii) This Trust Agreement shall terminate upon the
earlier of (a) the twentieth anniversary hereof, (b) written notice of
termination by the Trustee, or (c) the death of the Trustee.
(C) (i) In the event of any proposed sale of Stock pursuant to
clauses (a) or (b) of the first sentence of Paragraph 11(B)(i), the Stockholder
shall notify the Trustee of the proposed sale and of the number of shares to be
sold, and, upon receipt of (a) confirmation, in a form reasonably requested by
the Trustee, of the consummation of the sale and (b) the Voting Certificate(s)
representing the purchased Stock, the Trustee shall deliver or request that the
Company deliver to the purchaser stock certificates for the purchased Stock,
and, if necessary, shall deliver to the Stockholder a Voting Certificate for the
Remaining Shares.
(ii) In the event of termination of this TrustAgreement
pursuant to Paragraph 11(B)(ii), as soon as practicable after the termination,
the Trustee shall deliver to or upon the order of the registered owners of the
Voting Trust Certificates, and upon surrender thereof, the shares of Stock
represented thereby, together with any other shares of voting stock of the
Company subject to this Trust Agreement.
12. Any notice or other communication required or permitted by this
Trust Agreement to be given by any party hereto shall be in writing, and any
communication and payment or delivery of securities required to be made by any
party to any other party shall be sent by first class prepaid mail, certified or
registered, return receipt requested, addressed in the case of the Stockholder,
to the address that is provided by the Stockholder and, in the case of the
Trustee to:
A. Dale Mayo
7 Waverly Place
Madison, New Jersey 07940
or in any other manner as any party shall hereafter designate by notice to the
other party.
13. This Trust Agreement shall be legally binding upon, and shall
inure to the benefit of, the Stockholder and their respective heirs, legal
representatives, and permitted successors and assigns.
14. The validity and effectiveness of this Trust Agreement shall be
governed by, and its provisions shall be construed and enforced in accordance
with, the laws of the State of Delaware.
15. If, for any reason, any provision or part of this Trust
Agreement is held invalid, that invalidity shall not affect any other provision
or the rest of provision of this Trust Agreement, as the case may be, and each
provision or part shall, to the full extent consistent with law, continue in
full force and effect.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Trust
Agreement as of the day and year first above written.
F&N CINEMA, INC.:
By: /s/ John Nelson
------------------------------
John Nelson
President
ROXBURY CINEMA, INC.:
By: /s/ John Nelson
-------------------------------
John Nelson
President
Trustee:
/s/ A. Dale Mayo
-------------------------------
A. Dale Mayo
6
SUBORDINATED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD,
PLEDGED, ASSIGNED OR TRANSFERRED UNLESS REGISTERED THEREUNDER OR
UNLESS AN EXEMPTION FROM SUCH REGISTRATION SHALL BE AVAILABLE.
THE PAYMENT OF THIS INSTRUMENT, BOTH PRINCIPAL AND INTEREST AND ALL
OTHER INDEBTEDNESS EVIDENCED HEREBY IS SUBORDINATE, SUBJECT TO, AND
MADE JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR RIGHTS OF THE PROVIDENT
BANK, AGENT, ITS SUCCESSORS AND ASSIGNS, FOR THE RATABLE BENEFIT OF
THE PROVIDENT BANK AND OTHER LENDERS, IN THE MANNER AND TO THE
EXTENT SET FORTH IN A CERTAIN SUBORDINATION AGREEMENT DATED AS OF
NOVEMBER 21, 1997, WHICH AGREEMENT IS INCORPORATED HEREIN BY
REFERENCE.
SUBORDINATED PROMISSORY NOTE
$4,000,000.00 Madison, New Jersey
November 21, 1997
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the
"Company"), hereby promises to pay to F&N Cinema, Inc., a New Jersey
corporation, and Roxbury Cinema, Inc., a New Jersey corporation (collectively,
the "Holder"), the principal amount of FOUR MILLION ($4,000,000) DOLLARS,
together with interest calculated from the date hereof in accordance with the
provisions of this Subordinated Promissory Note (this "Note"). Payments on this
Note are to be made at 93 Hope Road, Blairstown, New Jersey 07825, or such other
address as duly designated by the Holder, in lawful money of the United States
of America.
1. PAYMENT OF INTEREST; RATE. This Note shall bear interest on the
outstanding principal amount hereof at an annual rate of ten and one-half
percent (10 1/2%). Interest hereunder shall be based upon a 360-day year and
shall be payable monthly in arrears on the 15th day of each month of each year
(each of such monthly interest payment dates being referred to herein as an
"Interest Payment Date") commencing January 15, 1998. In the event that an
Interest Payment Date is not a business day, the Company shall pay to the Holder
the interest payment on the first business day following the applicable Interest
Payment Date.
<PAGE>
2. PAYMENT OF PRINCIPAL. All outstanding principal and all accrued
but unpaid interest shall be paid in full on the earliest to occur of (i) the
fifth anniversary of the date hereof, (ii) the date of closing of the issuance
by the Company of debt securities under Rule 144A issued by the Securities
Exchange Commission under the Securities Act of 1933, and (iii) the issuance by
the Company in an underwritten public offering of additional equity securities
or the issuance by the Company of debt to institutional debt holders (other than
banks) in either case having an aggregate offering price of at least
$10,000,000.
3. MANDATORY PREPAYMENT OF PRINCIPAL. If the Company obtains at any
time or from time to time bank financing pursuant to which the Company borrows
in excess of $60 million in principal amount ("Bank Financing"), then, at the
time of such borrowing or borrowings, the Company shall repay an amount of
principal under this Note equal to 15% of the excess of (i) the principal amount
of the Bank Financing over (ii) $60 million; PROVIDED, HOWEVER, that repayments
and subsequent additional borrowings up to the amount of such repayments will
not give rise to additional repayment obligations hereunder. [By way of example
and not limitation, if the Company borrows in the aggregate $64 million from a
bank or banks, then the Company must repay $600,000 in principal amount
hereunder ((64-60)*15%). If the Company thereafter repays $6 million of Bank
Financing (reducing the then outstanding amount of Bank Financing to $58
million) and then subsequently obtains an additional $12 million of Bank
Financing (increasing the then outstanding amount of Bank Financing to $70
million), then, at the time of the $12 million borrowing, the Company shall
repay an additional $900,000 hereunder ((70-64)*15%). If the Company thereafter
repays $4 million of Bank Financing (reducing the then outstanding amount of
Bank Financing to $66 million) and then subsequently obtains an additional $3
million of Bank Financing (increasing the then outstanding amount of Bank
Financing to $69 million), then no amount is due under this Note as a result of
such $3 million borrowing.]
4. PREPAYMENT OF NOTE. The Company may prepay, without penalty or
premium, the outstanding principal amount of this Note in whole or in part at
any time and from time to time.
5. SUBORDINATION. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder covenants and agrees, that the
indebtedness evidenced by this Note shall be subordinate and subject in right of
payment, to the prior payment in full of all Senior Indebtedness of the Company
to the extent provided in a subordination agreement by and among the Company,
the Holder and the holder of the Senior Indebtedness.
(b) For purposes of this Section 5, "Senior Indebtedness"
shall mean the principal of, premium, if any, and interest (including any
interest accruing after the filing of a petition in bankruptcy) on and other
amounts due on or in connection with any indebtedness of the Company as defined
in and arising under any loan, credit, security or similar agreement with any
bank, insurance company, or other commercial financial institution, in any case
whether arising prior to, on or after the date of issuance of this Note, and all
renewals, extensions, and refundings thereof.
2
<PAGE>
(c) Holder acknowledges that the holder of Senior Indebtedness
as of the date of this Note is The Provident Bank. In the event that the Company
from time to time refinances, substitutes or replaces the Senior Indebtedness
with any other bank, insurance company or commercial lending institution such
that such other person then replaces The Provident Bank as the holder of Senior
Indebtedness, then Holder shall enter into a subordination agreement with such
holder of Senior Indebtedness in form and substance substantially similar to the
Subordination Agreement (other than the identity of the Senior Indebtedness and
the holder thereof) and Holder shall make a notation to such effect on the
legend of this Note.
(d) The Company may at any time and from time to time issue
any indebtedness that is pari passu with this Note.
6. DEFAULT. Each of the following events shall constitute an "Event
of Default" under this Note:
(a) the failure of the Company to pay when due any interest,
principal or any other sum under this Note, and such default shall remain
uncured for a five (5) business day period;
(b) the Company shall (i) file, or consent by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy or insolvency law of any
jurisdiction, (ii) make an assignment for the benefit of its creditors, (iii)
consent to the appointment of a custodian, receiver, trustee or other officer
with similar powers of itself or of any substantial part of its property, (iv)
be adjudicated insolvent or be liquidated, or (v) take corporate action for the
purpose of any of the foregoing;
(c) a court or governmental authority of competent
jurisdiction shall enter an order appointing, without consent by the Company, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or if an order
for relief shall be entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or liquidations
of the Company, or if any petition for any such relief shall be filed against
the Company and such petition shall not be dismissed within 60 days;
(d) any material default by the Company or its affiliates
under the Merger Agreement or the Purchase Agreement (defined below) or under
any Other Agreement other than the Promissory Notes (as such terms are defined
under the Merger Agreement and the Purchase Agreement), which default results in
a material out-of-pocket liability to the Holder or its affiliates and which
default is not waived or substantially cured within 30 days after the Company
has notice of such default;
(e) any material default by the Company under the Senior
Indebtedness as a result of which the holder of the Senior Indebtedness has
exercised its rights of acceleration or foreclosure and which default is not
waived or substantially cured within 10 business days after the exercise of such
rights by such holder.
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Upon the occurrence of any Event of Default, Holder may declare the unpaid
principal amount of and the accrued interest on this Note immediately due and
payable.
7. ASSET PURCHASE AGREEMENT. This Note has been issued pursuant to
that certain Asset Purchase Agreement (the "Purchase Agreement") dated as of the
date hereof among the Company, the Holder and the Company's wholly owned
Delaware subsidiaries, CCC Succusanna Cinema Corp., CCC Parsippany Cinema Corp.,
and others, and is subject to its terms, including, without limitation, the
Company's rights of setoff and recoupment thereunder.
8. REPORTING. So long as this Note is outstanding, the Company shall
deliver to Holder on a timely basis all material public documents that the
Company files with the Securities Exchange Commission (such a Forms 10K and
10Q).
9. MISCELLANEOUS. (a) This Note shall be construed in accordance
with and governed by the laws of the State of New Jersey (without regard to its
conflict of laws principles).
(b) The Company agrees to remain and continue bound hereby
notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of this Note or to protest it for non-payment, and hereby expressly
waives any and all presentment or demand for its payment and protest for time of
payment of it, or any part of it, or its non-payment or dishonor.
(c) Payments made on this Note shall be applied first to
collection costs and expenses hereof (including reasonable attorneys fees), next
to accrued interest, then to other amounts which may be due (other than
principal), and then to principal.
(d) Notwithstanding anything to the contrary contained in this
Note, no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
by its President as of the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By:/s/ A. Dale Mayo
-----------------------------
Name: A. Dale Mayo
Title: President
4
SUBORDINATED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD,
PLEDGED, ASSIGNED OR TRANSFERRED UNLESS REGISTERED THEREUNDER OR
UNLESS AN EXEMPTION FROM SUCH REGISTRATION SHALL BE AVAILABLE.
THE PAYMENT OF THIS INSTRUMENT, BOTH PRINCIPAL AND INTEREST AND ALL
OTHER INDEBTEDNESS EVIDENCED HEREBY IS SUBORDINATE, SUBJECT TO, AND
MADE JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR RIGHTS OF THE PROVIDENT
BANK, AGENT, ITS SUCCESSORS AND ASSIGNS, FOR THE RATABLE BENEFIT OF
THE PROVIDENT BANK AND OTHER LENDERS, IN THE MANNER AND TO THE
EXTENT SET FORTH IN A CERTAIN SUBORDINATION AGREEMENT DATED AS OF
NOVEMBER 21, 1997, WHICH AGREEMENT IS INCORPORATED HEREIN BY
REFERENCE.
SUBORDINATED PROMISSORY NOTE
$2,000,000.00 Madison, New Jersey
November 21, 1997
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 7 Waverly Place, Madison, New Jersey 07940 (the
"Company"), hereby promises to pay to F&N Cinema, Inc., a New Jersey
corporation, and Roxbury Cinema, Inc., a New Jersey corporation (collectively,
the "Holder"), the principal amount of TWO MILLION ($2,000,000) DOLLARS,
together with interest calculated from the date hereof in accordance with the
provisions of this Subordinated Promissory Note (this "Note"). Payments on this
Note are to be made at 93 Hope Road, Blairstown, New Jersey 07825, or such other
address as duly designated by the Holder, in lawful money of the United States
of America.
1. PAYMENT OF INTEREST; RATE. This Note shall bear interest on the
outstanding principal amount hereof at an annual rate of ten and one-half
percent (10 1/2%). Interest hereunder shall be based upon a 360-day year and
shall be payable monthly in arrears on the 15th day of each month of each year
(each of such monthly interest payment dates being referred to herein as an
"Interest Payment Date") commencing January 15, 1998. In the event that an
Interest Payment Date is not a business day, the Company shall pay to the Holder
the interest payment on the first business day following the applicable Interest
Payment Date.
<PAGE>
2. PAYMENT OF PRINCIPAL. All outstanding principal and all accrued
but unpaid interest shall be paid in full on the earliest to occur of (i) the
date of closing of the issuance by the Company of debt securities under Rule
144A issued by the Securities Exchange Commission under the Securities Act of
1933, (ii) the issuance by the Company in an underwritten public offering of
additional equity securities or the issuance by the Company of debt to
institutional debt holders (other than banks) in either case having an aggregate
offering price of at least $10,000,000, (iii) upon demand if a valid building
permit is not issued by Mansfield Township, New Jersey or the State of New
Jersey by June 1, 1998 for the construction of a 12 screen (or greater) movie
theater in Mansfield, New Jersey (the "Mansfield Theater") in accordance with
plans prepared by Johannes Hoffman Architects and Maser Sosinski and Associates
as contemplated by the Lease Agreement (as defined in the Merger Agreement dated
the date hereof among the Company, CCC Mansfield Cinema Corp., a Delaware
corporation, Warren County Cinemas, Inc., a New Jersey corporation, and John
Nelson, Pamela Ferman and Seth Ferman (the "Merger Agreement")), (iv) the date
120 days after the date that a valid certificate of occupancy for the Mansfield
Theater is issued by Mansfield Township, New Jersey, and (v) January 15, 1999.
3. PREPAYMENT OF NOTE. The Company may prepay, without penalty or
premium, the outstanding principal amount of this Note in whole or in part at
any time and from time to time.
4. SUBORDINATION. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder covenants and agrees, that the
indebtedness evidenced by this Note shall be subordinate and subject in right of
payment, to the prior payment in full of all Senior Indebtedness of the Company
to the extent provided in a subordination agreement by and among the Company,
the Holder and the holder of the Senior Indebtedness.
(b) For purposes of this Section 4, "Senior Indebtedness"
shall mean the principal of, premium, if any, and interest (including any
interest accruing after the filing of a petition in bankruptcy) on and other
amounts due on or in connection with any indebtedness of the Company as defined
in and arising under any loan, credit, security or similar agreement with any
bank, insurance company, or other commercial financial institution, in any case
whether arising prior to, on or after the date of issuance of this Note, and all
renewals, extensions, and refundings thereof.
(c) Holder acknowledges that the holder of Senior Indebtedness
as of the date of this Note is The Provident Bank. In the event that the Company
from time to time refinances, substitutes or replaces the Senior Indebtedness
with any other bank, insurance company or commercial lending institution such
that such other person then replaces The Provident Bank as the holder of Senior
Indebtedness, then Holder shall enter into a subordination agreement with such
holder of Senior Indebtedness in form and substance substantially similar to the
Subordination Agreement (other than the identity of the Senior Indebtedness and
the holder thereof) and Holder shall make a notation to such effect on the
legend of this Note.
(d) The Company may at any time and from time to time issue
any
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<PAGE>
indebtedness that is pari passu with this Note.
5. DEFAULT. Each of the following events shall constitute an "Event
of Default" under this Note:
(a) the failure of the Company to pay when due any interest,
principal or any other sum under this Note, and such default shall remain
uncured for a five (5) business day period;
(b) the Company shall (i) file, or consent by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy or insolvency law of any
jurisdiction, (ii) make an assignment for the benefit of its creditors, (iii)
consent to the appointment of a custodian, receiver, trustee or other officer
with similar powers of itself or of any substantial part of its property, (iv)
be adjudicated insolvent or be liquidated, or (v) take corporate action for the
purpose of any of the foregoing;
(c) a court or governmental authority of competent
jurisdiction shall enter an order appointing, without consent by the Company, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or if an order
for relief shall be entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or liquidations
of the Company, or if any petition for any such relief shall be filed against
the Company and such petition shall not be dismissed within 60 days;
(d) any material default by the Company or its affiliates
under the Merger Agreement or the Purchase Agreement (defined below) or under
any Other Agreement other than the Promissory Notes (as such terms are defined
under the Merger Agreement and the Purchase Agreement), which default results in
a material out-of-pocket liability to the Holder or its affiliates and which
default is not waived or substantially cured within 30 days after the Company
has notice of such default;
(e) any material default by the Company under the Senior
Indebtedness as a result of which the holder of the Senior Indebtedness has
exercised its rights of acceleration or foreclosure and which default is not
waived or substantially cured within 10 business days after the exercise of such
rights by such holder.
Upon the occurrence of any Event of Default, Holder may declare the unpaid
principal amount of and the accrued interest on this Note immediately due and
payable.
6. ASSET PURCHASE AGREEMENT. This Note has been issued pursuant to
that certain Asset Purchase Agreement (the "Purchase Agreement") dated as of the
date hereof among the Company, the Holder and the Company's wholly owned
Delaware subsidiaries, CCC Succusanna Cinema Corp., CCC Parsippany Cinema Corp.,
and others, and is subject to its terms, including, without limitation, the
Company's rights of setoff and recoupment thereunder.
7. REPORTING. So long as this Note is outstanding, the Company shall
deliver to
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<PAGE>
Holder on a timely basis all material public documents that the Company files
with the Securities Exchange Commission (such a Forms 10K and 10Q).
8. MISCELLANEOUS. (a) This Note shall be construed in accordance
with and governed by the laws of the State of New Jersey (without regard to its
conflict of laws principles).
(b) The Company agrees to remain and continue bound hereby
notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of this Note or to protest it for non-payment, and hereby expressly
waives any and all presentment or demand for its payment and protest for time of
payment of it, or any part of it, or its non-payment or dishonor.
(c) Payments made on this Note shall be applied first to
collection costs and expenses hereof (including reasonable attorneys fees), next
to accrued interest, then to other amounts which may be due (other than
principal), and then to principal.
(d) Notwithstanding anything to the contrary contained in this
Note, no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
by its President as of the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By: /s/ A. Dale Mayo
-------------------------------
Name: A. Dale Mayo
Title: President
4
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of November 21, 1997 (the
"Agreement"), by and among Clearview Cinema Group, Inc., a Delaware corporation
(the "Company"), F&N Cinema, Inc., a New Jersey corporation, and Roxbury Cinema,
Inc., a New Jersey corporation (collectively "Seller").
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. DEFINITIONS. The following terms have the meanings set forth in this
Section 1 unless the context clearly otherwise requires:
(a) "Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Common Stock" means the Common Stock, $.01 par value, of the
Company.
(d) "Holder" means Seller so long as Seller are holders of any
Registrable Securities and Seller's permitted successors, transferees and
assigns so long as any such successor, transferee or assignee executes and
delivers a written agreement, in form and substance satisfactory to the Company,
agreeing to be bound by the provisions of this Agreement.
(e) "Offering" means any underwritten public offering of shares of
Common Stock by the Company or any holder thereof in accordance with the
registration requirements of the Act.
(f) "Registrable Securities" means any shares of Common Stock now or
hereafter held by Seller.
(g) "Registration", "register" and like words mean compliance with
all of the laws, rules and regulations (federal, state and local), and
provisions of agreements and corporate documents pertaining to the public
offering of securities, including registration of any public offering of
securities on any form under the Act.
2. INCIDENTAL REGISTRATION. If the Company shall at any time propose for
itself or any other person the registration under the Act of any Offering (other
than any Offering in connection with any employee benefit plan or a transaction
required to be registered by means of a registration statement on Form S-4), the
Company shall give notice of such proposed registration to all Holders. Upon
receipt of such notice, each Holder may elect to participate in such Offering.
To make such election, any such Holder must give notice to the Company of such
Holder's election and the number of Registrable Securities that such Holder
wishes to sell in such Offering within fifteen (15) days of the day that the
Company gave notice of such Offering.
<PAGE>
Subject to the provisions of the last sentence of this Section 2, the Company
shall include in such Offering such Registrable Securities and shall cause the
managing underwriter or sole underwriter of such Offering, if any, to enter into
an underwriting agreement that will have all such electing Holders as parties
thereto. The rights provided in this Section 2 are available to any Holder even
though such Holder may be free at the time to sell all of the Registrable
Securities of such Holder with respect to which registration is requested in
accordance with Rule 144 (or any similar rule or regulation) under the Act. If
the managing underwriter or sole underwriter of any Offering subject to the
provisions of this Section 2 advises the Holders participating therein in
writing that marketing factors require a limitation on the number of shares of
Common Stock to be underwritten in such Offering, then the number of shares of
Common Stock that may be included in such Offering shall be allocated as
follows: (i) all shares of Common Stock to be sold for the account of the
Company shall be included; and (ii) the remaining shares of Common Stock that
may be sold pursuant to the advice of such managing underwriter shall be
allocated among all Holders and other persons participating in such Offering in
proportion, as nearly as practicable, to the respective numbers of shares of
Common Stock held by or issuable to all such persons at the time of the filing
of the registration statement for such Offering.
3. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder participating in an
Offering pursuant to Section 2 shall furnish to the Company in writing all
information within such Holder's possession or knowledge required by the
applicable rules and regulations of the Commission and by any applicable state
securities or blue sky laws concerning such Holder, the proposed method of sale
or other disposition of the shares of Common Stock being sold by such Holder in
such Offering, and the identity of and compensation to be paid to any proposed
underwriter or underwriters to be employed in connection with such Offering.
4. COSTS AND EXPENSES. Except as provided in the last sentence of this
Section 4, the Company shall pay all costs and expenses in connection with the
registration of any Offering under this Agreement. Such costs and expenses for
any Offering, include: (a) the reasonable fees and expenses of the Company's
counsel and one special counsel selected by the Holders offering shares of
Common Stock in such Offering; (b) the fees and expenses of the Company's
accountants and auditors; (c) the costs and expenses incident to the
preparation, printing and filing of any and all documents to be filed under the
Act and any applicable state securities or blue sky laws in connection with such
Offering, each prospectus forming a part of the relevant registration statement
and all amendments thereof and supplements thereto; (d) the costs incurred in
connection with the qualification of the Offering and the shares of Common Stock
being offered in such Offering under any applicable state securities or blue sky
laws (including any related fees and disbursements); (e) the cost of listing the
shares of Common Stock being offered in such Offering on any exchange; (f) the
cost of furnishing to each Holder such copies as such Holder shall reasonably
request of the relevant registration statement, each preliminary prospectus and
the final prospectus forming part of such registration statement and each
amendment thereof or supplement thereto; and (g) all expenses incident to
delivery of the shares of Common Stock being offered in such Offering to any
underwriter or underwriters. Notwithstanding anything to the contrary set forth
herein, the Company shall not be obligated to pay (i) the commissions or
discounts payable to any underwriter for any shares of Common Stock sold by any
Holder or (ii) any costs or expenses incurred in connection with any
registration statement referred to in Section 2 which any other person on whose
behalf such registration statement is being filed has agreed to pay.
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<PAGE>
5. INDEMNIFICATION BY COMPANY. The Company shall, to the maximum extent
permitted by law, indemnify and hold harmless each Holder participating in any
Offering pursuant to this Agreement, any underwriter for such Holder and each
person, if any, who controls (as defined in the Act) such Holder or such
underwriter against any losses, claims, damages, liabilities, judgments,
settlements, awards and expenses (including attorneys' fees) (each a "Loss" and
collectively "Losses") to which such Holder or underwriter or controlling person
may become subject under the Act or otherwise, insofar as such Losses are caused
by, based upon, arise out of, or relate to, any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
for such Offering, any prospectus contained therein, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company shall not be liable
in any such case to the extent that any such Loss is caused by, is based upon,
arises out of, or relates to, an untrue statement or alleged untrue statement or
omission or alleged omission made in conformity with written information
furnished by such Holder or underwriter specifically for use in preparation of
such registration statement, prospectus, amendment or supplement or if, in
respect to such statement, alleged statement, omission or alleged omission, the
final prospectus for such registration statement corrected such statement,
alleged statement, omission or alleged omission and a copy of such final
prospectus was not sent or given by or on behalf of such Holder at or prior to
the confirmation of the sale of shares of Common Stock of such Holder with
respect to which such Loss relates. The Company shall reimburse each such
Holder, underwriter or controlling person for any legal or other expenses
incurred by such Holder, underwriter or controlling person in connection with
investigating or defending against any such Loss as incurred if such Holder,
underwriter or controlling person has provided to the Company an undertaking to
repay such reimbursed expenses if it is determined that such Holder, underwriter
or controlling person was not entitled to indemnification hereunder.
6. INDEMNIFICATION BY HOLDER. Each Holder participating in any Offering
pursuant to this Agreement shall, to the maximum extent permitted by law,
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the applicable registration statement and each person,
if any, who controls the Company against any Losses to which the Company or any
such director, officer or controlling person may become subject under the Act or
otherwise, insofar as such Losses are caused by, based upon, arise out of, or
relate to, (a) any untrue or alleged untrue statement of any material fact
contained in the registration statement for such Offering, any prospectus
contained therein, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such Losses are caused by,
based upon, arise out of, or relate to, an untrue statement or alleged untrue
statement or omission or alleged omission made in conformity with written
information furnished by such Holder specifically for use in preparation of such
registration statement, prospectus, amendment or supplement; or (b) any untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus for such registration statement if, in respect to
such statement, alleged statement, omission or alleged omission, the final
prospectus for such registration statement corrected such statement, alleged
statement, omission or alleged omission and a copy of such final prospectus was
not sent or given by or on behalf of such Holder at or prior to the confirmation
of the sale of shares of Common Stock of such Holder with respect to which such
Loss relates. Each Holder's obligation under
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this Section 7 shall be several and not joint and in no event shall exceed the
net proceeds received by such Holder in the Offering to which the applicable
Loss relates.
7. NOTICE TO INDEMNITOR. Promptly after receipt by any indemnified party
of notice of the commencement of any action which may involve an indemnifiable
Loss, such indemnified party shall, if a claim is to be made against an
indemnifying party with respect to such Loss pursuant hereto, notify such
indemnifying party of the commencement thereof; but the failure to so notify
such indemnifying party shall not relieve it from any liability that it may have
to such indemnified party hereunder unless such indemnifying party shall have
been actually and materially prejudiced by such failure. In case any such action
is brought against any indemnified party and it notifies an indemnifying party
of the commencement thereof, and such indemnifying party, without acknowledging
any validity of the underlying claim, acknowledges that it may be obligated to
indemnify such indemnified party therefor, such indemnifying party shall be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party, but may not
settle such action without the consent of such indemnified party, which consent
shall not be unreasonably withheld, unless such settlement involves no payment
by such indemnified party, no equitable relief against such indemnified party
and a complete release of all claims against such indemnified party. If an
indemnifying party undertakes the defense of any matter for which indemnity is
claimed under this Agreement, and if the relevant indemnified party wishes
nevertheless to retain counsel to represent it in such matter, the fees of such
counsel shall be the responsibility solely of the party retaining such counsel
unless such indemnified party and such indemnifying party have conflicting or
separate defenses in such action, in which case the attorneys' fees of such
indemnified party will be borne by such indemnifying party.
8. ADDITIONAL OBLIGATIONS. If, in order to effect any Offering in
accordance with this Agreement, such Offering or the shares of Common Stock
being offered in such Offering require a declaration of, registration with, or
approval of, any federal or state governmental official or authority (other than
registration under the Act or qualification or registration under state
securities or blue sky laws) before such shares of Common Stock may be sold, the
Company at its own expense shall take all reasonable actions in connection with
such registration, declaration or approval and will use its reasonable best
efforts to cause such shares of Common Stock to be duly registered or approved
as may be required; provided, however, that in connection therewith or as a
condition thereof, the Company may not be required to execute a general consent
to service or to qualify to do business in any jurisdiction. The foregoing shall
not be applicable to any regulatory requirements applicable solely to any Holder
wishing to participate in any such Offering.
9. RULE 144 COVENANTS. With a view to making available to each Holder the
benefits of Rule 144 under the Act (which term as used in this Section 9
includes the present Rule 144 and any other, additional, substitute,
supplemental or analogous rule or regulation of the Commission that may at any
time permit a Holder to sell Registrable Securities to the public without
compliance with the registration requirements of the Act), the Company (a) shall
maintain registration of the Common Stock under Section 12 or 15(d) of the
Securities Exchange Act of 1934, as amended; (b) shall file with the Commission
in a timely manner all reports and other documents required to be filed by an
issuer of securities registered under the Securities Exchange Act of 1934, as
amended, so as to maintain the availability of Rule 144 to the Holders; (c) at
its expense, forthwith upon any Holder's request, shall deliver to such Holder a
certificate, signed by
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one of the Company's principal officers, stating (i) the Company's name, address
and telephone number (including area code); (ii) the Company's I.R.S. taxpayer
identification number; (iii) the Company's Commission file number; (iv) the
number of shares of Common Stock outstanding as shown by the most recent report
or statement published by the Company or filed by the Company with the
Commission; and (v) that the Company has filed the reports required to be filed
under the Securities Exchange Act of 1934, as amended, for a period of at least
90 days prior to the date of such certificate and in addition has filed the most
recent annual report required to be filed thereunder and such other or
additional information as shall be necessary to make available to such Holder
the ability to offer and sell the maximum number of shares of Common Stock under
Rule 144; and (d) when Rule 144 is being complied with, shall deliver securities
not bearing any legend restricting transfer of such securities, as requested
from time to time by any Holder subject to this Agreement.
10. NOTICES. All notices and other communications provided for hereunder
must be in writing and shall be deemed to have been given on the same day when
personally delivered or sent by confirmed facsimile transmission or on the next
business day when delivered by receipted courier service or on the third
business day when mailed with sufficient postage, registered or certified mail,
return receipt requested, to the following addresses:
(a) if to the Company: Clearview Cinema Group, Inc., 7 Waverly
Place, Madison, New Jersey 07940, Telecopy No. (201) 377-4303, marked
"Attention: President," with a copy to: Kirkpatrick & Lockhart LLP, 1251 Avenue
of the Americas, New York, New York 10020, Attention: David L. Forney, Esq.;
(b) if to Seller: c/o Ferman & Nelson, 21 Sunset Strip, P.O. Box
648, Succasunna, New Jersey 07876, marked "Attention: John Nelson," with a copy
to: Alter Bartfeld & Mantel LLP, 90 Park Avenue, New York, New York 10016,
marked "Attention: Arthur S. Mantel, Esq."
or to such other address as any party shall have furnished to the other parties
pursuant to this Section 10. Failure to send a copy of a notice to any attorney
shall not vitiate any notice sent to a party.
11. ENTIRE AGREEMENT; MODIFICATION OF AGREEMENT; CONSENTS. This Agreement
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof. Changes in or additions to this Agreement may be made
and/or compliance with any covenant or condition herein set forth may be omitted
only upon written consent of all the parties hereto; provided, however, that any
agreement by any person to become a party to this Agreement because such person
has acquired shares of Common Stock from Seller only needs to be executed by
such person and the Company to be binding upon all of the parties hereto.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors, transferees and assigns. For purposes of this Agreement, any person
who is a successor to or assignee of any party hereto by operation of law,
including by means of a merger, consolidation or share exchange or by the laws
of intestacy or inheritance or pursuant to a will (but only if such person is
the administrator or executor of the applicable estate) and excluding any person
who receives a distribution of shares of Common Stock as an heir, upon
dissolution or liquidation (whether full or partial), as a
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<PAGE>
dividend on or a redemption (whether full or partial) of such person's interest
in such party or by any other means, shall be deemed to be a permitted successor
or assignee hereunder upon execution of an agreement to become a party hereto.
Any person who receives a distribution of shares of Common Stock from any party
hereto by any other means or for any other reason shall only be permitted to
become a party hereto if (a) such person, after such distribution, beneficially
owns at least five percent of the then outstanding shares of Common Stock, on a
fully diluted basis, or (b) such person is an affiliate of the Company (as
defined in Rule 144 under the Act), and such person executes an agreement to
become a party hereto.
13. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware without regard to any of its
principles of conflicts of law.
14. 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 agreement.
15. TERM. This Agreement shall remain in full force and effect until the
earliest to occur of (a) the liquidation or dissolution of the Company, (b) the
sale of all or substantially all of the assets of the Company, and (c) the tenth
anniversary of the date hereof.
16. CONSTRUCTION.
(a) The descriptive headings of this Agreement are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
(b) As used in this Agreement, the term "person" means any
individual, corporation, partnership, joint venture, trust, limited liability
company, governmental authority or other entity.
(c) The invalidity or unenforceability of any particular provision
of this Agreement in any jurisdiction shall not affect the other provisions
hereof or such provision in other jurisdictions, and this Agreement shall be
construed in such jurisdiction in all respects as if such invalid or
unenforceable provision were omitted. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision in such jurisdiction there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date first set forth above.
CLEARVIEW CINEMA GROUP, INC.
By: /s/ A. Dale Mayo
------------------------------------
A. Dale Mayo
President
F&N CINEMA, INC.
By: /s/ John Nelson
------------------------------------
John Nelson
President
ROXBURY CINEMA, INC.
By: /s/ John Nelson
------------------------------------
John Nelson
President
7
