<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 18, 1997
REGISTRATION NO. 333-27819
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------
CLEARVIEW CINEMA GROUP, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7832 22-3338356
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
7 WAVERLY PLACE
MADISON, NJ 07940
(201) 377-4646
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE
OFFICES AND PRINCIPAL PLACE OF BUSINESS)
------------------------
A. DALE MAYO
CLEARVIEW CINEMA GROUP, INC.
7 WAVERLY PLACE
MADISON, NJ 07940
(201) 377-4646
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
LEONARD S. FERLEGER MARK R. BAKER
KIRKPATRICK & LOCKHART LLP DEWEY BALLANTINE
1500 OLIVER BUILDING 1301 AVENUE OF THE AMERICAS
PITTSBURGH, PA 15222-2312 NEW YORK, NY 10019-6092
(412) 355-6500 (212) 259-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY PART I
OF FORM SB-2
<TABLE>
<CAPTION>
ITEM NO. CAPTION LOCATION IN PROSPECTUS
- -------- --------------------------------------------------- ---------------------------------------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Front
Cover of Prospectus.............................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front and Outside Back Cover Pages;
Additional Information
3. Summary Information and Risk Factors............... Prospectus Summary; Risk Factors
4. Use of Proceeds.................................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price.................... Underwriting
6. Dilution........................................... Dilution
7. Selling Security Holders........................... Not applicable
8. Plan of Distribution............................... Outside Front Cover Page; Underwriting
9. Legal Proceedings.................................. Business
10. Directors, Executive Officers, Promoters and
Control Persons.................................. Management and Directors
11. Security Ownership of Certain Beneficial Owners and
Management....................................... Principal Stockholders
12. Description of Securities.......................... Description of Capital Stock
13. Interest of Named Experts and Counsels............. Not applicable
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... Not applicable
15. Organization within Last Five Years................ Certain Transactions
16. Description of Business............................ Prospectus Summary; Business
17. Management's Discussion and Analysis or Plan of
Operation........................................ Management's Discussion and Analysis of Financial
Condition and Results of Operation
18. Description of Property............................ Business
19. Certain Relationships and Related Transactions..... Certain Transactions
20. Market for Common Equity and Related Stockholder
Matters.......................................... Outside Front Cover; Risk Factors; Dividend Policy;
Principal Stockholders; Shares Eligible for
Future Sale; Underwriting
21. Executive Compensation............................. Management and Directors
22. Financial Statements............................... Summary; Pro Forma Consolidated Financial Data;
Financial Statements
23. Changes In and Disagreement With Accountants on
Accounting and Financial Disclosure.............. Not applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY , 1997
PROSPECTUS
SHARES
[LOGO]
CLEARVIEW CINEMA GROUP, INC.
COMMON STOCK
------------------------
All of the shares of Common Stock, $.01 par value (the 'Common Stock'), of
Clearview Cinema Group, Inc. ('Clearview' or the 'Company') offered hereby (the
'Offering') are being sold for the account of the Company. Prior to the
Offering, there has been no public market for the Common Stock. It is
anticipated that the initial public offering price will be between $ and
$ per share. For information relating to the factors considered in
determining the initial offering price to the public, see 'Underwriting.' The
Common Stock has been approved for listing on the American Stock Exchange (the
'ASE'), subject to official notice of issuance, under the symbol ' .'
------------------------
SEE 'RISK FACTORS' ON PAGE SEVEN FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
THE PUBLIC AND COMMISSIONS(1) THE COMPANY(2)
<S> <C> <C> <C>
Per Share....................... $ $ $
Total(3)........................ $ $ $
</TABLE>
(1) Does not include a 2 1/2% non-accountable expense allowance payable to Prime
Charter Ltd. (the 'Representative') on behalf of the Underwriters and
warrants to purchase shares of Common Stock issuable to the
Representative (the 'Underwriter Warrants'). The Company has also agreed to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
'Underwriting.'
(2) Before deducting expenses payable by the Company, estimated at $ ,
which does not include the non-accountable expense allowance.
(3) The Company has granted the Underwriters an option, exercisable within 30
days of the date of this Prospectus, to purchase up to additional
shares of Common Stock on the same terms as set forth above, solely to cover
over-allotments. If the option is exercised in full, the total Price to the
Public will be $ ; Underwriting Discounts and Commissions will be
$ ; and Proceeds to the Company will be $ .
The shares of Common Stock offered hereby are offered by the Underwriters,
subject to prior sale, when, as and if accepted by them and subject to certain
conditions, the right to withdraw, cancel, modify or reject any order in whole
or part, and approval of certain legal matters by counsel. It is expected that
delivery of the shares of Common Stock offered hereby will be made on or about
, 1997.
------------------------
PRIME CHARTER LTD.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
[INSERT GRAPHICS AND/OR PHOTOGRAPHS]
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS AND SELLING GROUP
MEMBERS, IF ANY, MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE AMERICAN STOCK EXCHANGE IN ACCORDANCE WITH RULE 103 OF REGULATION M
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SEE 'UNDERWRITING.'
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Prospective investors should consider
carefully, among other things, the information set forth under 'Risk Factors'
below. Unless otherwise indicated, all information in this Prospectus assumes no
exercise of the over-allotment option and gives effect to the Concurrent
Transactions (as defined below). See 'The Concurrent Transactions' and
'Description of Capital Stock.' As used in this Prospectus, unless the context
indicates otherwise, the terms 'the Company' and 'Clearview' refer to Clearview
Cinema Group, Inc. and its subsidiaries.
THE COMPANY
Clearview Cinema Group, Inc. is a regional motion picture exhibitor that
operates in-town multiplex theaters primarily located in affluent suburban
communities in the New York/New Jersey metropolitan area. The Company's theaters
offer a mix of first-run commercial, art and family-oriented films designed to
appeal primarily to sophisticated moviegoers and families with younger children.
Since its inception in December, 1994, the Company has grown from four to 17
theaters and from eight to 69 screens. From 1995 to 1996, the Company's revenues
have increased from $2.3 million to $8.2 million and theater level operating
income has increased from $344,000 to $1.6 million.
The Company's strategy is to grow primarily through the acquisition or
development of in-town multiplex theaters. The Company seeks locations in the
retail centers of suburban communities that have the characteristics of the
Company's target audiences. The Company intends to build upon its concentration
of existing theaters and to expand into retail centers in suitable communities
throughout the Middle Atlantic and New England states. The Company also will be
opportunistic when evaluating theaters and locations in communities that meet
many, but not necessarily all, of the Company's criteria. The Company intends to
grow by operating additional theaters, adding screens to its existing theaters
and developing theaters in locations not previously used for motion picture
exhibition.
The theatrical exhibition industry is fragmented. Although the fifty
largest theater circuits operated approximately 76% of the screens in use at May
1, 1995, there are a substantial number of small independent exhibitors with
four or fewer theaters. The large circuits that are growing most rapidly appear
to have begun to concentrate on building new mega-multiplex theaters, rather
than buying established theaters. The Company believes that, in the Middle
Atlantic and New England states, in-town theaters serve audiences that prefer
these theaters to the larger out-of-town multiplex theaters. The Company also
believes that in-town theaters can offer movie selections more attuned to their
local markets, better customer service and more convenience when compared to
out-of-town multiplexes. Primarily for these reasons, the Company thinks that
operating in-town theaters can be attractive, and the Company believes that
there are a large number of potential acquisition candidates. The Company seeks
to identify targets that will complement its existing theaters or provide entry
into new markets.
The Company seeks to improve the operating margins of its theaters by
controlling theater level costs through centralized management, by increased
efficiencies in concession purchasing and through film selection that is
sensitive to the local community's tastes. The Company intends to acquire or
develop clusters of theaters that will increase its flexibility by permitting
the sharing of theater managers and skilled and hourly wage personnel. Clearview
believes that its management information system and internal controls gives its
senior management timely access to comprehensive operating data, allows the
local theater managers to focus on day-to-day operations, and enables the
Company to expand its theater operations without incurring proportionate
increases in general and administrative expenses.
The Company seeks theaters that will be the sole or dominant exhibitors in
their geographic film licensing zones. A geographic film licensing zone or 'film
zone' is a geographic area, recognized by film distributors, that generally has
a three to five mile radius in metropolitan and suburban markets, in which a
film is licensed for exhibition at only one theater in that film zone.
Currently, 75% of the Company's theaters are the sole exhibitors in their film
zones.
3
<PAGE>
Clearview's theaters are community-oriented and place a strong emphasis on
patron satisfaction and customer service. The theaters provide clean and
comfortable environments at convenient in-town locations and offer opportune
movie show times, courtesy telephones for local calls and a large variety of
specialty concession items. The Company's theaters are characterized by custom
interiors and decor designed to enhance the movie-going experience. In addition,
the Company provides party and special event facilities for community residents
and regularly participates in community fundraising and charity functions to
maintain patron loyalty.
The Company's executive offices are located at 7 Waverly Place, Madison,
New Jersey 07940 and its telephone number is (201) 377-4646.
RECENT DEVELOPMENTS
On June 30, 1997, Clearview reacquired warrants to purchase 196,250 shares
of Common Stock (the 'Provident Warrants') from The Provident Bank
('Provident'), the Company's senior lender, for $1.0 million (or $ per
share), plus the right to receive up to an additional $300,000 (or $ per
share) under certain circumstances. The Provident Warrants were issued to
Provident in 1996 in connection with the Company's current financing
arrangements and Provident owns no additional securities of the Company. See
'Business--Recent Developments' and 'Certain Transactions.'
On July , 1997, Clearview entered into an agreement with United Artists
Theater Circuit, Inc. ('United Artists') to acquire three theaters and the
underlying real estate and the leaseholds of two additional theaters (the 'UA
Theaters') for an aggregate purchase price of $8.65 million. These five UA
Theaters have a total of 14 screens and are located in Wayne, New Jersey and
Bronxville, Larchmont, Mamaroneck and New City, New York. See 'Business--Recent
Developments.'
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered hereby............... _________ shares
Common Stock to be outstanding after the
Offering................................ _________ shares(1)
Use of proceeds........................... $600,000 will be used to repay certain subordinated indebtedness; the
remaining $_____ million (based on an estimated offering price of
$___ per share) will be used to pay a substantial portion of the
purchase price for the UA Theaters, except under certain
circumstances. See 'Use of Proceeds.'
Proposed ASE symbol....................... __________
</TABLE>
- ------------------
(1) Excludes the shares of Common Stock reserved for issuance (a) upon
conversion of the outstanding shares of Class A Convertible Preferred Stock,
$.01 par value (the 'Class A Preferred Stock'), of the Company, (b) upon
exercise of the A/B Warrants (as defined below), the Underwriter Warrants
and the Class A Warrants (as defined below), and (c) under the 1997
Incentive Plan (as defined below). See 'The Concurrent Transactions,'
'Management and Directors--1997 Incentive Plan,' 'Certain Transactions,'
'Description of Capital Stock' and 'Underwriting.'
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data should be read in
conjunction with the consolidated financial statements, including the notes
thereto, and 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' appearing elsewhere in this Prospectus. The summary
consolidated financial data presented below are derived from the Company's
consolidated financial statements audited by Wiss & Company, LLP, independent
accountants, whose report covering the Company's financial statements as of
December 31, 1996 and for each of the two years in the period ended December 31,
1996 and the related financial statements are included elsewhere in this
Prospectus, and the Company's unaudited consolidated financial statements as of
March 31, 1997 and for the periods ended March 31, 1996 and 1997, which are
included elsewhere herein, and from the Company's audited consolidated balance
sheet as of December 31, 1995, which is not included herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
------------------------ ------------------------
1995 1996(1) 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Theater Revenues:
Box office............................................. $1,759,131 $6,195,399 $ 781,073 $2,712,210
Concession sales....................................... 554,671 1,861,155 226,425 743,986
Other.................................................. 31,895 141,420 5,505 49,739
---------- ---------- ---------- ----------
2,345,697 8,197,974 1,013,003 3,505,935
---------- ---------- ---------- ----------
Operating Expenses:
Film rental and booking fees........................... 823,791 3,022,377 345,411 1,196,126
Cost of concession sales............................... 99,261 279,549 33,097 108,605
Other theater operating expenses....................... 1,078,370 3,297,825 463,024 1,226,799
General and administrative expenses.................... 375,262 589,822 95,525 191,806
Depreciation and amortization.......................... 99,632 684,007 35,874 425,011
---------- ---------- ---------- ----------
2,476,316 7,873,580 972,931 3,148,347
---------- ---------- ---------- ----------
Operating Income (Loss).................................. (130,619) 324,394 40,072 357,588
Interest Expense......................................... 85,697 591,722 54,466 358,966
---------- ---------- ---------- ----------
Net loss................................................. $ (216,316) $ (267,328) $ (14,394) $ (1,378)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net loss per share $ (.06) $ (.07) $ -- $ --
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
OTHER OPERATING DATA:
EBITDA(3).............................................. (30,987) 1,008,401 75,946 782,599
Theater level cash flow(4)............................. 344,275 1,598,223 171,471 974,405
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31, 1997
------------------------- --------------------------
1995(2) 1996 HISTORICAL ADJUSTED(6)
---------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash.................................................. $ 176,203 $ 751,345 $ 1,431,782
Total assets.......................................... 2,029,151 16,601,544 17,459,415
Total long-term debt, including current maturities.... 948,262 10,252,129 10,663,311
Total liabilities..................................... 1,563,532 11,478,631 12,337,880
Redeemable preferred and common stock, at redemption
price(5)............................................ 112,832 2,525,599 3,174,008
Stockholders' equity.................................. 352,787 2,597,314 1,947,527
</TABLE>
5
<PAGE>
NOTES TO SUMMARY CONSOLIDATED FINANCIAL DATA
(1) See Note 7 of the Notes to Consolidated Financial Statements of Clearview
Cinema Group, Inc. and Subsidiaries with respect to its acquisitions.
(2) This information is derived from the Company's audited consolidated balance
sheet as of December 31, 1995, which is not included herein.
(3) Earnings before interest, taxes, depreciation and amortization ('EBITDA') is
a financial measure commonly used in the Company's industry, but should not
be construed as an alternative to operating income (as determined in
accordance with generally accepted accounting principles), as an indicator
of the Company's operating performance or as an alternative to cash flows
from operating activities (as determined in accordance with generally
accepted accounting principles) as a measure of the Company's liquidity.
(4) Theater level cash flow represents total revenues less film rental and
booking costs, cost of concessions and theater operating expenses. Theater
level cash flow is presented because the Company believes that certain
investors find it useful in analyzing companies in the motion picture
exhibition industry.
(5) Represents the aggregate redemption price (determined pursuant to formulas
set forth in the applicable agreements) for the outstanding shares of Class
A Preferred Stock and for 312,500 shares of Common Stock based on the
respective contractual rights of the holder of the Class A Preferred Stock
and a certain holder of Common Stock to sell their shares to the Company.
See 'Certain Transactions.'
(6) Gives effect to the consummation of the Offering, the application of the net
proceeds from the Offering as described under 'Use of Proceeds,' and the
Concurrent Transactions. See 'The Concurrent Transactions' and 'Use of
Proceeds.'
6
<PAGE>
RISK FACTORS
The shares of Common Stock offered hereby involve a high degree of risk.
The following risk factors should be considered carefully in addition to the
other information in this Prospectus before purchasing any of the shares of
Common Stock offered hereby. This Prospectus contains certain forward-looking
statements that involve risks and uncertainties, such as statements concerning
the Company's plans, objectives, expectations and intentions. The cautionary
statements made in this Prospectus should be read as being applicable to all
related forward-looking statements wherever they appear in this Prospectus. The
Company's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include those
discussed below, as well as those discussed elsewhere herein.
LIMITED OPERATING HISTORY AND RESULTS
The Company was incorporated on November 23, 1994 and acquired the
leaseholds of four theaters with eight screens on December 21, 1994. The
Company, which was organized as a vehicle to acquire theaters, has acquired the
leaseholds of 10 additional theaters and two theaters and their underlying real
estate since its initial acquisition and had 60 screens in operation as of
December 31, 1996. Therefore, the Company has a limited combined operating
history. In addition, the Company had net losses of $216,316 and $267,328 in
1995 and 1996, respectively, and net losses of $14,394 and $1,378 in the first
quarters of 1996 and 1997, respectively. There can be no assurances that the
Company will have net income in the future. See 'Prospectus Summary--Summary
Consolidated Financial Data,' 'Pro Forma Consolidated Financial Data' and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
EXPANSION PLANS
The Company's strategy is to acquire or develop theaters at a rapid pace
and add screens in its theaters where appropriate. The Company's ability to
implement its expansion plans will depend on a number of factors, including
obtaining any required financing, the selection and availability of suitable
locations, the hiring and training of sufficiently skilled management and other
personnel and other factors, such as general economic and demographic
conditions, that are beyond the control of the Company. There can be no
assurances that the Company will be able to execute this strategy at its
contemplated pace or to operate profitably the theaters that it acquires the
right to operate or develops. See 'Business--Business Plan.'
NEED FOR ADDITIONAL FINANCING
The Company has entered into an agreement with United Artists to acquire
three theaters and the underlying real estate and the leaseholds of two
additional theaters for an aggregate purchase price of $8.65 million. The
Company plans to fund this acquisition by using approximately $ million from
the proceeds of the Offering (based on an estimated offering price of $ per
share) and by obtaining the remainder from the Company's cash reserves. See 'Use
of Proceeds' and 'Business--Recent Developments.' In addition, Clearview has
entered into a lease for a 10-screen theater that is being constructed and a
lease for a four-screen theater that is currently being operated by another
exhibitor. See 'Business--Acquisitions.' The Company is obligated to spend
approximately $100,000 of its own funds in connection with the renovation of
that four-screen theater. Such funds should be available from the Company's cash
reserves.
At the present time, the Company is negotiating to obtain a new credit
facility (the 'New Facility') from Provident. See 'Business--Recent
Developments.' The Company plans to use part of the New Facility to finance its
future expansion. There can be no assurances that Clearview and Provident will
be able to agree on the terms of the New Facility.
In accordance with the Company's strategic plan, Clearview intends to
continue to acquire theaters and it is pursuing the acquisition of additional
locations. Any such transactions may require the Company to secure new financing
in addition to the financing referred to above. That new financing may be in the
form of additional equity, subordinated debt or bank financing. There can be no
assurances that the Company will be able to obtain such additional financing at
the time it is needed or that such additional financing, if available, will be
on terms that are acceptable to the Company. Furthermore, any such financing may
result in dilution of the interests of the then-current stockholders of the
Company.
The Company's estimates of its cash requirements to develop or acquire and
renovate theaters and service any debts incurred in connection with such
development or acquisition and renovation are and will be based upon certain
assumptions, including assumptions as to the Company's revenues and cash flow
after any such acquisition or development. There can be no assurances that such
assumptions will prove to be accurate or that unforeseen costs will not be
incurred.
7
<PAGE>
DEPENDENCE ON ABILITY TO SECURE FAVORABLE LOCATIONS AND LEASE TERMS
The success of the Company's strategic plan is dependent on its ability to
acquire or develop theaters in favorable locations with advantageous lease
terms. There can be no assurances that the Company will be able to locate or
develop theaters in appropriate communities or, if it does locate any such
theaters, lease them on favorable terms. The failure of the Company to acquire
or develop theaters in favorable locations or to lease theaters on advantageous
terms could result in an inability to fully implement its strategic plan. See
'Business--Business Plan.'
POSSIBLE RISKS IN THEATER DEVELOPMENT AND RENOVATION
In connection with the development of new theaters, the Company either will
enter into an agreement with the property owner/developer who will oversee
almost all of the construction and completion of a theater or will oversee that
construction and completion itself. When acquiring the right to operate an
existing theater (either by entering into a lease or purchasing the theater and
its underlying real estate), the Company generally will take responsibility for
the completion of any proposed renovations or the construction of new screens.
As a result, the Company will, at times, be subject to some of the risks
inherent in the development of real estate, many of which are beyond its
control. Such risks include changes in Federal, state or local laws or
regulations, strikes, adverse weather, material shortages and increases in the
costs of labor and materials. There can be no assurances that any such theater
development or renovation will be successfully completed in a timely manner.
DEPENDENCE ON PRESIDENT AND CHIEF EXECUTIVE OFFICER
The Company's success depends upon the continued contributions of A. Dale
Mayo, its Chairman of the Board, President and Chief Executive Officer. The loss
or unavailability of Mr. Mayo to the Company for an extended period of time
could have a material adverse effect upon the Company's business and
development. To the extent that the services of Mr. Mayo are unavailable to the
Company for any reason, the Company will be required to hire other personnel to
manage and operate the Company. There can be no assurances that the Company will
be able to locate qualified personnel to manage and operate the Company or to
employ them on acceptable terms. The Company has entered into an employment
agreement with Mr. Mayo that provides for his employment through 2003. In
addition, the Company maintains 'key man' life insurance in the amount of $10
million on the life of Mr. Mayo. It is contemplated that, after the Offering,
the face value of such insurance will be reduced to $4 million. See 'Management
and Directors.'
GEOGRAPHIC CONCENTRATION
Each of the Company's current theaters are located in the New York/New
Jersey metropolitan area and the theaters that it has agreed to or is
contemplating acquiring or developing are primarily in the same area. As a
result, negative economic or demographic changes in that area would have a
disproportionately large and adverse effect on the success of the Company's
operations when compared to the effect of any such changes on its competitors
that have a wider geographic distribution of theaters.
CONFLICTS OF INTEREST
Brett E. Marks, who is a director of and a consultant to Clearview, is also
a licensed real estate salesman with First New York Realty Co. Inc. ('First New
York'), a New York City-based realty brokerage firm. Mr. Marks' main consulting
work for Clearview relates to the identification of theaters that could be
suitable acquisition candidates for the Company, because of their locations and
the demographics of their communities, and of communities that could be
appropriate for the development of new theaters, given their demographics and
the available locations in such communities, and the performance of due
diligence with respect thereto. If the Company decides to acquire any such
theater, First New York may be entitled to a commission from the lessor of that
theater and Mr. Marks would then be entitled to a commission from First New
York. In connection with Clearview's proposed acquisition of the leasehold of a
theater in Brooklyn, New York, First New York and Mr. Marks will be entitled to
fees of approximately $66,000 and $22,000, respectively, if the transaction is
consummated. In addition, in connection with the proposed acquisition of the UA
Theaters, First New York and Mr. Marks will be entitled to fees of approximately
$259,500 and $86,500, respectively, if the transaction is consummated. Mr. Marks
and First New York have entered into agreements with Clearview with respect to
their future business relationships. See 'Certain Transactions.'
8
<PAGE>
COMPETITION
The motion picture exhibition industry is highly competitive, particularly
with respect to licensing films, attracting patrons and finding theater sites.
There are a number of well-established theater circuits with substantially
greater financial and other resources than the Company that operate in the New
York/New Jersey metropolitan area and in the Middle Atlantic and New England
states generally. Some of these theater operators have been in existence
significantly longer than the Company and may be better established in the
Company's markets and better capitalized. Moreover, alternative delivery systems
are available for the presentation of filmed entertainment, including cable
television, direct satellite delivery, video cassettes and pay-per-view
television. An expansion of such delivery systems could have a material adverse
effect on movie theater attendance in general and upon the Company's business
and results of operations in particular. See 'Business--Industry Overview' and
'--Competition.'
DEPENDENCE ON FILMS
The ability of the Company to operate successfully depends upon a number of
factors, the most important of which is the availability of marketable motion
pictures. Poor relationships with film distributors, a disruption in the
production of motion pictures or poor commercial success for motion pictures
could have a material adverse effect upon the Company. See 'Business--Film
Licensing.'
DEPENDENCE ON CONCESSION SALES
Concession sales accounted for approximately 24% and 23% of the Company's
revenues in the years ended December 31, 1995 and 1996, respectively; and,
therefore, the financial success of the Company depends, to a significant
extent, on its ability to successfully generate concession sales in the future.
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
Generally, the most marketable motion pictures have been released during
the summer and the Thanksgiving through year-end holiday season, so that the
motion picture exhibition industry's revenues have been seasonal. The emergence
of hit films during other periods can alter this traditional trend. In any case,
the timing of releases is likely to have a substantial effect on the Company's
results of operations and the results for any one quarter are not necessarily
indicative of results of operations for subsequent quarters. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Quarterly Results and Seasonality.'
SIGNIFICANT LEVERAGE
The Company has incurred significant debt obligations in the past year in
connection with financing its acquisitions. As of March 31, 1997, Clearview's
total long-term debt, including current maturities thereof, was approximately
$10.7 million, its total assets were approximately $17.5 million and its
stockholders' equity was approximately $2.0 million (deducting approximately
$3.2 million in redeemable equity that, after the Offering, will no longer be
redeemable). During the three months ended March 31, 1997, the Company's
interest expense equaled $358,966 and its operating income plus depreciation and
amortization ('EBITDA') was $782,599. As noted above, the Company expects to
continue incurring debt to finance future acquisitions. The Company's ability to
meet its debt service obligations, including the repayment of principal as it
comes due, will be dependent upon its future performance, which, in turn, will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond the
Company's control. If the Company fails to generate sufficient cash flow to
repay its debt, the Company may be required to refinance all or a portion of its
existing debt or to obtain additional financing. There can be no assurances that
such refinancing would be possible or that any additional financing could be
obtained.
CERTAIN ANTI-TAKEOVER EFFECTS
Certain provisions of Clearview's proposed Amended and Restated Certificate
of Incorporation (the 'New Certificate') and proposed Amended and Restated
By-laws (the 'New By-laws') could have the effect of delaying, deferring or
preventing a change of control of Clearview not approved by Clearview's Board of
Directors (the 'Board of Directors') or could affect the prices that investors
might be willing to pay in the future for shares of Common Stock. These
provisions include (i) the division of the directors to be elected by the
holders of the Common Stock into three classes; (ii) the right of the holders of
the Class A Preferred Stock to elect directors separately as a class; (iii) the
requirement that any action to be taken by the holders of the Common Stock be
taken at a meeting of the stockholders of the Company; (iv) advance notice
requirements for stockholder proposals and nominations; (v) a requirement that
the holders of two-thirds of the Common Stock and the Class A Preferred Stock,
voting together, approve the amendment, alteration or repeal of certain
9
<PAGE>
provisions of the New Certificate and the New By-laws; and (vi) the authority of
the Board of Directors to fix the rights and preferences of, and issue,
additional shares of the preferred stock, $.01 par value (the 'Preferred
Stock'), of the Company without further action by the holders of the Common
Stock. See 'The Concurrent Transactions' and 'Description of Capital Stock.'
OWNERSHIP AND SIGNIFICANT INFLUENCE OF PRINCIPAL STOCKHOLDERS
After consummation of the Offering, the current stockholders of the Company
will collectively own approximately __% of the outstanding Common Stock
(approximately __% if the over-allotment option is exercised in full) and
approximately __% of the Common Stock assuming the conversion of all outstanding
shares of Class A Preferred Stock (approximately __% if the over-allotment
option is exercised in full). As a result of this ownership, if the current
stockholders or some combination thereof act in concert, they will have the
ability to exert significant influence over the policies and affairs of the
Company and corporate actions requiring stockholder approval, including the
composition of the Board of Directors. This concentration of ownership could
have the effect of delaying, deferring or preventing a change of control of the
Company, including a business combination with an unaffiliated party, and could
also affect the prices that investors might be willing to pay in the future for
shares of Common Stock. See 'Management and Directors,' 'Principal Stockholders'
and 'Description of Capital Stock.'
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of shares of Common Stock in the Offering will experience
immediate and substantial dilution of $ in net tangible book value per
share with respect to their shares of Common Stock. In addition, the Company
intends to grant options to certain officers of and a consultant to the Company
to purchase up to 155,000 shares of Common Stock at the initial public offering
price. See 'Dilution,' 'Management and Directors--1997 Incentive Plan' and
'Principal Stockholders.'
ABSENCE OF PRIOR PUBLIC MARKET
Prior to the Offering, there has been no public market for the Common Stock
and there can be no assurances that an active trading market for the Common
Stock will develop or be sustained. The initial public offering price for the
shares of Common Stock offered hereby will be determined by negotiation between
the Company and the Representative and may not be indicative of the market price
of the Common Stock after consummation of the Offering. See 'Underwriting.'
There can be no assurances that the market price of the Common Stock will not
decline below the initial public offering price. After consummation of the
Offering, the market price of the Common Stock will be subject to fluctuations
in response to a variety of factors, including variations in the Company's
operating results, changes in competitors' circumstances and general economic,
political and market conditions.
SHARES ELIGIBLE FOR FUTURE SALE
A total of 1,301,250 shares of Common Stock held by the Company's existing
stockholders will be eligible for sale pursuant to exemptions from registration
under the Securities Act of 1933, as amended (the 'Securities Act'), including
exemptions provided by Rule 144 under the Securities Act, following consummation
of the Offering. The Company has also granted registration rights to its
existing stockholders who will beneficially own 2,971,250 shares of Common Stock
following consummation of the Offering. In addition, the Company intends to
register 500,000 shares of Common Stock reserved for issuance pursuant to the
1997 Incentive Plan. See 'Management and Directors--1997 Incentive Plan.' On the
other hand, the Company and its existing stockholders have agreed that they will
not, directly or indirectly, without the prior written consent of the
Representative, for a period of one year after the date of this Prospectus,
sell, offer to sell, solicit an offer to buy, contract to sell, pledge, grant
any option for the sale of, or otherwise transfer or dispose of, or cause the
transfer or disposition of, any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for any shares of Common Stock,
or exercise any registration rights with respect to any shares of Common Stock
or any securities convertible into or exchangeable or exercisable for any shares
of Common Stock. No prediction can be made as to the effect, if any, that future
sales of any of these shares of Common Stock or the availability of these shares
for future sale will have on the market price of the Common Stock prevailing
from time to time. Any sales of a substantial number of these shares of Common
Stock in the public market following the Offering, or the perception that such
sales could occur, could adversely affect the market price of the Common Stock
and could impair the Company's ability to raise capital through an offering of
its equity securities. See 'Shares Eligible for Future Sale' and 'Underwriting.'
10
<PAGE>
THE CONCURRENT TRANSACTIONS
As of the date of this Prospectus: (i) the Company's outstanding capital
stock consists of 1,388 shares of Common Stock and 779 shares of Class A
Preferred Stock (which are convertible into 779 shares of Common Stock); (ii)
the holders of $1.1 million aggregate principal amount of 8% subordinated
promissory notes of the Company (the '8% Notes') hold 200 warrants to purchase
up to 200 shares of Common Stock (the 'A/B Warrants'); and (iii) the holder of
the outstanding shares of Class A Preferred Stock hold warrants to purchase 471
shares of Class A Preferred Stock (the 'Class A Warrants').
Immediately prior to the consummation of the Offering, the New Certificate
will become effective (the 'Certificate Amendment'). Among the amendments to the
Company's current Certificate of Incorporation contained in the New Certificate
are changes to the terms of the Class A Preferred Stock that include the
following: The holders of the Class A Preferred Stock will only vote separately
as a class in connection with (i) any change in the New Certificate that would
adversely affect their rights, (ii) any proposed issuance of shares of Preferred
Stock that would rank senior or pari passu to the Class A Preferred Stock with
respect to dividends or upon liquidation or dissolution, (iii) and the election
of no more than two directors of the Company. The holders of the shares of Class
A Preferred Stock will otherwise vote with the holders of the shares of Common
Stock on all matters other than the election of directors while they have the
right to elect at least one director separately. The right of the holders of the
Class A Preferred Stock to vote separately as a class with respect to the
issuance of shares of Preferred Stock that rank pari passu to the Class A
Preferred Stock with respect to dividends or upon liquidation or dissolution
will terminate once the outstanding shares of Class A Preferred Stock represent
less than % of the combined voting power of the outstanding capital stock of
Clearview. Likewise, the right of the holders of the Class A Preferred Stock to
vote separately for the election of directors will terminate once the
outstanding shares of Class A Preferred Stock represent less than % of the
combined voting power of the outstanding capital stock of Clearview. In those
circumstances, those holders would be entitled to vote with the holders of
shares of Common Stock for the election of directors. See 'Description of
Capital Stock.'
Immediately prior to the consummation of the Offering, a 1250 to 1 stock
split on the Common Stock will become effective and will be accomplished by a
dividend of 1249 shares of Common Stock on each then-outstanding share of Common
Stock (the 'Stock Split').
The holders of the A/B Warrants have agreed that they will exchange 162.5
A/B Warrants for 137,500 shares of Common Stock after the Stock Split (the
'Warrant Exchange') and amend two sets of the 8% Notes, with an aggregate
principal amount of $500,000, so that they mature on October 31, 1997. At the
same time, CMNY Capital II, L.P. ('CMNY'), a holder of 75 A/B Warrants, will
terminate its right to sell, under certain circumstances, the shares of Common
Stock it owns as of the date of this Prospectus to the Company, and the Company
will terminate its right to purchase, under certain circumstances, those same
shares (the 'Put/Call Termination').
The holder of the outstanding shares of Class A Preferred Stock, MidMark
Capital, L.P. ('MidMark'), has agreed to terminate, immediately prior to the
consummation of the Offering, its right to sell, under certain circumstances, to
the Company those shares of Class A Preferred Stock or the shares of Common
Stock into which those shares had been converted (the 'Put Termination'). In
consideration for the termination of this right, the Company will issue to
MidMark 125,000 shares of Common Stock. In connection with the Put Termination,
the Class A Warrants will be amended to make them exercisable for up to 588,750
shares of Common Stock (the 'Warrant Amendment').
The Certificate Amendment, the Stock Split, the Warrant Exchange, the
Put/Call Termination, the Put Termination and the Warrant Amendment are
sometimes referred to in this Prospectus as the 'Concurrent Transactions.' The
consummation of the Offering and the Concurrent Transactions are conditioned
upon one another.
11
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby, after deducting the underwriting discounts and estimated
offering expenses payable by the Company, are estimated to be approximately $
million (assuming an initial public offering price of $ per share). The
Company intends to use the net proceeds as follows:
<TABLE>
<S> <C>
Repayment of a senior subordinated promissory note (the 'Senior Note')......................... $ 600,000
Acquire the UA Theaters........................................................................
</TABLE>
Pending such uses, net proceeds will be invested in short-term, interest
bearing, investment grade securities.
The Senior Note that will be repaid with a portion of the net proceeds from
the Offering was issued by the Company as part of the consideration for three
theaters acquired by the Company in December, 1996. The principal amount of the
Senior Note is $600,000 and its interest rate until December 13, 1997 is 12% per
annum and increases 2% each year thereafter to a maximum of 18%. The Senior Note
will mature at the earlier to occur of December 13, 2001 or the consummation of
an initial public offering of debt or equity securities by the Company.
As set forth above, the Company intends to use a substantial portion of the
net proceeds from the Offering for the acquisition of the UA Theaters. If, for
any reason, that acquisition is not consummated within 90 days after the
consummation of the Offering, the Company will be obligated under its current
credit agreement with Provident (the 'Current Facility') to use those net
proceeds to prepay, in part, the outstanding term loans under that agreement.
See 'Business--Recent Developments.'
DIVIDEND POLICY
Clearview currently intends to retain its future earnings, if any, to
support its operations and to fund the development and growth of its business
and does not anticipate paying any cash dividends on its Common Stock or Class A
Preferred Stock in the foreseeable future. Clearview paid $30,000 in dividends
in the aggregate in 1995 and $10,000 in dividends in the aggregate in 1996. The
decision whether to pay future dividends will be in the discretion of the Board
of Directors and will depend upon the Company's earnings, financial condition,
capital requirements, level of indebtedness and other factors that the Board of
Directors deems relevant, subject to any contractual restrictions with respect
to the payment of dividends. The Current Facility does and it is likely that the
New Facility will prohibit the payment of any dividends. Payment of dividends on
the Common Stock is also subject to the requirement that the Company pay
dividends on the Class A Preferred Stock at the same time that dividends are
paid on the Common Stock in a per share amount equal to the product of the
dividend payable per share of Common Stock and the number of shares of Common
Stock into which a share of Class A Preferred Stock is then convertible.
12
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997 and as adjusted to reflect the sale of the shares of
Common Stock offered hereby (at an assumed initial public offering price of
$ per share), the application of the net proceeds therefrom as described
under 'Use of Proceeds' and the Concurrent Transactions. See 'The Concurrent
Transactions' and 'Use of Proceeds.' This table should be read in conjunction
with the consolidated financial statements, including the notes thereto, and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
LONG-TERM DEBT (INCLUDING CURRENT PORTIONS):
Notes payable--bank and other................................................ $ 8,982,581
Subordinated debt--related parties........................................... 1,080,730
Subordinated debt--other..................................................... 600,000
-----------
Total...................................................................... $10,663,311
-----------
REDEEMABLE PREFERRED STOCK AT REDEMPTION PRICE.................................... 2,780,703
-----------
REDEEMABLE COMMON STOCK AT REDEMPTION PRICE....................................... 393,305
-----------
STOCKHOLDERS' EQUITY:
Undesignated Preferred Stock:
Authorized 2,498,697 shares, issued and outstanding--none.................. --
Class A Preferred Stock, par value $.01, authorized 1,303 shares; outstanding
779 shares.................................................................. 8
Common Stock, par value $.01, authorized 10,000,000 shares; outstanding
1,735,000 shares............................................................ 17,350
Additional paid-in capital................................................... 5,248,931
Accumulated deficit.......................................................... (603,897)
Less: Redemption price of redeemable stock................................... (3,174,008)
-----------
Total stockholders' equity................................................. 1,947,527
-----------
Total capitalization....................................................... $15,784,846
-----------
-----------
</TABLE>
13
<PAGE>
DILUTION
The net tangible book value of the Company as of March 31, 1997 was $
, or $ per share of Common Stock. Net tangible book value per share
represents the amount of the Company's tangible assets less total liabilities
divided by the number of shares of Common Stock outstanding. After giving effect
to the sale of the shares of Common Stock offered hereby (at an assumed initial
public offering price of $ per share) and after deduction of the
underwriting discounts and estimated offering expenses payable by the Company,
the Company's net tangible book value as of March 31, 1997 would have been
$ , or $ per share of Common Stock. This represents an immediate
increase in net tangible book value of $ per share for existing
stockholders and an immediate dilution of $ per share to the purchasers of
shares of Common Stock in the Offering. The following table illustrates the per
share dilution to investors in the Offering:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share(1)............................................. $
------
Net tangible book value per share before the Offering.......................................... $
------
Increase per share attributable to the sale of shares of Common Stock in the Offering(2).......
------
Net tangible book value per share after the Offering(2)........................................ $
------
Dilution per share to new investors(3)(4)...................................................... $
------
------
</TABLE>
- ------------------
(1) Before deduction of underwriting discounts and estimated offering expenses
payable by the Company.
(2) After deduction of underwriting discounts and estimated offering expenses
payable by the Company.
(3) Dilution is determined by subtracting net tangible book value per share
after the Offering from the assumed initial public offering price per share.
(4) This calculation does not include the 46,875 shares of Common Stock issuable
upon exercise of the 37.5 A/B Warrants that will be outstanding after the
Concurrent Transactions or the up to 588,750 shares of Common Stock issuable
upon exercise of the Class A Warrants after the Concurrent Transactions.
The following table summarizes as of March 31, 1997 the differences between
the existing stockholders and new investors with respect to the number of shares
of Common Stock purchased from the Company, the total consideration paid and the
average price per share paid by existing stockholders and by new investors at an
assumed initial public offering price of $ per share, before deduction of
the underwriting discounts and estimated offering expenses payable by the
Company:
<TABLE>
<CAPTION>
TOTAL CONSIDERATION
SHARES PURCHASED ----------------------------------
----------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders....................................... (1) % $ (2) % $
------ ------- ------ ------- ------
New investors............................................... % % $
------ ------- ------ ------- ------
Total.................................................. 100.0% $ 100.0%
------ ------
</TABLE>
- ------------------
(1) Excludes the shares of Common Stock into which the shares of Class A
Preferred Stock are convertible.
(2) Total consideration from existing stockholders excludes the consideration
paid for the outstanding shares of Class A Preferred Stock and represents
the amounts paid in cash for shares of Common Stock and the valuation of
certain assets exchanged for shares of Common Stock. See 'Certain
Transactions.'
14
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL DATA
Set forth below are two sets of pro forma financial information and related
notes. The first set presents pro forma financial information for the
acquisitions that Clearview consummated in 1996 (the 'Acquisitions'). This set
includes an unaudited pro forma consolidated statement of operations of the
Company for the year ended December 31, 1996 giving effect to the Acquisitions
(see Note 1 of Notes to Pro Forma Consolidated Statement of Operations) as if
they had occurred on January 1, 1996.
The second set presents pro forma financial information for the proposed
acquisition of the UA Theaters from United Artists (the 'Probable Acquisition').
See 'Business--Recent Developments.' This set includes (i) an unaudited pro
forma consolidated balance sheet of the Company giving effect to the Probable
Acquisition as if it had occurred on March 31, 1997, (ii) an unaudited pro forma
consolidated statement of operations of the Company for the three months ended
March 31, 1997 giving effect to the Probable Acquisition as if it had occurred
on January 1, 1997, and (iii) an unaudited pro forma consolidated statement of
operations of the Company for the year ended December 31, 1996 giving effect to
the Probable Acquisition as if it had occurred on January 1, 1996.
This pro forma financial information is based on the estimates and
assumptions set forth herein and in the notes thereto and has been prepared
utilizing the consolidated and combined financial statements and notes thereto
appearing elsewhere in this Prospectus.
The following unaudited pro forma financial information is presented for
informational purposes only and is not necessarily indicative of (i) the results
of operations of the Company that actually would have occurred had the
Acquisitions or the Probable Acquisition been consummated on the dates indicated
or (ii) the results of operations of the Company that may occur or be obtained
in the future. The following information is qualified in its entirety by
reference to and should be read in conjunction with 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and the Company's
consolidated financial statements, including the notes thereto, and the other
historical financial information appearing elsewhere in this Prospectus.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NELSON
HISTORICAL FERMAN MAGIC LESSER ADJUSTMENTS PRO FORMA
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Theater Revenues:
Box office...................... $ 6,195,399 $1,515,839 $1,743,015 $ 802,043 $10,256,296
Concession sales................ 1,861,155 114,922 521,737 110,882 2,608,696
Other........................... 141,420 23,308 149,986 2,775 317,489
----------- ---------- ---------- ----------- -----------
8,197,974 1,654,069 2,414,738 915,700 13,182,481
----------- ---------- ---------- ----------- -----------
Operating expenses:
Film rental and booking fees.... 3,022,377 564,142 809,353 456,563 -- 4,852,435
Cost of concession sales........ 279,549 -- 85,090 -- -- 364,639
Theater operating expenses...... 3,297,825 622,997 865,639 530,704 -- 5,317,165
General and administrative...... 589,822 282,220 169,032 12,800 -- 1,053,874
Depreciation and amortization... 684,007 67,317 168,704 11,634 664,801 1,596,463
----------- ---------- ---------- ----------- ----------- -----------
7,873,580 1,536,676 2,097,818 1,011,701 664,801 13,184,576
----------- ---------- ---------- ----------- ----------- -----------
Operating income (loss) 324,394 117,393 316,920 (96,001) (664,801) (2,095)
Interest.......................... 591,722 35,965 45,408 -- 667,751 1,340,846
----------- ---------- ---------- ----------- ----------- -----------
Net Income (loss) $ (267,328) $ 81,428 $ 271,512 $ (96,001) $(1,332,552) $(1,342,941)
----------- ---------- ---------- ----------- ----------- -----------
</TABLE>
15
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Note 1 Theater Acquisitions:
During 1996, the Company acquired the right to operate nine theaters
located in New Jersey and New York. The acquisitions were accounted for under
the purchase method of accounting. Under the purchase method of accounting, the
results of operations of an acquired entity are included in the Company's
historical consolidated financial statements from its acquisition date. Under
that method of accounting, acquired assets are included therein based on an
allocation of their aggregate purchase price as of their dates of acquisition.
The financial information for each of the acquired entities reflects the results
of operations of that entity for the period from January 1, 1996 to their
respective dates of acquisition. The acquisitions are described as follows:
Nelson Ferman Acquisition
The Company purchased three New Jersey theaters and one New York theater in
May, 1996 from four entities that were affiliates of Nelson Ferman, Inc. The
aggregate acquisition cost of $7.0 million was paid by means of $5.0 million in
cash and the issuance of shares of Common Stock.
Lesser Acquisition
The Company purchased two New York theaters in July, 1996 from Bedford
Cinema Corp. and Kisco Cinema, Inc. The acquisition cost of $1,499,000 was paid
in cash.
Magic Cinemas Acquisition
The Company purchased three New Jersey theaters in December, 1996 from
Magic Cinemas, LLC. The purchase price of $5.0 million was paid with a $4.4
million secured note and the Senior Note.
Note 2 Presentation and Pro forma Adjustments:
The unaudited pro forma consolidated statement of operations for the year
ended December 31, 1996 presented above has been prepared as if the acquisitions
described in Note 1 had been consummated as of January 1, 1996.
Pro forma adjustments have been made for the following:
(a) Depreciation expense based on the increase in the book value
of the acquired theaters' property and equipment, which resulted from the
recording of the three purchases and the depreciation of the leaseholds
over the terms of the respective leases.
(b) Amortization expense adjustments reflect, over a 15-year
period, the amortization of the excess of cost over the fair value of
assets acquired.
(c) Interest expense adjustments reflect interests costs on debt
obligations incurred as if the related acquisition financing had occurred
on January 1, 1996.
16
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
FOR THE PROBABLE ACQUISITION
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
UA
HISTORICAL THEATERS ADJUSTMENTS PRO FORMA
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash........................................................ $ 1,431,782 $ 65,666 $(1,100,487)(B)(C)(D) $ 396,961
Inventories................................................. 47,624 22,930 -- 70,554
Other current assets........................................ 161,007 43,799 (43,799)(B) 161,007
----------- ---------- ----------- -----------
Total current assets...................................... 1,640,413 132,395 (1,144,286) 628,522
----------- ---------- ----------- -----------
Property and equipment, less accumulated depreciation......... 12,284,621 4,827,793 3,647,277 (C) 20,759,691
----------- ---------- ----------- -----------
Other assets:
Intangible assets, less accumulated amortization............ 2,673,355 -- 500,000 (C) 3,173,355
Due from parent and affiliate............................... -- 3,247,520 (3,247,520)(B) --
Project acquisition costs................................... 414,602 -- -- 414,602
Escrow deposits............................................. 294,529 -- -- 294,529
Deferred offering costs..................................... 65,179 -- (65,179)(D) --
Security deposits and other assets.......................... 86,716 2,000 -- 88,716
----------- ---------- ----------- -----------
3,534,381 3,249,520 (2,812,699) 3,971,202
----------- ---------- ----------- -----------
$17,459,415 $8,209,708 $ (309,708) $25,359,415
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt........................ $ 966,267 $ -- $ 132,062 (E) $ 1,098,329
Current maturities of subordinated notes payable, related
parties................................................... 484,260 -- 7,465 (F) 491,725
Accounts payable and accrued expenses....................... 1,674,569 932,282 (932,282)(B) 1,674,569
----------- ---------- ----------- -----------
Total current liabilities................................. 3,125,096 932,282 (792,755) 3,264,623
----------- ---------- ----------- -----------
Long-term liabilities:
Long-term debt, less current maturities..................... 8,016,314 -- 1,512,283 (E) 9,528,597
Subordinated notes payable, less current maturities:
Related parties........................................... 596,470 -- 2,000 (F) 598,470
Other..................................................... 600,000 -- (600,000 )(D) --
----------- ---------- ----------- -----------
9,212,784 -- 914,283 10,127,067
----------- ---------- ----------- -----------
Redeemable Preferred Stock at redemption price................ 2,780,703 -- (2,780,703 )(F) --
----------- ---------- ----------- -----------
Redeemable Common Stock at redemption price................... 393,305 -- (393,305 )(F) --
----------- ---------- ----------- -----------
Stockholders' equity:
Undesignated Preferred Stock:
Authorized 2,498,697 shares, issued and
outstanding--none....................................... -- -- -- --
Class A Preferred Stock, par value $.01, authorized 1,303
shares; outstanding 779 shares............................ 8 -- -- 8
Common Stock, par value $.01, authorized 10,000,000 shares;
outstanding 1,735,000 shares (historical) and 3,247,500
shares (pro forma)........................................ 17,350 -- 15,125 (C)(F) 32,475
Additional paid-in capital.................................. 5,708,074 -- 7,184,875 (C)(E)(F) 12,892,949
Accumulated deficit......................................... (603,897) 7,277,426 (7,631,236 )(B)(E)(F) (957,707)
Less: Redemption price of redeemable stock.................. (3,174,008) -- 3,174,008 (F) --
----------- ---------- ----------- -----------
Total stockholders' equity................................ 1,947,527 7,277,426 2,742,772 11,967,725
----------- ---------- ----------- -----------
$17,459,415 $8,209,708 $ (309,708 ) $25,359,415
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
</TABLE>
See the Notes to Pro Forma Financial Statements Reflecting the Probable
Acquisition.
17
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PROBABLE ACQUISITION
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
UA
HISTORICAL THEATERS ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Theater Revenues:
Box office.......................................... $2,712,210 $ 961,187 $ -- $3,673,397
Concession.......................................... 743,986 278,823 -- 1,022,809
Other............................................... 49,739 39,238 -- 88,977
---------- ---------- ----------- ----------
3,505,935 1,279,248 -- 4,785,183
---------- ---------- ----------- ----------
Operating Expenses:
Film rental and booking fees........................ 1,196,126 482,578 -- 1,678,704
Cost of concession sales............................ 108,605 43,294 -- 151,899
Theater operating expenses.......................... 1,226,799 470,704 -- 1,697,503
General and administrative expenses................. 191,806 19,890 -- 211,696
Depreciation and amortization....................... 425,011 49,142 49,000(C) 523,153
---------- ---------- ----------- ----------
3,148,347 1,065,608 49,000 4,262,955
---------- ---------- ----------- ----------
Operating Income (Loss)............................... 357,588 213,640 (49,000) 522,228
Interest Expense...................................... 358,966 112,304 (75,304)(D)(E) 395,966
---------- ---------- ----------- ----------
Net Income (Loss)..................................... $ (1,378) $ 101,336 $ 26,304 $ 126,262
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
See the Notes to Pro Forma Financial Statements Reflecting the Probable
Acquisition.
18
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PROBABLE ACQUISITION
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA COMPANY,
NELSON FERMAN, UA
MAGIC AND LESSER THEATERS ADJUSTMENTS PRO FORMA
------------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Theater Revenues:
Box office................................ $ 10,256,296 $3,578,346 $ -- $13,834,642
Concession................................ 2,608,696 1,048,292 -- 3,656,988
Other..................................... 317,489 174,334 -- 491,823
------------------ ---------- ----------- -----------
13,182,481 4,800,972 -- 17,983,453
------------------ ---------- ----------- -----------
Operating Expenses:
Film rental and booking fees.............. 4,852,435 1,603,729 -- 6,456,164
Cost of concession sales.................. 364,639 176,031 -- 540,670
Theater operating expenses................ 5,317,165 1,828,092 -- 7,145,257
General and administrative expenses....... 1,053,874 71,366 -- 1,125,240
Depreciation and amortization............. 1,596,463 216,154 178,000(C) 1,990,617
------------------ ---------- ----------- -----------
13,184,576 3,895,372 178,000 17,257,948
------------------ ---------- ----------- -----------
Operating Income (Loss)..................... (2,095) 905,600 (178,000) 725,505
------------------ ---------- ----------- -----------
Other Expenses:
Impairment of long-lived assets........... -- 224,908 (224,908)(G) --
Interest.................................. 1,340,846 444,534 (334,534)(D)(E) 1,450,846
------------------ ---------- ----------- -----------
Total other expenses................... 1,340,846 669,442 (559,442) 1,450,846
------------------ ---------- ----------- -----------
Net Income (Loss)........................... $ (1,342,941) $ 236,158 $ 381,442 $ (725,341)
------------------ ---------- ----------- -----------
------------------ ---------- ----------- -----------
</TABLE>
See the Notes to Pro Forma Financial Statements Reflecting the Probable
Acquisition.
19
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS REFLECTING THE PROBABLE ACQUISITION
NOTE A-- As set forth in 'Business--Recent Developments' elsewhere in this
Prospectus, the Company intends to acquire the right to operate five
theaters from United Artists for $8.65 million in cash, funded through
the use of proceeds from the Offering. Although there is no assurance
that such transaction will be consummated, management of the Company
believes that this acquisition is likely to occur. Accordingly,
historical financial statements for the UA Theaters and these pro forma
financial statements have been presented in this Prospectus.
NOTE B-- The acquisition, as contemplated, would be accounted for under the
purchase method of accounting. Under the purchase method of accounting,
the results of operations of an acquired entity are included in the
Company's historical consolidated financial statements from its
acquisition date. Under that method of accounting, the acquired assets
are included based on an allocation of their aggregate purchase price as
of their date of acquisition.
The unaudited pro forma balance sheet at March 31, 1997 presented herein
has been prepared as if the Probable Acquisition had been consummated on
March 31, 1997. The unaudited pro forma statements of operations for the
three months ended March 31, 1997 and the year ended December 31, 1996
have been prepared as if the Probable Acquisition had been consummated
as of January 1, 1996.
The Company will be acquiring the theater operations, certain real
estate or leasehold interests and the theater equipment of the five
theater locations. Cash, other current assets, amount due from the
parent or affiliates of the theaters and accounts payable and accrued
expenses of the acquired theaters will remain the property of, or
obligation of, the seller.
The net equity of the theaters to be acquired has been eliminated in
combination. The charge for the impairment of long-lived assets has been
eliminated based on the pro forma assumption that the Probable
Acquisition had occurred on January 1, 1996. Interest expense incurred
by the UA Theaters has also been eliminated in combination.
NOTE C-- The purchase price of the Probable Acquisition is $8.65 million, plus
estimated costs of acquisition of approximately $350,000. An estimated
allocation of the purchase price is as follows:
<TABLE>
<S> <C> <C>
Land......................................................................... $2,005,000
Buildings and improvements................................................... 3,758,000
Leaseholds and improvements.................................................. 1,712,070
Equipment.................................................................... 1,000,000
Goodwill..................................................................... 500,000
Inventory and other assets................................................... 24,930
----------
$9,000,000
Less: Carrying value of assets in historical financial statements--
Property and equipment..................................................... 4,827,793
Inventory and other assets................................................. 24,930
----------
4,852,723
----------
Adjustment to the carrying value of assets acquired.......................... $4,147,277
----------
----------
The adjustment to the carrying value of assets acquired is recorded as
follows:
Increase in property and equipment......................................... $3,647,277
Increase in goodwill....................................................... 500,000
----------
4,147,277
----------
----------
</TABLE>
NOTE D-- The Company intends to finance the Probable Acquisition through the use
of proceeds from the Offering. For purposes of this pro forma financial
information, it has been assumed that gross proceeds from the Offering
would be $10 million, based on the sale of 1,250,000 shares of the
Common Stock at $8.00 per share. Expenses of the Offering are estimated
to be $1.5 milion. The assumed net proceeds to the Company of $8.5
million will be used to repay the Senior Note ($600,000), with the
remaining $7,900,000 used to acquire the UA Theaters. See 'Use of
Proceeds'. Clearview will use approximately $750,000 of its available
cash resources to complete this transaction.
NOTE E-- In June 1997, the Company reacquired the Provident Warrants to purchase
196,250 shares of Common Stock which were previously issued to
Provident for $1.0 million, plus up to another $300,000, under certain
circumstances. See 'Certain Transactions.' The pro forma balance sheet
gives effect to the entire $1.3 million
20
<PAGE>
purchase price as a capital transaction. This purchase price was
financed by a term loan of $1.3 million from Provident. Pro forma
effect has also been given to interest expense based on the terms of
the $1.3 million loan. Unamortized debt discount originally recorded in
connection with the issuance of the Provident Warrants was charged to
retained earnings in the pro forma balance sheet at March 31, 1997.
NOTE F-- The pro forma balance sheet and statements of operations also give
effect to the Concurrent Transactions as if they had occurred on
January 1, 1996.
The exchange of 162.5 A/B Warrants for 137,500 shares of Common Stock
has been included as a capital transaction in the March 31, 1997 pro
forma balance sheet by recording the par value of the shares issued
with a corresponding charge to additional paid-in capital. The related
portion of the unamortized debt discount has been written off and
charged to retained earnings in the March 31, 1997 pro forma Balance
Sheet, as such unamortized debt discount will be charged to expense
upon consummation of the Concurrent Transactions. Pro forma effect is
also given to the termination of a certain stockholder's redemption
right.
Pro forma effect has also been given to the issuance of 125,000 shares
of Common Stock to the holder of the Class A Preferred Stock in
consideration of its termination of another redemption right.
See 'Concurrent Transactions.'
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's results of operations and
financial condition should be read in conjunction with 'Prospectus
Summary--Summary Consolidated Financial Data' and the Company's consolidated
financial statements, including the notes thereto, appearing elsewhere in this
Prospectus.
OVERVIEW
The Company has achieved significant growth in theaters and screens since
its formation in December, 1994. Since inception, the Company has acquired the
right to operate 13 theaters with 55 screens, has added six screens to two
existing theaters, and is developing a new theater with 10 screens. The Company
expects that its future revenue growth will be derived primarily from the
operation of additional theaters, the development of new theaters and adding
screens to existing theaters. The Company has had no theater closings since
inception.
The Company's revenues are predominantly generated from box office
receipts, concession sales and on-screen advertising. Direct theater costs
include film rental and booking fees and the cost of concessions. Other theater
operating expenses consist primarily of theater labor and related fringe benefit
costs and occupancy costs (including rent and/or real estate taxes, utilities,
repairs and maintenance, cleaning costs and supplies). Film rental costs are
directly related to the popularity of a film and the length of time since that
film's release. Film rental costs generally decline as a percentage of box
office receipts the longer a film has been showing. As certain concession items,
such as fountain drinks and popcorn, are purchased in bulk and not prepackaged
for individual servings, the Company has significant gross profit margins on
those items.
The Company believes that any future increases in minimum wage requirements
or negotiated increases in union wages will not significantly increase its
theater operating expenses as a percentage of total revenues.
General and administrative expenses consist primarily of corporate overhead
costs, such as management and office salaries and related fringe benefit costs,
professional fees, insurance costs and general office expenses. The Company
believes that its current internal controls and management information system
will allow the Company to expand its number of screens without incurring
proportionate increases in general and administrative expenses.
In September, 1995, the Company acquired the right to operate three
theaters with 11 screens in Nassau County, New York in an all-cash transaction.
In May, 1996, the Company purchased the leaseholds of four theaters with 19
screens in New York and New Jersey for a combination of stock and cash. In July,
1996, Clearview purchased the leaseholds of two theaters with seven screens in
Westchester County, New York for cash. In December, 1996, Clearview acquired two
more theaters with the underlying real estate and the leasehold of another
theater with a total of 13 screens in Bergen County, New Jersey for cash. See
'Business--Acquisition History.'
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Total Revenues. Total revenues for the first quarter of 1997 increased
246.1% to $3,505,935 from $1,013,003 in the comparable 1996 period. The increase
in revenues resulted primarily from a 259.5% increase in attendance to 539,748
attendees from 150,121 attendees in the first quarters of 1997 and 1996,
respectively. This increase is attributable primarily to the Company's operation
of nine additional theaters during 1996. For the three months ended March 31,
1997 and 1996, the Company had a total of 60 screens and 21 screens in
operation, respectively. Average ticket prices for the Company's theaters
remained relatively constant during the first quarters of 1997 and 1996. Total
concession sales increased 228.6% for the first quarter of 1997 to $743,986 from
$226,425 in the comparable 1996 period.
Film Rental and Booking Fees. Film rental and booking fees increased
246.3% to $1,196,126 in the first quarter of 1997 from $345,411 in the first
quarter of 1996. As a percentage of box office receipts, film rental and booking
fees stayed relatively constant at 44.1% and 44.2% for the three months ended
March 31, 1997 and 1996, respectively.
22
<PAGE>
Cost of Concession Sales. Cost of concession sales for the first quarter
of 1997 increased 228.1% to $108,605 from $33,097 for the first quarter of 1996.
As a percentage of concession revenues, the cost of concession sales remained
constant at 14.6% for the quarters ended March 31, 1997 and March 31, 1996.
Theater Operating Expenses. Theater operating expenses increased 165.0% to
$1,226,799 in the first quarter of 1997 from $463,024 during the first quarter
of 1996. This increase is attributable solely to the nine theaters acquired in
1996, which acquisitions occurred after the first quarter of 1996. As a
percentage of total revenues, theater operating expenses decreased to 35.0% in
the first quarter of 1997 from 45.7% in the first quarter of 1996. The decrease,
as a percentage of total revenues, is primarily due to the Company's efficient
management of its variable costs, such as labor and utilities, and the lower
average per-theater fixed costs, such as occupancy costs, taxes and common area
maintenance costs, of the theaters acquired in 1996 as compared to the Company's
other theaters.
General and Administrative Expenses. General and administrative expenses
increased by 100.8% to $191,806 in the first quarter of 1997 from $95,525 in the
first quarter of 1996. This increase is due principally to the hiring of
additional personnel and increases in salaries resulting from the transition
from seven locations and 21 screens at the beginning of 1996 to 16 locations and
60 screens at the beginning of 1997. As a percentage of total revenues, however,
general and administrative expenses decreased to 5.5% for the first quarter of
1977 from 9.4% for the first quarter of 1996. This decrease is primarily due to
the Company's internal controls and management information system which allowed
the Company to expand its number of screens without incurring proportionate
increases in general and administrative expenses.
Depreciation and Amortization. Depreciation and amortization expense in
the first quarter of 1997 increased 1084.7% to $425,011 from $35,874 in the
first quarter of 1996. This increase was primarily a result of the acquisition
of the nine theaters acquired in 1996, which significantly increased the
Company's depreciable and amortizable assets.
Operating Income. Operating income for the first quarter of 1997 increased
792.4% to $357,588 from $40,072 for the comparable 1996 period. As a percentage
of total revenues, operating income increased to 10.2% from 4.0% for the first
quarters of 1997 and 1996, respectively. Operating income increased as a
percentage of total revenues due primarily to the relatively fixed nature of
certain of the Company's other theater operating expenses, principally occupancy
costs, certain improvements in operating efficiency, the lower average occupancy
costs per-theater for the theaters acquired in 1996 as compared to the Company's
other theaters, and an increase in general and administrative expenses which was
less, on a percentage basis, than the growth in total revenues.
Interest Expense. Interest expense increased 559.1% in the first quarter
of 1997 to $358,966 from $54,466 in the first quarter of 1996. This increase was
attributable to the significant increase in the Company's total debt during
1996, which was primarily incurred in connection with the Company's acquisitions
in that year.
Net Loss. Net loss in the first quarter of 1997 decreased to $1,378 from a
net loss of $14,394 in the first quarter of 1996. This decrease in net loss is
attributable primarily to the additional screens operated by the Company in 1997
as a result of its acquisitions in 1996, improved theater level operating
margins and an increase in general and administrative expenses which was less,
on a percentage basis, than the growth in total revenues.
YEARS ENDED DECEMBER 31, 1996 AND 1995
Total Revenues. Total revenues for 1996 increased 249.5% to $8,197,974
from $2,345,697 in 1995. This increase in total revenues was primarily a result
of an increase in attendance of 249.2% to 1,101,251 attendees from 315,406
attendees in 1996 and 1995, respectively. The increase in attendance occurred
principally because of the addition of 39 screens during 1996 and the first full
year of operation of the 13 screens added during 1995. Revenues from those
theaters operated by the Company throughout 1995 and 1996 increased 15.67% from
$1,541,843 to $1,783,260. This increase in same theater revenues was
attributable primarily to an overall increase in attendance at two theaters and
the conversion from a single-screen to a triplex at another theater location.
Average ticket prices for the Company's theaters remained relatively constant
during 1995 and 1996. Total concession sales increased 235.5% in 1996 to
$1,861,155 from $554,671 in 1995 principally for the same reasons.
23
<PAGE>
Film Rental and Booking Fees. Film rental and booking fees increased
266.9% for 1996 to $3,022,377 from $823,791 for 1995. As a percentage of box
office receipts, film rental and booking fees increased to 48.8% from 46.8% for
the years ended December 31, 1996 and 1995, respectively. This increase is
primarily attributable to the Company's acquisition of the six theaters acquired
in May and July of 1996 (film rental and booking fees as a percentage of box
office receipts are generally higher during the summer months than most of the
rest of the year).
Cost of Concession Sales. Cost of concession sales for 1996 increased
181.6% to $279,549 from $99,261 for 1995. As a percentage of concession
revenues, the cost of concession sales decreased to 15.0% from 17.9% for the
years ended December 31, 1996 and 1995, respectively. The Company's gross margin
on concession revenues improved in 1996 when compared to 1995 as a result of
obtaining volume discounts.
Theater Operating Expenses. Theater operating expenses increased 205.8% to
$3,297,825 for 1996 from $1,078,370 for 1995 primarily due to the Company's
acquisitions during 1996. As a percentage of total revenues, theater operating
expenses decreased to 40.2% from 46.0% for the years ended December 31, 1996 and
1995, respectively. This reduction was due to the Company's careful management
of its theater labor and fringe benefit costs and the lower average per-theater
fixed costs, such as occupancy costs, taxes and common area maintenance costs,
of the theaters acquired in 1996 as compared to the Company's other theaters. As
a percentage of box office receipts, theater labor and fringe benefit costs
decreased to 20.9% from 23.2% for the years ended December 31, 1996 and 1995,
respectively.
General and Administrative Expenses. General and administrative expenses
for 1996 increased 57.2% to $589,822 from $375,262 for 1995. This increase is
due principally to the hiring of additional personnel and increases in salaries
resulting from the transition from seven locations and 21 screens at the
beginning of 1996 to 16 locations and 60 screens by the end of 1996. As a
percentage of total revenues, however, general and administrative expenses
decreased to 7.2% from 16.0% for the years ended December 31, 1996 and 1995,
respectively. This decrease is primarily due to the Company's internal controls
and management information system which allowed the Company to expand its number
of screens without incurring proportionate increases in general and
administrative expenses.
Depreciation and Amortization. Depreciation and amortization expense for
1996 increased 586.5% to $684,007 from $99,632 for 1995. This increase was
primarily a result of the acquisition of the nine theaters acquired in 1996,
which significantly increased the Company's depreciable and amortizable assets.
Operating Income. Operating income for 1996 increased to $324,394 from an
operating loss of $130,619 for 1995. This increase in the Company's operating
income was primarily due to certain improvements in operating efficiency, the
lower average occupancy costs per-theater of the theaters acquired in 1996 as
compared to the Company's other theaters, and an increase in general and
administrative expenses which was less, on a percentage basis, than the growth
in total revenues.
Interest Expense. Interest expense for 1996 increased 590.5% to $591,722
from $85,697 for 1995. The increase was primarily attributable to the
significant increase in the Company's total debt during 1996, which was
primarily incurred to finance the Company's acquisitions during that year.
Net Loss. Net loss for 1996 increased 23.6% to $267,328 from a net loss of
$216,316 for 1995. The increase in net loss was primarily due to the Company's
acquisitions during 1996 that resulted in a significant increase in depreciation
and amortization expense, which is a non-cash expense, and a large increase in
interest expense, which is primarily a cash expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company derives substantially all of its revenues from box office
receipts and concession sales and, therefore, benefits from the fact that it
has, in effect, no accounts receivable and minimal inventory requirements. On
the other hand, the Company's most significant operating expenses, film rental
and booking fees, are typically paid to distributors 30 to 45 days following the
receipt of the applicable cash ticket payments. In addition, most of the rest of
the Company's operating expenses, such as theater payroll and theater rent, are
paid bi-weekly or monthly, respectively. The periods between the receipt of cash
from operations and use of that cash to pay the related expenses provides
certain operating capital to the Company.
24
<PAGE>
Since the Company is in an industry which is capital intensive,
substantially all of its assets are non-current. The Company's primary current
asset is cash, while inventories are relatively insignificant throughout the
fiscal year. The Company had negative working capital of $1,484,683 at March 31,
1997, $1,710,825 at December 31, 1996 and $366,841 at December 31, 1995,
respectively. The increase in negative working capital is primarily attributable
to the increase in the current portion of long-term debt.
The Company has financed its day-to-day operations principally from the
cash flow generated by its operating activities. Such cash flow totaled
$1,154,409 in 1996, as compared to $118,820 in 1995. The difference between the
Company's net income and its cash flow from operating activities are principally
due to the Company's depreciation and amortization expenses of $684,007 in 1996
and $99,632 in 1995, which are non-cash expenses, and an increase in accounts
payable. The Company's cash flow generated by its operating activities was a
negative $77,092 and a positive $780,455 in the first quarters of 1996 and 1997,
respectively. The difference between the Company's net income and its cash flow
from operating activities in the first quarters of 1997 and 1996 is primarily
due to the Company's depreciation and amortization expenses of $425,011 and
$35,874 in the first quarters of 1997 and 1996, respectively, which are non-cash
expenses, and an increase in accounts payable.
The Company's capital requirements in 1995 and 1996 arose principally in
connection with theater acquisitions, the renovation of existing theaters, the
development of new theaters and the addition of screens to an existing theater.
Such capital expenditures were financed principally with bank borrowings,
seller-provided financing, equity financing and internally-generated cash.
Capital expenditures, exclusive of theater acquisitions, totaled approximately
$852,000 in 1996 and $631,000 in 1995. During 1996, the Company funded its
capital expenditures, including theater acquisitions, through approximately $4.3
million of bank borrowings, $5.0 million of seller-provided financing, $2.5
million of gross proceeds from the sale of shares of Class A Preferred Stock and
$2.0 million from the issuance of shares of Common Stock to the seller of a
theater. In January, 1997, the Company retired $4.4 million of that
seller-provided financing with additional bank borrowings and $100,000 in cash.
The Company seeks to lease theaters rather than to purchase theaters with
their underlying real estate or to purchase properties for development as
theaters due to the significantly lower capital requirements for leasing and
because it believes that its potential return on investment when leasing a
theater is higher than its potential return on investment if it owns that
theater and the underlying real estate.
The Company anticipates that its capital expenditures, including for
acquisitions, in 1997 will be approximately $25.0 million. Of this amount,
$500,000 was used to add four screens to the Company's theater in Chester, New
Jersey, $900,000 was used to convert a part of a building into a theater in
Summit, New Jersey, $100,000 will be used to renovate a theater in Brooklyn, New
York that the Company has signed a lease to operate, but has not yet taken
possession of, and $8.65 million will be used to purchase the UA Theaters. The
Company has not entered into agreements with any other parties with respect to
the renovation, development or acquisition of any other theaters. The Company
believes that its capital needs for the acquisition, renovation and development
of additional theaters for the next 12 to 18 months will be met by means of the
New Facility, from internally-generated cash flow and from the net proceeds from
the Offering.
QUARTERLY RESULTS AND SEASONALITY
Historically, the most successful films have been released during the
summer and Thanksgiving through year-end holiday season. Consequently, motion
picture exhibitors generally have had proportionately higher revenues during
such periods, although the seasonality of motion picture exhibition revenue has
become less pronounced in recent years as studios have begun to release major
motion pictures more evenly throughout the year. The Company believes that its
regular exhibition of art films has contributed to a moderation in the
seasonality of its own revenues as compared to the seasonality of the revenues
of some of its competitors. Nevertheless, the Company's revenues and income in
any particular quarter will be substantially the result of the commercial
success of the particular films being exhibited during such quarter.
25
<PAGE>
EFFECT OF INFLATION
Inflation has not had a significant impact on the Company's operations to
date.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ('SFAS') No. 121, 'Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of', requires that certain long-lived assets be reviewed for possible impairment
and written down to fair value, if appropriate. The Company adopted this
pronouncement in 1996 and adoption did not have a material effect on the
Company's financial statements.
SFAS No. 123, 'Accounting for Stock-Based Compensation', requires companies
to measure employee stock compensation plans based on a fair value method of
accounting. However, the statement allows the alternative of continued use of
Accounting Principles Board Opinion No. 25, 'Accounting for Stock Issued to
Employees', with pro forma disclosure of net income and earnings per share
determined as if the fair value based method had been applied in measuring
compensation cost. The Company adopted the pro forma disclosure provisions of
this new pronouncement in 1996 and such adoption did not have a material effect
on the Company's financial statements.
SFAS No. 128, 'Earnings per Share', was issued in February 1997, and is
effective for financial statements issued for periods ending after December 15,
1997. SFAS 128 requires that earnings per share be presented more in line with
earnings per share standards of other countries. The Company expects to adopt
SFAS 128 for the year ending December 31, 1997. The Company has not yet
determined the effect of adoption of this new pronouncement on its financial
statements.
26
<PAGE>
BUSINESS
GENERAL
Clearview is a regional motion picture exhibitor that operates in-town
multiplex theaters primarily located in affluent suburban communities in the New
York/New Jersey metropolitan area. The Company's theaters offer a mix of
first-run commercial, art and family-oriented films designed to appeal primarily
to sophisticated moviegoers and families with younger children. Since its
inception in December, 1994, the Company has grown from four to 17 theaters and
from eight to 69 screens. From 1995 to 1996, the Company's revenues have
increased from $2.3 million to $8.2 million and theater level operating income
has increased from $344,000 to $1.6 million.
The Company's strategy is to grow primarily through the acquisition or
development of in-town multiplex theaters. The Company seeks locations in the
retail centers of suburban communities that have the characteristics of the
Company's target audiences. The Company intends to build upon its concentration
of existing theaters and to expand into retail centers in suitable communities
throughout the Middle Atlantic and New England states. The Company also will be
opportunistic when evaluating theaters and locations in communities that meet
many, but not necessarily all, of the Company's criteria. The Company intends to
grow by operating additional theaters, adding screens to its existing theaters
and developing theaters in locations not previously used for motion picture
exhibition.
The theatrical exhibition industry is fragmented. Although the fifty
largest theater circuits operated approximately 76% of the screens in use at May
1, 1995, there are a substantial number of small independent exhibitors with
four or fewer theaters. The large circuits that are growing most rapidly appear
to have begun to concentrate on building new mega-multiplex theaters, rather
than buying established theaters. The Company believes that, in the Middle
Atlantic and New England states, in-town theaters serve audiences that prefer
these theaters to the larger out-of-town multiplex theaters. The Company also
believes that in-town theaters can offer movie selections more attuned to their
local markets, better customer service and more convenience when compared to
out-of-town multiplexes. Primarily for these reasons, the Company thinks that
operating in-town theaters can be attractive, and the Company believes that
there are a large number of potential acquisition candidates. The Company seeks
to identify targets that will complement its existing theaters or provide entry
into new markets.
The Company seeks to improve the operating margins of its theaters by
controlling theater level costs through centralized management, by increased
efficiencies in concession purchasing and through film selection that is
sensitive to the local community's tastes. The Company intends to acquire or
develop clusters of theaters that will increase its flexibility by permitting
the sharing of theater managers and skilled and hourly wage personnel. Clearview
believes that its management information system and internal controls gives its
senior management timely access to comprehensive operating data, allows the
local theater managers to focus on day-to-day operations, and enables the
Company to expand its theater operations without incurring proportionate
increases in general and administrative expenses.
The Company seeks theaters that will be the sole or dominant exhibitors in
their geographic film licensing zones. A geographic film licensing zone or 'film
zone' is a geographic area, recognized by film distributors, that generally has
a three to five mile radius in metropolitan and suburban markets, in which a
film is licensed for exhibition at only one theater in that film zone.
Currently, 75% of the Company's theaters are the sole exhibitors in their film
zones.
Clearview's theaters are community-oriented and place a strong emphasis on
patron satisfaction and customer service. The theaters provide clean and
comfortable environments at convenient in-town locations and offer opportune
movie show times, courtesy telephones for local calls and a large variety of
specialty concession items. The Company's theaters are characterized by custom
interiors and decor designed to enhance the movie-going experience. In addition,
the Company provides party and special event facilities for community residents
and regularly participates in community fundraising and charity functions to
maintain patron loyalty.
27
<PAGE>
INDUSTRY OVERVIEW
Theatrical exhibition is the primary initial distribution channel for new
motion pictures. The Company believes that the success of most films produced in
the United States during their domestic theatrical exhibition remains the best
indicator of their overall success. Other forms of delivery systems, such as
cable television, direct satellite delivery, video cassettes and pay-per-view
television, do not appear to have adversely affected the level of theater
admissions in the United States or the number of films released for theatrical
exhibition in the United States. This is evidenced by the relatively stable
theater attendance numbers and the increase in the number of films released for
theatrical exhibition in recent years. The Company believes that the
proliferation of distribution channels and the growth of the overseas markets
for films produced in the United States have, in fact, raised the potential
revenues that successful U.S. films can generate. The Company also believes,
therefore, that the film industry will continue to increase the number of films
available for theatrical exhibition which will permit the U.S.-based theater
industry to continue to expand.
The National Association of Theater Owners estimates that there were
approximately 360 theatrical motion picture exhibitors in the United States at
the end of 1995. Of these, 235 operated four or fewer theaters. In the five-year
period 1991 to 1995, the average ticket price for movies shown by
publicly-traded exhibitors has increased approximately 6%; compared to the U.S.
Consumer Price Index, which has increased by approximately 12%. During the same
period, admission revenues for these exhibitors increased from approximately
$1.37 billion to approximately $2.32 billion.
The multiplex theater was introduced to the moviegoing public in the 1960's
and multiplexing is now considered the industry standard. The advantages of a
multiplex theatrical format include the following: (i) the ability to play a
range of movies to fit the various tastes of the moviegoing public; (ii) the
ability to accommodate the expected size of the audience for a particular movie;
(iii) the ability to run a popular movie for a longer period of time and to
exhibit newer films immediately upon their release; and (iv) the ability to show
a single film in two auditoriums simultaneously, thereby effectively increasing
the viewing capacity for a popular film.
BUSINESS PLAN
GROWTH STRATEGY
The Company intends to acquire or develop primarily in-town, four to eight
screen, multiplex theaters in affluent suburban communities in the New York/New
Jersey metropolitan area in retail centers that are the focus of community life
or are being revitalized. The Company also plans to expand its operations into
other Middle Atlantic and New England states.
o Selectively Acquire Theater Operations
The Company believes that one of its strengths is its ability to
successfully identify available theaters in appropriate locations. A significant
number of theaters in the types of communities in which Clearview would want to
operate a theater are closely-held businesses that often do not have sufficient
capital to expand or renovate or are not managed as efficiently as possible. In
addition, because many of the major movie theater circuits are focused on
acquiring or developing mega-multiplex theaters, the Company believes that it
can offer an attractive 'exit strategy' for small independent operators. The
Company has also identified certain larger motion picture circuits with theaters
that may be suitable for acquisition.
o Add Screens to Existing Theaters
The Company plans to add screens to existing theaters when the Company
believes that this will increase revenues and cash flow. By adding screens, the
Company is able to offer a larger selection of films that can attract more
patrons. Dividing an auditorium into two or more smaller auditoriums, thus, can
create additional revenue with only a marginal increase in expenses.
28
<PAGE>
o Develop New Theaters
The Company believes that it can successfully identify locations in
suitable communities that can be developed into theaters. Opportunities have
been presented by real estate developers who wish to enhance their properties
with the presence of a movie theater, which opportunities often would require
limited direct investment by the Company. In addition, Clearview has been
approached by the governments or community development agencies of towns in the
New York/New Jersey metropolitan area that are interested in revitalizing parts
of their communities and believe that a movie theater could provide impetus to
such redevelopment.
OPERATING STRATEGY
The Company believes that there are several aspects of its operating
strategy that help to differentiate it from other exhibitors.
o Theater Facilities/Environment
Clearview's theaters are located in towns and communities rather than in
shopping malls or on highways. Each of the Company's theaters is located on a
major street in its town and is easily accessible. They are generally surrounded
by upscale stores and restaurants and parking is typically available at each
location. An important aspect of Clearview's operating strategy is to provide a
clean, comfortable and visually appealing environment, which usually includes
silk flower arrangements, chandeliers and a decorative fireplace. When Clearview
acquires a theater it typically refurbishes the existing seats and equips them
with cup holders. In addition, Clearview will generally redecorate the lobby,
upgrade the concession stand and provide a courtesy phone so that patrons can
make local telephone calls. The concession stand at each theater offers
high-margin snack and food items, such as fruit juices, bottled water, ice
cream, cappuccino and Swiss chocolates, as well as soft drinks, popcorn and an
assortment of candy items.
o Film Selection
The Company believes that its mix of films is unique among the larger
motion picture circuits. By concurrently showing first-run commercial, art and
family-oriented films, Clearview seeks to appeal to three main groups: families
with younger children (10 years of age and younger), baby boomers generally and
older moviegoers in affluent suburban communities. Because Clearview regularly
plays art films in most of its theaters throughout the year, it has been able to
establish good relationships with the distributors of those types of films.
These relationships, in turn, have resulted in increased flexibility concerning
the movement of prints, length of run and film rent. Clearview is sensitive to
the tastes of its audience in each community and adjusts its mix of films
accordingly.
o Customer Satisfaction
Customer satisfaction is one of Clearview's highest priorities. Clearview
believes that its theaters are perceived as good neighbors and it encourages
community involvement through regular participation in community fundraising and
charity functions. Most of the Company's theaters accommodate birthday parties
and other special events. Typically, food and beverages are provided by the
theater at such events. As a service-oriented business where cleanliness,
upkeep, safety and interaction with the general public are integral to success,
Clearview believes that it is vital that its employees be dedicated and
energetic. The Company mandates an extensive set of procedures to keep its
theaters clean and to ensure proper film presentation. Adherence to employee
dress and appearance codes and to specific rules of behavior is also required of
all its theater employees.
o Centralized Decision Making
The Company has developed sophisticated internal controls and installed a
computerized management information system of the type used by some of the
largest movie circuits to control and account for all aspects of their
day-to-day operations. Clearview believes that its internal controls and
management information system enable it to expand the number of locations and
screens in its circuit without a proportionate increase in general and
administrative expenses. The Company can closely track and manage theater and
concession revenues. The
29
<PAGE>
management information system has on-line capabilities to collect information
concerning box office receipts, ticketing, concession sales, inventory control
and booking.
o Operating Efficiencies
The Company seeks to acquire or develop theaters in communities that are
close to the communities where the Company's existing theaters are located. This
enables theaters to share skilled personnel and for the appropriate district
manager to coordinate the theaters' activities. In addition, the Company has
begun experimenting with advertising theaters in communities that are close to
each other under a single 'umbrella' to increase awareness and occupancy levels.
Adding screens at theaters that the Company acquires the right to operate will
enable it to offer a diverse selection of films, serve patrons from common
support facilities, and stagger movie showing times to increase attendance and
improve the utilization of seating capacity.
ACQUISITIONS
Since its initial acquisition of the leaseholds of four theaters in
December, 1994, Clearview has completed four transactions. From December 31,
1994 through the date of this Prospectus, the number of Clearview theaters has
increased from four to 17 and the number of Clearview screens has increased from
eight to 69. A summary of Clearview's acquisitions (both completed and pending)
is set forth in the following table.
<TABLE>
<CAPTION>
DATE OF NO. OF MEANS OF
ACQUISITION/OPENING COMMUNITY COUNTY, STATE SCREENS OWNERSHIP
- ----------------------------------------- ------------------- --------------- ------- ---------
<S> <C> <C> <C> <C>
December 21, 1994 Bernardsville Somerset, NJ 3 Lease
December 21, 1994 Chester Morris, NJ 6 Lease
December 21, 1994 Madison Morris, NJ 4 Lease
December 21, 1994 Manasquan Monmouth, NJ 1 Lease
September 8, 1995 Baldwin Nassau, NY 2 Lease
September 8, 1995 New Hyde Park Nassau, NY 2 Lease
September 8, 1995 Port Washington Nassau, NY 7 Lease
May 29, 1996 Clifton Passaic, NJ 6 Lease
May 29, 1996 Emerson Bergen, NJ 4 Lease
May 29, 1996 New City Rockland, NY 6 Lease
May 29, 1996 Washington Township Bergen, NJ 3 Lease
July 18, 1996 Bedford Westchester, NY 2 Lease
July 18, 1996 Mount Kisco Westchester, NY 5 Lease
December 13, 1996 Bergenfield Bergen, NJ 5 Own
December 13, 1996 Closter Bergen, NJ 4 Lease
December 13, 1996 Tenafly Bergen, NJ 4 Own
July 2, 1997 Summit Union, NJ 5 Lease
Pending Brooklyn Kings, NY 4* Lease
Pending Bayonne Hudson, NJ 10** Lease
Pending Bronxville Westchester, NY 3*** Own
Pending Larchmont Westchester, NY 1*** Lease
Pending Mamaroneck Westchester, NY 4*** Own
Pending New City Rockland, NY 2*** Own
Pending Wayne Passaic, NJ 4*** Lease
--
---------
Total 97
</TABLE>
- ------------------
* This is an existing theater being leased from a party who is acquiring it
from its current owner.
** This theater is under construction.
*** Part of the proposed acquisition of the UA Theaters.
30
<PAGE>
RECENT DEVELOPMENTS
On June 30, 1997, Clearview reacquired the Provident Warrants from
Provident for $1.0 million (or $ per share), plus the lesser of $300,000 (or
$ per share) or the product of (x) 186,250 and (y) the difference between
the initial public offering price in the Offering and $ per share. At the
same time, Clearview and Provident amended the Current Facility between them to
provide a term loan to Clearview of $1.3 million, of which $1.0 million was used
to pay the initial purchase price for the Provident Warrants and $300,000 was to
be used to pay some of the costs already incurred or to be incurred by the
Company in connection with the Offering. See 'Certain Transactions.'
On July , 1997, Clearview entered into an agreement with United Artists
to acquire either all the UA Theaters for an aggregate purchase price of $8.65
million or one theater in New City, New York for $1.4 million and paid United
Artists a $75,000 non-refundable deposit. These five UA Theaters have a total of
14 screens and are located in Wayne, New Jersey and Bronxville, Larchmont,
Mamaroneck and New City, New York. Clearview can exercise its right to acquire
the UA theaters at any time until October , 1997. If the Company exercises
that right by that date and does not consummate the acquisition by November ,
1997, it will have the right to delay the closing for an additional 90 days upon
payment of $75,000 to United Artists. If Clearview does not exercise that right
prior to October , 1997, it has no further obligation to United Artists.
FILM LICENSING
The Company licenses films from distributors on a film-by-film and
theater-by-theater basis. Prior to negotiating for film licenses, senior
management of Clearview, working with three outside film buyers, evaluates the
prospects for upcoming films using many factors, including cast, director, plot,
performance of similar films, estimated film rental costs and expected Motion
Picture Association of America rating. Senior management makes the final
determination regarding which films to license. Clearview's success when
licensing particular films depends in large part upon its knowledge of trends
and the historical film preferences of the residents in the markets served by
its theaters, as well as on the availability of motion pictures that the Company
believes will be successful in those markets.
A film is licensed from one of the film distributors owned by the major
film production companies or from one of the independent film distributors that
generally distribute films for smaller production companies for exhibition at
only one theater in a particular film licensing zone. Film distributors
typically recognize geographic film licensing zones with radii of three to five
miles in metropolitan and suburban markets, depending primarily on population
density. Of Clearview's current theaters, 75% are the sole exhibitors in their
film zones, permitting the Company to choose which films it wishes to exhibit at
these theaters.
In film zones where Clearview is the sole exhibitor, a film license is
generally obtained by Clearview after selecting a film from among those offered
and negotiating directly with its distributor. In film zones where there are
multiple exhibitors, a distributor will either require the exhibitors in the
film zone to bid for a film or will allocate films among the exhibitors in the
film zone. When films are licensed under the allocation process, a distributor
will choose which exhibitor is to be offered a movie and then that exhibitor
will have to negotiate film rental terms directly with that distributor. Over
the past several years, distributors have almost exclusively used the allocation
process rather than the bidding process to license their films in the New
York/New Jersey metropolitan area. When films are licensed through a bidding
process, exhibitors compete for licenses based upon the film rental fees to be
paid. The Company currently does not bid for films in any of its film zones,
although it may be required to do so in the future.
31
<PAGE>
Clearview predominantly licenses 'first run' films. If the Company believes
that a film has substantial remaining potential following its first run, it may
license that film for a 'second run.' Second runs enable Clearview to exhibit a
variety of films during periods in which there are few new releases and to offer
its target audience an opportunity to see a film that did not fit into
Clearview's first run schedule. Film distributors establish second run
availability on a national or market-by-market basis after a film's release from
first run theaters and generally permit each theater within a market to exhibit
that film.
Each film license typically specifies that the rental fee is based on
either a gross box office receipts formula or a theater admissions revenue
formula depending upon which one results in the larger amount. In addition, if a
distributor deems a film to be extremely promising, exhibitors may be required
to pay non-refundable guarantees of film rental fees or to make refundable
advance payments of film rental fees or both in order to obtain a license for
that film. Under a gross box office receipts formula, the distributor receives a
specified percentage of box office receipts from the licensed film, with the
percentage declining over the term of the film run. First run commercial and
family-oriented film rental fees typically begin at approximately 70% to 50% of
box office receipts for the licensed film (depending on the type of film and its
distributor) and gradually decline, over a period of four to seven weeks, to as
low as 30% of box office receipts. First run art film rental fees and second run
commercial and family-oriented film rental fees typically begin at 35% of box
office receipts for the licensed film and often decline to 30% of box office
receipts after the first week. Under a theater admissions revenue formula
(commonly known as a '90/10' clause), the distributor receives a specified
percentage (i.e., 90%) of the excess of box office receipts for a given film
over a negotiated allowance for theater overhead expenses. Although generally
not specifically contemplated by the provisions of film licenses, the terms of a
film license often is adjusted or renegotiated subsequent to the initial release
of the film.
The Company's business is dependent upon the availability of marketable
first run commercial, family-oriented and art motion pictures and its
relationships with distributors. Many distributors provide first run movies to
the motion picture exhibition industry; however, distribution has been
historically dominated by a limited number of distributors (Warner Brothers,
Paramount, 20th Century Fox, Universal, Disney/Touchstone, MGM/UA and
Columbia/Tri-Star) which, since 1989, have typically accounted for well over 75%
of domestic admission revenues and virtually every one of the top 25 grossing
films in a given year. No single major distributor dominates the market.
Disruption in the production of motion pictures by the major studios and/or
independent producers, poor commercial success of motion pictures or poor
relationships with distributors could have a material adverse effect upon the
Company's business and results of operations.
The Company licenses films from each of the major distributors and believes
that its relationships with these distributors are good. The Company also
licenses films from independent film distributors on a consistent basis. Because
these distributors often have difficulty licensing films at theaters that are
well-maintained and technologically up-to-date, these distributors have
cooperated with the Company when it seeks to move prints, modify the length of a
film's run or change a film's rent. From year to year, the box office revenues
of the Company attributable to individual distributors will vary depending upon
the films they distribute. Set forth below are the top fifteen distributors for
the Company for 1995 and 1996, ranked by the number of films shown.
DISTRIBUTORS RANKED BY NUMBER OF FILMS
<TABLE>
<CAPTION>
1995 1996
- ---------------------------------------------------------- -------------------------------------------------------
NAME # OF FILMS NAME # OF FILMS
- -------------------------------------------- ----------- ----------------------------------------- -----------
<S> <C> <C> <C>
Buena Vista 23 Buena Vista 31
Warner Brothers 19 Sony 22
20th Century Fox 14 Warner Brothers 21
Miramax 13 Miramax 20
Sony 13 Paramount 17
Paramount 12 20th Century Fox 16
MCA/Universal 11 MCA/Universal 15
MGM/UA 9 MGM/UA 13
New Line 6 New Line 9
Gramercy 4 Gramercy 6
Savoy 4 Fine Line 4
Fine Line 3 Orion 4
Columbia 1 Samuel Goldwyn 4
Samuel Goldwyn 1 Sony Classic 4
Triumph 1 October 3
</TABLE>
32
<PAGE>
One of the three film buyers with whom the Company works is employed by
Cineplex Odeon. Some of the Company's theaters, excluding any theaters for which
that buyer helps acquire films, compete with theaters owned by Cineplex Odeon.
The Company believes that, to date, this arrangement has been beneficial.
COMPETITION
The motion picture exhibition industry is highly competitive, particularly
with respect to licensing films, attracting patrons and acquiring or developing
theaters to operate. The Company's theaters compete with theaters operated by
national and regional circuits and by smaller independent exhibitors. The
Company believes that the principal competitive factors with respect to film
licensing include licensing terms, the seating capacity, location and reputation
of an exhibitor's theaters, the quality of projection and sound equipment at an
exhibitor's theaters and an exhibitor's ability and willingness to promote
films. Competition for patrons is dependent upon factors such as the
availability of popular films, the location of theaters, the comfort and quality
of theaters and ticket prices. The Company believes that it competes favorably
with respect to each of these factors.
There were approximately 360 domestic motion picture exhibitors at the end
of 1995. Motion picture exhibitors vary substantially in size, from small
independent operators of single screen theaters to large national chains of
multi-screen theaters. Many of the Company's larger competitors have been in
existence significantly longer than the Company and may be better established in
the markets where the Company's theaters are or may, in the future, be located.
Certain of the Company's larger competitors have sought to increase the number
of theaters and screens in operation in particular markets. Such increases may
cause those markets or portions thereof to become overscreened, which could
negatively impact the earnings of the Company's theaters, if any, in those
markets.
The Company analyzes the level of competition in a geographic area prior to
and in the early stages of the negotiation of any development or acquisition of
a theater. This analysis is crucial as many of the Company's potential theater
locations are primarily in well-established communities that have previously
experienced the building of large out-of town multiplexes and the addition of
screens to in-town theaters.
The Company's theaters also face competition from a number of other motion
picture delivery systems, such as cable television, direct satellite delivery,
video cassettes and pay-per-view television. The impact of such delivery systems
on the motion picture exhibition industry is difficult to determine precisely,
and there can be no assurances that existing or future delivery systems will not
have an adverse impact on attendance at movie theaters. The Company believes
that the public will continue to recognize the advantages of viewing a movie on
a large screen with superior audio-visual quality as a shared experience in a
public forum and that alternative delivery systems do not provide an experience
comparable to the out-of-home entertainment experience of attending a movie in a
theater. The Company believes that movie theaters also face competition from
other forms of outside-the-home entertainment that compete for the public's
leisure time and disposable income. Clearview believes that movie exhibition is
priced competitively relative to other out-of-home entertainment options, such
as music concerts, sporting events and live theater.
EMPLOYEES
As of April 30, 1997, the Company had 300 employees, of which seven worked
at the corporate headquarters, 38 are theater managers and projectionists and
255 are hourly employees. Clearview employs one primary manager and one or more
relief managers at each of its theaters. In most of its theaters, each shift
(which is five to six hours) has a manager and a projectionist or a single
manager/projectionist. Generally, the theater manager serves as the
projectionist if the applicable theater has four or fewer screens. In the larger
theaters there are separate managers and projectionists. In addition, each of
the Company's four district managers, who is also a manager of a theater in his
district, has certain supervisory obligations. The Company has entered into an
agreement with the International Alliance of Theatrical Stage Employees union
that provides for a skilled projectionist for every shift at a substantial
number of its theaters. The Company believes that its relationship with such
union is good.
REGULATORY ENVIRONMENT
The distribution of motion pictures is in large part regulated by federal
and state antitrust laws and has been the subject of numerous antitrust cases.
The Company has never been a party to any of such cases or the resulting
decrees, but its licensing operations are subject to those decrees. The consent
decrees resulting from such cases
33
<PAGE>
bind certain major motion picture distributors and require the films of those
distributors to be offered and licensed to exhibitors, including the Company, on
a film-by-film and theater-by-theater basis. Consequently, exhibitors, such as
the Company, cannot assure themselves of a supply of films by entering into
long-term arrangements with major distributors, but must negotiate for licenses
on a film-by-film and theater-by-theater basis.
The Federal Americans With Disabilities Act (the 'Disabilities Act')
prohibits discrimination on the basis of disability in public accommodations and
employment. The Disabilities Act became effective as to public accommodations in
January, 1992 and as to employment in July, 1992. The Company will have new
theaters constructed to be accessible to the disabled and believes that it is
otherwise in substantial compliance with all current applicable regulations
relating to accommodations for the disabled. The Company intends to comply with
any future regulations relating to accommodating the needs of the disabled, and
the Company does not currently anticipate that such compliance will require the
Company to expend substantial funds.
The Company's theater operations are also subject to federal, state and
local laws governing such matters as wages and working conditions, health and
sanitation requirements and licensing. A significant portion of the Company's
employees are paid just above the federal minimum wage and, accordingly, already
adopted and further increases in that minimum wage could increase the Company's
labor costs.
In connection with the construction, renovation and operation of its
theaters, the Company and its contractors and landlords are required to obtain
proper building and operating permits and to comply with the other requirements
of local zoning and other laws and regulations. The Company does not anticipate
that compliance with such laws and regulations will have a material adverse
effect on its business.
PROPERTIES
The Company leases or sub-leases all of its theaters other than the two
theaters in Tenafly and Bergenfield, New Jersey, which are owned by the Company.
The three theaters in Nassau County are being operated under agreements under
which the Company pays rent to the landlords and has the right beginning in
September, 1997 to acquire the underlying leaseholds and related theater
equipment upon paying the optionor an amount to be calculated based on the
operating cash flow of the theaters. The option will expire in September, 2000
if not exercised, and the three theaters would then be returned to the optionor.
When a theater is developed for Clearview or Clearview acquires a theater
from a landlord, the term of the relevant lease, including all renewal options,
is usually about forty years. If a lease is acquired from an exhibitor,
typically the lease is assigned to Clearview and still has a substantial term.
Most of Clearview's current leases have terms, including all renewal options, of
at least twenty years and provide for periodic rent increases. Only one theater
that is leased by the Company has a lease that expires in the next five years
and that theater is not material to the Company's business and future
operations. All of Clearview's landlords are unaffiliated third parties. The
aggregate annual minimum lease payments for all the Company's theaters over the
next five years are as follows: 1997: $954,878; 1998: $959,851; 1999: $943,821;
2000: $865,071; and 2001: $777,819.
The Company's corporate office is located in approximately 2,000 square
feet of space in Madison, New Jersey, and is subject to a lease agreement, the
term of which expires on February 28, 1998.
LEGAL PROCEEDINGS
From time to time the Company is involved in routine litigation in the
ordinary course of its business. Currently, the Company does not have pending
any litigation that would have a material adverse effect upon the Company.
34
<PAGE>
MANAGEMENT AND DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
Under the Company's current Certificate of Incorporation and By-laws,
members of the Board of Directors serve one-year terms and are elected by the
holders of the Common Stock and Class A Preferred Stock voting as a single
class. Under the New Certificate and New By-laws, the members of the Board of
Directors will be divided into two groups, one group to be elected by the
holders of the Common Stock (the 'Common Directors') and the other group to be
elected by the holders of the Class A Preferred Stock (the 'Preferred
Directors'). Furthermore, under those organizational documents, the Common
Directors will be divided into three classes, with the classes as nearly equal
in the number of directors as possible, while the Preferred Directors will not.
At each annual meeting of stockholders, Common Directors will be elected for
three-year terms to succeed the Common Directors of the class whose terms are
expiring, while Preferred Directors will be elected for one-year terms. See
'Description of Capital Stock.'
Set forth below is certain information as of June 30, 1997 concerning the
Company's directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------------------
<S> <C> <C>
A. Dale Mayo 55 Chairman of the Board, President, Chief Executive
Officer, Director
Paul Kay 57 Vice President -- Operations
Sueanne Hall Mayo 50 Vice President -- Management Information Systems,
Secretary, Director
Joan M. Romine 45 Treasurer, Chief Financial Officer
Wayne L. Clevenger 53 Director
Robert Davidoff 70 Director
Brett E. Marks 35 Director
Denis Newman 66 Director
</TABLE>
A. DALE MAYO has been the Chairman of the Board, President and Chief
Executive Officer and a director of the Company since its incorporation. He was
the president of Clearview Cinema Corp.(1) from 1987 to 1993. Mr. Mayo is a
member of the Foundation of Motion Picture Pioneers and the Motion Picture Club.
He is married to Sueanne Hall Mayo. Mr. Mayo will be a Class III Common
Director, with a term expiring in 2000, after the Offering.
PAUL KAY has been the Vice President-Operations of the Company since its
incorporation. He was the vice president and general manager of Clearview Cinema
Corp.(1) from 1987 to 1993.
SUEANNE HALL MAYO has been the Vice President-Management Information
Systems and Secretary of the Company since 1997 and a director since its
incorporation. She joined the Company upon its incorporation as its Vice
President-Finance and Treasurer. Ms. Mayo was the treasurer of Clearview Cinema
Corp. from 1987 to 1993.(1) She is married to A. Dale Mayo. Ms. Mayo will be a
Class II Common Director, with a term expiring in 1999, after the Offering.
JOAN M. ROMINE has been the Treasurer and Chief Financial Officer of the
Company since 1997. Prior to joining the Company in 1996 as its Controller, she
was the controller of Magic Cinemas, L.L.C. from 1995 through 1996 and
controller, treasurer and secretary of Hanita Cutting Tools, Inc., a U.S.
subsidiary of an international metal working company, from 1988 through 1995.
- ------------------
(1) Clearview Cinema Corp. was formed in 1987 by Mr. Mayo and two other persons
to operate one theater and it acquired an additional three theaters over the
next several years. It was sold in 1993, after Mr. Mayo and his
then-partners were unable to agree on its future, with Mr. Mayo retaining
the rights to the Clearview name and trademark and one of those theaters.
35
<PAGE>
WAYNE L. CLEVENGER has been a director of the Company since 1996. He has
been a managing director of MidMark Advisors, Inc., the general partner of
MidMark Equity Partners, L.P., since 1994 and a managing director of MidMark
Associates, Inc., the general partner of MidMark Capital, L.P., since 1994. Mr.
Clevenger was a managing director of MidMark Management, Inc., a private
investing management company, from 1989 through 1994. He also serves on the
board of directors of Exide Electronics Group, Inc. Mr. Clevenger will be a
Preferred Director after the Offering.
ROBERT G. DAVIDOFF has been a director of the Company since 1994. He is a
managing director of Carl Marks & Co., Inc. and a general partner of CMNY
Capital II, L.P. Mr. Davidoff also serves on the boards of directors of Marisa
Christina, Inc., Rex Stores, Inc., Hubco Exploration, Inc., SIDARI Corp., Consco
Enterprises, Inc. and Paging Partners Corp. Mr. Davidoff will be a Class II
Common Director, with a term expiring in 1999, after the Offering.
BRETT E. MARKS has been a director of the Company since its incorporation
and was its Vice President-- Development from such date to 1997. He has been an
executive vice president of First New York, a mid-sized realty brokerage firm
specializing in commercial leasing and investment sales, from _______________ to
the present, and the president of Marks Capital Management, a real estate
management company, from 1989 to the present. Mr. Marks will be a Class I Common
Director, with a term expiring in 1998, after the Offering.
DENIS NEWMAN has been a director of the Company since 1996. He has been a
managing director of MidMark Advisors, Inc., the general partner of MidMark
Equity Partners, L.P., since 1994; a managing director of MidMark Associates,
Inc., the general partner of MidMark Capital, L.P., since 1994; and a managing
director of MidMark Management, Inc. since 1989. Mr. Newman also serves on the
board of directors of First Brands Corporation. Mr. Newman will be a Preferred
Director after the Offering.
DIRECTOR COMPENSATION
The Company does not currently compensate its directors or reimburse them,
as such, for their expenses incurred in connection with attendance at Board of
Directors' meetings and has no current plans to change this policy after
consummation of the Offering. See 'Certain Transactions.'
THE BOARD OF DIRECTORS
The Board of Directors currently has six members. The Board of Directors
has no committees at the present time. Prior to the consummation of the
Offering, an audit committee will be created.
EXECUTIVE COMPENSATION
The following table set forth information concerning the compensation of
the Company's Chairman of the Board, President and Chief Executive Officer, who
was the only executive officer of the Company whose annual salary and bonus
exceeded $100,000 during 1996.
SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------
NAME SALARY ($) BONUS ($)
- ------------------------------------ ---------- ---------
<S> <C> <C>
A. Dale Mayo $ 99,167(1) $37,371(1)
</TABLE>
- ------------------
(1) Since May 29, 1996, Mr. Mayo's compensation has been calculated pursuant to
the Employment Agreement (as described below). Prior to that date, Mr.
Mayo's annual compensation was equal to 2% of the first $5,000,000 in gross
revenues of the Company, plus 1% of gross revenues in excess of $5,000,000.
36
<PAGE>
1997 INCENTIVE PLAN
The Clearview Cinema Group, Inc. 1997 Stock Incentive Plan (the '1997
Incentive Plan') is intended to assist the Company in attracting and retaining
highly competent key employees and consultants and to act as an incentive for
such individuals to achieve long-term Company objectives. The 1997 Incentive
Plan will be administered by the Board of Directors.
The 1997 Incentive Plan provides for awards of up to 500,000 shares of
Common Stock. The number of shares available for issuance under the 1997
Incentive Plan will be subject to adjustment for changes in Clearview's capital
structure or upon the occurrence of certain significant corporate events such as
mergers. All key employees and consultants of the Company or any of its
subsidiaries will be eligible to participate, including officers who are also
directors of the Company. No participant can receive awards under the 1997
Incentive Plan in any calendar year in respect of more than 150,000 shares of
Common Stock.
The 1997 Incentive Plan has no fixed expiration date. The Board of
Directors will establish expiration and exercise dates for awards under the 1997
Incentive Plan on an award-by-award basis. However, for the purpose of awarding
incentive stock options ('incentive stock options') under Section 422 of the
Internal Revenue Code of 1986, as amended (the 'Code'), the 1997 Incentive Plan
will expire ten years from its effective date. In addition, certain provisions
of the 1997 Incentive Plan relating to 'performance-based' compensation under
Section 162(m) of the Code will expire five years from that effective date.
The Board of Directors may grant incentive stock options, options that do
not qualify as incentive stock options ('non-qualified stock options') or a
combination thereof. The terms and conditions of any stock options granted,
including the quantity, price, waiting periods and other conditions on exercise,
will be determined by the Board of Directors. The exercise price for each stock
option will be determined by the Board of Directors in its discretion; provided,
that the exercise price per share for each stock option will be at least equal
to the fair market value of one share of Common Stock on the date when that
stock option is granted.
Stock appreciation rights ('SARs') and limited SARs may be granted by the
Board of Directors either separately from or in tandem with non-qualified stock
options or incentive stock options. A SAR entitles its holder to receive, upon
its exercise, a payment equal to (i) the excess of the fair market value of a
share of Common Stock on its exercise date over the SAR exercise price, times
(ii) the number of shares of Common Stock with respect to which the SAR is
exercised. Upon exercise of a SAR, payment will be made in cash, shares of
Common Stock or a combination thereof, as determined by the Board of Directors.
The Board of Directors may also award shares of Common Stock subject to
restrictions specified by the Board of Directors in its discretion ('Restricted
Shares'). Restricted Shares are subject to forfeiture if their holder does not
meet certain conditions such as continued employment over a specified forfeiture
period (the 'Forfeiture Period') and/or the attainment of specified performance
targets over the Forfeiture Period. Any performance targets will be determined
by the Board of Directors and may, but need not, include specified levels of one
or more of operating income, earnings per share, return on investment, return on
stockholders' equity or earnings before interest, taxes, depreciation and
amortization.
The Board of Directors may grant performance awards upon such terms and
conditions as the Board of Directors deems appropriate. A performance award
would entitle its recipient to receive a payment from the Company, the amount of
which is based upon the attainment of predetermined performance targets over a
specified award period. Performance awards may be paid in cash, shares of Common
Stock or a combination thereof, as determined by the Board of Directors. Any
award periods will be established at the discretion of the Board of Directors.
The performance targets will also be determined by the Board of Directors and
may, but need not, include specified levels of one or more of operating income,
earnings per share, return on investment, return on stockholders' equity or
earnings before interest, taxes, depreciation and amortization. When
circumstances occur which cause predetermined performance targets to be an
inappropriate measure of achievement, the Board of Directors, in its discretion,
may adjust the performance targets.
In the event of a Change in Control (as defined in the 1997 Incentive
Plan), all stock options and SARs will immediately become exercisable, the
restrictions on all Restricted Shares will immediately lapse and all performance
awards will immediately become payable.
37
<PAGE>
Upon consummation of the Offering, the Company will grant to the executive
officers of the Company and one consultant to the Company options for an
aggregate of 155,000 shares of Common Stock under the 1997 Incentive Plan. The
Board of Directors has determined to distribute those options as follows: Mr.
Mayo--an option to purchase 75,000 shares; Mr. Kay--an option to purchase 40,000
shares; Ms. Mayo--an option to purchase 20,000 shares; Ms. Romine--an option to
purchase 10,000 shares; and Mr. Marks--an option to purchase 10,000 shares.
Those options will (i) have an exercise price equal to the initial public
offering price (before underwriting discounts), (ii) provide for vesting on a
pro rata basis over a period of [four] years, subject to earlier vesting or
termination in certain circumstances, (iii) be exercisable for a period of ten
years, subject to earlier termination in certain circumstances, and (iv)
constitute incentive stock options to the maximum extent permitted under
applicable law and otherwise be non-statutory stock options.
EMPLOYMENT AGREEMENT
Pursuant to an Employment Agreement by and between the Company and Mr. Mayo
dated May 29, 1996 (the 'Employment Agreement'), Mr. Mayo has agreed to serve as
Chairman of the Board, President and Chief Executive Officer of the Company. As
compensation, Mr. Mayo is to receive an annual base salary of not less than
$120,000, plus an annual bonus equal to one percent of the Company's gross
revenues in excess of $7,000,000; provided, however, that such total
compensation may not exceed $750,000 in any one year. The initial term of the
Employment Agreement expires on May 29, 2003. Thereafter, the term of the
Employment Agreement will be automatically extended for successive one-year
periods ending on May 29, unless terminated by either party upon at least six
months' advance notice. The Employment Agreement also provides that, for a
period of three years after its termination, Mr. Mayo may not, directly or
indirectly, engage, have a financial interest in or become interested in any
other businesses similar to or in competition with the Company within a
fifty-mile radius of any theater owned or operated by the Company as of the date
of that termination.
CERTAIN TRANSACTIONS
Pursuant to a Contribution and Exchange Agreement dated December 21, 1994,
the Company issued to A. Dale Mayo ('Mayo') and Brett E. Marks ('Marks') 687,500
and 250,000 shares of Common Stock, respectively, in exchange for (i) all of the
outstanding shares of capital stock of Clearview Theater Group, Inc., CCC
Madison Triple Cinema Corp., CCC Chester Twin Cinema Corporation and CCC
Manasquan Cinema Corporation (collectively, the 'Subsidiaries') and (ii)
promissory notes of certain Subsidiaries with an aggregate principal amount of
$250,000. The principal assets of the Subsidiaries were the leases for the movie
theaters in Bernardsville, Chester, Madison and Manasquan, New Jersey and the
related leasehold improvements and equipment. Concurrently with that
contribution, pursuant to an Investment and Stockholders Agreement dated
December 21, 1994, the Company sold 312,500 shares of Common Stock to CMNY for
an aggregate purchase price of $500,000 in cash.
Mayo had formed CCC Chester Twin Cinema Corporation in August, 1993 to be
the lessee of the Chester Twin Theater. In September, 1993, as part of the
consideration in the sale of Clearview Cinema Corp., Mayo acquired the capital
stock of Clearview Theater Group, Inc. The terms of that sale were negotiated at
arm's length between the owners of Clearview Cinema Corp. and the purchaser. In
February, 1994, Mayo sold to Marks 49% of the capital stock of CCC Madison
Triple Cinema Corp. and of CCC Chester Twin Cinema Corporation for $10,000 and
$5,000, respectively. Simultaneously, Marks loaned CCC Madison Triple Cinema
Corp. $125,000 and received a promissory note in exchange. In May, 1994, Mayo
formed CCC Manasquan Cinema Corporation to be the lessee of the Algonquin
Theater in Manasquan, New Jersey.
No third party was retained by Clearview, Mayo, Marks or CMNY to value the
interests being exchanged by Mayo and Marks for shares of Common Stock or to
determine the relationship between those values and the purchase price paid by
CMNY for its shares of Common Stock. The valuation to be placed on those
interests and that relationship was determined by the arm's length negotiations
between Mayo and Marks and a representative of CMNY. Under the Investment and
Stockholders Agreement, CMNY has the right to sell its shares of Common Stock to
the Company for a 30-day period commencing in 2002 at a price based upon a
formula set forth therein and, if CMNY does not exercise that right, the Company
has the right to purchase those shares of Common Stock from CMNY for the 90-day
period commencing after the expiration of that 30-day period at a price based
upon
38
<PAGE>
the same formula. CMNY and Clearview have agreed to terminate those rights in
connection with the Offering. See 'The Concurrent Transactions.'
As of June 1, 1997, Marks and the Company entered into a consulting and
confidentiality agreement pursuant to which Marks as a consultant will assist
the Company in the identification of possible locations for the development of
theaters and of theaters that are potential acquisition candidates and provide
other services as requested by the Company. Marks is also an executive vice
president of First New York. To the extent, if any, that Marks identifies any
person who is interested in leasing a site to Clearview in his capacity as an
employee of First New York and Clearview determines to lease that site, First
New York could be entitled to a commission from that person and Marks would then
be entitled to a commission from First New York. In connection with the
Company's proposed acquisition of the leasehold of a theater in Brooklyn, New
York, First New York and Marks will be entitled to commissions of $66,000 and
$22,000, respectively, if the transaction is consummated. In addition, in
connection with the proposed acquisition of the UA Theaters, First New York and
Marks will be entitled to commissions of $259,500 and $86,500, if the
transaction is consummated. In order to formalize the relationships among the
parties, First New York, Marks and Clearview have entered into an agreement
dated as of May 23, 1997. In that agreement, First New York has acknowledged
that Marks, as a consultant to Clearview, will be engaged in activities that
might, under other circumstances, result in commissions being earned by First
New York and Marks, but that it will be within Clearview's sole discretion to
determine whether any such activity will result in commissions being payable to
them.
Robert G. Davidoff ('Davidoff'), a director of the Company, is a general
partner of CMNY and a managing director of CMCO, Inc. ('CMCO'). On August 31,
1995, CMNY, CMCO and Davidoff each purchased from the Company 8% Notes with the
principal amounts of $300,000, $50,000 and $50,000, respectively. Each of these
8% Notes matures on August 31, 1997, which term is to be amended in connection
with the Put/Call Termination to October 31, 1997. In connection with the sale
of these 8% Notes, the Company issued each purchaser two A/B Warrants to
purchase in the aggregate 93,750 shares, 15,625 shares and 15,625 shares of
Common Stock, respectively. See 'The Concurrent Transactions' and 'Description
of Capital Stock--Warrants.'
On October 11, 1995, Davidoff and CMCO each purchased an additional 8% Note
with a principal amount of $50,000 each. Each of these 8% Notes matures on
October 11, 1997, which term is to be amended in connection with the Put/Call
Termination to October 31, 1997. In connection with the sale of these 8% Notes,
the Company issued each purchaser two A/B Warrants to purchase in the aggregate
15,625 shares and 15,625 shares of Common Stock, respectively. See 'The
Concurrent Transactions' and 'Description of Capital Stock--Warrants.'
On December 13, 1996, Davidoff and CMCO each purchased an additional 8%
Note with a principal amount of $300,000 each. Each of these 8% Notes matures on
December 13, 1998. In connection with the sale of these 8% Notes, the Company
issued each purchaser two A/B Warrants to purchase in the aggregate 46,875
shares and 46,875 shares of Common Stock, respectively. See 'Description of
Capital Stock--Warrants'
If the Company does not pay the 8% Notes that are due on August 31, 1997
and October 31, 1997 (or, after their amendment, October 31, 1997), the Company
will extend the term of those 8% Notes an additional five years. If that occurs,
the Company must issue to each holder of one of those 8% Notes a warrant with
terms substantially similar to the A/B Warrants. Each of those holders would
receive warrants exercisable for the number of shares of Common Stock set forth
below:
<TABLE>
<CAPTION>
AUGUST 31, 1995 8% NOTES OCTOBER 11, 1995 8% NOTES
------------------------ -------------------------
<S> <C> <C>
CMNY 93,750 --
CMCO 15,625 15,625
Davidoff 15,625 15,625
</TABLE>
If the Company pays the 8% Notes that are due on December 13, 1998 by
December 13, 1997, then one of the A/B Warrants owned by each of Davidoff and
CMCO exercisable for 23,437.50 shares of Common Stock each will terminate. If
the Company does not pay those 8% Notes on December 13, 1998 and, instead
extends their term, the Company will have an obligation to issue new warrants to
Davidoff and CMCO exercisable for 46,875 shares of Common Stock each, which is
similar to the obligation described in the preceding paragraph.
39
<PAGE>
The Company intends to pay all of the 8% Notes in 1997 from borrowings
under the New Credit Facility.
The terms of the 8% Notes and the A/B Warrants were negotiated at arm's
length by Davidoff, a representative of CMNY and CMCO, and the Company. In
connection with the consummation of the Offering, the Company, CMNY, CMCO and
Davidoff have agreed to exchange 162.5 of the A/B Warrants for an aggregate of
137,500 shares of Common Stock. See 'The Concurrent Transactions.'
Wayne L. Clevenger and Denis Newman, each of whom is a director of the
Company, are managing directors of MidMark Associates, Inc., which is the
general partner of MidMark. MidMark has acquired from the Company a total of 779
shares of Class A Preferred Stock and two Class A Warrants to purchase a total
of 588,750 shares of Common Stock. See 'The Concurrent Transactions,'
'Description of Capital Stock -- Preferred Stock--Class A Preferred Stock' and
'--Warrants--Class A Warrants.' Pursuant to the two Preferred Stock and Warrant
Purchase Agreements under which MidMark acquired its shares of Class A Preferred
Stock and Class A Warrants, MidMark has the right exercisable on or after June
1, 2001 to sell to the Company all of those shares or the shares of Common Stock
into which they have been converted at a purchase price determined in accordance
with a formula set forth in those agreements that is based on the Company's
gross revenues or six times the Company's combined income for its theater
operations (excluding general and administrative expenses, interest and taxes,
but including depreciation and amortization). In connection with the Offering,
MidMark has agreed to terminate this right. See 'The Concurrent Transactions'
and 'Shares Eligible for Future Sale.' If the Company issues additional warrants
in connection with the extension of the maturity of any 8% Notes, the Company
would be obligated under the agreements with MidMark to issue additional shares
of Class A Preferred Stock and Class A Warrants for no additional payment.
Pursuant to a Management Consulting Agreement by and between MidMark
Associates, Inc. ('MidMark Associates') and the Company dated May 23, 1997 (the
'Consulting Agreement'), MidMark Associates will provide the Company with
business and organizational strategy and financial and investment management
advice for a fee equal to $60,000 per year. The Consulting Agreement terminates
on ___________, _____________ unless renewed.
Pursuant to an agreement by and among the Company, Roxbury Cinema, Inc.
(which owns the Cinema Ten Succasunna Theater), F&N Cinema, Inc. (which owns the
Parsipanny Twelve Theater), and John Nelson, Seth Ferman and Pamela Ferman, the
Company purchased a right of first refusal from each of those persons for
$200,000 with respect to those two theaters. The right must be exercised, if at
all, within a short period after any of the above persons delivers to Clearview
a notice of his, her or its desire to transfer any rights in these theaters. The
right of first refusal will expire on May 29, 1999 if not previously exercised.
In accordance with the agreement pursuant to which Clearview consummated
the acquisition of the leaseholds of four theaters in May, 1996, Mr. Nelson, Mr.
Ferman and Ms. Ferman entered into a Non-Competition Agreement with the Company,
in which they agreed not to, directly or indirectly, (i) engage or become
interested in the operation of any movie theater within a seven and one-half
mile radius of any of those theaters or (ii) disclose to anyone, or use in
competition with the Company, any information with respect to any confidential
or secret aspect of the operations of those theaters.
On June 30, 1997, Clearview reacquired the Provident Warrants from
Provident for $1.0 million (or $ per share), plus the lesser of $300,000
(or $ per share) or the product of (x) 186,250 and (y) the difference
between the initial public offering price in the Offering and $ per share.
Under the terms of the Provident Warrants, Provident had the right to sell
Provident Warrants exercisable for 186,250 shares of Common Stock to the Company
immediately following the consummation of the Offering for an amount based on
the highest of (i) the initial public offering price, (ii) an appraised value
per share for the Common Stock or (iii) a value per share calculated based on
the Company's cash flow. Following that transaction, Provident Warrants
exercisable for 10,000 shares would have remained outstanding.
At that time, Clearview and Provident amended the Current Facility to
provide a term loan to Clearview of $1.3 million, of which $1.0 million was used
to pay the initial purchase price for the Provident Warrants and $300,000 was to
be used to pay some of the costs already incurred or to be incurred by the
Company in connection with the Offering. This new term loan does not begin to
accrue interest until September 29, 1997 and has an interest rate equal to
Provident's prime rate. If the Offering is consummated, the Company is obligated
to
40
<PAGE>
pay this term loan within 90 days thereafter. Provident and Clearview also
modified the Current Facility in other ways in connection with the Offering, the
most significant of which was to provide that, if the Offering is consummated
and the acquisition of the UA Theaters is consummated within 90 days thereof,
Clearview's obligation to prepay all the term loans under the Current Facility
with the net proceeds of the Offering will be permanently waived.
All of these transactions were negotiated at arm's length among the various
parties thereto and the Company believes that all of these transactions have
terms that would be appropriate in a transaction between unaffiliated parties
and that are fair to the Company as a whole. Following consummation of the
Offering, Clearview plans to have any transaction with an affiliated party
reviewed and approved by the directors of the Company who have no relationship
with that party or that transaction.
41
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table (including the notes thereto) sets forth certain
information as of July , 1997 regarding the beneficial ownership of the Common
Stock after giving effect to the Concurrent Transactions and as adjusted to
reflect the sale of the shares of Common Stock being offered hereby by: (i) each
person (or group of affiliated persons) known by the Company to beneficially own
more than 5% of the outstanding shares of Common Stock; (ii) each director of
the Company; (iii) each executive officer of the Company; and (iv) all of the
Company's directors and executive officers as a group. Each stockholder
possesses sole voting and investment power with respect to the shares listed,
unless otherwise noted.
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OF COMMON
STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED BEFORE THE OWNED AFTER THE
OFFERING OFFERING
-------------------- --------------------
NAME AND ADDRESS(1) NUMBER PERCENT NUMBER PERCENT
- --------------------------------- --------- ------- --------- -------
<S> <C> <C> <C> <C>
A. Dale Mayo(2) 1,422,500 47.88
MidMark Capital, L.P.(3) 1,098,750 36.98
CMNY Capital II, L.P.(4) 383,500 12.91
Emerson Cinema, Inc.(2)(5) 433,750 14.60
Wayne L. Clevenger(3)(6) 1,098,750 36.98
Robert Davidoff(4)(7) 450,000 15.15
Brett E. Marks(2)(8) 245,000 8.25
Denis Newman(3)(6) 1,098,750 36.98
Paul Kay(2) 20,000 *
Sueanne Hall Mayo(9) 0 0
All directors and executive
officers as a group(2) 2,971,250 100.00
</TABLE>
- ------------------
* Less than 1%
(1) The address of each person set forth above is 7 Waverly Place, Madison, New
Jersey except as otherwise noted.
(2) Mr. Mayo owns directly 662,500 shares of Common Stock. The other 760,000
shares are owned by other stockholders of the Company, including Brett
Marks, Emerson Cinema, Inc. and Paul Kay, subject to voting trust agreements
for which Mr. Mayo is the trustee. Under those agreements, Mr. Mayo has the
right to exercise all voting rights with respect to those shares for a
period of twenty years or until they are sold in a public offering under the
Securities Act or in accordance with Rule 144 under the Securities Act.
(3) The address for MidMark Capital, L.P. and Messrs. Clevenger and Newman is
c/o MidMark Management, Inc., 466 Southern Boulevard, Chatham, New Jersey.
MidMark Capital, L.P. beneficially owns its 1,098,750 shares of Common Stock
by means of its ownership of 779 shares of Class A Preferred Stock, which
represent all of the outstanding shares of Class A Preferred Stock, and
125,000 shares of Common Stock. MidMark is a small business investment
company registered with the Small Business Administration.
(4) The address for CMNY Capital II, L.P. and Mr. Davidoff is c/o Carl Marks &
Co., Inc., 135 East 57th Street, New York, New York. CMNY is a small
business investment company registered with the Small Business
Administration.
(5) The address for Emerson Cinema, Inc. is c/o Roxbury Cinemas, Inc., Route 10,
Succasunna, New Jersey.
(6) Both Mr. Clevenger and Mr. Newman disclaim beneficial ownership of the
shares of Common Stock beneficially owned by MidMark.
(7) Mr. Davidoff disclaims beneficial ownership of the shares of Common Stock
beneficially owned by either CMNY or CMCO.
(8) The address for Mr. Marks is c/o First New York Realty Co. Inc., 310 Madison
Avenue, New York, New York.
(9) Ms. Mayo disclaims beneficial ownership of all the shares beneficially owned
by Mr. Mayo.
42
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following is a description of the material provisions of the New
Certificate, the New By-laws, the A/B Warrants and the Class A Warrants but does
not purport to be complete. Copies of the New Certificate, the New By-laws, the
A/B Warrants and the Class A Warrants have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part.
Immediately prior to the consummation of the Offering, the authorized
capital stock of the Company will consist of 10,000,000 shares of Common Stock
and 2,500,000 shares of Preferred Stock.
COMMON STOCK
The holders of shares of Common Stock are entitled to one vote for each
share held on all matters submitted to a vote of the holders of the Common Stock
and the Class A Preferred Stock and do not have cumulative voting rights.
Holders of shares of Common Stock are entitled to receive dividends, if any, as
declared by the Board of Directors out of funds legally available therefor. Upon
liquidation, dissolution or winding up of the Company, holders of shares of
Common Stock are entitled to share ratably in the net assets of the Company
available after the payment of all debts and other liabilities of the Company,
subject to the prior rights of outstanding shares of Preferred Stock. Holders of
shares of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares of
Common Stock offered in the Offering will be, when issued and paid for, validly
issued, fully paid and nonassessable. The rights, preferences and privileges of
holders of shares of Common Stock are subject to, and may be adversely affected
by, the rights of the holders of shares of the Class A Preferred Stock or any
other series of Preferred Stock the Company may designate and issue in the
future.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue shares of Preferred Stock in one or more series and to
fix the number of shares, designations, voting powers, preferences, optional and
other special rights and the restrictions or qualifications thereof, subject to
the rights of the holders of the Class A Preferred Stock discussed below. The
rights, preferences, privileges and powers of each series of Preferred Stock may
differ with respect to dividend rates, amounts payable on liquidation, voting
rights, conversion rights, redemption provisions, sinking fund provisions and
other matters. The issuance of shares of Preferred Stock could decrease the
amount of earnings and assets available for distribution to holders of shares of
Common Stock and could adversely affect the rights and powers, including voting
rights, of holders of shares of Common Stock. The existence of authorized and
undesignated shares of Preferred Stock may also have a depressive effect on the
market price of the Common Stock. In addition, the issuance of any shares of
Preferred Stock could have the effect of delaying, deferring or preventing a
change of control of the Company by a third party. Upon consummation of the
Offering, no shares of Preferred Stock other than the Class A Preferred Stock
will be outstanding, and the Company has no current intention to issue any
additional shares of Preferred Stock.
CLASS A PREFERRED STOCK
The holders of the Class A Preferred Stock are entitled to receive
preferential dividends, when and as declared by the Board of Directors, in a per
share amount equal to the product of the dividend payable per share of Common
Stock and the number of shares of Common Stock into which a share of Class A
Preferred Stock is then convertible. So long as any shares of Class A Preferred
Stock are outstanding, unless all dividends on the Class A Preferred Stock have
been paid, no dividend or other distribution may be paid or made on the Common
Stock or any other capital stock of the Company ranking junior as to dividends
to the Class A Preferred Stock and no such capital stock may be acquired by the
Company, other than by means of a distribution or exchange of capital stock of
the Company ranking junior to the Class A Preferred Stock.
In the event of any sale of all or substantially all of the assets of the
Company or any liquidation, dissolution or winding up of the Company, the
holders of the Class A Preferred Stock will be entitled to receive an amount per
share equal to the Liquidation Value (as defined below) plus all declared but
unpaid dividends per share on the Class A Preferred Stock, prior to any
distribution to holders of the Common Stock or any other capital stock of the
Company ranking junior upon liquidation or dissolution to the Class A Preferred
Stock. Liquidation Value
43
<PAGE>
is equal to $2,558.85 per share, subject to adjustment upon any changes in the
Class A Preferred Stock by means of dividends of shares of Class A Preferred
Stock or subdivisions or combinations of the Class A Preferred Stock.
Generally, the holders of the Class A Preferred Stock will vote with the
holders of the Common Stock on all matters submitted to a vote of the
stockholders of the Company other than the election of members of the Board of
Directors for so long as those holders vote separately for Preferred Directors.
The holders of the Class A Preferred Stock will vote separately as a class for
two Preferred Directors so long as the outstanding shares of Class A Preferred
Stock represent more than ___% of the combined voting power of the outstanding
capital stock of the Company or for one Preferred Director so long as the
outstanding shares of Class A Preferred Stock represent at least ___% and no
less than ___% of the combined voting power of the outstanding capital stock of
the Company. The holders of the Class A Preferred Stock will vote separately as
a class with respect to any proposed amendment to the New Certificate that would
affect their rights as such holders adversely and with respect to any proposed
issuance of capital stock of the Company ranking senior to the Class A Preferred
Stock as to dividends or upon liquidation or dissolution. The holders of the
Class A Preferred Stock will also vote separately as a class with respect to any
proposed issuance of capital stock of the Company (other than Common Stock)
ranking pari passu to the Class A Preferred Stock as to dividends or upon
liquidation or dissolution so long as the outstanding shares of Class A
Preferred Stock represent more than ___% of the combined voting power of the
outstanding capital stock of the Company.
The shares of Class A Preferred Stock are convertible at any time at the
option of the holders thereof into shares of Common Stock at a conversion ratio
of 1250 as of the consummation of the Offering which is equal to the Liquidation
Value divided by the Conversion Price of $2.047 as of the consummation of the
Offering. Upon the occurrence of any Qualifying Liquidity Event, the shares of
Class A Preferred Stock will automatically convert into shares of Common Stock.
A Qualifying Liquidity Event includes a bona fide unconditional offer to
purchase those shares at a price equal to the product of the conversion ratio
and four times the then-current Conversion Price from the Company, a third party
or an underwriter or the ability to sell the shares of Common Stock into which
such shares of Class A Preferred Stock are convertible on the open market so
long as certain trading price and liquidity conditions are met. The Conversion
Price is subject to adjustment if the Company pays a dividend in shares of the
Common Stock, subdivides or combines the Common Stock, reclassifies the Common
Stock or issues or is deemed to have issued shares of Common Stock for a
consideration per share less than the then-current Conversion Price.
WARRANTS
The Company has outstanding the following warrants to acquire shares of
Common Stock as of the date of this Prospectus.
<TABLE>
<CAPTION>
SECURITIES ISSUABLE NUMBER ISSUABLE
TITLE OR SERIES EXPIRATION DATE EXERCISE PRICE UPON EXERCISE UPON EXERCISE
- ---------------------------------- ------------------ --------------- -------------------- ---------------
<S> <C> <C> <C> <C>
A/B Warrant....................... August 31, 2000 $1.60/share Common Stock 62,500
A/B Warrant....................... August 31, 2001 $1.60/share Common Stock 62,500
A/B Warrant....................... October 11, 2000 $1.60/share Common Stock 15,625
A/B Warrant....................... October 11, 2001 $1.60/share Common Stock 15,625
A/B Warrant....................... December 13, 2001 $3.20/share Common Stock 46,875
A/B Warrant....................... December 13, 2002 $3.20/share Common Stock 46,875
Class A Warrants.................. June 1, 2006 $.01/share Common Stock 588,750
</TABLE>
A/B WARRANTS
All of the A/B Warrants are currently exercisable through their respective
expiration dates except for two A/B Warrants issued on December 13, 1996 which
will be cancelled if the Company pays the 8% Notes issued on that day in full no
later than December 13, 1997. The exercise price of the A/B Warrants and the
number of shares of Common Stock issuable upon exercise of the A/B Warrants are
subject to adjustment for subdivisions of the outstanding shares of Common Stock
or dividends in stock on the outstanding shares of Common Stock.
44
<PAGE>
CLASS A WARRANTS
The Class A Warrants are not exercisable until June 1, 2001 unless, prior
to that date, the Company sells all or substantially all of its assets,
liquidates, dissolves or winds up or merges or consolidates with another
corporation in a transaction immediately after which persons who held voting
securities of the Company having more than 50% of the combined voting power of
the outstanding voting securities of the Company do not hold voting securities
of the surviving corporation having more than 50% of the combined voting power
of the outstanding voting securities of the surviving corporation or a majority
of the outstanding shares of Common Stock are acquired by a single person or
group of affiliated persons. The number of shares of Common Stock for which the
Class A Warrants are exercisable will be subject to reduction if any of the
events described in the preceding sentence occur or if there is an underwritten
public offering of shares of Common Stock pursuant to an effective registration
statement under the Securities Act or if the Common Stock is listed on a
national securities exchange or registered as a class under the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and the Fair Market Value
(as defined below) of the Common Stock is greater than the Floor Price (at the
time of the closing of the Offering this will be equal to $5.46 per share). Fair
Market Value for purposes of any of such transactions is equal to the
consideration paid or payable to the holders of the Common Stock assuming the
exercise of all warrants to purchase shares of Common Stock and the conversion
of all securities convertible into shares of Common Stock (other than the Class
A Warrants). Fair Market Value for purposes of a public offering or any listing
or registration of the Common Stock is based on the average closing prices or
last bid prices for the Common Stock for any 120-day trading period following
the closing of such offering or listing or registration, so long as the closing
price or bid price on each day in that period exceeds the Floor Price. The
reduction in the number of shares of Common Stock purchasable upon exercise of
the Class A Warrants is based upon a formula and, if the Fair Market Value is
high enough, could result in the Class A Warrants not being exercisable for any
shares. The Floor Price and the number of shares of Common Stock that the Class
A Warrants are exercisable for are also subject to adjustment for subdivisions
or combinations of the Common Stock, the issuance of shares of Common Stock as a
dividend and certain capital reorganizations and reclassifications, mergers and
consolidations.
PROVISIONS OF THE NEW CERTIFICATE AND THE NEW BY-LAWS
The New Certificate and the New By-laws contain a number of provisions
relating to corporate governance and the rights of stockholders. Certain of
these provisions may be deemed to have a potential 'anti-takeover' effect
insofar as such provisions may delay, defer or prevent a change of control of
the Company, including, but not limited, to the following provisions:
The New Certificate provides that the holders of the Common Stock may only
take action at a duly called meeting of the stockholders of the Company and may
not act by written consent.
The New By-laws contain certain notification requirements relating to
nominations to the Board of Directors and to the raising of business matters at
stockholder meetings. Such requirements provide that a notice of proposed
stockholder business must be timely given in writing to the Secretary of the
Company prior to the appropriate meeting. To be timely, notice relating to an
annual meeting must be given not less than 60, nor more than 90, days in advance
of such meeting; provided, that if the date of the annual meeting is changed by
more than 30 days from the anniversary date of the prior annual meeting, written
notice must be given no later than the fifth day after the first public
disclosure of the date of the meeting. The New By-laws provide that special
meetings of stockholders may be called only by certain officers of the Company
or the Board of Directors.
The New Certificate contains certain provisions permitted under the
Delaware General Corporation Law (the 'DCL') regarding the liability of
directors. These provisions eliminate the personal liability of a director to
the Company and its stockholders for monetary damages for breach of fiduciary
duty as a director other than for any breach of that director's duty of loyalty,
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, for any transaction from which the director
derived an improper personal benefit or for an unlawful payment of dividends or
redemption of stock. Those provisions do not affect the availability of
equitable remedies such as an action to enjoin or rescind a transaction
involving a breach of fiduciary duty. The New By-laws provide that the Company
will indemnify its directors and officers, and may indemnify any authorized
representative of the Company, to the fullest extent permitted by the DCL. The
45
<PAGE>
Company believes that such provisions will assist the Company in attracting and
retaining qualified individuals to serve as directors and officers.
The New By-laws provide that the number of directors constituting the
entire Board of Directors will be established by the Board of Directors except
as otherwise provided in the New Certificate, but will consist of not less than
three Common Directors. Common Directors may be removed by the holders of the
Common Stock only for cause and new Common Directors may be elected
simultaneously with such removal. The New By-laws further provide that any
amendment of the New By-laws to permit the removal of Common Directors without
cause by the holders of the Common Stock will not apply to any incumbent
director for the balance of his or her term.
The New Certificate provides that the Common Directors will be divided into
three classes serving staggered three-year terms. Each class will consist, as
nearly as possible, of one-third of the whole number of Common Directors. The
classification of the Common Directors and the separate voting for the Preferred
Directors has the effect of making it more difficult for stockholders to change
the composition of the Board of Directors in a relatively short period of time.
At least three annual meetings of stockholders will generally be required to
effect a change in a majority of the Board of Directors.
The New By-laws may be amended by a majority of the Board of Directors,
subject to the right of the stockholders to amend the New By-laws by the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Common Stock and Class A Preferred Stock voting as a single class. The New
Certificate may be amended by the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock and Class A Preferred Stock voting as
a single class, except that the affirmative vote of the holders of at least
two-thirds of such shares is required to amend certain provisions, including the
provisions establishing a classified board and prohibiting action by written
consent.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is The Bank of New
York.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, ________ shares of Common Stock will be
outstanding (_______ shares if the over-allotment option is exercised in full).
Of these shares, the _________ shares of Common Stock sold in the Offering
(___________ shares if the over-allotment option is exercised in full) will be
freely tradeable under the Securities Act, except that any shares of Common
Stock purchased by affiliates of the Company ('Affiliates'), as that term is
defined in Rule 144 under the Securities Act ('Rule 144'), may generally be sold
only in compliance with the limitations of Rule 144 described below. The
remaining 1,997,500 shares of Common Stock (the 'Restricted Shares') held by
existing stockholders were sold by the Company in reliance on exemptions from
the registration requirements of the Securities Act and may be restricted
securities within the meaning of Rule 144.
In general, under Rule 144 as currently in effect, beginning after the
effective date of the Registration Statement of which this Prospectus is a part,
a stockholder, including an Affiliate, who has beneficially owned his or her
Restricted Shares for at least one year from the date those Restricted Shares
were acquired from the Company or an Affiliate, is entitled to sell, within any
three-month period, a number of such shares that does not exceed certain volume
restrictions; provided, that certain requirements concerning availability of
public information, manner of sale and notice of sale are satisfied. In
addition, under Rule 144(k), if a period of at least two years has elapsed from
the date any Restricted Shares were acquired from the Company or an Affiliate, a
stockholder that is not an Affiliate at the time of sale and has not been an
Affiliate for at least three months prior to the sale is entitled to sell those
shares without compliance with the above-referenced requirements of Rule 144. An
Affiliate must comply with the volume restrictions and the other requirements
referred to above whenever that Affiliate sells any securities of the Company.
Following consummation of the Offering, the Company intends to register on
Form S-8 under the Securities Act 500,000 shares of Common Stock reserved for
issuance under the 1997 Incentive Plan. Shares registered on
46
<PAGE>
Form S-8 will be available for resale in the open market subject to the
limitations applicable to Affiliates as provided in Rule 144.
The Company and its existing stockholders have agreed that they will not,
directly or indirectly, without the prior written consent of the Representative,
for a period of one year after the date of this Prospectus sell, contract to
sell, pledge, grant any option for the sale of, or otherwise transfer or dispose
of, or cause the transfer or disposition of, any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for any shares of
Common Stock or exercise any registration rights with respect to any shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for any shares of Common Stock. The Representative may, in its sole discretion
and at any time without notice, release all or a portion of the shares subject
to such restrictions therefrom, although it has no present intention of doing
so. See 'Underwriting.'
Prior to the Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that future sales
of shares of Common Stock, including Restricted Shares, or the availability of
shares of Common Stock, including Restricted Shares, for future sale, will have
on the market price of the Common Stock prevailing from time to time. Sales of a
substantial number of Restricted Shares in the public market following the
Offering, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock and could impair the Company's
ability to raise capital through an offering of its equity securities.
Under a registration rights agreement that will be effective following
consummation of the Offering, Mayo, CMNY and MidMark will each have the right to
have the Company prepare and file up to two registrations statements for him or
it at any time after the first anniversary of the consummation of the Offering,
subject to certain conditions. In addition those stockholders and the other
stockholders who are parties to that agreement will have unlimited piggyback
registration rights so long as they are not eligible to sell shares of Common
Stock in accordance with Rule 144(k) and subject to customary 'cutback'
provisions. This agreement contains customary provisions relating to the
expenses of any such registration and the rights to indemnification among the
parties and the Company.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part (the 'Underwriting Agreement'),
the Underwriters named below, acting through Prime Charter Ltd. as the
Representative, have severally agreed to purchase from the Company, and the
Company has agreed to sell to the Underwriters, an aggregate of __ shares of
Common Stock. The Underwriting Agreement provides that the Underwriters'
obligations to pay for and accept delivery of those shares of Common Stock are
subject to certain conditions precedent, and that the Underwriters are committed
to purchase all of those shares of Common Stock if any shares are purchased.
Under certain circumstances, the commitments of non-defaulting Underwriters may
be increased as set forth in the Underwriting Agreement.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Prime Charter Ltd.....................................................................................
---------
Total............................................................................................
---------
---------
</TABLE>
The Underwriters propose initially to offer the shares of Common Stock
offered hereby to the public at the offering price set forth on the front cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $________ per share. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $____________ per share to
certain other dealers. After the Offering, the public offering price, concession
and reallowance may be changed by the Underwriters.
47
<PAGE>
The Company has agreed to pay to the Representative on behalf of the
Underwriters a non-accountable expense allowance equal to 2 1/2% of the gross
proceeds of the Offering, $100,000 of which has already been paid by the Company
to cover some of the underwriting costs and due diligence expenses related to
the Offering.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to
____________ additional shares of Common Stock at the initial public offering
price, less the underwriting discounts and commissions and a pro-rata portion of
the non-accountable expense allowance. The Underwriters may exercise this option
solely to cover over-allotments, if any, made in the sale of the shares of
Common Stock offered hereby. To the extent that this option is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares of Common Stock as
the percentage of shares of Common Stock it was originally obligated to purchase
pursuant to the Underwriting Agreement.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
At the request of the Company, the Underwriters have reserved up to
_________ shares of Common Stock for sale at the initial offering price to
certain directors, officers, employees and agents of the Company and its
subsidiaries. The number of shares of Common Stock available to the general
public will be reduced to the extent that those persons purchase reserved
shares. Any reserved shares that are not so purchased by those persons at the
closing of the Offering will be offered by the Underwriters to the general
public on the same terms as the other shares offered by this Prospectus.
The Company has agreed to sell to the Representative or its designees, for
nominal consideration, the Underwriter Warrants to purchase an aggregate of
________ shares of Common Stock. The shares of Common Stock subject to the
Underwriter Warrants will be in all respects identical to the shares of Common
Stock offered to the public hereby. The Underwriter Warrants will be exercisable
for a four-year period commencing one year after the effective date of the
Registration Statement of which this Prospectus forms a part at a per share
exercise price equal to 120% of the initial offering price. During the period
beginning one year from the effective date of the Registration Statement and
ending five years after such effective date, the Company has agreed at its
expense to register under the Securities Act the shares of Common Stock issued
or issuable upon exercise of the Underwriter Warrants and, for the period
beginning one year from the effective date of the Registration Statement and
ending seven years after such effective date, to include such shares of Common
Stock in any appropriate registration statement which is filed by the Company.
The Underwriter Warrants will contain anti-dilution provisions providing for
appropriate adjustment of the exercise price and number of shares that may be
purchased upon the occurrence of certain events. The Underwriter Warrants may be
exercised by paying the exercise price in cash, through the surrender of shares
of Common Stock, through a reduction in the number of shares covered thereby, or
by using a combination of such methods.
The Company and its existing stockholders have agreed that they will not,
directly or indirectly, without the prior written consent of the Representative,
for a period of one year after the date of this Prospectus sell, offer to sell,
solicit an offer to buy, contract to sell, pledge, grant any option for the sale
of, or otherwise transfer or dispose of or cause the transfer or disposition of,
any shares of Common Stock or any securities convertible into or exchangeable or
exercisable for any shares of Common Stock or exercise any registration rights
with respect to any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for any shares of Common Stock. See 'Shares Eligible
for Future Sale.'
The Common Stock has been approved for listing on the ASE, subject to
official notice of issuance.
Prior to the Offering, there has been no public market for the Common
Stock. Accordingly, the initial public offering price for the shares of Common
Stock offered hereby will be determined by negotiation between the Company and
the Representative. In determining that price, consideration will be given to
various factors, including market conditions for initial public offerings, the
history of and prospects for the Company's business, the Company's past and
present operations, its past and present earnings and current financial
position, an assessment of the Company's management, the market for securities
of companies in businesses similar to those of the Company, the general
condition of the securities markets and other relevant factors. There can be no
assurances, however, that the initial public offering price will correspond to
the prices at which the Common
48
<PAGE>
Stock will trade in the public market subsequent to the Offering or that an
active trading market for the Common Stock will develop and continue after the
Offering.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby and certain other
legal matters relating to the Offering will be passed upon for the Company by
Kirkpatrick & Lockhart LLP, Pittsburgh, Pennsylvania. Certain legal matters
relating to the Offering will be passed upon for the Underwriters by Dewey
Ballantine, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and for each of the two years in the period ended December 31, 1996, the
combined statements of income of Nelson Ferman Theaters at Emerson, New City,
Allwood and Washington Township for the periods ended May 29, 1996 and December
31, 1995, the combined statements of income of Magic Cinemas at Bergenfield,
Tenafly and Closter for the periods ended December 13, 1996 and December 31,
1995 and the combined financial statements of United Artists Theaters at
Bronxville, Larchmont, Wayne, New City and Mamaroneck as of December 31, 1996
and for each of the two years in the period ended December 31, 1996 included in
this Prospectus have been so included in reliance on the reports of Wiss &
Company, LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
SB-2 under the Securities Act and the rules and regulations promulgated
thereunder covering the shares of Common Stock offered hereby. For the purposes
hereof, the term 'Registration Statement' means that original Registration
Statement, any and all amendments thereto and the schedules and exhibits to such
original Registration Statement or any such amendment. This Prospectus omits
certain information contained in the Registration Statement and reference is
made to the Registration Statement for further information with respect to the
Company and the shares of Common Stock offered hereby. Each statement contained
in this Prospectus as to the contents of any contract, agreement or other
document filed as an exhibit to the Registration Statement is qualified in its
entirety by reference to such exhibit for a more complete description of the
matter involved. The Registration Statement may be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission maintained at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such materials may be obtained from the Public Reference
Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the prescribed rates. The Commission
also maintains a web site at http://www.sec.gov which contains reports, proxy
statements and other information regarding registrants that file electronically
with the Commission.
As a result of the Offering, the Company will be subject to the
informational requirements of the Exchange Act. The Company will fulfill its
obligations with respect to the requirements of the Exchange Act by filing
periodic reports and other information with the Commission and by distributing
such information, to the extent required by the Exchange Act, to its
stockholders.
49
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
Independent Auditors' Report............................................................................. F-2
Consolidated Balance Sheets at December 31, 1996 and (unaudited) March 31, 1997.......................... F-3
Consolidated Statements of Operations for the years ended December 31, 1995 and 1996 and the (unaudited)
three months ended March 31, 1996 and 1997............................................................ F-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 1995 and 1996
and the (unaudited) three months ended March 31, 1997................................................. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1995 and 1996 and the (unaudited)
three months ended March 31, 1996 and 1997............................................................ F-6
Notes to Consolidated Financial Statements............................................................... F-7
NELSON FERMAN THEATERS AT EMERSON, NEW CITY, ALLWOOD AND WASHINGTON TOWNSHIP
Independent Auditors' Report............................................................................. F-16
Combined Statements of Income for the year ended December 31, 1995 and the period ended May 29, 1996..... F-17
Notes to Combined Statements of Income................................................................... F-18
MAGIC CINEMAS AT BERGENFIELD, TENAFLY AND CLOSTER
Independent Auditors' Report............................................................................. F-19
Combined Statements of Income for the year ended December 31, 1995 and the period ended December 13,
1996.................................................................................................. F-20
Notes to Combined Statements of Income................................................................... F-21
UNITED ARTISTS THEATERS AT BRONXVILLE, LARCHMONT, WAYNE, NEW CITY AND MAMARONECK
Independent Auditors' Report............................................................................. F-23
Combined Balance Sheets at December 31, 1996 and (unaudited) March 31, 1997.............................. F-24
Combined Statements of Income and Divisional Equity for the years ended December 31, 1995 and 1996 and
the (unaudited) three months ended March 31, 1996 and 1997............................................ F-25
Combined Statements of Cash Flows for the years ended December 31, 1995 and 1996 and the (unaudited)
three months ended March 31, 1996 and 1997............................................................ F-26
Notes to Combined Financial Statements................................................................... F-27
</TABLE>
F-1
<PAGE>
The stock split described in Note 8 had not been effected at the date of
this report. When it has been consummated, we would be in a position to render
the following report:
INDEPENDENT AUDITORS' REPORT
'Board of Directors
Clearview Cinema Group, Inc.
We have audited the consolidated balance sheet of Clearview Cinema Group,
Inc. and subsidiaries as of December 31, 1996 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for
each of the two years in the period ended December 31, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Clearview
Cinema Group, Inc. and subsidiaries at December 31, 1996 and the results of
their operations and their cash flows for each of the two years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
WISS & COMPANY, LLP
Woodbridge, New Jersey
February 10, 1997 (except as to Note 8
for which the date is 1997)'
F-2
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------ MARCH 31,
1997
-----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................................................. $ 751,345 $ 1,431,782
Inventories...................................................................... 45,102 47,624
Other current assets............................................................. 34,866 161,007
------------ -----------
Total current assets.......................................................... 831,313 1,640,413
------------ -----------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION.............................. 12,253,217 12,284,621
------------ -----------
OTHER ASSETS:
Intangible assets, less accumulated amortization................................. 2,711,518 2,673,355
Project acquisition costs........................................................ 434,326 414,602
Escrow deposits.................................................................. 294,529 294,529
Deferred offering costs.......................................................... -- 65,179
Security deposits and other assets............................................... 76,641 86,716
------------ -----------
3,517,014 3,534,381
------------ -----------
$ 16,601,544 $17,459,415
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt............................................. $ 835,650 $ 966,267
Current maturities of subordinated notes payable, related parties................ 479,986 484,260
Accounts payable and accrued expenses............................................ 1,226,502 1,674,569
------------ -----------
Total current liabilities..................................................... 2,542,138 3,125,096
------------ -----------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities.......................................... 7,742,611 8,016,314
Subordinated notes payable, less current maturities:
Related parties............................................................... 593,882 596,470
Other......................................................................... 600,000 600,000
------------ -----------
8,936,493 9,212,784
------------ -----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK AT REDEMPTION PRICE..................................... 2,132,294 2,780,703
------------ -----------
REDEEMABLE COMMON STOCK AT REDEMPTION PRICE........................................ 393,305 393,305
------------ -----------
STOCKHOLDERS' EQUITY:
Undesignated Preferred Stock:
Authorized 2,498,697 shares, issued and outstanding--none..................... -- --
Class A Preferred Stock, par value $.01, authorized 1,303 shares; outstanding 779
shares........................................................................ 8 8
Common Stock, par value $.01, authorized 10,000,000 shares; outstanding 1,735,000
shares........................................................................ 17,350 17,350
Additional paid-in capital....................................................... 5,708,074 5,708,074
Accumulated deficit.............................................................. (602,519) (603,897)
Less: Redemption price of redeemable stock....................................... (2,525,599) (3,174,008)
------------ -----------
Total stockholders' equity.................................................... 2,597,314 1,974,527
------------ -----------
$ 16,601,544 $17,459,415
------------ -----------
------------ -----------
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ ------------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
THEATER REVENUES:
Box office............................................. $1,759,131 $6,195,399 $ 781,073 $2,712,210
Concession............................................. 554,671 1,861,155 226,425 743,986
Other.................................................. 31,895 141,420 5,505 49,739
---------- ---------- ---------- ----------
2,345,697 8,197,974 1,013,003 3,505,935
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Film rental and booking fees........................... 823,791 3,022,377 345,411 1,196,126
Cost of concession sales............................... 99,261 279,549 33,097 108,605
Theater operating expenses............................. 1,078,370 3,297,825 463,024 1,226,799
General and administrative expenses.................... 375,262 589,822 95,525 191,806
Depreciation and amortization.......................... 99,632 684,007 35,874 425,011
---------- ---------- ---------- ----------
2,476,316 7,873,580 972,931 3,148,347
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS).................................. (130,619) 324,394 40,072 357,588
INTEREST EXPENSE......................................... 85,697 591,722 54,466 358,966
---------- ---------- ---------- ----------
NET LOSS................................................. $ (216,316) $ (267,328) $ (14,394) $ (1,378)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS
OUTSTANDING............................................ 3,743,750 3,743,750 3,743,750 3,743,750
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET LOSS PER COMMON SHARE................................ $ (.06) $ (.07) $ -- $ --
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------- -------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
------ ------- --------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1995................. -- $ -- 1,250,000 $12,500 $ 758,700 $ (78,875)
YEAR ENDED DECEMBER 31, 1995:
Dividends paid.......................... -- -- -- -- -- (30,000)
Issuance of warrants in connection with
subordinated debt.................... -- -- -- -- 19,610 --
Net loss................................ -- -- -- -- -- (216,316)
------ ------- --------- ------- ---------- -----------
BALANCES, DECEMBER 31, 1995............... -- -- 1,250,000 12,500 778,310 (325,191)
YEAR ENDED DECEMBER 31, 1996:
Proceeds from sale of preferred stock,
net of related costs of $154,911..... 779 8 -- -- 2,345,081 --
Dividends paid.......................... -- -- -- -- -- (10,000)
Issuance of common stock:
For cash............................. -- -- 26,250 262 69,738 --
Upon conversion of debt.............. -- -- 25,000 250 79,750 --
For assets acquired.................. -- -- 433,750 4,338 1,995,662 --
Issuance of warrants in connection with:
Subordinated debt.................... -- -- -- -- 23,532 --
Bank financing....................... -- -- -- -- 416,001 --
Net loss.................................. -- -- -- -- -- (267,328)
------ ------- --------- ------- ---------- -----------
BALANCES, DECEMBER 31, 1996............... 779 8 1,735,000 17,350 5,708,074 (602,519)
THREE MONTHS ENDED MARCH 31, 1997
(Unaudited):
Net loss................................ -- -- -- -- -- (1,378)
------ ------- --------- ------- ---------- -----------
779 $ 8 1,735,000 $17,350 $5,708,074 $(603,897)
------ ------- --------- ------- ---------- -----------
------ ------- --------- ------- ---------- -----------
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- -----------------------
1995 1996 1996 1997
----------- ----------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss................................................. $ (216,286) $ (267,328) $ (14,394) $ (1,378)
Adjustments to reconcile net loss to net cash flows from
operating activities:
Depreciation and amortization.......................... 99,632 684,007 35,874 425,011
Amortization of debt discount.......................... 5,320 42,715 3,805 47,493
Changes in operating assets and liabilities:
Inventories......................................... (4,938) (28,455) (3,042) (2,522)
Other current assets................................ (62,014) 32,954 (2,012) (126,141)
Security deposits and other assets.................. (9,600) (40,716) (1,667) (10,075)
Accounts payable and accrued liabilities............ 306,706 731,232 (95,656) 448,067
----------- ----------- --------- ----------
Net cash flows from operating activities.......... 118,820 1,154,409 (77,092) 780,455
----------- ----------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment....................... (630,675) (317,946) (56,353) (305,347)
Purchase of property and equipment upon acquisition of
theaters............................................... -- (6,290,000) -- --
Purchase of intangible assets............................ (35,576) (686,906) -- (93,181)
Project acquisition costs................................ (285,557) -- (3,959) --
Escrow deposits.......................................... (287,182) (7,347) (50,000) --
----------- ----------- --------- ----------
Net cash flows from investing activities.......... (1,238,990) (7,302,199) (110,312) (398,528)
----------- ----------- --------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from long term debt............................. 400,000 4,317,228 32,192 625,000
Payments on long term debt............................... (17,448) (136,543) (2,337) (261,311)
Proceeds from subordinated notes payable,
related parties........................................ 580,000 600,000 72,000 --
Proceeds from issuance of preferred stock................ -- 2,500,000 -- --
Proceeds from issuance of common stock................... -- 70,000 -- --
Payments on option....................................... (80,000) (120,000) (45,000) --
Costs related to issuance of
preferred stock........................................ -- (154,911) -- --
Debt issuance costs...................................... -- (342,842) -- --
Deferred offering costs.................................. -- -- -- (65,179)
Dividends paid........................................... (30,000) (10,000) (10,000) --
----------- ----------- --------- ----------
Net cash flows from financing activities.......... 852,552 6,722,932 46,855 298,510
----------- ----------- --------- ----------
NET CHANGE IN CASH......................................... (267,618) 575,142 (140,549) 680,437
CASH, BEGINNING OF PERIOD.................................. 443,821 176,203 176,203 751,345
----------- ----------- --------- ----------
CASH, END OF PERIOD........................................ $ 176,203 $ 751,345 $ 35,654 $1,431,782
----------- ----------- --------- ----------
----------- ----------- --------- ----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid............................................ $ 42,877 $ 623,656 $ 58,161 $ 235,371
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Income taxes paid........................................ $ 1,670 $ 2,814 $ 1,230 $ 1,746
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Non-cash investing and financing activities:
Conversion of subordinated note payable--related party
into common stock................................... $ -- $ 80,000 $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Project acquisition costs in exchange for option
payable............................................. $ 200,000 $ -- $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Common stock issued for purchase of assets............. $ -- $ 2,000,000 $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Acquisition of assets through issuance of note payable
and subordinated note payable....................... $ -- $ 5,000,000 $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
Fair value of warrants issued in connection with
subordinated debt and bank financing................ $ 19,610 $ 439,533 $ -- $ --
----------- ----------- --------- ----------
----------- ----------- --------- ----------
</TABLE>
See the accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information after February 10, 1997 is unaudited)
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation--The consolidated financial statements include
the accounts of Clearview Cinema Group, Inc. ('Clearview') and its wholly-owned
subsidiaries (collectively referred to as 'the Company'). All significant
intercompany balances and transactions have been eliminated in consolidation.
Nature of the Business--The Company is a regional motion picture exhibitor
that operates in-town multiplex theaters primarily located in affluent suburban
communities in the New York/New Jersey metropolitan area. The Company's theaters
show a mix of first-run commercial, art and family-oriented films that is
designed to appeal primarily to sophisticated moviegoers and families with
younger children.
The Company has a limited operating history. Its future success is
dependent upon, among other things, its ability to secure favorable leases,
develop new theaters, obtain significant financing, and continue the employment
of its Chief Executive Officer. See 'Risk Factors' elsewhere in this Prospectus
concerning these and other risks.
Revenues and Film Rental Costs--The Company recognizes revenues from box
office admissions and concession sales at the time of sale. Film rental costs
are based on a film's box office receipts and length of a film's run.
Seasonality--The Company's business is seasonal with a substantial portion
of its revenues and profits being derived during the summer months (June through
August) and the holiday season (November and December).
Estimates and Uncertainties--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results, as determined at a later date,
could differ from those estimates.
Inventories--Inventories consist of concession products and are stated at
the lower of cost (first-in, first-out method) or market.
Property and Equipment--Property and equipment are stated at cost. Acquired
assets are included based on an allocation of their respective aggregate
purchase prices (see Note 7). Buildings and improvements, theater equipment and
office furniture and equipment are depreciated using straight line and
accelerated methods over the estimated useful lives of the assets. In general,
the estimated useful lives used in computing depreciation and amortization are:
buildings and improvements--39 years; theater equipment--5 to 7 years; office
furniture and equipment--5 to 7 years. Leasehold improvements are amortized
using the straight-line method over the term of the respective lease or the
estimated useful life of the asset, whichever is less. Leaseholds are amortized
using the straight-line method over the term of the respective leases.
Intangible Assets--Intangible assets consist of cost in excess of fair
value of businesses acquired (goodwill), organization costs, covenant not
compete, and debt issuance costs. Costs are amortized on a straight line basis
over the following lives: goodwill--15 years, organization costs--5 years and
covenant not to compete--3 years.
Costs related to the issuance of debt are capitalized. Debt issuance costs
and debt discounts are amortized over the term of the related debt.
Deferred Offering Costs--Offering costs have been deferred, pending the
outcome of the offering contemplated herein. If the offering is successful,
these costs will be charged against additional paid-in capital; otherwise, they
will be charged to expense.
Rent Expense--Certain of the Company's theaters have operating leases that
contain predetermined increases in the rentals payable during the terms of such
leases. For these leases, the aggregate rental expense over the lease term is
recognized on a straight-line basis over the lease term. The differences between
the expense charged to operations and amounts payable under such leases are
recorded annually as deferred rent expense, which will ultimately reverse over
the lease term.
F-7
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:--(CONTINUED)
Additional rent is paid for common area maintenance and may also be charged
based on a percentage of net revenue in excess of a predetermined amount.
Financial Instruments--Financial instruments include cash, other assets,
subordinated notes and accounts payable, accrued expenses and long-term debt.
The amounts reported for financial instruments are considered to be reasonable
approximations of their fair values, based on market information concerning
financial instruments with similar characteristics available to management. The
use of different market assumptions and/or estimation methodologies could have a
material effect on the estimated fair value amounts.
Concentration of Credit Risk--The Company maintains its cash balances in
several financial institutions in accounts which are insured by the Federal
Deposit Insurance Corporation for up to $100,000 each. At December 31, 1996, the
Company had uninsured balances totaling approximately $763,000.
Income Taxes--Deferred tax assets and liabilities are computed annually for
temporary differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
temporary differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amounts expected to be realized.
Net Income (Loss) Per Common Share--Net income (loss) per common share is
based upon the weighted average number of outstanding common shares. However,
common shares, preferred shares and warrants issued after December 31, 1995 have
been treated as outstanding for all reported periods due to their per share
prices being significantly less than the price of the shares in the offering
contemplated herein.
Had the offering contemplated in this Prospectus been consummated as of
January 1, 1997 and a portion of its proceeds used to retire the $600,000
subordinated note payable (see Note 5), earnings per share for the three months
ended March 31, 1997 would remain unchanged.
Interim Reporting--The interim financial statements included herein reflect
all adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. Such adjustments
consist solely of normal recurring accruals. Results for interim periods are not
necessarily indicative of results for a full year.
New Accounting Pronouncements--Statement of Financial Accounting Standards
('SFAS') No. 121, 'Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of', requires that certain long-lived assets be
reviewed for possible impairment and written down to fair value, if appropriate.
The Company adopted this pronouncement in 1996 and adoption did not have a
material effect on the Company's financial statements.
SFAS No. 123, 'Accounting for Stock-Based Compensation', requires companies
to measure employee stock compensation plans based on a fair value method of
accounting. However, the statement allows the alternative of continued use of
Accounting Principles Board Opinion No. 25, 'Accounting for Stock Issued to
Employees', with pro forma disclosure of net income and earnings per share
determined as if the fair value based method had been applied in measuring
compensation cost. The Company adopted the pro forma disclosure provisions of
this new pronouncement in 1996 and such adoption did not have a material effect
on the Company's financial statements.
SFAS No. 128, 'Earnings per Share', was issued in February 1997, and is
effective for financial statements issued for periods ending after December 15,
1997. SFAS 128 requires that earnings per share be presented more in line with
earnings per share standards of other countries. The Company expects to adopt
SFAS 128 for the year ending December 31, 1997. The Company has not yet
determined the effect of adoption of this new pronouncement on its financial
statements.
F-8
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 2--PROPERTY AND EQUIPMENT:
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
<S> <C> <C>
Land........................................................... $ 400,000 $ 400,000
Buildings and improvements..................................... 1,302,098 1,302,767
Leaseholds and improvements.................................... 8,985,097 9,089,530
Office furniture and equipment................................. 2,347,117 2,564,016
------------ -----------
13,034,312 13,356,313
Less: Accumulated depreciation and amortization................ 781,095 1,071,692
------------ -----------
$ 12,253,217 $12,284,621
------------ -----------
------------ -----------
</TABLE>
NOTE 3--INTANGIBLE ASSETS:
Intangible assets are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
<S> <C> <C>
Goodwill....................................................... $ 2,151,437 $ 2,207,361
Debt issue costs............................................... 378,264 409,649
Covenant not to compete........................................ 210,000 210,000
Organization costs and other................................... 36,362 42,234
------------ -----------
2,776,063 2,869,244
Less: Accumulated amortization................................. 64,545 195,889
------------ -----------
$ 2,711,518 $ 2,673,355
------------ -----------
------------ -----------
</TABLE>
NOTE 4--ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
<S> <C> <C>
Film rental and booking fees payable........................... $ 699,444 $ 916,767
Accounts payable--other........................................ 243,278 366,772
Sales taxes.................................................... 49,228 49,866
Accrued payroll................................................ 68,632 42,394
Accrued interest............................................... 55,351 76,663
Other accrued expenses......................................... 110,569 222,107
------------ -----------
$ 1,266,502 $ 1,674,569
------------ -----------
------------ -----------
</TABLE>
F-9
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 5--LONG-TERM DEBT, CREDIT AGREEMENT AND SUBORDINATED NOTE PAYABLE:
Long-term debt--A summary of long-term debt follows:
<TABLE>
<CAPTION>
INTEREST DECEMBER 31, MARCH 31,
DESCRIPTION RATE 1996 1997
- ----------------------------------------------------------------------- ----------- ------------ -----------
<S> <C> <C> <C>
Notes payable to bank, issued under a credit agreement, interest 2% above
payable in monthly installments, principal due in quarterly bank's
installments through July 2002, net of unamortized debt discount of prime rate
$384,976 and $344,345................................................ $3,790,024 $8,602,095
Note payable--seller, refinanced as described below.................... -- 4,400,000 --
Notes payable in monthly installments of principal and interest of
$5,029, due October 2004............................................. 11.25% 337,009 331,343
Other.................................................................. 51,228 49,143
------------ -----------
8,578,261 8,982,581
Less: Current maturities............................................... 835,650 966,267
------------ -----------
$7,742,611 $8,016,314
------------ -----------
------------ -----------
</TABLE>
Long-term debt matures as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ------------------------------------------------------------
<S> <C>
1997........................................................ $ 835,650
1998........................................................ 1,276,870
1999........................................................ 1,518,476
2000........................................................ 1,777,516
2001........................................................ 2,982,499
2002 and thereafter......................................... 187,250
----------
$8,578,261
----------
----------
</TABLE>
The notes payable to the bank are collateralized by substantially all of
the assets of the Company and the related credit agreement contains various
restrictive covenants, including maintenance of specified levels of net worth
and debt coverage ratios.
Refinancing--In January 1997, seller-financing of $4,400,000 was paid with
$100,000 from the Company's operating cash and the proceeds from a $4,300,000
bank term note, issued under the Company's credit agreement with its principal
lender. The bank term note bears interest at 2% above the bank's prime rate
(payable monthly), with quarterly principal payments, commencing in July 1997
and ending October 2001, with a balloon payment of $1,225,000 due in December
2001. Accordingly, the note payable at December 31, 1996 has been classified in
accordance with the terms of this new bank term note.
Under a second amendment to this credit agreement with its principal
lender, the Company has additional borrowing availability of $1,250,000, of
which $625,000 was drawn in March 1997.
In accordance with this credit agreement, the Company maintains a
$10,000,000 key-man life insurance policy on its President and Chief Executive
Officer.
Subordinated note payable, other--The Company has a $600,000 subordinated
note payable to the seller of the Bergen County theaters (see Note 7). Interest
is due monthly at rates set forth below. The principal and any
F-10
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 5--LONG-TERM DEBT, CREDIT AGREEMENT AND SUBORDINATED NOTE
PAYABLE:--(CONTINUED)
unpaid interest is due December 2001 or immediately upon the consummation of any
public offering, including the offering contemplated by this Prospectus.
<TABLE>
<CAPTION>
PERIOD: RATE
- -------------------------------------------------------------------- ----
<S> <C>
December 1996 through 1997.......................................... 12%
December 1997 through 1998.......................................... 14%
December 1998 through 1999.......................................... 16%
December 1999 and thereafter........................................ 18%
</TABLE>
See Note 10 for subordinated notes payable to related parties.
NOTE 6--INCOME TAXES:
Deferred income taxes reflect the net effects of temporary differences
between the amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The principal temporary difference
arises from the net operating loss carryforwards and results in a non-current
deferred tax asset of approximately $175,000 at December 31, 1996 and $85,000 at
December 31, 1995.
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. The Company has
determined, based on its recurring net losses since inception, that a full
valuation allowance is appropriate at December 31, 1996 and 1995.
A reconciliation of the provision (benefit) for income taxes computed at
the federal statutory rate of 34% and the effective tax rate of income (loss)
before income taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------- -------------------
1995 1996 1996 1997
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Computed benefit on net loss at federal statutory rate.............. $(72,000) $(76,000) $(4,000) $ (1,000)
State income benefit, net of federal income tax effect.............. (13,000) (14,000) (1,000) --
Tax effect of net operating losses not currently usable............. 85,000 90,000 5,000 1,000
-------- -------- ------- --------
Provision (benefit) for income taxes................................ $ -- $ -- $ -- $ --
-------- -------- ------- --------
-------- -------- ------- --------
</TABLE>
The Company has available at December 31, 1996 net operating loss
carryforwards totaling approximately $454,000 that may be applied against future
consolidated federal taxable income and the future state taxable income of the
respective subsidiary companies. The loss carryforwards will expire through
2011.
Current tax law limits the use of net operating loss carryforwards after
there has been a substantial change in ownership (as defined) during a
three-year period. Because of the possible future changes in common stock
ownership, the use of the Company's net operating loss carryforwards may be
subject to an annual limitation. To the extent amounts available under the
annual limitation are not used, they may be carried forward for the remainder of
15 years from the year the losses were originally incurred.
NOTE 7--THEATER ACQUISITIONS:
During 1996, the Company acquired the leaseholds of seven theaters and two
theaters and the underlying real estate, all located in New Jersey and New York.
The acquisitions have been accounted for under the purchase method of
accounting. Under the purchase method of accounting, the purchase price for each
transaction has been allocated at fair value to the separately identifiable
assets (principally property, equipment and leaseholds) of the respective
theater locations with the remaining balance allocated to goodwill. Also, the
results of operations of
F-11
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 7--THEATER ACQUISITIONS:--(CONTINUED)
the acquired theaters are included in the accompanying consolidated financial
statements from their respective acquisition dates. The acquisitions are
described as follows:
May 1996--The Company purchased the leaseholds of three New Jersey theaters
and one New York theater in May 1996. The total cost of $7,000,000 was paid by
$5,000,000 in cash and the issuance of 433,750 shares of the Company's Common
Stock, valued at $2,000,000. The total cost was allocated as follows:
$835,000--theater equipment, $5,965,000--leasehold interests and
$200,000--covenant not to compete.
July 1996--The Company purchased the leaseholds of two New York theaters in
July 1996. The total cost of $1,499,000 was paid in cash and was allocated as
follows: $1,489,000--leasehold interests and $10,000--covenant not to compete.
December 1996--The Company purchased two theaters and the underlying real
estate and the leasehold of another theater in New Jersey in December 1996. The
total cost of $5,000,000 was paid with a $4,400,000 secured note and $600,000
subordinated note (see Note 5). The purchase price was allocated as follows:
$400,000--land, $1,300,000--buildings and leasehold improvements,
$832,000--theater equipment, $848,000--leasehold interests and
$1,620,000--goodwill.
The following unaudited pro forma results of operations for the years ended
December 31, 1995 and 1996 and the three months ended March 31, 1996 assume all
of the Company's acquisitions occurred as of January 1, 1995 after giving effect
to certain adjustments, including depreciation and increased interest expense on
acquisition debt. The pro forma results have been prepared for comparative
purposes only and do not purport to indicate the results of operations which
would actually have occurred had the combinations been in effect on the dates
indicated, or which may occur in the future.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, THREE MONTHS
-------------------------- ENDING
1995 1996 MARCH 31, 1996
----------- ----------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues........................................................... $10,754,531 $13,182,481 $2,998,294
Net loss........................................................... $(1,629,759) $(1,342,941) $ (465,762)
Net loss per common share.......................................... $ (.44) $ (.36) $ (.12)
</TABLE>
NOTE 8--STOCKHOLDERS' EQUITY:
Stock Split--In May 1997, the Company's Board of Directors approved a 1,250 to 1
stock split which has been retroactively reflected in the accompanying
consolidated financial statements.
Preferred Stock--The Company's Certificate of Incorporation authorizes the
issuance of up to 2,500,000 shares of Preferred Stock. The Board of Directors is
authorized to issue shares of Preferred Stock from time to time in one or more
series and to establish and designate any such series and to fix the number of
shares and the relative conversion rights, voting rights, terms of redemption
and liquidation.
During May and July 1996, the Company sold a total of 779 shares of Class A
Convertible Preferred Stock and preferred warrants for $2,500,000. The warrants,
which expire in June 2006, entitle the holder to purchase up to 471 shares of
Class A Convertible Preferred Stock at an exercise price defined in the
warrants.
The holders of the Class A Convertible Preferred Stock are entitled to
receive preferential dividends, when and as declared by the Board of Directors.
So long as any shares of Class A Convertible Preferred Stock are outstanding,
unless all dividends on the Class A Convertible Preferred Stock have been paid,
no dividend or other distribution may be paid or made on the Common Stock or any
other capital stock of the Company ranking junior as to dividends to the Class A
Convertible Preferred Stock. In the event of any sale of all or substantially
all of the assets of the Company or any liquidation, dissolution or winding up
of the Company, the holders of the Class A Convertible Preferred Stock will be
entitled to receive an amount per share equal to a Liquidation Value (as
defined) plus all declared but unpaid dividends per share on the Class A
Convertible Preferred Stock, prior to
F-12
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 8--STOCKHOLDERS' EQUITY:--(CONTINUED)
any distribution to holders of the Common Stock or any other capital stock of
the Company ranking junior upon liquidation or dissolution to the Class A
Convertible Preferred Stock. The shares of Class A Convertible Preferred Stock
are convertible at any time at the option of the holders thereof into shares of
Common Stock at a conversion ratio of 1,250 to 1 as of the consummation of the
offering contemplated herein. Upon the occurrence of certain events, the shares
of Class A Convertible Preferred Stock will automatically convert into shares of
common stock.
The preferred warrants are not exercisable until June 1, 2001 unless, prior
to that date, the Company sells all or substantially all of its assets,
liquidates, dissolves or winds up or merges or consolidates with another
corporation in a transaction in which certain voting rights are not maintained
by the holders of the Company's voting stock. The number of shares of Class A
Convertible Preferred Stock for which the preferred warrants are exercisable
will be subject to reduction upon the occurrence of certain events. See 'The
Concurrent Transactions' and 'Description of Capital Stock' included elsewhere
in this Prospectus for additional information.
Redemption Rights--A certain common stockholder has the right to sell its
shares of Common Stock to the Company for a 30-day period commencing in 2002 at
a redemption price based upon a formula. If such stockholder does not exercise
that right, the Company has the right to purchase those shares of Common Stock
from such stockholder for the 90-day period commencing after the expiration of
that 30-day period at a price based upon the same formula. Those rights
terminate upon the occurrence of certain events. Such stockholder and the
Company have agreed to terminate those rights in connection with the offering
contemplated herein.
The holder of the Class A Convertible Preferred Stock has the right,
exercisable on or after June 1, 2001, to sell to the Company all of those shares
or the shares of Common Stock into which they have been converted at a
redemption price determined in accordance with a specified formula. In
connection with the offering contemplated in this Prospectus, such holder has
agreed to terminate this right.
The Company reports this redeemable stock at the current redemption value
separately between liabilities and stockholders' equity, since redemption is
outside of the Company's control. A corresponding reduction is made to
stockholders' equity, as the equivalent of treasury stock. The per share
redemption value of the Class A Convertible Preferred Stock is based on the
greater of gross revenues (as defined) or six times theater operating income
before general and administrative expenses, interest and taxes for the preceding
twelve months divided by the number of shares of Common Stock issued and, as if
converted or exercised, all convertible securities, options, warrants and
similar instruments. The redemption value of the Common Stock is based on book
value per share computed on a fully diluted basis.
As described above, the Company and the respective stockholders have agreed
to terminate their redemption rights in connection with the offering
contemplated in this Prospectus. See 'The Concurrent Transactions' included
elsewhere in this Prospectus for additional information.
Other Warrants--In connection with the bank financing as described in Note
5 and pursuant to a May 1996 warrant agreement (amended in December 1996), the
Company issued seven-year warrants in May and December 1996 to its principal
lender to purchase 91,250 and 105,000 shares of the Common Stock, respectively,
at an exercise price of $.01 per share. The warrants issued in connection with
the bank financing and the related debt discount have been recorded based upon
their estimated fair values.
NOTE 9--COMMITMENTS AND CONTINGENCIES:
Theater Leases--Certain of the Company's subsidiaries have entered into
lease arrangements for their respective theater facilities. The following is a
schedule of future minimum rental payments required for all
F-13
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 9--COMMITMENTS AND CONTINGENCIES:--(CONTINUED)
non-cancellable operating leases (for theater facilities) that have initial or
remaining lease terms in excess of one year at December 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- -----------------------------------------------------------
<S> <C>
1997.................................................. $ 954,878
1998.................................................. 959,851
1999.................................................. 943,821
2000.................................................. 865,071
2001.................................................. 777,819
2002 and thereafter................................... 6,868,926
-----------
$11,370,366
-----------
</TABLE>
Rent expense for theater operating leases in 1996 and 1995 was
approximately $802,000 and $290,000, respectively.
In addition, the Company leases its administrative facilities under a
lease, expiring in February 1998, which requires minimum annual payments of
$22,200.
Lease, Project Acquisition Costs and Escrow Deposits--During September
1995, the Company entered into an option agreement providing for the lease of
three New York theater locations with the option to purchase certain assets
relating to the three theaters. In consideration of the option granted by the
agreement, the Company made an initial $200,000 payment which was financed by
the potential seller. The option to purchase the assets for $1,500,000 is
initially exercisable in September 1997. Until then, the Company is required to
make two annual payments of at least $150,000, which it considers to be the
equivalent of interest expense. An annual payment of $186,402 was made in 1996.
If the Company does not exercise the option in 1997, it will be required to make
three additional annual payments of at least $150,000 through the second
exercisable date of September 2000. However, if, at the first exercisable date,
revenues generated from the three theaters do not reach levels specified by the
agreement, the Company has the right to terminate the agreement and would no
longer be obligated for any remaining payments. The agreement also requires the
Company to maintain an escrow deposit, which totaled approximately $294,000 at
December 31, 1996 and March 31, 1997. Capitalized costs related to this project
were approximately $274,000 at December 31, 1996 and March 31, 1997 and are
included in project acquisition costs. It is the Company's present intention to
ultimately exercise this option.
The Company has also incurred certain costs associated with the development
of an additional theater location, principally architect, legal and engineering
fees. At December 31, 1996 and March 31, 1997, these project costs amounted to
approximately $160,000 and $140,000, respectively.
Employment Agreement--The Company is obligated through May 2003 to pay its
President and Chief Executive Officer an annual base salary of $120,000, plus an
additional amount based on gross revenue, such total not to exceed $750,000.
Consulting Agreement--The Company has entered a consulting agreement with
an affiliate of a stockholder, wherein for certain management services, the
Company will pay $50,000 per year through May 1998, then at the rate of 50% of
the Chief Executive Officer's base salary through May 2003 or until the
shareholder should sell its shares.
F-14
<PAGE>
CLEARVIEW CINEMA GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Information after February 10, 1997 is unaudited)
NOTE 10--RELATED PARTY TRANSACTIONS:
Subordinated notes payable to related parties are subordinate to the bank
debt described in Note 5, are due two years from date of issuance and are
summarized as follows:
<TABLE>
<CAPTION>
INTEREST
DESCRIPTION RATE DECEMBER 31, 1996 MARCH 31, 1997
- --------------------------------------------------------------------- -------- ----------------- --------------
<S> <C> <C> <C>
Notes payable of $400,000 to a director of the Company, $50,000 due
in each of August and October 1997 and $300,000 due in December
1998, all with interest payable quarterly, less unamortized
discount of $12,360 and $9,341..................................... 8 % $ 387,640 $ 390,659
Notes payable of $400,000 to an affiliated entity of a director,
$50,000 due in each of August and October 1997 and $300,000 due in
December 1998, all with interest payable quarterly, less
unamortized discount of $12,360 and $9,341......................... 8 % 387,640 390,659
Note payable of $300,000 to a stockholder, due in August 1997, with
interest payable quarterly, less unamortized discount of $1,412 and
$588............................................................... 8 % 298,588 299,412
----------------- --------------
1,073,868 1,080,730
Less: Current maturities............................................. 479,986 484,260
----------------- --------------
$ 593,882 $ 596,470
----------------- --------------
----------------- --------------
</TABLE>
In connection with the issuance of this subordinated debt, the Company
issued warrants to purchase a total of 156,250 shares of the Common Stock at
$1.60 per share, expiring through October 2001; and warrants to purchase 93,750
shares of the Common Stock at $3.20 per share, expiring through December 2002.
Of such warrants, all are currently exercisable, except for the warrants
exercisable for 46,875 shares that would expire in December 2002. Those warrants
will be canceled if the Company pays the related debt in full no later than
December 13, 1997.
The warrants issued in connection with these transactions and the related
debt discount have been recorded based upon their estimated fair values.
The Company has the option of converting the outstanding principal of each
of the above notes on their maturity dates to new notes. The new notes will bear
interest at the rate of 8% per annum with interest and principal due in 20 equal
quarterly installments. Upon exercising its option, the Company would
concurrently issue 5-year warrants to purchase 156,250 shares of the Company's
Common Stock at an exercise price of $1.60 per share or warrants to purchase
93,750 shares of the Company's Common Stock at $3.20 per share.
The related party subordinated notes payable mature as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ----------------------------------------------------------------------
<S> <C>
1997.................................................................. $ 479,986
1998.................................................................. 593,882
----------
$1,073,868
----------
----------
</TABLE>
F-15
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Clearview Cinema Group, Inc.
We have audited the combined statements of income of the Nelson Ferman Theaters
at Emerson, New City, Allwood and Washington Township, movie theaters formerly
owned by affiliates of Nelson Ferman, Inc., for the period of January 1, 1996
through May 29, 1996 (date of sale) and the year ended December 31, 1995. These
combined financial statements are the responsibility of the management of the
Nelson Ferman Theaters. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, combined financial statements referred to above present fairly,
in all material respects, the results of operations of Nelson Ferman Theaters at
Emerson, New City, Allwood and Washington Township, for the periods then ended
in conformity with generally accepted accounting principles.
WISS & COMPANY, LLP
Woodbridge, New Jersey
April 1, 1997
F-16
<PAGE>
NELSON FERMAN THEATERS AT EMERSON, NEW CITY, ALLWOOD AND
WASHINGTON TOWNSHIP
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, THROUGH
DECEMBER 31, MAY 29,
1995 1996
------------ ------------------
<S> <C> <C>
THEATER REVENUES:
Box office.................................................................... $3,679,118 $1,515,839
Concession.................................................................... 584,946 114,922
Other......................................................................... 21,797 23,308
------------ ------------------
4,285,861 1,654,069
------------ ------------------
OPERATING EXPENSES:
Film rental and booking fees.................................................. 1,787,212 564,142
Theater operating expenses.................................................... 1,370,367 622,997
General and administrative expenses........................................... 705,300 282,220
Depreciation and amortization................................................. 161,563 67,317
------------ ------------------
4,024,442 1,536,676
------------ ------------------
OPERATING INCOME................................................................ 261,419 117,393
INTEREST EXPENSE................................................................ 20,613 35,965
------------ ------------------
NET INCOME...................................................................... $ 240,806 $ 81,428
------------ ------------------
------------ ------------------
</TABLE>
See accompanying Notes to Combined Statements of Income.
F-17
<PAGE>
NELSON FERMAN THEATERS AT EMERSON, NEW CITY,
ALLWOOD AND WASHINGTON TOWNSHIP
NOTES TO COMBINED STATEMENTS OF INCOME
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Combination and Nature of the Business--The combined
financial statements include the accounts of four theater affiliates of Nelson
Ferman, Inc. ('Nelson Ferman'): Emerson ('Emerson'), New City ('New City'),
Allwood ('Allwood') and Washington Township ('Washington'), collectively, the
'NF Theater Group'. Until May 29, 1996, these theaters were part of an
independent theater circuit with locations in New Jersey and New York. All
significant intercompany balances and transactions have been eliminated in
combination.
The NF Theater Group operated multi-screen first run theaters in New Jersey
and New York.
Revenue Recognition--The NF Theater Group recognizes revenue from ticket
sales at the time of sale. Concessions sales are recognized as a commission from
a third party, when earned.
Estimates and Uncertainties--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results, as determined at a later date,
could differ from those estimates.
Property and Equipment--Property and equipment are stated at cost. Theater
equipment is depreciated over a period of 5 to 7 years using straight line and
accelerated methods over the estimated useful lives of the assets. Leasehold
improvements are amortized using the straight-line method over the term of the
related lease or the estimated useful life of the asset, whichever is less.
Rent Expense--The NF Theater Group leased its theater facilities pursuant
to various long-term leases. Additional rent was paid for common area
maintenance and was also charged based on a percentage of net revenue in excess
of a predetermined amount. Rent for the NF Theater Group amounted to
approximately $162,000 for the period ended May 29, 1996 and $344,000 for the
year ended December 31, 1995.
Income Taxes--The members of the NF Theater Group had elected under Section
1361 of the Internal Revenue Code of 1986, as amended, to be taxed as 'S'
corporations. Under those provisions, all earnings and losses of the members of
the NF Theater Group were reported on the tax returns of their shareholders.
Accordingly, no provisions have been made for federal income tax reporting
purposes. The NF Theater Group continues to be subject to state income taxes at
reduced rates.
NOTE 2--RELATED PARTY TRANSACTIONS:
Operating Expenses and Management Fees--The NF Theater Group's operations
through the date of sale were significantly controlled by Nelson Ferman. In that
regard, the cash deposited in the operating accounts of each theater was
transferred to Nelson Ferman, which used the funds to pay operating expenses,
along with the funds from other Nelson Ferman affiliated theaters, using an
integrated system.
In addition to the normal operating expenses, the NF Theater Group was
allocated a management fee from Nelson Ferman based on total corporate overhead.
The management fee allocation amounted to approximately $705,000 for the year
ended December 31, 1995 and $282,000 for the period ended May 29, 1996.
NOTE 3--SUBSEQUENT EVENT:
On May 29, 1996, substantially all of the NF Theater Group's assets,
including leasehold interests, equipment and various operating contracts were
sold to Clearview Cinema Group, Inc. ('Clearview') for $7,000,000, including
$5,000,000 in cash and $2,000,000 in shares of common stock of Clearview.
The theaters began operating, effective May 30, 1996, as Clearview theaters
at which time the third party concession commission arrangements were
discontinued and Clearview commenced operating the concession facilities. The
results of operations of the NF Theater Group subsequent to the acquisition are
included in Clearview's results of operations.
See Note 7 of the Notes to Consolidated Financial Statements of Clearview
Cinema Group, Inc. and Subsidiaries included elsewhere in this Prospectus for
additional information.
F-18
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Clearview Cinema Group, Inc.
We have audited the combined statements of income of Magic Cinemas at
Bergenfield, Tenafly and Closter, movie theaters formerly owned by Magic
Cinemas, LLC, for the period of January 1, 1996 through December 13, 1996 (date
of sale) and the year ended December 31, 1995. These combined financial
statements are the responsibility of the management of Magic Cinemas, LLC. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, combined financial statements referred to above present fairly,
in all material respects, the results of operations of Magic Cinemas at
Bergenfield, Tenafly and Closter, for the periods then ended in conformity with
generally accepted accounting principles.
WISS & COMPANY, LLP
Woodbridge, New Jersey
April 10, 1997
F-19
<PAGE>
MAGIC CINEMAS AT BERGENFIELD, TENAFLY AND CLOSTER
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
THROUGH
YEAR ENDED DECEMBER 13,
DECEMBER 31, 1995 1996
------------------ ------------
<S> <C> <C>
THEATER REVENUES:
Box office.................................................................... $1,772,745 $1,743,015
Concession.................................................................... 504,905 521,737
Other......................................................................... 136,225 149,986
------------------ ------------
2,413,875 2,414,738
------------------ ------------
OPERATING EXPENSES:
Film rental and booking fees.................................................. 832,834 809,353
Cost of concession sales...................................................... 89,925 85,090
Theater operating expenses.................................................... 768,530 865,639
General and administrative expenses........................................... 173,186 169,032
Depreciation and amortization................................................. 255,067 168,704
------------------ ------------
2,119,542 2,097,818
------------------ ------------
OPERATING INCOME................................................................ 294,333 316,920
INTEREST EXPENSE................................................................ 243,290 45,408
------------------ ------------
NET INCOME...................................................................... $ 51,043 $ 271,512
------------------ ------------
------------------ ------------
</TABLE>
See accompanying Notes to Combined Statements of Income.
F-20
<PAGE>
MAGIC CINEMAS AT BERGENFIELD, TENAFLY AND CLOSTER
NOTES TO COMBINED STATEMENTS OF INCOME
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Combination and Nature of the Business--The combined
financial statements include the accounts of three theater divisions of Magic
Cinemas, LLC: Bergenfield ('Bergenfield'), Tenafly ('Tenafly') and Closter
('Closter'), collectively, the 'Magic Theater Group'. Until December 13, 1996,
these theaters were divisions of Magic Cinemas, LLC ('Magic'), an independent
theater circuit with locations in New Jersey and Pennsylvania. All significant
intercompany balances and transactions have been eliminated in combination.
The Magic Theater Group operated multi-screen first run theaters in New
Jersey.
Revenue Recognition--The Magic Theater Group recognizes revenue from ticket
and concessions sales at the time of sale. Rental income is recognized in the
month that it is earned.
Estimates and Uncertainties--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results, as determined at a later date,
could differ from those estimates.
Property and Equipment--Property and equipment are stated at cost.
Buildings and improvements, theater equipment and office furniture and equipment
are depreciated using straight line and accelerated methods over the estimated
useful lives of the assets. In general, the estimated useful lives used in
computing depreciation and amortization are: buildings and improvements--39
years; theater equipment--5 to 7 years; office furniture and equipment--5 to 7
years. Leasehold improvements are amortized using the straight-line method over
the term of the related lease or the estimated useful life of the asset,
whichever is less.
Rent Expense--The Closter facility has an operating lease which contains
predetermined increases in the rental payable during the term of such lease. For
this lease, the aggregate rental expense is recognized on a straight-line basis
over the lease term. The differences between the expense charged to operations
and amounts payable under such leases are recorded annually as deferred rent
expense, which will ultimately reverse over the lease term. Additional rent is
paid for common area maintenance and may also be charged based on a percentage
of net revenue in excess of a predetermined amount.
Rent expense for the Closter theater amounted to approximately $77,000 for
the period ended December 13, 1996 and $50,000 for the year ended December 31,
1995.
Theaters located in Bergenfield and Tenafly were owned by the Magic Theater
Group.
Income Taxes--For the year ended December 31, 1995, the Magic Theater Group
had elected under Section 1361 of the Internal Revenue Code of 1986, as amended,
to be taxed as 'S' corporations and, for the period ended December 13, 1996,
Magic was treated as a partnership for Federal and New Jersey state income tax
reporting purposes. Under these provisions, all earnings and losses were
reported on the tax returns of the respective shareholders, partners or members.
Accordingly, no provisions have been made for federal income tax reporting
purposes.
NOTE 2--RELATED PARTY TRANSACTIONS:
Operating Expenses and Management Fees--The Magic Theater Group's
operations through the date of sale by Magic were significantly controlled by
Magic. In that regard, the cash deposited to the Magic Theater Group's operating
accounts was transferred to Magic which used the funds to pay operating
expenses, along with funds from other Magic-owned theaters, on a company-wide
basis using an integrated system.
In addition to the normal operating expenses, the Magic Theater Group was
allocated a management fee from the corporate division of Magic based on
corporate overhead. The management fee amounted to approximately $149,000 for
the year ended December 31, 1995. For the period ended December 13, 1996, an
administrative charge was provided based on Magic's historical percentage of
corporate overhead.
F-21
<PAGE>
MAGIC CINEMAS AT BERGENFIELD, TENAFLY AND CLOSTER
NOTES TO COMBINED STATEMENTS OF INCOME--(CONTINUED)
NOTE 2--RELATED PARTY TRANSACTIONS:--(CONTINUED)
Interest Expense--Interest expense for the period ended December 13, 1996
and the year ended December 31, 1995 was for interest paid and/or owed to
related parties. On March 22, 1996, the underlying related party debt was
restructured into equity.
NOTE 3--SUBSEQUENT EVENTS:
On December 13, 1996, substantially all of the Magic Theater Group's
assets, including land, building, equipment and various operating contracts and
leases were sold to Clearview Cinema Group, Inc. ('Clearview') at a sale price
of $5,000,000. The theaters began operating, effective December 14, 1996, as
Clearview theaters and the results of operations subsequent to the acquisition
are included in Clearview's results of operations.
See Note 7 of the Notes to the Consolidated Financial Statements of
Clearview Cinema Group, Inc. and Subsidiaries included elsewhere in this
Prospectus for additional information.
F-22
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Clearview Cinema Group, Inc.
We have audited the combined balance sheet of the United Artist Theatre Circuit,
Inc. Theaters at Bronxville, Larchmont, Wayne, New City and Mamaroneck (the 'UA
Theaters'), as of December 31, 1996 and the related combined statements of
income and divisional equity and cash flows for each of the two years in the
period ended December 31, 1996. These combined financial statements are the
responsibility of the management of United Artist Theatre Circuit, Inc. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the UA Theaters at
December 31, 1996 and the results of their operations and their cash flows for
each of the two years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the combined financial statements, United Artist
Theatre Circuit, Inc. changed its method of accounting for impairment of
long-lived assets in accordance with SFAS 121 in 1996.
WISS & COMPANY, LLP
Woodbridge, New Jersey
June 4, 1997
F-23
<PAGE>
UNITED ARTISTS THEATRES AT BRONXVILLE, LARCHMONT, WAYNE,
NEW CITY AND MAMARONECK
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
1997
DECEMBER 31, ----------
1996
------------ (UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................................................... $ 61,716 $ 65,666
Inventories........................................................................ 22,122 22,930
Other current assets............................................................... 19,366 43,799
------------ ----------
Total current assets............................................................ 103,204 132,395
------------ ----------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION................................ 4,846,814 4,827,793
------------ ----------
OTHER ASSETS:
Due from parent and affiliate...................................................... 2,955,667 3,247,520
Security deposits.................................................................. 2,000 2,000
------------ ----------
2,957,667 3,249,520
------------ ----------
$7,907,685 $8,209,708
------------ ----------
------------ ----------
LIABILITIES AND DIVISIONAL EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses.............................................. $ 731,595 $ 932,282
DIVISIONAL EQUITY.................................................................... 7,176,090 7,277,426
------------ ----------
$7,907,685 $8,209,708
------------ ----------
------------ ----------
</TABLE>
See accompanying notes to combined financial statements.
F-24
<PAGE>
UNITED ARTISTS THEATRES AT BRONXVILLE, LARCHMONT, WAYNE,
NEW CITY AND MAMARONECK
COMBINED STATEMENTS OF INCOME AND DIVISIONAL EQUITY
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
-------------------------- --------------------------
1995 1996 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
THEATER REVENUES:
Box office................................. $3,503,949 $3,578,346 $ 864,313 $ 961,187
Concession................................. 1,004,651 1,048,292 239,725 278,823
Other...................................... 147,248 174,334 35,051 39,238
---------- ---------- ---------- ----------
4,655,848 4,800,972 1,139,089 1,279,248
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Film rental and booking fees............... 1,556,970 1,603,729 362,806 482,578
Cost of concession sales................... 171,003 176,031 42,005 43,294
Theater operating expenses................. 1,734,320 1,828,092 444,099 470,704
General and administrative................. 71,634 71,366 16,933 19,890
Depreciation and amortization.............. 224,947 216,154 56,033 49,142
---------- ---------- ---------- ----------
3,758,874 3,895,372 921,876 1,065,608
---------- ---------- ---------- ----------
OPERATING INCOME............................. 896,974 905,600 217,213 213,640
---------- ---------- ---------- ----------
OTHER EXPENSES:
Impairment of long-lived assets............ -- 224,908 -- --
Interest................................... 588,577 444,534 111,000 112,304
---------- ---------- ---------- ----------
Total other expenses.................... 588,577 669,442 111,000 112,304
---------- ---------- ---------- ----------
NET INCOME................................... 308,397 236,158 106,213 101,336
DIVISIONAL EQUITY:
Beginning of period........................ 6,631,535 6,939,932 6,939,932 7,176,090
---------- ---------- ---------- ----------
End of period.............................. $6,939,932 $7,176,090 $7,046,145 $7,277,426
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to combined financial statements.
F-25
<PAGE>
UNITED ARTISTS THEATRES AT BRONXVILLE, LARCHMONT, WAYNE,
NEW CITY AND MAMARONECK
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER THREE MONTHS ENDED
31, MARCH 31,
---------------------- --------------------
1995 1996 1996 1997
-------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................... $308,397 $ 236,158 $106,213 $101,336
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
Depreciation and amortization.............................. 224,947 216,154 56,033 49,142
Loss in impairment of long-lived asset..................... -- 224,908 -- --
Changes in operating assets and liabilities:
Inventories.............................................. 299 (1,442) (1,073) (808)
Other current assets..................................... 471 19,510 14,586 (24,433)
Security deposits........................................ -- (2,000) (2,000) --
Accounts payable and accrued expenses.................... (73,043) 274,470 51,129 200,687
-------- ---------- -------- --------
Net cash flows from operating activities.............. 461,071 967,758 224,888 325,924
-------- ---------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment............................ (180,994) (46,942) (28,277) (30,121)
Advances to parent and affiliate.............................. (250,028) (1,004,461) (289,193) (291,853)
-------- ---------- -------- --------
Net cash flows from investing activities.............. (431,022) (1,051,403) (317,470) (321,974)
-------- ---------- -------- --------
NET CHANGE IN CASH.............................................. 30,049 (83,645) (92,582) 3,950
CASH, BEGINNING OF PERIOD....................................... 115,312 145,361 145,361 61,716
---------- -------- --------
CASH, END OF PERIOD............................................. $145,361 $ 61,716 $ 52,779 $ 65,666
-------- ---------- -------- --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid................................................. $ -- $ -- $ -- $ --
-------- ---------- -------- --------
Income taxes paid............................................. $ -- $ -- $ -- $ --
-------- ---------- -------- --------
</TABLE>
See accompanying notes to combined financial statements.
F-26
<PAGE>
UNITED ARTIST THEATRE CIRCUIT, INC. CINEMAS AT
BRONXVILLE, LARCHMONT, WAYNE, NEW CITY AND MAMARONECK
NOTES TO COMBINED FINANCIAL STATEMENTS
(Data relating to March 31, 1997 and 1996 are unaudited)
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Combination--The combined financial statements include the
accounts of the United Artist Theatre Circuit, Inc. theaters at Bronxville,
Larchmont, Wayne, New City and Mamaroneck (the 'UA Theaters'). All significant
inter-location balances and transactions have been eliminated in combination.
Nature of the Business--The UA Theaters are regional motion picture houses
located in suburban communities in the New York/New Jersey metropolitan area.
Revenues and Film Rental Costs--The UA Theaters recognize revenues from box
office admissions and concession sales at the time of sale. Film rental costs
are based a film's box office receipts and length of a film's run.
Seasonality--The UA Theaters' business is seasonal with a large portion of
their revenues and profits being derived during the summer months (June through
August) and the holiday season (November and December).
Estimates and Uncertainties--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results, as determined at a later date,
could differ from those estimates.
Inventories--Inventories consist of concession products and are stated at
the lower of cost (first-in, first-out method) or market.
Property and Equipment--Property and equipment are stated at cost.
Buildings and improvements, theater equipment and office furniture and equipment
are depreciated using straight line and accelerated methods over the estimated
useful lives of the assets. In general, the estimated useful lives used in
computing depreciation and amortization are: buildings and improvements--39
years; theater equipment--5 to 10 years; office furniture and equipment--5 to 10
years. Leasehold improvements are amortized using the straight-line method over
the term of the related lease or the estimated useful life of the asset,
whichever is less.
Rent Expense--The Wayne theater included in the combined financial
statements is operated under a lease that contains predetermined increases in
the rent payable during the term of such lease. For this lease, the aggregate
rental expense over the lease term is recognized on a straight-line basis over
the lease term. The differences between the expense charged to operations and
the amount payable under that lease are recorded annually as deferred rent
expense, which will ultimately reverse over the lease term.
Additional rent is paid for common area maintenance and may also be charged
based on a percentage of net revenue in excess of a predetermined amount.
Financial Instruments--Financial instruments include cash, security
deposits, accounts payable and accrued expenses The amounts reported for
financial instruments are considered to be reasonable approximations of their
fair values, based on market information concerning financial instruments with
similar characteristics available to management.
Impairment of Long-Lived Assets--In 1996, the United Artists Theatre
Circuit, Inc. ('UA') adopted Statement of Financial Accounting Standards
('SFAS') No. 121, 'Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of' (See Note 4). SFAS No. 121 prescribes that
an impairment loss is recognized in the event that facts and circumstances
indicate that the carrying amount of an asset may not be recoverable.
F-27
<PAGE>
UNITED ARTIST THEATRE CIRCUIT, INC. CINEMAS AT
BRONXVILLE, LARCHMONT, WAYNE, NEW CITY AND MAMARONECK
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(Data relating to March 31, 1997 and 1996 are unaudited)
NOTE 1--NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:--(CONTINUED)
Interim Reporting--The interim financial statements included herein reflect
all adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. Such adjustments
consist solely of normal recurring accruals. Results for interim periods are not
necessarily indicative of results for a full year.
NOTE 2--PROPERTY AND EQUIPMENT:
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ ----------
<S> <C> <C>
Land............................................................. $1,520,650 $1,520,650
Buildings and improvements....................................... 1,584,363 1,584,363
Leasehold improvements........................................... 1,922,135 1,928,550
Office furniture and equipment................................... 874,058 897,702
------------ ----------
5,901,206 5,931,265
Less: Accumulated depreciation and amortization.................. 1,054,392 1,103,472
------------ ----------
$4,846,814 $4,827,793
------------ ----------
------------ ----------
</TABLE>
NOTE 3--COMMITMENTS AND CONTINGENCIES:
Theater Leases--Certain of the UA Theaters are operated under lease
arrangements. The following is a schedule of future minimum rental payments
required for all non-cancellable operating leases (for theater facilities) that
have initial or remaining lease terms in excess of one year at December 31,
1996:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ----------------------------------------------------------------------
<S> <C>
1997.................................................................. $ 121,293
1998.................................................................. 121,293
1999.................................................................. 121,293
2000.................................................................. 121,293
2001.................................................................. 122,439
2002 and thereafter................................................... 961,689
----------
$1,569,300
----------
----------
</TABLE>
Rent expense for theater operating leases in 1995 and 1996 was
approximately $108,000 and $151,000, respectively.
NOTE 4--IMPAIRMENT OF LONG-LIVED ASSETS:
In the third quarter of 1996, UA recorded a $224,908 charge for the
difference between the fair value and the carrying value of the New City theater
location. The fair value was determined based on an offer received by UA to sell
such location for approximately $1,300,000, reduced further for estimated sales
costs.
F-28
<PAGE>
UNITED ARTIST THEATRE CIRCUIT, INC. CINEMAS AT
BRONXVILLE, LARCHMONT, WAYNE, NEW CITY AND MAMARONECK
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(Data relating to March 31, 1997 and 1996 are unaudited)
NOTE 5--RELATED PARTY TRANSACTIONS:
Operating Expenses, Management Fees and Interest Expense--The UA Theaters'
operations through the date of sale were significantly controlled by UA. In that
regard, the cash deposited to the UA Theaters' operating accounts was
transferred to UA which used the funds to pay operating expenses, along with the
funds from other UA affiliated theaters, on a company-wide basis using an
integrated system.
Interest expense represents an allocation of interest costs incurred by UA
and is charged to the UA Theaters based on each theater's respective net assets.
NOTE 6--SUBSEQUENT EVENTS (UNAUDITED):
In July 1997, UA entered into an agreement in principle to sell
substantially all of the assets, including leasehold interests, equipment and
various operating contracts of the UA Theaters to Clearview Cinema Group, Inc.
for $8,650,000.
F-29
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. ANY INFORMATION OR REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR
MADE, MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN
RESPECT OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS. HOWEVER, IN THE EVENT
OF A MATERIAL CHANGE, THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED
ACCORDINGLY.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 7
The Concurrent Transactions.................... 11
Use of Proceeds................................ 12
Dividend Policy................................ 12
Capitalization................................. 13
Dilution....................................... 14
Pro Forma Consolidated Financial Data.......... 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 22
Business....................................... 27
Management and Directors....................... 35
Certain Transactions........................... 38
Principal Stockholders......................... 42
Description of Capital Stock................... 43
Shares Eligible For Future Sale................ 46
Underwriting................................... 47
Legal Matters.................................. 49
Experts........................................ 49
Additional Information......................... 49
Index to Financial Statements.................. F-1
</TABLE>
UNTIL ____________, 1997 (25 DAY AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
_______ SHARES
[LOGO]
CLEARVIEW CINEMA
GROUP, INC.
COMMON STOCK
-------------------
PROSPECTUS
-------------------
PRIME CHARTER LTD.
______________, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is hereby made to Section 145 of the General Corporation Law of
the State of Delaware (the 'DCL'), which provides that a corporation will have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (a 'proceeding'), by
reason of the fact the he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, with respect to the payment of certain
amounts under certain circumstances.
Article V ('Article V') of the proposed Amended and Restated By-laws of
Clearview Cinema Group, Inc. (the 'Company') provides that the Company will
indemnify and hold harmless, to the fullest extent permitted by applicable law,
any person who was or is made or is threatened to be made a party or is
otherwise involved in any proceeding by reason of the fact that he, or a person
for whom he is the legal representative, is or was a director or officer of the
Company or is or was a director or officer of the Company and is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust, enterprise or
non-profit entity, including service with respect to employee benefit plans.
Any indemnification pursuant to Article V (unless ordered by a court) will
be made by the Company only upon a determination that indemnification is proper
in the circumstances because the director or officer, as the case may be, has
met the applicable standard of conduct set forth in Article V. Such
determination will be made (a) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(b) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (c) by the stockholders. To
the extent, however, that a director or officer of the Company has been
successful on the merits or otherwise in defense of a proceeding, or in defense
of any claim, issue or matter therein, he or she will be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith, without the necessity of authorization in the
specific case. Except for proceedings to enforce rights to indemnification
(which are governed by Section 5.5 of Article V), the Company is not obligated
to indemnify any director or officer in connection with a proceeding (or part
thereof) initiated by that person unless that proceeding was authorized or
consented to by the Board of Directors of the Company.
Expenses (including attorneys' fees) incurred by a director or officer in
defending or investigating any threatened or pending civil, criminal,
administrative or investigative action, suit or proceeding will be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of that director or officer to
repay those amounts if it ultimately is determined that he or she is not
entitled to be indemnified by the Company as authorized in Article V, if such an
undertaking is required at the time by the DCL. In addition, the Board of
Directors of the Company, without approval from the stockholders, may borrow
money on behalf of the Company from time to time to discharge the Company's
obligations with respect to indemnification, the advancement and reimbursement
of expenses, and the purchase and maintenance of insurance on behalf of any
person, whether or not the Company would have the power or the obligation to
indemnify him or her against such liability under the provisions of Article V.
Article V provides that the rights to indemnification and advancement of
expenses conferred by Article V are not exclusive of any other rights to which
those seeking indemnification or advancement of expenses may otherwise be
entitled. Article V further provides that the Board of Directors of the Company
is authorized to provide rights to indemnification and the advancement of
expenses to employees and agents of the Company similar to those conferred in
Article V on directors and officers of the Company. Nothing in Article V
precludes the indemnification of any person whom the Company has the power or
obligation to indemnify under the provisions of the DCL, including, without
limitation, the provisions of Section 145 thereof, or otherwise.
Article V states that any repeal or modification of the Article will not
adversely affect any right or protection of a director of the Company existing
at the time of such repeal or modification with respect to acts or omissions
occurring prior to such repeal or modification. Further, the rights conferred by
Article V, unless otherwise
II-1
<PAGE>
provided when authorized or ratified, continue as to any person who has ceased
to be a director of the Company and inure to the benefit of the heirs, executors
and administrators of such person.
Article IX ('Article IX') of the proposed Amended and Restated Certificate
of Incorporation of the Company provides that the personal liability of a
director of the Company is eliminated to the fullest extent permitted by Section
102(b)(7) of the DCL, as the same may be amended and supplemented. Article IX
states that, without limiting the generality of the foregoing, no director will
be personally liable to the Company or any of its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the DCL (relating to
unlawful distributions and redemptions of shares), or (iv) for any transaction
from which the director derived an improper personal benefit.
The rights conferred by Article IX are presumed to have been relied upon by
directors of the Company in serving or continuing to serve the Company and are
enforceable as contract rights. Those rights are not exclusive of any other
rights to which the directors of the Company may otherwise be entitled. The
Company may enter into contracts to provide the directors of the Company with
rights to indemnification to the maximum extent permitted by the DCL. The
Company may create trust funds, grant security interests in the assets of the
Company, obtain letters of credit or use other means to ensure payment of such
amounts as may be necessary to perform the obligations provided for in Article
IX, the Amended and Restated By-laws of the Company or any such contract.
The rights conferred by Article IX continue as to any person who has ceased
to be a director of the Company and inure to the benefit of the heirs, executors
and administrators of such person. Any repeal or modification of Article IX by
the stockholders of the Company will not adversely affect any right or
protection of a director of the Company existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such repeal or
modification.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees payable to the Securities and
Exchange Commission and other estimated expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.................................. $ 3,484.85
Listing Fee.......................................................................... 27,500.00
Printing and Engraving Expenses...................................................... *
Accounting Fees and Expenses......................................................... *
Legal Fees and Expenses.............................................................. *
Blue Sky Qualification Fees and Expenses............................................. *
Transfer Agent Fees and Expenses..................................................... *
Miscellaneous........................................................................ *
----------
Total........................................................................... *
----------
----------
</TABLE>
- ------------------
* To be filed by amendment.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Pursuant to an Investment and Stockholders Agreement dated December 21,
1994, the Company sold 250 shares of its common stock, $.01 par value (the
'Common Stock'), to CMNY Capital II, L.P. ('CMNY') for an aggregate purchase
price of $500,000 in cash. Concurrently, the Company, pursuant to a Contribution
and Exchange Agreement dated December 21, 1994, issued to A. Dale Mayo ('Mayo')
and Brett E. Marks ('Marks') 550 and 200 shares of Common Stock, respectively,
in exchange for (i) all of the outstanding shares of capital stock of Clearview
Theater Group, Inc., CCC Madison Triple Cinema Corp., CCC Chester Twin Cinema
Corporation and CCC Manasquan Cinema Corporation (collectively, the
'Subsidiaries') and (ii) promissory notes of certain Subsidiaries with an
aggregate principal amount of $250,000.
II-2
<PAGE>
On June 20, 1995, Michael C. Rush ('Rush') purchased (i) 20 shares of
Common Stock, pursuant to a Stock Purchase Agreement, for an aggregate purchase
price of $40,000 in cash from Mayo and (ii) a convertible promissory note in the
principal amount of $80,000 from the Company. The terms of the convertible
promissory note provided Rush with the right to convert that note at any time on
or prior to June 20, 1996 into 20 shares of Common Stock, and Rush exercised
that right on May 15, 1996.
On August 31, 1995, the Company issued three 8% Subordinated Promissory
Notes with the principal amounts of $300,000, $50,000 and $50,000 (each a
'Subordinated Note') to CMNY, CMCO, Inc. ('CMCO') and Robert G. Davidoff
('Davidoff'), respectively. The principal of these Subordinated Notes is payable
in one installment on August 31, 1997. With each Subordinated Note sold, the
Company issued one Common Stock Purchase Warrant A ('Warrant A') and one Common
Stock Purchase Warrant B ('Warrant B'; Warrants A and Warrants B being
collectively referred to herein as the 'Warrants'). Each of these Warrants
entitles its holder for a five-year period to purchase a specified number of
shares of Common Stock at an exercise price of $2,000 per share, subject to
adjustment as set forth in each Warrant. Each Warrant A is exercisable from
September 1, 1996 through August 31, 2001, and each Warrant B is exercisable
from August 31, 1995 through August 31, 2000.
On October 11, 1995, the Company issued two additional Subordinated Notes
with a principal amount of $50,000 each to Davidoff and CMCO. The principal of
these Subordinated Notes is payable in one installment on October 11, 1997. With
each Subordinated Note sold, the Company issued one Warrant A and one Warrant B.
Each of these Warrants entitles its holder for a five-year period to purchase a
specified number of shares of Common Stock at an exercise price of $2,000 per
share, subject to adjustment as set forth in each Warrant. Each of these
Warrants is the same as the Warrants previously issued with an exercise price of
$2,000 per share, except that these Warrant A's are exercisable from October 11,
1996 through October 11, 2001, and theseWarrant B's are exercisable from October
11, 1995 through October 11, 2000.
On December 13, 1996, the Company issued two more Subordinated Notes with a
principal amount of $300,000 each to Davidoff and CMCO. The principal of these
Subordinated Notes is payable in one installment on December 13, 1998. With each
Subordinated Note sold,the Company issued one Warrant A and one Warrant B. Each
of these Warrants entitles its holder for a five-year period to purchase a
specified number of shares of Common Stock at an exercise price of $4,000 per
share, subject to adjustment as set forth in each Warrant. However, each Warrant
A is cancelable and non-exercisable if the Company repays the corresponding
Subordinated Note in full prior to December 13, 1997. These Warrant A's are
exercisable from December 13, 1997 through December 13, 2002, and these Warrant
B's are exercisable from December 13, 1996 through December 13, 2001.
The holders of the Subordinated Notes received Warrants exercisable for the
number of shares of Common Stock set forth below:
<TABLE>
<CAPTION>
AUGUST 31, 1995 OCTOBER 11, 1995 DECEMBER 13, 1996
SUBORDINATED SUBORDINATED SUBORDINATED
NOTES NOTES NOTES
--------------- ---------------- -----------------
<S> <C> <C> <C>
CMNY 75 -- --
CMCO 12.5 12.5 37.5
Davidoff 12.5 12.5 37.5
</TABLE>
The Company acquired the assets of Emerson Cinema, Inc. in exchange for 347
shares of Common Stock pursuant to the Agreement and Plan of Reorganization
dated May 29, 1996 ('Plan of Reorganization').
In connection with an Asset Purchase Agreement dated December 31, 1996, the
Company, as purchaser, issued on that same date a Senior Subordinated Note (the
'Senior Note') to the seller, Magic Cinemas, L.L.C. in the principal amount of
$600,000. The principal of the Senior Note is payable in full on the earlier of
(i) December 13, 2001 and (ii) the date of the closing of an initial public
offering of the Company's debt or equity securities.
Pursuant to a Subscription Agreement dated July 31, 1996, Rush purchased
another 5 shares of Common Stock at $4,000 per share for an aggregate purchase
price of $20,000. Also on that date, Paul and Cindy Kay
II-3
<PAGE>
purchased 16 shares of Common Stock from the Company at $3,124 per share for an
aggregate purchase price of $50,000.
The Company sold a total of 779 shares of its Class A Convertible Preferred
Stock, $.01 par value ('Class A Preferred Stock'), to MidMark Capital, L.P.
('MidMark'). Pursuant to a Preferred Stock and Warrant Purchase Agreement dated
May 29, 1996 and for a purchase price of $1,750,000, MidMark purchased 684
shares of Class A Preferred Stock. Pursuant to a Preferred Stock and Warrant
Purchase Agreement dated July 2, 1996 and for a purchase of $750,000, MidMark
purchased another 95 shares of Class A Preferred Stock.
In connection with the above-described sales of securities (the
'transactions'), the Company relied upon the exemption from registration set
forth in Section 4(2) of the Securities Act of 1933, as amended (the 'Act'), as
construed by the United States Supreme Court in Securities and Exchange
Commission v. Ralston Purina Co., (1953).
Each of the transactions was the result of arm's length negotiations with
purchasers who were knowledgeable about the Company due to their relationships
with the Company or otherwise had access to the same kinds of information
required by the Act to be disclosed in the form of a registration statement. In
addition, each purchaser possessed the experience and skills necessary to
evaluate the risks involved with the purchase of securities of the Company.
At the time of their purchases, Mayo and Marks were both directors and
officers and Paul Kay was an officer of the Company. MidMark and CMNY are small
business investment companies licensed by the Small Business Administration
under the Small Business Investment Act of 1958, as amended. In addition,
Davidoff, a managing director of CMCO and a general partner of CMNY, was a
director of the Company at the time CMCO purchased securities of the Company.
Emerson Cinema, Inc. and Magic Cinema, L.L.C. had been involved in the movie
exhibition industry for several years. A former chief executive officer of Home
Unity Savings Bank, a $900,000,000 asset savings bank and a former managing
director of Lehman Brothers, New York, Rush is a sophisticated investor with a
net income in excess of $200,000 in each year during the period 1993-1996.
ITEM 27. EXHIBITS.
The following exhibits are filed as part of this registration statement:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
1.01 Form of Underwriting Agreement***
2.01 Agreement of Purchase and Sale by and among United Artists Theatre Circuit, Inc., United Artists
Properties I Corp., Mamaroneck Playhouse Holding Corporation and CCC Bronxville Cinema Corp., CCC
Mamaroneck Cinema Corp., CCC Wayne Cinema Corp., CCC BC Realty Corp., CCC Cinema 304 Corp. and
Larchmont Cinema Corp., dated July , 1997.***
3.01(a) Current Certificate of Incorporation of Clearview Cinema Group, Inc.*
3.01(b) Proposed Amended and Restated Certificate of Incorporation of Clearview Cinema Group, Inc.***
3.02(a) Current By-laws of Clearview Cinema Group, Inc.*
3.02(b) Proposed Amended and Restated By-laws of Clearview Cinema Group, Inc.***
4.01 Specimen Common Stock Certificate***
5.01 Opinion of Kirkpatrick & Lockhart LLP as to the validity of the securities being registered***
9.01 Voting Trust Agreement by and between Brett E. Marks and A. Dale Mayo as Voting Trustee, dated
December 21, 1994*
9.02 Voting Trust Agreement by and between Michael C. Rush and A. Dale Mayo as Voting Trustee, dated
June 20, 1995*
9.03 Voting Trust Agreement by and between Emerson Cinema, Inc. and A. Dale Mayo as Voting Trustee,
dated May 29, 1996*
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
9.04 Voting Trust Agreement by and among Paul Kay, Cindy Kay and A. Dale Mayo as Voting Trustee, dated
July 31, 1996*
9.05 Voting Trust Agreement by and between Louis G. Novick and A. Dale Mayo as Voting Trustee, dated
August 30, 1996.**
10.01 Contribution, Exchange & Termination Agreement by and among Clearview Cinema Group, Inc. (the
'Company'), A. Dale Mayo, and Brett E. Marks, dated December 21, 1994*
10.02 Investment and Stockholders Agreement by and among the Company, A. Dale Mayo, Brett E. Marks and
CMNY Capital II, L.P., dated December 21, 1994*
10.03 First Amendment to Investment and Stockholders Agreement by and among the Company, A. Dale Mayo,
Brett E. Marks and CMNY Capital II, L.P., dated May 29, 1996*
10.04 Agreement by Michael C. Rush, dated June 20, 1995, to join the Investment and Stockholders
Agreement dated December 21, 1994*
10.05 Stockholders and Registration Rights Agreement by and among the Company, A. Dale Mayo, Brett E.
Marks, Michael C. Rush, MidMark Capital, L.P. and Emerson Cinema, Inc., dated May 29, 1996*
10.06 Agreement by Paul Kay and Cindy Kay, dated July 31, 1996, to join the Stockholders and
Registration Rights Agreement dated May 29, 1996*
10.07 Agreement by Louis G. Novick, dated April 11, 1996, to join the Stockholders and Registration
Rights Agreement dated May 29, 1996.**
10.08 Employment Agreement by and between the Company and A. Dale Mayo, dated May 29, 1996*
10.09 Management and Monitoring Fee Agreement by and between the Company and MidMark Associates, Inc.,
dated May 29, 1996*
10.10 Credit Agreement by and among the Company, CCC Madison Triple Cinema Corp., CCC Chester Twin
Cinema Corporation, CCC Manasquan Cinema Corporation, Clearview Theater Group, Inc., CCC Herricks
Cinema Corp., CCC Port Washington Cinema Corp., CCC Grand Avenue Cinema Corp., CCC Washington
Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New City Cinema Corp. and
343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema Corp.), and The Provident Bank, dated
May 29, 1996*
10.11 Joinder Agreement by CCC Bedford Cinema Corp. and CCC Kisco Cinema Corp., dated July 18, 1996*
10.12 Joinder Agreement and First Amendment to Credit Agreement, by and among the Company, CCC Madison
Triple Cinema Corp., CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema Corporation,
Clearview Theater Group, Inc., CCC Herricks Cinema Corp., CCC Port Washington Cinema Corp., CCC
Grand Avenue Cinema Corp., CCC Washington Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson
Cinema Corp., CCC New City Cinema Corp., 343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema
Corp.), CCC Bedford Cinema Corp., CCC Kisco Cinema Corp., CCC Closter Cinema Corp., CCC
Bergenfield Cinema Corp., CCC Tenafly Cinema Corp. and CCC B.C. Realty Corp. and The Provident
Bank, dated December 13, 1996*
10.13 Second Amendment to Credit Agreement, by and among the Company, CCC Madison Triple Cinema Corp.,
CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema Corporation, Clearview Theater Group,
Inc., CCC Herricks Cinema Corp., CCC Port Washington Cinema Corp., CCC Grand Avenue Cinema Corp.,
CCC Washington Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New City
Cinema Corp., 343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema Corp.), CCC Bedford Cinema
Corp., CCC Kisco Cinema Corp., CCC Closter Cinema Corp., CCC Bergenfield Cinema Corp., CCC Tenafly
Cinema Corp. and CCC B.C. Realty Corp. and The Provident Bank, dated March 27, 1997*
10.14 Amended and Restated Pledge Agreement by and between the Company and The Provident Bank, dated
July 18, 1996*
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
10.15 Amendment No. 1 to Pledge Agreement by and between the Company and The Provident Bank, dated
December 13, 1996*
10.16 Subordination Agreement by and among The Provident Bank, the Company, CMNY Capital II, L.P. and
Robert G. Davidoff, dated May 29, 1996*
10.17 8% Subordinated Promissory Note for the principal amount of $300,000 payable to CMNY Capital II,
L.P., dated August 31, 1995*
10.18 8% Subordinated Promissory Note for the principal amount of $50,000 payable to CMCO, Inc., dated
August 31, 1995*
10.19 8% Subordinated Promissory Note for the principal amount of $50,000 payable to Robert G. Davidoff,
dated August 31, 1995*
10.20 8% Subordinated Promissory Note for the principal amount of $50,000 payable to CMCO, Inc., dated
October 11, 1995*
10.21 8% Subordinated Promissory Note for the principal amount of $50,000 payable to Robert G. Davidoff,
dated October 11, 1995*
10.22 8% Subordinated Promissory Note for the principal amount of $300,000 payable to CMCO, Inc., dated
December 13, 1996*
10.23 8% Subordinated Promissory Note for the principal amount of $300,000 payable to Robert G.
Davidoff, dated December 13, 1996*
10.24 Senior Subordinated Promissory Note for the principal amount of $600,000 payable to Magic Cinemas
L.L.C., dated December 13, 1996*
10.25 Preferred Stock and Warrant Purchase Agreement by and among MidMark Capital, L.P., the Company and
A. Dale Mayo, dated May 29, 1996*
10.26 Preferred Stock and Warrant Purchase Agreement by and among MidMark Capital, L.P., the Company and
A. Dale Mayo, dated July 2, 1996*
10.27 Warrant Agreement by and between the Company and The Provident Bank, dated May 29, 1996*
10.28 Amendment No. 1 to Warrant Agreement by and between the Company and The Provident Bank, dated
December 13, 1996*
10.29 Form of Common Stock Purchase Warrant A**
10.30 Form of Common Stock Purchase Warrant B**
10.31 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 1 issued to The Provident Bank,
dated May 29, 1996*
10.32 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 2 issued to The Provident Bank,
dated May 29, 1996*
10.33 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 3 issued to The Provident Bank,
dated December 13, 1996*
10.34 Clearview Cinema Group, Inc. Preferred Stock Warrant W-1 issued to MidMark Capital, L.P., dated
May 29, 1996*
10.35 Clearview Cinema Group, Inc. Preferred Stock Warrant W-2 issued to MidMark Capital, L.P., dated
July 2, 1996*
10.36 Agreement by and among Cinema Grand Avenue, Inc., Triplex Movies at Port Washington, Inc. and the
Company, CCC Grand Avenue Cinema Corp., CCC Port Washington Cinema Corp., dated September 8, 1995
(the 'Collective Agreement')*
10.37 Agreement by and among Cinema Herricks, Inc., the Company, and CCC Herricks Cinema Corp. dated
September 8, 1995 (the 'Management Agreement')*
10.38 Letter modifying Management Agreement and Collective Agreement dated November 17, 1995*
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
10.39 Escrow Agreement by and among Cinema Grand Avenue, Inc., Triplex Movies at Port Washington, Inc.,
the Company, CCC Grand Avenue Cinema Corp. and CCC Port Washington Cinema Corp., dated September
8, 1995*
10.40 Escrow Agreement by and among Cinema Herricks, Inc., the Company and CCC Cinema Herricks Corp.,
dated September 8, 1995*
10.41 Agreement and Plan of Reorganization among the Company, CCC Emerson Cinema Corp. and Emerson
Cinema, Inc., dated May 29, 1996*
10.42 Indemnification Escrow Agreement, by and among the Company, CCC Emerson, Inc. and Jack Wenarsky
('Escrow Agent'), dated May 29, 1996*
10.43 Asset Purchase Agreement among the Company, CCC Washington Cinema Corp., CCC Allwood Cinema Corp.,
CCC New City Cinema Corp., Township of Washington Cinema, Inc., Allwood Clifton Cinema, Inc., and
New City Cinema, Inc., dated May 29, 1996*
10.44 Indemnification Escrow Agreement by and among the Company, CCC Washington Cinema Corp., CCC
Allwood Cinema Corp., CCC New City Cinema Corp. and Township of Washington Theatre, Inc., Allwood
Clifton Cinema, Inc., New City Cinema, Inc. and Jack Wenarsky ('Escrow Agent'), dated May 29,
1996*
10.45 Right of First Refusal Agreement by and among the Company, Roxbury Cinema, Inc., F&N Cinema, Inc.,
John Nelson, Seth Ferman and Pamela Ferman, dated May 29, 1996*
10.46 Non-Competition Agreement, by and among the Company, CCC Emerson Cinema, Inc. and John Nelson,
Pamela Ferman and Seth Ferman, dated May 29, 1996*
10.47 Asset Purchase Agreement among Magic Cinemas L.L.C., CCC Tenafly Cinema Corp., CCC Bergenfield
Cinema Corp., CCC Closter Cinema Corp. and the Company, dated December 13, 1996*
10.48 Assignment of Real Estate Lease by and between Allwood Clifton Cinema, Inc. ('Assignor') and CCC
Allwood Cinema Corp. ('Assignee'), dated May 29, 1996, assigning that certain lease dated November
5, 1986, by and between 96 Market Associates, as lessor and Assignor, as amended pursuant to the
Lease Modification Agreement dated October 10, 1989 (collectively, the 'CCC Allwood Lease')**
10.49 Assignment of Real Estate Lease by and between New City Cinema's, Inc. ('Assignor') and CCC New
City Cinema Corp. ('Assignee'), dated May 29, 1996, assigning that certain lease dated January 18,
1965, by and between Bridon Realty Co. as lessor and Irving Sherman and David Sanders, as assigned
by Irving Sherman and David Sanders to New City Town Theater, Inc. pursuant to an Assignment
Agreement dated February 10, 1981, as further amended pursuant to an Addendum to Lease dated
November 14, 1990, as further assigned by New City Town Theater, Inc. to Assignor pursuant to an
Assignment and Assumption of Lease dated November 14, 1990 (collectively, the 'CCC New City
Lease')**
10.50 Assignment of Real Estate Lease by and between Emerson Cinema, Inc. ('Assignor') and CCC Emerson
Cinema Corp. ('Assignee'), dated May 29, 1996, assigning that certain lease by and between Robert
Nelson, Bernat Nelson and Leo Zucker doing business as Robert Lee Realty Co., a partnership
('Lessor') and Irving Sherman, David Sanders and Albert Margulies, dated January 18, 1965, as
further amended by Lessor and Emerson Town Theatre, Inc. pursuant to an Extension and Modification
of Lease dated July 12, 1982, as further amended by Lessor and Emerson Town Theatre, Inc. pursuant
to an Addendum to Lease dated June 1, 1986, and further amended and assigned by Emerson Town
Theatre, Inc. to Emerson Cinema, Inc. pursuant to an Addendum to Lease dated November 18, 1988
among Lessor, Emerson Town Theatre, Inc. and Assignor (collectively, the 'CCC Emerson Lease')**
10.51 Subordination Agreement by and among the Company, The Provident Bank and Magic Cinemas, L.L.C.
dated December 13, 1996**
10.52 Form of Lock-up Agreement***
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
11.01 Statement regarding computation of per share earnings***
21.01 Subsidiaries of the Company*
23.01 Consent of Wiss & Company LLP**
27.01 Financial Data Schedules***
</TABLE>
- ------------------
* Previously filed.
** Filed herewith.
*** To be filed by amendment.
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the 'Securities Act'), may be permitted to directors,
officers and controlling persons of the registrant pursuant to the provisions
described under Item 24 above, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the registrant will, unless in the opinion of its counsel
the question has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-8
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant has duly caused this amendment to its registration
statement on Form SB-2 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Madison, State of New Jersey, on July 17, 1997.
CLEARVIEW CINEMA GROUP, INC.
By: /s/ A. DALE MAYO
-------------------------------------
A. Dale Mayo
Chairman of the Board,
President and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------------------------------------- ------------------------------------------------------- --------------
<S> <C> <C>
/s/ A. DALE MAYO Chairman of the Board, President, Chief Executive July 17, 1997
- --------------------------------------- Officer and Director
A. Dale Mayo
* Director July 17, 1997
- ---------------------------------------
Sueanne H. Mayo
/s/ JOAN M. ROMINE Treasurer and Chief Financial Officer July 17, 1997
- ---------------------------------------
Joan M. Romine
* Director July 17, 1997
- ---------------------------------------
Wayne Clevenger
* Director July 17, 1997
- ---------------------------------------
Robert Davidoff
* Director July 17, 1997
- ---------------------------------------
Brett E. Marks
* Director July 17, 1997
- ---------------------------------------
Denis Newman
By: /s/ A. DALE MAYO
- ---------------------------------------
A. Dale Mayo
Attorney-in-Fact, pursuant to the power
of attorney previously filed as part of
this registration statement.
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C>
1.01 Form of Underwriting Agreement***
2.01 Agreement of Purchase and Sale by and among United Artists Theatre Circuit, Inc., United Artists
Properties I Corp., Mamaroneck Playhouse Holding Corporation and CCC Bronxville Cinema Corp., CCC
Mamaroneck Cinema Corp., CCC Wayne Cinema Corp., CCC BC Realty Corp., CCC Cinema 304 Corp. and
Larchmont Cinema Corp., dated July , 1997.***
3.01(a) Current Certificate of Incorporation of Clearview Cinema Group, Inc.*
3.01(b) Proposed Amended and Restated Certificate of Incorporation of Clearview Cinema Group, Inc.***
3.02(a) Current By-laws of Clearview Cinema Group, Inc.*
3.02(b) Proposed Amended and Restated By-laws of Clearview Cinema Group, Inc.***
4.01 Specimen Common Stock Certificate***
5.01 Opinion of Kirkpatrick & Lockhart LLP as to the validity of the securities being registered***
9.01 Voting Trust Agreement by and between Brett E. Marks and A. Dale Mayo as Voting Trustee, dated
December 21, 1994*
9.02 Voting Trust Agreement by and between Michael C. Rush and A. Dale Mayo as Voting Trustee, dated
June 20, 1995*
9.03 Voting Trust Agreement by and between Emerson Cinema, Inc. and A. Dale Mayo as Voting Trustee,
dated May 29, 1996*
9.04 Voting Trust Agreement by and among Paul Kay, Cindy Kay and A. Dale Mayo as Voting Trustee, dated
July 31, 1996*
9.05 Voting Trust Agreement by and between Louis G. Novick and A. Dale Mayo as Voting Trustee, dated
August 30, 1996.**
10.01 Contribution, Exchange & Termination Agreement by and among Clearview Cinema Group, Inc. (the
'Company'), A. Dale Mayo, and Brett E. Marks, dated December 21, 1994*
10.02 Investment and Stockholders Agreement by and among the Company, A. Dale Mayo, Brett E. Marks and
CMNY Capital II, L.P., dated December 21, 1994*
10.03 First Amendment to Investment and Stockholders Agreement by and among the Company, A. Dale Mayo,
Brett E. Marks and CMNY Capital II, L.P., dated May 29, 1996*
10.04 Agreement by Michael C. Rush, dated June 20, 1995, to join the Investment and Stockholders
Agreement dated December 21, 1994*
10.05 Stockholders and Registration Rights Agreement by and among the Company, A. Dale Mayo, Brett E.
Marks, Michael C. Rush, MidMark Capital, L.P. and Emerson Cinema, Inc., dated May 29, 1996*
10.06 Agreement by Paul Kay and Cindy Kay, dated July 31, 1996, to join the Stockholders and
Registration Rights Agreement dated May 29, 1996*
10.07 Agreement by Louis G. Novick, dated April 11, 1996, to join the Stockholders and Registration
Rights Agreement dated May 29, 1996.**
10.08 Employment Agreement by and between the Company and A. Dale Mayo, dated May 29, 1996*
10.09 Management and Monitoring Fee Agreement by and between the Company and MidMark Associates, Inc.,
dated May 29, 1996*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C>
10.10 Credit Agreement by and among the Company, CCC Madison Triple Cinema Corp., CCC Chester Twin
Cinema Corporation, CCC Manasquan Cinema Corporation, Clearview Theater Group, Inc., CCC Herricks
Cinema Corp., CCC Port Washington Cinema Corp., CCC Grand Avenue Cinema Corp., CCC Washington
Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New City Cinema Corp. and
343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema Corp.), and The Provident Bank, dated
May 29, 1996*
10.11 Joinder Agreement by CCC Bedford Cinema Corp. and CCC Kisco Cinema Corp., dated July 18, 1996*
10.12 Joinder Agreement and First Amendment to Credit Agreement, by and among the Company, CCC Madison
Triple Cinema Corp., CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema Corporation,
Clearview Theater Group, Inc., CCC Herricks Cinema Corp., CCC Port Washington Cinema Corp., CCC
Grand Avenue Cinema Corp., CCC Washington Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson
Cinema Corp., CCC New City Cinema Corp., 343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema
Corp.), CCC Bedford Cinema Corp., CCC Kisco Cinema Corp., CCC Closter Cinema Corp., CCC
Bergenfield Cinema Corp., CCC Tenafly Cinema Corp. and CCC B.C. Realty Corp. and The Provident
Bank, dated December 13, 1996*
10.13 Second Amendment to Credit Agreement, by and among the Company, CCC Madison Triple Cinema Corp.,
CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema Corporation, Clearview Theater Group,
Inc., CCC Herricks Cinema Corp., CCC Port Washington Cinema Corp., CCC Grand Avenue Cinema Corp.,
CCC Washington Cinema Corp., CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New City
Cinema Corp., 343-349 Springfield Avenue Corp. (n/k/a CCC Summit Cinema Corp.), CCC Bedford Cinema
Corp., CCC Kisco Cinema Corp., CCC Closter Cinema Corp., CCC Bergenfield Cinema Corp., CCC Tenafly
Cinema Corp. and CCC B.C. Realty Corp. and The Provident Bank, dated March 27, 1997*
10.14 Amended and Restated Pledge Agreement by and between the Company and The Provident Bank, dated
July 18, 1996*
10.15 Amendment No. 1 to Pledge Agreement by and between the Company and The Provident Bank, dated
December 13, 1996*
10.16 Subordination Agreement by and among The Provident Bank, the Company, CMNY Capital II, L.P. and
Robert G. Davidoff, dated May 29, 1996*
10.17 8% Subordinated Promissory Note for the principal amount of $300,000 payable to CMNY Capital II,
L.P., dated August 31, 1995*
10.18 8% Subordinated Promissory Note for the principal amount of $50,000 payable to CMCO, Inc., dated
August 31, 1995*
10.19 8% Subordinated Promissory Note for the principal amount of $50,000 payable to Robert G. Davidoff,
dated August 31, 1995*
10.20 8% Subordinated Promissory Note for the principal amount of $50,000 payable to CMCO, Inc., dated
October 11, 1995*
10.21 8% Subordinated Promissory Note for the principal amount of $50,000 payable to Robert G. Davidoff,
dated October 11, 1995*
10.22 8% Subordinated Promissory Note for the principal amount of $300,000 payable to CMCO, Inc., dated
December 13, 1996*
10.23 8% Subordinated Promissory Note for the principal amount of $300,000 payable to Robert G.
Davidoff, dated December 13, 1996*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C>
10.24 Senior Subordinated Promissory Note for the principal amount of $600,000 payable to Magic Cinemas
L.L.C., dated December 13, 1996*
10.25 Preferred Stock and Warrant Purchase Agreement by and among MidMark Capital, L.P., the Company and
A. Dale Mayo, dated May 29, 1996*
10.26 Preferred Stock and Warrant Purchase Agreement by and among MidMark Capital, L.P., the Company and
A. Dale Mayo, dated July 2, 1996*
10.27 Warrant Agreement by and between the Company and The Provident Bank, dated May 29, 1996*
10.28 Amendment No. 1 to Warrant Agreement by and between the Company and The Provident Bank, dated
December 13, 1996*
10.29 Form of Common Stock Purchase Warrant A**
10.30 Form of Common Stock Purchase Warrant B**
10.31 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 1 issued to The Provident Bank,
dated May 29, 1996*
10.32 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 2 issued to The Provident Bank,
dated May 29, 1996*
10.33 Clearview Cinema Group, Inc. Common Stock Purchase Warrant No. 3 issued to The Provident Bank,
dated December 13, 1996*
10.34 Clearview Cinema Group, Inc. Preferred Stock Warrant W-1 issued to MidMark Capital, L.P., dated
May 29, 1996*
10.35 Clearview Cinema Group, Inc. Preferred Stock Warrant W-2 issued to MidMark Capital, L.P., dated
July 2, 1996*
10.36 Agreement by and among Cinema Grand Avenue, Inc., Triplex Movies at Port Washington, Inc. and the
Company, CCC Grand Avenue Cinema Corp., CCC Port Washington Cinema Corp., dated September 8, 1995
(the 'Collective Agreement')*
10.37 Agreement by and among Cinema Herricks, Inc., the Company, and CCC Herricks Cinema Corp. dated
September 8, 1995 (the 'Management Agreement')*
10.38 Letter modifying Management Agreement and Collective Agreement dated November 17, 1995*
10.39 Escrow Agreement by and among Cinema Grand Avenue, Inc., Triplex Movies at Port Washington, Inc.,
the Company, CCC Grand Avenue Cinema Corp. and CCC Port Washington Cinema Corp., dated September
8, 1995*
10.40 Escrow Agreement by and among Cinema Herricks, Inc., the Company and CCC Cinema Herricks Corp.,
dated September 8, 1995*
10.41 Agreement and Plan of Reorganization among the Company, CCC Emerson Cinema Corp. and Emerson
Cinema, Inc., dated May 29, 1996*
10.42 Indemnification Escrow Agreement, by and among the Company, CCC Emerson, Inc. and Jack Wenarsky
('Escrow Agent'), dated May 29, 1996*
10.43 Asset Purchase Agreement among the Company, CCC Washington Cinema Corp., CCC Allwood Cinema Corp.,
CCC New City Cinema Corp., Township of Washington Cinema, Inc., Allwood Clifton Cinema, Inc., and
New City Cinema, Inc., dated May 29, 1996*
10.44 Indemnification Escrow Agreement by and among the Company, CCC Washington Cinema Corp., CCC
Allwood Cinema Corp., CCC New City Cinema Corp. and Township of Washington Theatre, Inc., Allwood
Clifton Cinema, Inc., New City Cinema, Inc. and Jack Wenarsky ('Escrow Agent'), dated May 29,
1996*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C>
10.45 Right of First Refusal Agreement by and among the Company, Roxbury Cinema, Inc., F&N Cinema, Inc.,
John Nelson, Seth Ferman and Pamela Ferman, dated May 29, 1996*
10.46 Non-Competition Agreement, by and among the Company, CCC Emerson Cinema, Inc. and John Nelson,
Pamela Ferman and Seth Ferman, dated May 29, 1996*
10.47 Asset Purchase Agreement among Magic Cinemas L.L.C., CCC Tenafly Cinema Corp., CCC Bergenfield
Cinema Corp., CCC Closter Cinema Corp. and the Company, dated December 13, 1996*
10.48 Assignment of Real Estate Lease by and between Allwood Clifton Cinema, Inc. ('Assignor') and CCC
Allwood Cinema Corp. ('Assignee'), dated May 29, 1996, assigning that certain lease dated November
5, 1986, by and between 96 Market Associates, as lessor and Assignor, as amended pursuant to the
Lease Modification Agreement dated October 10, 1989 (collectively, the 'CCC Allwood Lease')**
10.49 Assignment of Real Estate Lease by and between New City Cinema's, Inc. ('Assignor') and CCC New
City Cinema Corp. ('Assignee'), dated May 29, 1996, assigning that certain lease dated January 18,
1965, by and between Bridon Realty Co. as lessor and Irving Sherman and David Sanders, as assigned
by Irving Sherman and David Sanders to New City Town Theater, Inc. pursuant to an Assignment
Agreement dated February 10, 1981, as further amended pursuant to an Addendum to Lease dated
November 14, 1990, as further assigned by New City Town Theater, Inc. to Assignor pursuant to an
Assignment and Assumption of Lease dated November 14, 1990 (collectively, the 'CCC New City
Lease')**
10.50 Assignment of Real Estate Lease by and between Emerson Cinema, Inc. ('Assignor') and CCC Emerson
Cinema Corp. ('Assignee'), dated May 29, 1996, assigning that certain lease by and between Robert
Nelson, Bernat Nelson and Leo Zucker doing business as Robert Lee Realty Co., a partnership
('Lessor') and Irving Sherman, David Sanders and Albert Margulies, dated January 18, 1965, as
further amended by Lessor and Emerson Town Theatre, Inc. pursuant to an Extension and Modification
of Lease dated July 12, 1982, as further amended by Lessor and Emerson Town Theatre, Inc. pursuant
to an Addendum to Lease dated June 1, 1986, and further amended and assigned by Emerson Town
Theatre, Inc. to Emerson Cinema, Inc. pursuant to an Addendum to Lease dated November 18, 1988
among Lessor, Emerson Town Theatre, Inc. and Assignor (collectively, the 'CCC Emerson Lease')**
10.51 Subordination Agreement by and among the Company, The Provident Bank and Magic Cinemas, L.L.C.
dated December 13, 1996**
10.52 Form of Lock-up Agreement***
11.01 Statement regarding computation of per share earnings***
21.01 Subsidiaries of the Company*
23.01 Consent of Wiss & Company LLP**
27.01 Financial Data Schedules***
</TABLE>
- ------------------
* Previously filed.
** Filed herewith.
*** To be filed by amendment.
<PAGE>
Exhibit 9.05
VOTING TRUST AGREEMENT
August 30, 1996
This VOTING TRUST AGREEMENT (this "Trust Agreement") is made by and between
Louis G. Novick ("Novick") and A. Dale Mayo (the "Trustee").
Novick owns in the aggregate 4 shares (the "Stock") of the common stock of
Clearview Cinema Group, Inc., a Delaware Corporation (the "Company"). The Stock
is subject to a Stockholders and Registration Rights Agreement dated as of May
29, 1996 (the "Stockholders Agreement"), among the Company, the Trustee and the
other parties named therein.
In accordance with Section 218 of the General Corporation Law of the State
of Delaware, Novick 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, Novick shall
deliver the certificates representing the Stock, duly executed for transfer, to
Mayo to be held under this Trust Agreement.
2. (A) Promptly after the delivery required by paragraph 1, the Trustee
shall deliver the certificates representing the Stock to the Company for
transfer and shall cause the shares represented thereby to be transferred to his
name as Trustee under this Trust Agreement. The new certificates representing
the Stock registered in the name of the Trustee shall be delivered to the
Trustee by the Company, and the Trustee shall hold those certificates in his
custody.
(B) The Trustee shall hold the shares of the Stock transferred to him
hereunder, and all other shares of the common stock that Novick 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 Novick a Voting Trust
<PAGE>
Certificate for the number of shares of the Stock deposited by Novick, which
Voting Trust Certificate shall be in substantially the following form:
[Front Side]
CLEARVIEW CINEMA GROUP, INC.
(a Delaware corporation)
Certificate No. _____ _____ Shares
VOTING TRUST CERTIFICATE
THIS IS TO CERTIFY that, subject to the provisions hereof and of the
Trust Agreement as hereinafter defined, Louis G. Novick, or registered
assigns, will be entitled to receive, on August 30, 2016, or upon the
earlier termination of the Trust Agreement, but only upon surrender of this
certificate, a certificate or certificates for 16 shares of common stock of
Clearview Cinema Group, Inc., a Delaware corporation (hereinafter called
the "Company"), or of any other corporation into which shares of common
stock of the Company shall have been reclassified or converted, or for
which they shall have been exchanged.
Until the expiration or termination of the Trust Agreement, the
undersigned Trustee shall pay or deliver all cash dividends, and certain
other distributions mentioned in the Trust Agreement, on or in respect of
the common stock from time to time held by the undersigned Trustee
thereunder, to the person who, on the record date for the determination of
stockholders entitled to receive the dividends and other distributions, was
the registered owner of this Voting Trust Certificate.
This certificate has been issued under and pursuant to the provisions
of a Voting Trust Agreement (the "Trust Agreement"), by and between Louis
G. Novick, as stockholders of the Company and A. Dale Mayo, as Trustee,
dated as of August 30, 1996, as the same may be amended from time to time.
The Trust Agreement more fully defines and sets forth the rights and
obligations of the owner and holder of this certificate and of the Trustee
and is incorporated in and made a part of this Voting Trust Certificate
with the same effect as if set forth in full.
Subject to any restriction contained on the reverse side of this
certificate, this Voting Trust Certificate is transferable by its
registered owner, in person or by duly authorized attorney, on the books to
be maintained for that purpose by the undersigned
<PAGE>
Trustee, upon the terms and conditions provided in the Trust Agreement.
WITNESS THE DUE EXECUTION HEREOF on this ______ day of ____________,
199_.
________________________(SEAL)
A. Dale Mayo
Trustee under Voting Trust
Agreement, dated August 30, 1996
[Reverse side]
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any state Blue
Sky or securities laws. These securities cannot be resold without
registration under such Act or applicable state securities laws or an
exemption therefrom.
In addition, the securities represented by this certificate are
subject to an Stockholders and Registration Agreement dated May 29, 1996
among the Company and the parties named therein, as the same may be
modified from time to time, and may not be sold, offered, transferred,
assigned, pledged, hypothecated or otherwise disposed of except in
compliance with the provisions of that agreement.
4. The Voting Trust Certificate issued under this Trust Agreement shall be
transferable in the same manner, with the same effect, and subject to the same
restrictions as certificates for shares of the Stock. The Voting Trust
Certificate shall be transferable only at the principal executive office of the
Company or at any other place that the Company may maintain for its corporate
books and records.
5. The Trustee has no authority to sell or otherwise dispose of or encumber
any of the Stock.
6. The Trustee shall possess and be entitled, subject to the provisions of
this Agreement, to exercise all the rights and powers of an absolute owner of
all the shares of Stock deposited under this Trust Agreement, including without
limitation the right to receive dividends on the Stock (subject to paragraph 7
below) and the right to vote, consent in writing, or otherwise act with respect
to any corporate or stockholders' action, to increase or reduce the capital
stock of the Company, to classify or reclassify any of the shares as now or
hereafter authorized into preferred or common stock or other classes of
<PAGE>
stock with or without par value, to amend the Certificate of Incorporation or
by-laws of the Company, to merge or consolidate the Company with other
corporations, to sell all or any part of its assets, to create any mortgage lien
on any of its property, or for any other corporate act or purpose. Except as
otherwise provided herein, no voting right shall pass to others by or under the
Voting Trust Certificate or by or under this Trust Agreement or by or under any
agreement express or implied. All shares of Stock shall be voted as directed by
the Trustee and shall be deemed to be represented for the purposes of
determining a quorum.
7. (A) All dividends paid on the Stock from time to time held under this
Trust Agreement, except stock dividends, shall be remitted by the Trustee,
promptly upon receipt, to the person or persons who, on the record date for the
determination of stockholders entitled to receive the dividends, were the record
owners of the Voting Trust Certificates representing the shares on which the
dividends were declared.
(B) Dividends paid in shares of common stock of the Company shall be
retained by the Trustee and added to the Stock held under this Trust Agreement.
The Trustee shall promptly issue to the appropriate persons Voting Trust
Certificates representing any Stock that the Trustee shall receive as a dividend
and retain in accordance with the provisions of this paragraph 7. Those Voting
Trust Certificates shall be in the form as set forth in this Trust Agreement,
with any changes that are appropriate.
(C) All warrants or rights to subscribe to any class of voting stock of
the Company ("Warrants") that shall be received by the Trustee in respect or on
account of the Stock held under this Trust Agreement shall be distributed by the
Trustee to the holders of the Voting Trust Certificates in the same manner as he
is required to distribute cash dividends under this Trust Agreement. If any
voting stock is purchased by Novick pursuant to the Warrants, Novick shall
immediately deliver the certificates representing all the shares of stock so
purchased, duly executed for transfer, to the Trustee to be added to the Stock
held under the Trust Agreement. The Trustee shall promptly issue to Novick
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. Novick, at any time from and after the date of this Trust
Agreement, must deposit any additional capital stock of the Company purchased or
owned by them (but not specifically described within the Trust Agreement) with
the Trustee. Additional shares of Stock so deposited shall become subject to all
the terms and conditions of this Trust Agreement to the same
<PAGE>
extent as if it were originally deposited under this Trust Agreement.
9. (A) If, as the result of any split-up, combination or reclassification
of any Stock held by the Trustee under this Trust Agreement, or as the result of
any merger, consolidation, reorganization or sale of assets to which the Company
shall be a party, the Stock held by the Trustee under this Trust Agreement shall
be reclassified, converted into or become exchangeable for any other securities,
either of the Company or of any other corporation, the Trustee shall exchange or
surrender the Stock held by it for those other securities and shall deliver the
certificates evidencing the same to the Company or other appropriate agency in
exchange or surrender. The Trustee shall hold the securities received upon the
exchange or surrender for the purposes and upon the same conditions as are
provided in this Trust Agreement in respect of the shares of the Stock.
(B) Upon any exchange or surrender, the Trustee may, if he considers it
to be advisable, issue new Voting Trust Certificates in lieu of and in exchange
for the outstanding Voting Trust Certificates. The Voting Trust Certificates
shall be in the form set forth in this Trust Agreement, with any changes that
are appropriate.
10. (A) The Trustee may serve as a director or officer of the Company or
any successor corporation, and he or any firm of which he may be a member, or
any corporation of which he may be a stockholder, director or officer, may
contract with the Company or any successor corporation, or be pecuniarily
interested in any transaction to which the Company or any successor corporation
may be a party, or in which it may be interested, as fully as though he were not
a Trustee.
(B) The Trustee shall not be liable to any stockholder or the
registered owner or holder of any Voting Trust Certificate for any error of
judgment or for any neglect, default, negligence (including gross negligence)
except for his own willful and deliberate malfeasance.
(C) The Trustee shall not receive any compensation for his services
as Trustee, and he shall not be required to give any bond or security for the
discharge of his duties as Trustee.
(D) The Trustee hereby accepts the trust hereunder, subject to all
the terms and conditions contained in this Trust Agreement, and he agrees to
exercise the powers and perform the duties of Trustee as set forth in this Trust
Agreement.
11. (A) The trust created by this Trust Agreement is expressly declared to
be irrevocable.
(B) (i) This Trust Agreement shall terminate with respect only to the
shares of Stock that are sold by Novick (a) from and after the date the Company
consummates an underwritten
<PAGE>
public offering, pursuant to Rule 144 promulgated under the Securities Act of
1933, as amended, (b) pursuant to the registration rights granted to Novick in
the Stockholders Agreement, or (c) pursuant to the right of participation
granted to Novick in the Stockholders Agreement. A termination of this Trust
Agreement as to any shares of Stock sold pursuant to clauses (a), (b) or (c) of
the preceding sentence shall not affect any shares of Stock continuing to be
owned by Novick (the "Remaining Shares"), and this Trust Agreement shall
continue in force with respect to the Remaining Shares until terminated pursuant
to Paragraph 11(B)(ii).
(ii) This Trust Agreement shall terminate upon the earlier of (a) the
twentieth anniversary hereof, (b) written notice of termination by the Trustee,
or (c) the death of the Trustee.
(C) (i) In the event of any proposed sale of Stock pursuant to clauses
(a), (b) or (c) of the first sentence of Paragraph 11(B)(i), Novick 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 Novick a Voting Certificate for the Remaining
Shares.
(ii) In the event of termination of this Trust Agreement pursuant to
Paragraph 11(B)(ii), as soon as practicable after the termination, the Trustee
shall deliver to or upon the order of the registered owners of the Voting Trust
Certificates, and upon surrender thereof, the shares of Stock represented
thereby, together with any other shares of voting stock of the Company subject
to this Trust Agreement.
12. Any notice or other communication required or permitted by this Trust
Agreement to be given by any party hereto shall be in writing, and any
communication and payment or delivery of securities required to be made by any
party to any other party shall be sent by first class prepaid mail, certified or
registered, return receipt requested, addressed in the case of Novick, to the
address that is provided by Novick 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, Novick and their heirs, legal representatives, successors and
assigns.
<PAGE>
14. The validity and effectiveness of this Trust Agreement shall be
governed by, and its provisions shall be construed and enforced in accordance
with, the laws of the State of Delaware.
15. If, for any reason, any provision or part of this Trust Agreement is
held invalid, that invalidity shall not affect any other provision or the rest
of provision of this Trust Agreement, as the case may be, and each provision or
part shall, to the full extent consistent with law, continue in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement
as of the day and year first above written.
--------------------------------
Louis G. Novick
<PAGE>
Exhibit 10.07
AGREEMENT
WHEREAS, the undersigned has executed a Stock Subscription Agreement dated
the date hereof pursuant to which the undersigned has purchased 16 shares of
Common Stock, par value $0.01 per share, of Clearview Cinema Group, Inc. (the
"Company"), a Delaware corporation (the "Shares"); and
WHEREAS, transfer of the Shares is restricted pursuant to the terms and
provisions of the Stockholders and Registration Rights Agreement, dated as of
May 29, 1996, by and among the Company, and its stockholders (the "Stockholders
Agreement"); and
WHEREAS, the parties to the Stockholders Agreement have waived compliance
with Article 2 of the Stockholders Agreement in connection with the transactions
contemplated by the Subscription Agreement upon condition that the undersigned
execute this Agreement;
NOW, THEREFORE, the undersigned hereby joins in and agrees to be bound by
the terms and provisions of the Stockholders Agreement, as are applicable to
Stockholders (as defined therein) generally.
____________________________________
Louis G. Novick
Date: _____________________________
<PAGE>
Exhibit 10.29
FORM OF COMMON STOCK PURCHASE WARRANT A
NEITHER THIS WARRANT NOR THE COMMON STOCK FOR WHICH IT MAY BE EXERCISED HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF,
EXCEPT AS PROVIDED IN ARTICLE 4, UNLESS SO REGISTERED OR UNLESS SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF PURSUANT TO AN EXEMPTION THEREFROM.
No. ___ August 31, 1995
CLEARVIEW CINEMA GROUP, INC.
COMMON STOCK PURCHASE WARRANT A
This CERTIFIES that, for value received _____________, or its
registered assignee (the "Holder") is entitled to subscribe for and purchase
from Clearview Cinema Group, Inc. a Delaware corporation (the "Company"), _____
shares (subject to adjustment as set forth in Article 2 below, the "Warrant
Shares") of Common Stock of the Company, par value $0.01 per share ("Common
Stock"), at the price of $2,000 per share (subject to adjustment as set forth in
Article II below, the "Warrant Purchase Price"), at any time on or after August
31, 1996 but on or before the Expiration Date, subject to the terms provided
herein. This Warrant is issued in connection with the Promissory Note (as herein
defined).
Capitalized terms used herein, and not otherwise defined, shall have
the meanings specified in Article 5. This Warrant is subject to the following
provisions, terms and conditions:
<PAGE>
ARTICLE 1
EXERCISE; RESERVATION OF SHARES
Section 1.01. Warrant Exercise. The rights represented by this Warrant
may be exercised by the Holder by the surrender of this Warrant at any time on
or after August 31, 1996, but in no event later than the Expiration Date, at the
principal office of the Company, together with a duly executed Subscription in
the form annexed as Exhibit "1" hereto, and by payment to the Company by
certified check or bank draft of the Warrant Purchase Price (as adjusted as set
forth in Article 2 below, if applicable) for such shares; provided, however,
that if the issuance of the Underlying Common Stock upon the exercise of this
Warrant requires registration under the Securities Act in the reasonable
judgment of the Company or its counsel, this Warrant shall not be exercisable by
the Holder and no subscription of or payment for shares will be acceptable by
the Company prior to the effectiveness of a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), covering the issuance
of the Underlying Common Stock by the Company to the holder of this Warrant. The
shares so purchased shall be deemed to be issued to the Holder as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been exercised as hereinabove provided.
Section 1.02. Certificates. Certificates for the shares purchased
pursuant to Section 1.01 shall be delivered to the Holder within a reasonable
time, not exceeding 30 days, after the rights represented by this Warrant shall
have been so exercised.
Section 1.03. Reservation of Shares. The Company covenants and agrees:
(a) That all Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof; and
(b) That during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue and delivery upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
-2-
<PAGE>
ARTICLE 2
ADJUSTMENTS
Section 2.01. Reorganization, Reclassification, Consolidation, Merger
or Sale. If any reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation
in which the Company is not the surviving corporation, or the sale of all or
substantially all of its assets to another corporation or similar transaction
(in any instance, a "Capital Event") shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities or assets
(including cash) with respect to or in exchange for their Common Stock, then, as
a condition of such Capital Event, lawful and adequate provisions shall be made
whereby the Holder hereof shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, an amount of such shares of stock, securities or assets
(including cash) as may have been issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such Capital
Event not taken place.
Section 2.02. Subdivision or Combination of Stock. In the event that
the Company shall at any time subdivide or split its outstanding shares of
Common Stock into a greater number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately increased. In
the event that the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately reduced.
Section 2.03. Stock Dividends. In the event that the Company shall at
any time declare any dividend upon its Common Stock payable in stock, the number
of shares subject to issuance upon exercise of this Warrant shall be increased
by the number (and the kind) of shares which would have been issued to the
holder of this Warrant if this Warrant were exercised immediately prior to such
dividend.
Section 2.04. Adjustment to Warrant Purchase Price. If and whenever
the Company shall (i) subdivide or split its outstanding shares of Common Stock
into a greater number of shares or (ii) declare any dividend upon its Common
Stock payable in stock, the Warrant Purchase Price shall be reduced to the
-3-
<PAGE>
price determined by multiplying the Warrant Purchase Price in effect immediately
prior to such subdivision, split, or dividend, by a fraction, the numerator of
which shall be the number of shares (the "Outstanding Section 2.04 Shares") of
Common Stock outstanding immediately prior to such subdivision, split, dividend,
issuance, grant or sale (as if all warrants (including the Specified Warrants)
had been exercised, whether or not actually exercised on such date, outstanding
immediately prior to such subdivision, split or dividend and the denominator of
which shall be the sum of the Outstanding Section 2.04 Shares plus the the
number of additional shares of Common Stock resulting from such subdivision,
split or dividend, provided that in no event will the Warrant Purchase Price be
reduced below the par value of the Common Stock.
Section 2.06. Record Date. In the event that the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend payable in Common Stock, then such record date shall be
deemed for the purposes of this Article 2 to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend.
Section 2.07. Notice of Adjustment. Upon any adjustment, the Company
shall give notice thereof to the Holder, which notice shall state the increase
or decrease, if any, in the number of shares purchasable upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
ARTICLE 3
CANCELLATION
This Warrant shall not be exerciseable and shall be marked canceled
and returned to the Company if the Company shall have paid the Promissory Note
in full prior to September 1, 1996.
ARTICLE 4
TRANSFER RESTRICTIONS
Section 4.01. Transfer of Warrants. This Warrant shall not be
transferrable except to an entity that is controlled by, controlling, or under
common control with the Holder (each a "Permitted Transferee"); provided,
however, that the Permitted Transferee, as a condition to such transfer, shall
execute and deliver a written agreement, in form and substance satisfactory to
the Company, agreeing to be bound by the provisions of this Warrant.
-4-
<PAGE>
Section 4.02. Transfer of Stock; Registration Rights. The shares of
stock issuable upon the exercise of this Warrant shall be subject to that
certain Investment and Stockholders Agreement, dated December 21, 1995, among
the Company, A. Dale Mayo, Brett E. Marks, and CMNY Capital II, L.P, as shares
held by the Investor (as defined therein), including, but not limited to the
restrictions upon transfer contained therein and the rights of registration
granted therein. Any certificate for such shares of Common Stock issued upon the
exercise of this Warrant shall bear an appropriate legend describing the
foregoing restriction.
Section 4.03. Securities Law Transfer Restrictions. By taking and
holding this Warrant, the Holder (i) acknowledges that neither this Warrant nor
any shares of Common Stock issuable upon the exercise of this Warrant have been
registered under the Securities Act or any applicable state securities or blue
sky law (collectively, the "Acts"); and (ii) agrees not to sell, transfer or
otherwise dispose of this Warrant or any such shares of Common Stock without
such registration unless the sale, transfer or disposition can be effected
without such registration and in compliance with the Acts. Any certificate for
shares of Common Stock issued upon exercise of this Warrant shall bear an
appropriate legend describing the foregoing restrictions.
Section 4.04. Provision of Information by Holder. The Holder shall
make available to the Company such written information, presented in form and
content reasonably satisfactory to the Company, as the Company may reasonably
request, from time to time, in order to make the determination provided for in
Section 4.01.
ARTICLE 5
ADDITIONAL DEFINITIONS
As used herein, the following terms shall have the meanings specified
below:
"Expiration Date" shall mean August 31, 2001.
"Promissory Note" shall mean that certain Subordinated Promissory Note
dated the date hereof, in the principal amount of $300,000, payable to CMCO,
INC.
"Specified Warrants" shall mean the Warrants issued by the Company to
CMNY, CMCO, Inc. and Robert G. Davidoff, on the date hereof.
"Underlying Common Stock" shall mean the shares of Common Stock
purchasable by the holder of this Warrant upon the
-5-
<PAGE>
exercise thereof, assuming that this Warrant is then exercisable.
ARTICLE 6
MISCELLANEOUS
Section 6.01. Holder of Record. Each Holder, by holding this Warrant,
consents and agrees that said Holder shall be treated by the Company and all
other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled (i) to exercise the rights represented by
this Warrant, or (ii) to the transfer hereof on the books of the Company, any
notice to the Company to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered Holder as the owner for all
purposes.
Section 6.02. Notices. Any notice or communication to be given
pursuant to this Warrant ("Notice") shall be in writing and shall be delivered
in person or by certified mail, return receipt requested, in the United States
mail, postage prepaid. Notices to the Company shall be addressed to the
Company's principal office. Notices to the Holder shall be addressed to the
Holder's address as reflected in the records of the Company. Notices shall be
effective upon delivery in person, or, if mailed, at midnight on the third
business day after mailing.
Section 6.03. Issue Tax. The issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holders for any issuance tax in respect thereof, provided that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate name other
than that of the Holder of the Warrant exercised.
Section 6.04. No Stockholder Rights. This Warrant
shall not entitle the Holder to any voting rights or other
rights stockholder of the Company.
Section 6.05. Governing Law. This Warrant shall be
governed by and construed in accordance with the laws of the
State of Delaware.
Section 6.06. Headings, Interpretation. The section headings used
herein are for convenience of reference only and not intended to define, limit
or describe the scope or intent any provision of this Warrant. When used in this
Warrant, the term "including" shall mean "including, without limitation by
reason of enumeration".
Section 6.07. Successors. The covenants, agreements
-6-
<PAGE>
and provisions of this Warrant shall bind the parties hereto and their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant be issued this
________ day of ____________, 19 __.
CLEARVIEW CINEMA GROUP, INC.
a Delaware corporation
By____________________________
Its___________________________
-7-
<PAGE>
EXHIBIT "1"
SUBSCRIPTION
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases the number of shares of Common Stock of Clearview
Cinema Group, Inc. purchasable under this Warrant and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant. Such shares are to be registered in the name of the registered holder
of this Warrant and certificates evidencing such shares are to be delivered to
it at its address set forth below its signature unless contrary instructions are
herein given.
Register shares in the name of _______________________________________________.
Deliver certificates to ______________________________________________________.
Dated: ______________________________ ____________________________________
(Signature of Registered Owner)
____________________________________
(Street Address)
____________________________________
(City) (State) (Zip Code)
<PAGE>
SCHEDULE OF COMMON STOCK PURCHASE WARRANTS B
NUMBER OF
SERIES ISSUED TO DATE SHARES
------ --------- ---- ---------
Warrant B, No. 1 CMNY Capital II L.P. August 31, 1995 37.5
Warrant B, No. 2 CMCO, Inc. August 31, 1995 6.25
Warrant B, No. 3 Robert G. Davidoff August 31, 1995 6.25
Warrant B, No. 4 CMCO, Inc. October 11, 1995 6.25
Warrant B, No. 5 Robert G. Davidoff October 11, 1995 6.25
Warrant B, No. 7 Robert G. Davidoff December 13, 1996 18.75
Warrant B, No. 8 CMCO, Inc. December 13, 1996 18.75
<PAGE>
Exhibit 10.30
FORM OF COMMON STOCK PURCHASE WARRANT B
NEITHER THIS WARRANT NOR THE COMMON STOCK FOR WHICH IT MAY BE EXERCISED HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF,
EXCEPT AS PROVIDED IN ARTICLE 3, UNLESS SO REGISTERED OR UNLESS SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF PURSUANT TO AN EXEMPTION THEREFROM.
No. ____ August 31, 1995
CLEARVIEW CINEMA GROUP, INC.
COMMON STOCK PURCHASE WARRANT B
This CERTIFIES that, for value received _________, or its registered
assignee (the "Holder") is entitled to subscribe for and purchase from Clearview
Cinema Group, Inc. a Delaware corporation (the "Company"), _____ shares (subject
to adjustment as set forth in Article 2 below, the "Warrant Shares") of Common
Stock of the Company, par value $0.01 per share ("Common Stock"), at the price
of $2,000 per share (subject to adjustment as set forth in Article II below, the
"Warrant Purchase Price"), at any time on or after the date of this Warrant but
on or before the Expiration Date, subject to the terms provided herein. This
Warrant is issued in connection with the Promissory Note (as herein defined).
Capitalized terms used herein, and not otherwise defined, shall have
the meanings specified in Article 4. This Warrant is subject to the following
provisions, terms and conditions:
<PAGE>
ARTICLE 1
EXERCISE; RESERVATION OF SHARES
Section 1.01. Warrant Exercise. The rights represented by this Warrant
may be exercised by the Holder by the surrender of this Warrant at any time on
or after the date of this Warrant, but in no event later than the Expiration
Date, at the principal office of the Company, together with a duly executed
Subscription in the form annexed as Exhibit "1" hereto, and by payment to the
Company by certified check or bank draft of the Warrant Purchase Price (as
adjusted as set forth in Article 2 below, if applicable) for such shares;
provided, however, that if the issuance of the Underlying Common Stock upon the
exercise of this Warrant requires registration under the Securities Act in the
reasonable judgment of the Company or its counsel, this Warrant shall not be
exercisable by the Holder and no subscription of or payment for shares will be
acceptable by the Company prior to the effectiveness of a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), covering
the issuance of the Underlying Common Stock by the Company to the holder of this
Warrant. The shares so purchased shall be deemed to be issued to the Holder as
the record owner of such shares as of the close of business on the date on which
this Warrant shall have been exercised as hereinabove provided.
Section 1.02. Certificates. Certificates for the shares purchased
pursuant to Section 1.01 shall be delivered to the Holder within a reasonable
time, not exceeding 30 days, after the rights represented by this Warrant shall
have been so exercised.
Section 1.03. Reservation of Shares. The Company covenants and agrees:
(a) That all Common Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof; and
(b) That during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue and delivery upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
-2-
<PAGE>
ARTICLE 2
ADJUSTMENTS
Section 2.01. Reorganization, Reclassification, Consolidation, Merger
or Sale. If any reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation
in which the Company is not the surviving corporation, or the sale of all or
substantially all of its assets to another corporation or similar transaction
(in any instance, a "Capital Event") shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities or assets
(including cash) with respect to or in exchange for their Common Stock, then, as
a condition of such Capital Event, lawful and adequate provisions shall be made
whereby the Holder hereof shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, an amount of such shares of stock, securities or assets
(including cash) as may have been issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such Capital
Event not taken place.
Section 2.02. Subdivision or Combination of Stock. In the event that
the Company shall at any time subdivide or split its outstanding shares of
Common Stock into a greater number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately increased. In
the event that the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the number of shares subject to
issuance upon exercise of this Warrant shall be proportionately reduced.
Section 2.03. Stock Dividends. In the event that the Company shall at
any time declare any dividend upon its Common Stock payable in stock, the number
of shares subject to issuance upon exercise of this Warrant shall be increased
by the number (and the kind) of shares which would have been issued to the
holder of this Warrant if this Warrant were exercised immediately prior to such
dividend.
Section 2.04. Adjustment to Warrant Purchase Price. If and whenever
the Company shall (i) subdivide or split its outstanding shares of Common Stock
into a greater number of shares or (ii) declare any dividend upon its Common
Stock payable in stock, the Warrant Purchase Price shall be reduced to the
-3-
<PAGE>
price determined by multiplying the Warrant Purchase Price in effect immediately
prior to such subdivision, split, or dividend, by a fraction, the numerator of
which shall be the number of shares (the "Outstanding Section 2.04 Shares") of
Common Stock outstanding immediately prior to such subdivision, split, dividend,
issuance, grant or sale (as if all warrants (including the Specified Warrants)
had been exercised, whether or not actually exercised on such date, outstanding
immediately prior to such subdivision, split or dividend and the denominator of
which shall be the sum of the Outstanding Section 2.04 Shares plus the the
number of additional shares of Common Stock resulting from such subdivision,
split or dividend, provided that in no event will the Warrant Purchase Price be
reduced below the par value of the Common Stock.
Section 2.06. Record Date. In the event that the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend payable in Common Stock, then such record date shall be
deemed for the purposes of this Article 2 to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend.
Section 2.07. Notice of Adjustment. Upon any adjustment, the Company
shall give notice thereof to the Holder, which notice shall state the increase
or decrease, if any, in the number of shares purchasable upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
ARTICLE 3
TRANSFER RESTRICTIONS
Section 3.01. Transfer of Warrants. This Warrant shall not be
transferrable except to an entity that is controlled by, controlling, or under
common control with the Holder (each a "Permitted Transferee"); provided,
however, that the Permitted Transferee, as a condition to such transfer, shall
execute and deliver a written agreement, in form and substance satisfactory to
the Company, agreeing to be bound by the provisions of this Warrant.
Section 3.02. Transfer of Stock; Registration Rights. The shares of
stock issuable upon the exercise of this Warrant shall be subject to that
certain Investment and Stockholders Agreement, dated December 21, 1995, among
the Company, A. Dale Mayo, Brett E. Marks, and CMNY Capital II, L.P, as shares
held by the Investor (as defined therein), including, but not limited to the
restrictions upon transfer contained
-4-
<PAGE>
therein and the rights of registration granted therein. Any certificate for such
shares of Common Stock issued upon the exercise of this Warrant shall bear an
appropriate legend describing the foregoing restriction.
Section 3.03. Securities Law Transfer Restrictions. By taking and
holding this Warrant, the Holder (i) acknowledges that neither this Warrant nor
any shares of Common Stock issuable upon the exercise of this Warrant have been
registered under the Securities Act or any applicable state securities or blue
sky law (collectively, the "Acts"); and (ii) agrees not to sell, transfer or
otherwise dispose of this Warrant or any such shares of Common Stock without
such registration unless the sale, transfer or disposition can be effected
without such registration and in compliance with the Acts. Any certificate for
shares of Common Stock issued upon exercise of this Warrant shall bear an
appropriate legend describing the foregoing restrictions.
Section 3.04. Provision of Information by Holder. The Holder shall
make available to the Company such written information, presented in form and
content reasonably satisfactory to the Company, as the Company may reasonably
request, from time to time, in order to make the determination provided for in
Section 3.01.
ARTICLE 4
ADDITIONAL DEFINITIONS
As used herein, the following terms shall have the meanings specified
below:
"Expiration Date" shall mean August 31, 2000.
"Promissory Note" shall mean that certain Subordinated Promissory Note
dated the date hereof, in the principal amount of $50,000, payable to CMCO, Inc.
"Specified Warrants" shall mean the Warrants issued by the Company to
CMNY, CMCO, Inc. and Robert G. Davidoff, on the date hereof.
"Underlying Common Stock" shall mean the shares of Common Stock
purchasable by the holder of this Warrant upon the exercise thereof, assuming
that this Warrant is then exercisable.
ARTICLE 5
MISCELLANEOUS
Section 5.01. Holder of Record. Each Holder, by
-5-
<PAGE>
holding this Warrant, consents and agrees that said Holder shall be treated by
the Company and all other persons dealing with this Warrant as the absolute
owner hereof for any purpose and as the person entitled (i) to exercise the
rights represented by this Warrant, or (ii) to the transfer hereof on the books
of the Company, any notice to the Company to the contrary notwithstanding; but
until such transfer on such books, the Company may treat the registered Holder
as the owner for all purposes.
Section 5.02. Notices. Any notice or communication to be given
pursuant to this Warrant ("Notice") shall be in writing and shall be delivered
in person or by certified mail, return receipt requested, in the United States
mail, postage prepaid. Notices to the Company shall be addressed to the
Company's principal office. Notices to the Holder shall be addressed to the
Holder's address as reflected in the records of the Company. Notices shall be
effective upon delivery in person, or, if mailed, at midnight on the third
business day after mailing.
Section 5.03. Issue Tax. The issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holders for any issuance tax in respect thereof, provided that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate name other
than that of the Holder of the Warrant exercised.
Section 5.04. No Stockholder Rights. This Warrant shall not entitle
the Holder to any voting rights or other rights stockholder of the Company.
Section 5.05. Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 5.06. Headings, Interpretation. The section headings used
herein are for convenience of reference only and not intended to define, limit
or describe the scope or intent any provision of this Warrant. When used in this
Warrant, the term "including" shall mean "including, without limitation by
reason of enumeration".
Section 5.07. Successors. The covenants, agreements and provisions of
this Warrant shall bind the parties hereto and their respective successors and
permitted assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant be issued this
________ day of ____________, 19 _.
CLEARVIEW CINEMA GROUP, INC.
a Delaware corporation
By____________________________
Its___________________________
-6-
<PAGE>
EXHIBIT "1"
SUBSCRIPTION
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases the number of shares of Common Stock of Clearview
Cinema Group, Inc. purchasable under this Warrant and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant. Such shares are to be registered in the name of the registered holder
of this Warrant and certificates evidencing such shares are to be delivered to
it at its address set forth below its signature unless contrary instructions are
herein given.
Register shares in the name of ______________________________________________.
Deliver certificates to _____________________________________________________.
Dated: ______________________________ ______________________________________
(Signature of Registered Owner)
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
<PAGE>
SCHEDULE OF COMMON STOCK PURCHASE WARRANTS B
NUMBER OF
SERIES ISSUED TO DATE SHARES
------ --------- ---- ---------
Warrant A, No. 1 CMNY Capital II L.P. August 31, 1995 37.5
Warrant A, No. 2 CMCO, Inc. August 31, 1995 6.25
Warrant A, No. 3 Robert G. Davidoff August 31, 1995 6.25
Warrant A, No. 4 CMCO, Inc. October 11, 1995 6.25
Warrant A, No. 5 Robert G. Davidoff October 11, 1995 6.25
Warrant A, No. 7 Robert G. Davidoff December 13, 1996 18.75
Warrant A, No. 8 CMCO, Inc. December 13, 1996 18.75
<PAGE>
Exhibit 10.48
Clifton, NJ
ASSIGNMENT OF REAL ESTATE LEASE
In consideration of ten dollars and other good and valuable
consideration, to it in hand paid, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, Allwood Clifton
Cinema, Inc., a New Jersey corporation ("Assignor"), hereby sells, transfers,
conveys, assigns and delivers to CCC Allwood Cinema Corp., a Delaware
corporation ("Assignee"), all of Assignor's right, title and interest as lessee
under, to and in that certain lease dated November 5, 1986 by and between 96
Market Associates, a partnership, as lessor and Assignor, as amended by 96
Market Associates and Assignor pursuant to a Lease Modification Agreement dated
October 10, 1989 (collectively, the "Lease") relating to the real property
located at 96 Market Street, Clifton, Passaic County, New Jersey and known as
the Clifton Theater. Assignee hereby assumes all of such right, title and
interest and agrees to pay, perform and otherwise satisfy the obligations of
Assignor under the Lease to be performed on or after the date of this Assignment
other than any such obligations or any other liability arising out of any
failure by Assignor to pay, perform and satisfy all its obligations arising
thereunder prior to the date hereof.
This Assignment is being delivered pursuant to the Asset Purchase
Agreement dated as of May 29, 1996 by and among Clearview Cinema Group, Inc., a
Delaware corporation, CCC Washington Cinema Corp., a Delaware corporation, CCC
Allwood Cinema Corp., a Delaware corporation, and CCC New City Cinema Corp., a
Delaware corporation (collectively, the "Purchasers") and Township of Washington
Theater, Inc., a New Jersey corporation, Allwood Clifton Cinema, Inc., a New
Jersey corporation and New City Cinemas, Inc., a New York corporation
(collectively, the "Sellers") including the provisions of Articles III, IV and
VII thereof regarding representations and warranties and indemnification,
respectively.
<PAGE>
Witness the due execution hereof this the ____ day of May, 1996.
ATTEST: ALLWOOD CLIFTON CINEMA, INC.
By: __________________________ By: __________________________
Title: _______________________ Title: _______________________
ATTEST: CCC ALLWOOD CINEMA CORP.
By: __________________________ By: __________________________
Title: _______________________ Title: ________________________
<PAGE>
STATE OF NEW JERSEY
SS.:
COUNTY OF _______________________
I CERTIFY that on May ____, 1996, _________________________ personally
came before me, and this person acknowledged under oath, to my satisfaction,
that:
a) this person is the ______________ secretary of Allwood Clifton
Cinema, Inc., the corporation named in this document;
b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is
_______________________________, the ____________ President of the
corporation;
c) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board
of Directors; and
d) this person signed this proof to attest to the truth of these
facts.
------------------------------------------------
(Print name of attesting witness below signature)
Signed and sworn to before me on May _______, 1996.
- --------------------------------
<PAGE>
STATE OF ________________________
SS.:
COUNTY OF _______________________
I CERTIFY that on May ____, 1996, ________________________ personally
came before me, and this person acknowledged under oath, to my satisfaction,
that:
a) this person is the ______________ secretary of CCC Allwood Cinema
Corp. the corporation named in this document;
b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is
_______________________________, the ____________ President of the
corporation;
c) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board
of Directors; and
d) this person signed this proof to attest to the truth of these
facts.
------------------------------------------------
(Print name of attesting witness below signature)
Signed and sworn to before me on May _______, 1996.
- ---------------------------------
<PAGE>
This lease, dated the 5th day of November 1986 Between 96 MARKET ASSOCIATES, a
partnership, c/o Jersey Management Co., Inc.
ALLWOOD CLIFTON CINEMA, INC., 322 Center Grove Road, Randolph, New
Jersey 07869, hereinafter referred to as the Tenant,
WITNESSETH: That the Landlord hereby demises and leases unto the Tenant, and the
Tenant hereby hires and takes from the Landlord for the term and upon the
rentals hereinafter specified, the premises described as follows, situated in
the City of Clifton, County of Passaic and State of New Jersey.
Theatre located on the first floor in the building known as Allwood Theatre, 96
Market Street, Clifton, New Jersey 07012.
The term of this demise shall be for twenty (20) years beginning January
15, 1987 and ending January 14, 2007.
The rent for the demised term shall be ONE MILLION THREE HUNDRED
THOUSAND AND NO/100 DOLLARS--------------------------($1,300,000.00),*which
shall accrue at the yearly rate of SIXTY-FIVE THOUSAND AND NO/100*($65,000.00)
DOLLARS.*
The said rent is to be payable monthly in advance on the first day of each
calendar month for the term hereof, in instalments as follows: FIVE THOUSAND
FOUR HUNDRED SIXTEEN DOLLARS AND SIXTY-SEVEN CENTS* ($5,416.67)*. All rents are
due and payable on the first day of each and every month,
at the office of the Landlord,
or as may be otherwise directed by the Landlord in writing.
THE ABOVE LETTING IS UPON THE FOLLOWING CONDITIONS:
First.--The Landlord covenants that the Tenant, on paying the said
rental and performing the covenants and conditions in this Lease contained,
shall and may peaceably and quietly have, hold and enjoy the demised premises
for the term aforesaid.
Second.--The Tenant covenants and agrees to use the demised premises
as a Movie Theatre only, provided no x-rated films may be shown or exhibited
without the consent of the Landlord, and under no circumstances shall what are
classified as triple x hardcore pornography to be shown at any time or exhibited
at any time at said theatre. It is understood that the Tenant can show x-rated
<PAGE>
films which are not of ** and agrees not to use or permit the premises to be
used for any other purpose without the prior written consent of the Landlord
endorsed hereon. **the hardcore pornography type which are shown by other
neighborhood or similar theatres and distributed by major movie studios.
Third.--The Tenant shall, without any previous demand therefor, pay to
the Landlord, or its agent, the said rent at the times and in the manner above
provided. In the event of the non-payment of said rent, or any instalment
thereof, at the times and in the manner above provided, and if the same shall
remain in default for 20 days after becoming due, or if the Tenant shall be
dispossessed for non-payment of rent, or if the leased premises shall be
deserted or vacated, the Landlord or its agents shall have the right to and may
enter the said premises as the agent of the Tenant, either by force or
otherwise, without being liable for any prosecution or damages therefor, and may
relet the premises as the agent of the Tenant, and receive the rent therefor,
upon such terms as shall be satisfactory to the Landlord, and all rights of the
Tenant to repossess the premises under this lease shall be forfeited. Such
re-entry by the Landlord shall not operate to release the Tenant from any rent
to be paid or covenants to be performed hereunder during the full term of this
lease. For the purpose of reletting, the Landlord shall be authorized to make
such repairs or alternations in or to the leased premises as may be necessary to
place the same in good order and condition. The Tenant shall be liable to the
Landlord for the cost of such repairs or alterations, and all expenses of such
reletting. If the sum realized or to be realized from the reletting is
insufficient to satisfy the monthly or term rent provided in this lease, the
Landlord, at its option, may require the Tenant to pay such deficiency month by
month, or may hold the Tenant in advance for the entire deficiency to be
realized during the term of the reletting. The Tenant shall not be entitled to
any surplus accruing as a result of the reletting. The Landlord is hereby
granted a lien, in addition to any statutory lien or right to distrain that may
exist, on all personal property of the Tenant in or upon the demised premises,
to secure payment of the rent and performance of the covenants and conditions of
this lease. The Landlord shall have the right, as agent of the Tenant, to take
possession of any furniture, fixtures or other personal property of the Tenant
found in or about the premises, and sell the same at public or private sale and
to apply the proceeds thereof to the payment of any monies becoming due under
this lease, the Tenant hereby waiving the benefit of all laws exempting property
from execution, levy and sale on distress or judgment. The Tenant agrees to pay,
as additional rent, all attorney's fees and other expenses incurred by the
Landlord in enforcing any of the obligations under this lease.
Fourth--The Tenant shall not sub-let the demised premises nor any
portion thereof, nor shall this lease be assigned by the Tenant without the
prior written consent of the Landlord endorsed hereon.
Fifth--The Tenant has examined the demised premises, and accepts them
in their present condition (except as otherwise expressly provided herein) and
without any representations on the part of the Landlord or its agents as to the
present or future condition of the said premises. The Tenant shall keep the
demised premises in good condition, and shall redecorate, paint and renovate the
said premises as may be necessary to keep them in repair and good appearance.
The Tenant shall quit and surrender the premises at the end of the demised term
in as good condition as the reasonable use thereof will permit. The Tenant shall
not make any structural alterations, additions, or improvements to said premises
without the prior written consent of the Landlord improvements, the same as long
as the same do not diminish the value of the premises. All erections,
alterations, additions and improvements, whether temporary or permanent in
character, which may be made upon the premises either by the Landlord or the
Tenant, except furniture or movable trade fixtures installed at the expense of
the Tenant, shall be the property of the Landlord and shall remain upon and be
surrendered with the premises as a part thereof at the termination of this
Lease, without compensation to the Tenant. The Tenant further agrees to keep
said premises and all parts thereof in a clean and sanitary condition and free
from trash, inflammable material and other objectionable matter. If this lease
covers premises, all or a part of which are on the ground floor, the Tenant
further agrees to keep the sidewalks in front of such ground floor portion of
the demised premises clean and free of obstructions, snow and ice.
Sixth.--In the event that any mechanics' lien is filed against the
premises as a result of alterations, additions or improvements made by the
Tenant, the Landlord, at its option, after thirty days' notice to the Tenant,
may terminate this lease and may pay the said lien, without inquiring into the
validity thereof, and the Tenant shall
<PAGE>
forthwith reimburse the Landlord the total expense incurred by the Landlord in
discharging the said lien, as additional rent hereunder.
Seventh--The Tenant agrees to replace at the Tenant's expense any and
all glass which may become broken in and on the demised premises. Plate glass
and mirrors, if any, shall be insured by the Tenant at their full insurable
value in a company satisfactory to the Landlord. Said policy shall be of the
full premium type, and shall be deposited with the Landlord or its agent.
Eighth.--The Landlord shall not be responsible for the loss of or
damage to property, or injury to persons, occurring in or about the demised
premises, by reason of any existing or future condition, defect, matter or thing
in said demised premises or the property of which the premises are a part, or
for the acts, omissions or negligence of other persons or tenants in and about
the said property. The Tenant agrees to indemnify and save the Landlord harmless
from all claims and liability for losses of or damage to property, or injuries
to persons occurring in or about the demised premises.
Ninth.--Utilities and services furnished to the demised premises for
the benefit of the Tenant shall be provided and paid for as follows: water by
the Tenant; gas by the Tenant; electricity by the Tenant; heat by the Tenant;
refrigeration by the Tenant; hot water by the Tenant. Tenant shall be
responsible for all interior repairs and the maintenance and repair of the
air-conditioning and heating system, the repair and maintenance of the roof, and
the maintenance of all exterior doors and glass areas.
The Landlord shall not be liable for any interruption or delay in any of the
above services for any reason.
Tenth.--The Landlord, or its agents, shall have the right to enter the
demised premises at reasonable hours in the day or night to examine the same, or
to run telephone or other wires, or to make such repairs, additions or
alterations as it shall deem necessary for the safety, preservation or
restoration of the improvements, or for the safety or convenience of the
occupants or users thereof (there being no obligation, however, on the part of
the Landlord to make any such repairs, additions or alterations), or to exhibit
the same to prospective purchasers and put upon the premises a suitable "For
Sale" sign. For three months prior to the expiration of the demised terms, the
Landlord, or its agents, may similarly exhibit the premises to prospective
tenants, and may place the usual "To Let" signs thereon.
Eleventh.--In the event of the destruction of the demised premises or
the building containing the said premises by fire, explosion, the elements or
otherwise during the term hereby created, or previous thereto, or such partial
destruction thereof as to render the premises wholly untenantable or unfit for
occupancy, or should the demised premises be so badly injured that the same
cannot be repaired within ninety days from the happening of such injury, then
and in such case the term hereby created shall, at the option of the Landlord,
cease and become null and void from the date of such damage or destruction, and
the Tenant shall immediately surrender said premises and all the Tenant's
interest therein to the Landlord, and shall pay rent only to the time of such
surrender, in which event the Landlord may re-enter and re-possess the premises
thus discharged from this lease and may remove all parties therefrom. Should the
demised premises be rendered untenatable and unfit for occupancy, but yet be
repairable within ninety days from the happening of said injury, the Landlord
may enter and repair the same with reasonable speed, and the rent shall not
accrue after said injury or while repairs are being made, but shall recommence
immediately after said repairs shall be completed. But if the premises shall be
so slightly injured as not to be rendered untenatable and unfit for occupancy,
then the Landlord agrees to repair the same with reasonable promptness and in
that case the rent accrued and accruing shall not cease or determine. The Tenant
shall immediately notify the Landlord in case of fire or other damage to the
premises. SEE RIDER ATTACHED HERETO.
Twelfth--The Tenant agrees to observe and comply with all laws,
ordinances, rules and regulations of the Federal, State, County and Municipal
authorities applicable to the business to be conducted by the Tenant in the
demised premises. The Tenant agrees not to do or permit anything to be done in
said premises, or keep anything
<PAGE>
therein, which will increase the rate of fire insurance premiums on the
improvements or any part thereof, or on property kept therein, or which will
obstruct or interfere with the rights of other tenants, or conflict with the
regulations of the Fire Department or with any insurance policy upon said
improvements or any part thereof. In the event of any increase in insurance
premiums resulting from the Tenant's occupancy of the premises, or from any act
or omission on the part of the Tenant, the Tenant agrees to pay said increase in
insurance premiums on the improvements or contents thereof as additional rent.
Thirteenth.--No sign, advertisement or notice shall be affixed to or
placed upon any part of the demised premises by the Tenant, except in such
manner, and of such size, design and color as shall be approved in advance in
writing by the Landlord.
Fourteenth.--This lease is subject and is hereby subordinated to all
present and future mortgages, deeds of trust and other encumbrances affecting
the demised premises or the property of which said premises are a part. The
Tenant agrees to execute, at no expense to the Landlord, any instrument which
may be deemed necessary or desirable by the Landlord to further effect the
subordination of this lease to any such mortgage, deed of trust or encumbrance.
Fifteenth.--XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
Sixteenth.--The rules and regulations regarding the demised premises,
affixed to this lease, if any, as well as any other and further reasonable rules
and regulations which shall be made by the Landlord, shall be observed by the
Tenant and by the Tenant's employees, agents and customers. The Landlord
reserves the right to rescind any presently existing rules applicable to the
demised premises, and to make such other and further reasonable rules and
regulations as, in its judgment, may from time to time be desirable for the
safety, care and cleanliness of the premises, and for the preservation of good
order therein, which rules, when so made and notice thereof given to the Tenant,
shall have the same force and effect as if originally made a part of this lease.
Such other and further rules shall not, however, be inconsistent with the proper
and rightful enjoyment by the Tenant of the demised premises.
Seventeenth.--In case violation by the Tenant of any of the covenants,
agreements and conditions of this lease, or of the rules and regulations now or
hereafter to be reasonably established by the Landlord, and upon failure to
discontinue such violation within ten days after notice thereof given to the
Tenant, this lease shall thenceforth, at the option of the Landlord, become null
and void, and the Landlord may re-enter without further notice or demand. The
rent in such case shall become due, be apportioned and paid on and up to the day
of such re-entry, and the Tenant shall be liable for all loss or damage
resulting from such violation as aforesaid. No waiver by the Landlord of any
violation or breach of condition by the Tenant shall constitute or be construed
as a waiver of any other violation or breach of condition, nor shall lapse of
time after breach of condition by the Tenant before the Landlord shall exercise
its option under this paragraph operate to defeat the right of the Landlord to
declare this lease null and void and to re-enter upon the demised premises after
the said breach or violation.
Eighteenth.--All notices and demands, legal or otherwise, incidental
to this lease, or the occupation of the demised premises, shall be in writing.
If the Landlord or its agent desires to give or serve upon the Tenant any notice
or demand, it shall be sufficient to send a copy thereof by registered mail,
addressed to the Tenant at the demised premises or to leave a copy thereof with
a person of suitable age found on the premises, or to post a copy thereof upon
the door of said premises. Notices from the Tenant to the Landlord shall be sent
by registered mail or delivered to the Landlord at the place hereinbefore
designated for the payment of rent, or to such party or place as the Landlord
may from time to time designate in writing.
Nineteenth.--It is further agreed that if any time during the term of
this lease the Tenant shall make _____ assignment for the benefit of creditors,
or be decreed insolvent or bankrupt, according to law, or if a receiver shall
_______ appointed for the Tenant, then the Landlord may, at its option,
terminate this lease, exercise of such option to be evidenced by notice to that
effect served upon the assignee, receiver, trustee or other person in charge
<PAGE>
of the liquidation ________ the property of the Tenant or the Tenant's estate,
but such termination shall not release or discharge any payment _________ rent
payable hereunder and then accrued, or any liability then accrued by reason of
any agreement or covenant here_____ contained on the part of the Tenant, or the
Tenant's legal representatives.
Twentieth.--In the event that the Tenant shall remain in the demised
premises after the expiration of the term of this lease without having executed
a new written lease with the Landlord, such holding over shall not constitute a
renewal or extension of this lease. The Landlord may, at its option, elect to
treat the Tenant as one who has not removed at the end of his term, and
thereupon be entitled to all the remedies against the Tenant provided by law in
that situation or the Landlord may elect, at its option, to construe such
holding over as a tenancy from month to month, subject to all the terms and
conditions of this lease, except as to duration thereof, and in that event the
Tenant shall pay monthly rent in advance at the rate provided herein as
effective during the last month of the demised term.
Twenty-first.--If the property or any part thereof wherein the demised
premises are located shall be taken by public or quasi-public authority under
any power of eminent domain or condemnation, this lease, at the option of the
Landlord, shall forthwith terminate and the Tenant shall have no claim or
interest in or to any award of damages for such taking.
Twenty-second.--The Tenant has this day deposited with the Landlord
the sum of $ NONE as security for the full and faithful PERFORMANCE BY THE
Tenant of all the terms, covenants and conditions of this lease upon the
Tenant's part to be performed, which said sum shall be returned to the Tenant
after the time fixed as the expiration of the term herein, provided the Tenant
has fully and faithfully carried out all of said terms, covenants and conditions
on Tenant's part to be performed. In the event of a bona fide sale, subject to
this lease, the Landlord shall have the right to transfer the security to the
vendee for the benefit of the Tenant and the Landlord shall be considered
released by the Tenant from all liability for the return of such security; and
the Tenant agrees to look to the new Landlord solely for the return of the said
security, and it is agreed that this shall apply to every transfer or assignment
made of the security to a new Landlord. The security deposited under this lease
shall not be mortgaged, assigned or encumbered by the Tenant without the written
consent of the Landlord. SEE PARAGRAPH #38 for addition to this Paragraph.
Twenty-third.--Any dispute arising under this lease shall be settled
by arbitration. Then Landlord and Tenant shall each choose an arbitrator, and
the two arbitrators thus chosen shall select a third arbitrator. The findings
and award of the three arbitrators thus chosen shall be final and binding on the
parties hereto.
Twenty-fourth.--No rights are to be conferred upon the Tenant until
this lease has been signed by the Landlord, and an executed copy of the lease
has been delivered to the Tenant.
Twenty-fifth.--The foregoing rights and remedies are not intended to
be exclusive but as additional to all rights and remedies the Landlord would
otherwise have by law.
Twenty-sixth.--All of the terms, covenants and conditions of this
lease shall inure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and assigns of the parties hereto.
However, in the event of the death of the Tenant, if an individual, the Landlord
may, at its option, terminate this lease by notifying the executor or
administrator of the Tenant at the demised premises.
Twenty-seventh.--This lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on
part of Tenant to be performed shall in nowise be effected, impaired or excused
because Landlord is unable to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or is delayed in
making any repairs, additions, alterations or decorations or is unable to supply
or is delayed in supplying any equipment or fixtures if Landlord is prevented or
delayed from so doing by reason of governmental preemption in connection with
the National Emergency declared by the President of the United States or in
connection with any rule, order or regulation of any department or subdivision
thereof of any
<PAGE>
governmental agency or by reason of the conditions of supply and demand which
have been or are affected by the war.
Twenty-eighth.--This instrument may not be changed orally.
SEE RIDER ATTACHED HERETO
IN WITNESS WHEREOF, the said Parties have hereunto set their hands and
seals the day and year first above written.
Witness: 96 MARKET ASSOCIATES (SEAL)
------------------------------------
Landlord
By /s/ Walter F. Calligaro
- --------------------------- --------------------------------
WALTER F. CALLIGARO, Partner
ALLWOOD CLIFTON CINEMA, INC. (SEAL)
- --------------------------- ------------------------------------
Tenant
Dated: November 5, 1986 By __________________________ (SEAL)
<PAGE>
RIDER ATTACHED TO LEASE BY AND BETWEEN
96 MARKET ASSOCIATES, a partnership,
as Landlord; and ALLWOOD CLIFTON CINEMA,
INC., as Tenant, dated Nov. 5, 1986.
TWENTY-NINTH: In addition to the within monthly rental, the Tenant shall
pay as additional rent seventy-six (76%) per cent of any increase in real estate
taxes levied against the land and building of which the demised premises are a
part over and above the real estate taxes so levied for the base year 1986,
which is Eighteen Thousand One Hundred Forty-Four and 62/100 ($18,144.62)
Dollars. Annually, during the term hereof or any renewals hereof the Landlord
shall calculate such increase in real estate taxes and advise the Tenant, in
writing, of the amount of such increase over and above the base year. The Tenant
shall pay its seventy-six (76%) per cent share of any such increases by
remitting the same to the Landlord on the first day of the month following
receipt of such notice. If this Lease is in effect for only part of a particular
calendar year, the additional rent herein provided shall be prorated for that
year based on the number of months during which the Lease is in effect. This
paragraph shall not be effective during the first year of the Lease (calendar
year 1987).
THIRTIETH: In further addition to the within monthly rental, the Tenant
shall pay as additional rental seventy-six (76%) per cent of the cost of
providing services and all other operating costs incurred by the Landlord in the
operation of the land and building of which the leased premises are a part,
including but not limited to snow removal, general repairs of the common areas,
common systems, and parking lot, and parking lot maintenance. Monthly, during
the term hereof or any renewals hereof, the Landlord shall calculate such costs
of providing said utilities and services and advise the Tenant, in writing, of
the amount. The Tenant shall pay its seventy-six (76%) per cent share by
remitting the same to the Landlord on the first day of the month following
receipt of such notice. This paragraph shall not be effective during the first
year of the Lease to wit: the calendar year 1987. The Landlord shall be
responsible for snow removal and maintenance of said parking lots referred to in
this paragraph, except for the parking lot covered by the library lease which is
referred to and was entered into on October 1, 1984, which shall be the sole
responsibility of the Tenant. The Tenant, however, in addition, shall be
obligated to remove all snow and ice from the sidwalk abutting the leased
premises and shall be required to keep said sidewalk area clean at all times.
THIRTY-FIRST: In further addition to the within monthly rental, the
Tenant shall pay as additional rent seventy-six (76%) per cent of any increase
in insurance premiums incurred by the Landlord in insuring the land and building
of which the demised premises are a part for liability and for damage by fire,
explosion, elements or otherwise over and above the base year 1986. Annually,
during the term hereof, the Landlord shall calculate such increase in insurance
costs and advise the Tenant, in writing, of the amount of such increase over and
above the base year. The Tenant shall pay its seventy-six (76%) per cent share
of any such increase by remitting the same to the Landlord on the first day of
the month following receipt of such notice. If this Lease is in effect for only
part of a particular calendar year, the additional rent herein provided shall be
prorated for that year based on the number of months during which the Lease is
in effect. This
<PAGE>
paragraph shall not be effective during the first year of the Lease (calendar
year 1987). In addition to the above, the Tenant shall be liable to obtain and
maintain liability insurance covering its operations, naming the Landlord as an
additional insured in an insurance company duly authorized and licensed to do
business in the State of New Jersey in an amount of One Million and No/100
($1,000,000.00) Dollars for each accident or occurrence of bodily injury or
death and for Fifty Thousand and No/100 ($50,000.00) Dollars for property
damage. Said policy is to include a waiver of subrogation. Additionally, the
Tenant agrees to keep the personal property, including betterments and
improvements on the premises insured from loss against fire, theft or other
cause, extended coverage insurance during the term of this Lease at its sole
costs and expense and to name the Landlord as owner and insured in such policies
of insurance, which insurance coverage shall be in the amount of not less than
Two Hundred Fifty Thousand and No/100 ($250,000.00) Dollars. All certificates
and policies of insurance shall be delivered to the Landlord prior to January
15, 1987.
THIRTY-SECOND: It is expressly understood and agreed that if because of
the Tenant's occupancy, it shall be impossible to obtain fire insurance on the
buildings of which the demised premises are a part in an amount and in a form
acceptable to the Landlord, and at a rate equal to the rate now being paid by
the Landlord and from a fire insurance company licensed to do business in the
State of New Jersey by the Commissioner of Insurance, the Landlord may, if it so
elects, at any time thereafter, terminate this Lease and the term hereof, upon
giving to the Tenant thirty (30) days notice of its intension so to do, and upon
giving of such notice, this Lease shall terminate and come to an end.
THIRTY-THIRD: The Tenant will install, at its own cost and expense, such
fire extinguishers in the demised premises as may be required by the Fire
Prevention Bureau of the City of Clifton.
THIRTY-FOURTH: In the event any improvements installed by the Tenant
causes an increase in the assessment for real estate tax purposes of the land
and building of which the demised premises are a part, all taxes resulting from
such increase in assessment shall be paid by the Tenant as additional rent in
the manner set forth in Paragraph Twenty-Ninth hereof.
THIRTY-FIFTH: If rent is not postmarked by the Tenant or paid by the
Tenant to the Landlord before the fifth of the month, then if the same is
postmarked by the Tenant or paid by the Tenant to the Landlord on the fifth of
the month and by the tenth of the month, then there shall be late charge of five
(5%) per cent of said monthly payment to be added as additional rental to said
monthly payment of rent not so paid, and if the rent is postmarked on the
eleventh of the month and by the twentieth of the month or paid by the Tenant to
the Landlord on the eleventh of the month through the twentieth of the month, a
late charge of twenty (20%) per cent of said monthly rental is to be added as
additional rental to each monthly rental installment of rent not so paid.
THIRTY-SIXTH: The rent schedule is set forth in this paragraph. In
addition to the base annual rent as described below, the Tenant agrees to pay
additional rents as explained in Paragraphs Number 29, 30, and 31:
<PAGE>
(a) Rents for the five (5) year period from January 15, 1987 to January
14, 1992: The Sixty-Five Thousand and No/100 ($65,000.00) Dollars base annual
rental will remain constant for the first five (5) years of the Lease.
(b) Rent for the five (5) year period from January 15, 1992 to January
14, 1997: Effective January 15, 1992, the base annual rent is to be increased by
fifty (50%) per cent of the percentage increase of the Consumer Price Index for
Urban Wage Earners & Clerical Workers for the New York/Northeastern New Jersey
Area for the month of July, 1991, over and above said index for the month of
July, 1986, which is 316.5, or by fifteen (15%) per cent of the prior year's
base annual rent, whichever amount is greater, but not to exceed twenty-five
(25%) per cent.
(c) Rent for the five (5) year period from January 15, 1997 to January
14, 2002: Effective January 15, 1997, the base annual rent is to be increased by
fifty (50%) per cent of the percentage increase of the Consumer Price Index for
Urban Wage Earners & Clerical Workers for the New York/Northeastern New Jersey
Area for the month of July, 1996, over and above said index for the month of
July, 1986, which is 316.5, or by fifteen (15%) per cent of the prior year's
base annual rent, whichever amount is greater, but not to exceed twenty-five
(25%) per cent.
(d) Rent for the five (5) year period from January 15, 2002 to January
14, 2007: Effective January 15, 2002, the base annual rent is to be increased by
fifty (50%) per cent of the percentage increase of the Consumer Price Index for
Urban Wage Earners & Clerical Workers for the New York/Northeastern New Jersey
Area for the month of July, 2001, over and above said index for the month of
July, 1986, which is 316.5, or by fifteen (15%) per cent of the prior year's
base annual rent, whichever amount is greater, but not to exceed twenty-five
(25%) per cent.
THIRTY-SEVENTH: It is understood and agreed that in the event the Tenant
desire to sub-let or assign the space for theatre use only, that they must first
obtain the consent of the Landlord, which consent shall not be unreasonably
withheld. If the Tenant chooses to sub-let the premises for theatre use only,
any increase in rental received by the Tenant in such sub-letting will be turned
over directly to the Landlord. In the event of said sub-leasing, the Landlord
and Tenant agree that the new Tenant will deposit with the Landlord a sum equal
to two (2) months of the prior year's base rent as Tenant's security deposit,
subject to the terms and conditions of Paragraph 22. It is further understood
and agreed that if the sub-letting be for the same amount as that reflected in
the Lease, the Landlord shall not pursue a claim that part of the other
consideration which may have been obtained by the Tenant relates to the value of
the sub-letting. Whether the transaction be an assignment or a sub-letting, the
party who shall become the Tenant or sub-tenant shall have to prove its or his
financial ability to be able to operate the theatre in accordance with the terms
and provisions of this Lease by evidencing a value at a minimum of One Hundred
Fifty Thousand and No/100 ($150,000.00) Dollars which shall either be contained
as assets in the business of said Tenant or sub-tenant, or include monies that
were paid to the present Tenant in consideration of the assignment or sale to
the said new Tenant or sub-tenant or a combination thereof, as long as the said
total shall evidence a minimum of One Hundred Fifty Thousand and No/100
($150,000.00) Dollars. If the transaction be an assignment or sub-letting, under
either situation, a security deposit of two (2) months of the prior year's base
rent as
<PAGE>
tenant's security shall be placed in accordance with the terms and conditions of
Paragraph 22 set forth in this Lease.
THIRTY-EIGHTH: In reference to the leased premises referred to on the
top of the first page of this Lease, the same shall be modified to contain the
additional language as follows:
"Together with use in common with other tenants of the building of the
parking lot which services said building and use of the portion of the
parking lot servicing the Allwood Branch of the Clifton Public Library
pursuant to a certain agreement dated October 1, 1984, entered into by
and between Allwood Theatre, Inc. and the Board of Trustees of the Free
Public Library, a copy of which is attached hereto and made a part
hereof. Tenant shall be liable to maintain all insurance as required by
said agreement of October 1, 1984, and further shall be obligated to
carry out all of the terms and provisions of said lease agreement."
THIRTY-NINTH: In reference to the payment of rent referred to on the
first page of this Lease to which this is a Rider, the first monthly rental
shall commence as of March 15, 1987, at which time fifty (50%) per cent of
rental due for the month of March shall be paid; full monthly payments shall
commence April 1, 1987 in accordance with the terms and provisions of this Lease
and the final monthly rental due in January of 2007 shall be also prorated to be
fifty (50%) per cent of the rental as shall be due for the month of January,
2007.
FORTIETH: In reference to Paragraph Second of the Lease to which
this is a Rider, the same shall have appended to it the following language:
"It is represented that the primary purpose of the Tenant is the
operation of a motion picture theatre. However, it shall be permited to
also participate in normal merchandising found typically in theatres
such as the sale of records, tapes, tee-shirts, posters related to
movies, and also the operation of electric games subject to local
ordinances. The Tenant shall also be permitted to operate a food and
drink concession or to contract with others for the purpose of operating
said food or drink concession."
FORTY-FIRST: As to Paragraph Eleventh of the Lease which deals with fire
loss, the same shall be modified to have the following additional language added
to it:
"In the event the premises shall be so damaged that the Landlord shall
have the option not to rebuild or reconstruct said theatre, then and in
that event, the Landlord shall reimburse to the Tenant a sum which shall
be as follows:
`If within the first twelve (12) months of the execution of this
Lease, the Landlord shall reimburse to the Tenant a sum equal to
seventy-five (75%) per cent of Two Hundred Fifty Thousand and
No/100 ($250,000.00) Dollars, and for each year thereafter the
amount to be paid to the Tenant shall be reduced by one-twentieth
<PAGE>
(1/20th) so that after twenty (20) years no monies would have to
be reimbursed to the said Tenant.' "
FORTY-SECOND: As to Paragraph Thirteenth of said Lease, the same shall
be modified to provide:
"which consent shall not be unreasonably withheld, and the Tenant shall
be obligated to comply with all of the rules, regulations and ordinances
of the City of Clifton, and any other governmental agency which relates
to signage on said premises. The Tenant shall be permitted to erect such
sign as shall be in compliance with the ordinances, regulations and
other requirements of the City of Clifton."
FORTY-THIRD: As to Paragraph Fourteenth of said Lease, the same shall be
modified to contain the following provision:
"The Landlord agrees to seek from the holder of any mortgages on the
premises an attornment which would permit the Tenant to remain on the
premises even after default of the Landlord as long as the Tenant shall
comply with all of the terms and provisions of this Lease and not be in
default in reference to any obligations contained herein."
FORTY-FOURTH: As to Paragraph Seventeenth of said Lease, the same shall
contain the following additional provision:
"The Tenant shall not be deemed in default in reference to such
covenants or requirements as long as correction is commenced within a
reasonable time after the tenant has received notification from the
Landlord of any such violation and said corrections are completed within
a reasonable time after they are commenced."
FORTY-FIFTH: As to Paragraph Eighteenth of said Lease, the same shall be
modified to require:
"All notifications required either to Landlord or Tenant shall be
forwarded as follows:
As to the Landlord: c/o Jersey Management, 1005 Clifton
Avenue, Clifton, N.J. 07013 or such other address as shall be
communicated to the Tenant in writing.
As to the Tenant: c/o John Nelson, 322 Center Grove Road,
Randolph, N.J. 07869 or such other address as shall be
communicated to the Landlord in writing."
<PAGE>
FORTY-SIXTH: As to Paragraph Twenty-first of said Lease agreement, the
same shall be modified to provide as follows:
"In the event the premises shall be condemned as provided in Paragraph
Twenty-first, the Landlord shall reimburse to the Tenant, if such
condemnation occurs within the first twelve (12) months of the execution
of this Lease, seventy-five (75%) per cent of Two Hundred Fifty Thousand
and No/100 ($250,000.00) Dollars being the agreed value of the
improvements, betterments and personalty added to the premises by the
Tenant at the commencement of this Lease, and for each year thereafter,
said amount shall be reduced by one-twentieth (1/20th) so that at the
expiration of twenty (20) years, no such further amount would be
required to be paid by the Landlord to the Tenant."
FORTY-SEVENTH: The Tenant shall be obligated to make certain renovations
and improvements to the premises, including the installation of additional
fixtures and equipment so that the same can be and shall be operated as a quad
or four-plex movie theatre. Any and all equipment, fixtures and personalty
placed on the premises shall, upon their being placed on the premises, become
the property of the Landlord. Any and all such fixtures, equipment and
personalty shall be free and clear of any liens or encumbrances and title shall
immediately be turned over to the Landlord as of the date the same are delivered
to the premises. UCC documents, including Financing Statements, shall be
executed by the Tenant and Landlord and filed upon the execution of this
Agreement, evidencing the ownership by the Landlord of all fixtures, equipment
and personalty located in the premises, whether existing at this time, or any
replacements, accessions or modifications or repairs of same. A list of the
initial equipment on the premises is attached hereto and made a part hereof.
FORTY-EIGHTH: The Landlord agrees to have a new roof placed on the
premises, and any warranties or guarantees received from the roofing company
shall be transferred to the benefit of the Tenant, who shall then be obligated
as provided for herein to repair and maintain said roof for the term of this
Lease. The Landlord further agrees to install a new heating and air-conditioning
system (Landlord can utilize existing duct system) in the premise and upon
completion of such renovations or installation of the new system, the Tenant
shall become obligated to maintain and repair said system for the term of this
Lease. Separate heating, ventilating and air-conditioning system_ with separate
thermostats, shall be installed for each of the four (4) theatres. Any
warranties or guarantees received by the Landlord shall be turned over to the
Tenant for its benefit. The requirements of this paragraph reflect the only
obligations of the Landlord.
FORTY-NINTH: The Tenant agrees to accomplish, before the grand opening
of the theatre, but no later than March 15, 1987, the following work in
accordance with the local codes and requirements of the City of Clifton, and
State of New Jersey; all work to be fully in compliance with said requirements
and the Tenant shall be obligated to obtain a Certificate of Occupancy from the
local municipality; said work shall include the following:
A. All new or reconditioned seats.
<PAGE>
B. Construction of four (4) separate auditoriums and
projection and sound systems so that the premises shall
consist of four (4) movie theatres.
C. New carpeting throughout theatres.
D. Painting or wall covering on all walls in the entire
premises.
E. Repair or replacement of all ceilings, where necessary.
F. Either the redecoration or replacement of all bathrooms.
G. Both the inner and outer lobbies shall be redecorated.
H. The ticket booth shall be renovated and redecorated.
FIFTIETH: In reference to that work provided for in Paragraph
Forty-Ninth immediately above, all plans, specifications and drawings shall be
submitted to the Landlord on or before December 1, 1986 for its approval. The
Landlord shall not unreasonably withhold its consent to the approval of the
plans, specifications and drawings as submitted. The Tenant agrees that it will
spend a minimum of Two Hundred Fifty Thousand and No/100 ($250,000.00) Dollars
in reference to the work to be performed as referred to above, and the
installation of fixtures, equipment and personalty in the premises. As
indicated, said fixtures, equipment and personalty shall become the property of
the Landlord and shall be free and clear of any and all liens as of the date it
is delivered to the leased premises. The Tenant shall deposit with George L.
Garrison, Esq., as Escrow Agent, the total sum of Fifty Thousand and No/100
($50,000.00) Dollars, which will be used for the purposes of making payment for
the final Fifty Thousand and No/100 ($50,000.00) Dollars required to be paid to
complete that work required to be accomplished by the Tenant. Said funds shall
be placed in an interest-bearing account, with the interest for the benefit of
the Tenant. All payments and distributions from said escrow account shall be
made at the direction of the Landlord. All bills and contracts shall be
submitted to the Landlord and all invoicing which is to be paid by said escrow
funds are to be submitted to the Landlord for its approval so that the same can
then be paid by George L. Garrison, Escrow Agent at the direction of the
Landlord. George L. Garrison shall incur no obligations or liabilities in
reference to the handling of said escrow fund, as long as he complies with the
directions received from the Landlord. If the Tenant shall make payment for all
invoicing without the necessity of using the Fifty Thousand and No/100
($50,000.00) Dollars being held in escrow, and the same is submitted to the
Landlord and approved, then the balance in said escrow account, after the work
has all been completed and approved by the Landlord, shall be turned over to the
Tenant, together with all undistributed interest. The Tenant agrees to pay at
the time of the signing of this Lease, an initial contribution of Five Thousand
and No/100 ($5,000.00) Dollars towards this escrow fund, a further sum of Twenty
Thousand and No/100 ($20,000.00) Dollars on November 11, 1986, and a final
payment of Twenty-Five Thousand and No/100 ($25,000.00) Dollars on January 15,
1987. If the work is not completed in accordance with the plans and
specifications as submitted to the Landlord and approved by it, then any monies
left in said escrow account shall be deemed
<PAGE>
liquidated damages to be utilized by the Landlord as it shall deem appropriate.
No liens shall be incurred nor permitted to be incurred in reference to the work
to be performed by the Tenant. If any liens are placed upon the premises, or if
any notices of intention are filed against the premises relating to the work to
be performed by the Tenant, the same must be removed by action of the Tenant
within ten (10) days of notification by the Landlord, or appropriate bonds or
cash security placed to secure the Landlord as to the payment and removal of
said liens or notices of intention. For failure of same, the Tenant shall be
deemed in default under the terms and provisions of this Lease.
FIFTY-FIRST: Attached hereto is a list of equipment which was located in
the premises at the time the same were leased to the prior Tenant. Said
equipment or replacements thereto shall be and remain the property of the
Landlord, but can be utilized by the Tenant in its operations. In the event the
Tenant is to repair, replace or improve any such equipment, the same shall
continue to remain the sole property and assets of the Landlord.
FIFTY-SECOND: The Landlord represents that the tenancy of the prior
theatre operator has been terminated, and that the only lien on the premises
including the fixtures and equipment, relate to the lien of the first mortgage
holder.
FIFTY-THIRD: The Tenant is to prepare appropriate and complete plans and
specifications and drawings in accordance with the requirements of the City of
Clifton for the purpose of obtaining a Building Permit from the City of Clifton
to convert the premises to a four-plex or quad movie theatre. All such plans,
specifications and drawings are to be delivered to the Landlord on or before
December 1, 1986. Such plans, specifications and drawings are subject to the
Landlord's approval. The Landlord agrees to participate and assist the Tenant in
obtaining a Building Permit from the City of Clifton. Any and all costs incurred
in obtaining said Building Permit shall be the sole responsibility of the
Tenant. Under no circumstances, shall the plans, specifications or drawings
reflect nor shall the premises contain any more seats for theatre occupancy than
those which were in existence as of the date this Lease was executed. If a
Building Permit is not obtained from the City of Clifton on or before January
15, 1987, the time for obtaining said Building Permit shall be extended for a
period of sixty (60) days at the sole option of the Landlord so that the
Landlord can continue to assist the Tenant in obtaining said Building Permit, as
long as an application is pending and the same is being pursued diligently by
the Landlord, the Tenant and the Tenant's agents and experts. If the Tenant does
not supply appropriate plans, specifications and drawings as required by the
City of Clifton or its ordinances, for the obtaining of a Building Permit on or
before December 1, 1986, then the contingencies contained in this provision
shall be waived and the Tenant shall be bound by this Lease without
consideration as to whether or not its able to obtain a Building Permit to be
able to convert the premises to a quad or four-plex movie theatre.
<PAGE>
96 MARKET ASSOCIATES, Landlord
By /s/ Walter F. Calligaro
------------------------------
WALTER F. CALLIGARO, Partner
ALLWOOD CLIFTON CINEMA, INC.
By
------------------------------
/s/ JOHN NELSON, PRES.
Dated: November 5, 1986
<PAGE>
LEASE MODIFICATION AGREEMENT
This Agreement made by and between 96 Market Associates, a partnership,
c/o Jersey Management Co., Inc., 1005 Clifton Avenue, Clifton, New Jersey 07013
(hereinafter referred to as "Landlord") and Allwood Clifton Cinema, Inc., 322
Center Grove Road, Randolph, New Jersey 07869 (hereinafter referred to as
"Tenant").
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into a Lease Agreement dated
November 5, 1986 ("Lease") for the lease of certain premises located at 96
Market Street, Clifton, New Jersey 07012; and
WHEREAS, the Lease provided for modifying the interior to provide for
four theaters; and
WHEREAS, the Tenant desires to add two additional theaters to the
premises for a total of six theaters; and
WHEREAS, Landlord is agreeable to permit the addition of the two
additional theaters upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and the sum of One ($1.00) Dollar, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. The Lease Agreement is hereby modified to provide that Tenant may
make any and all interior alterations to the building as may be necessary to
create six individual movie viewing theaters within the premises. Tenant shall
be responsible for securing any and all approvals and
<PAGE>
permits and shall make all alterations at its sole cost and expense. Landlord
hereby agrees to cooperate as may be necessary in securing approvals for the
additional theaters.
Prior to the submission of the plans for a building permit, Tenant
hereby agrees to submit the plans to the Landlord for the Landlord's approval
which approval shall not be unreasonably withheld by the Landlord. Tenant agrees
that all work will be made in a good workmanship like manner with suitable
materials. Furthermore, the Tenant agrees that the alterations will be completed
in accordance with all applicable governmental codes, laws, rules and
regulations. All improvements and fixtures installed as part of the renovation
will be and become the property of the Landlord immediately upon its
installation. As part of the work to be completed, Tenant shall replace all
existing seats in the theater with either new seats or reconditioned used seats.
2. Tax Increase. In the event that the subject property is subject to a
tax increase imposed by the City of Clifton as a result of the additional two
theaters, Tenant agrees to pay 100% of any such tax increase that is directly
attributable to the additional assessment as a result of these two additional
theaters. Furthermore, in the event that the subject property is reassessed,
Tenant's obligation to pay a percentage of the increased real estate taxes over
the 1986 base year as set forth in the lease shall be determined as follows:
76% of the assessment on 100% of added assessment
existing structure for the + for additional
1986 base year two theaters
------------------------------------------------------------------
Assessment on existing + 100% of added assessment
building for 1986 base year for additional two theaters
New Percentage of Real Estate Tax Obligation
<PAGE>
Tenant shall only be responsible to pay this new percentage multiplied
by the tax increase over the original base year as set forth in the lease and
shall in no way be obligated to pay any portion of the base year taxes. The new
percentage shall then be applied to the increase of the real estate taxes on the
entire land and building of which the demised premises are a part for the
current year less the taxes on the entire parcel for the 1986 base year. Tenant
shall not be obligated to pay for any increase in real estate taxes that result
from improvements or additions made to other parts of the building other than
the portion that the tenant is renting. In the event that improvements or
additions are made to any other parts of the building then the denominator in
the above fraction shall be increased by an amount equal to any increase in the
tax assessment attributable to such improvements or additions made in these
other parts of the building. The New Percentage would then accordingly be
adjusted to reflect the change. Landlord represents that the subject property is
currently assessed at the same value as in the 1986 base year.
3. Sub-lettor or Assignment. Paragraph 37 of the original Lease is
hereby modified replacing the sum of $150,000 with $250,000 as the minimum net
worth of a sub-tenant or assignee.
Notwithstanding anything contained herein to the contrary, Tenant
hereby agrees that in the event that Tenant sells or assigns its rights in the
Lease within five (5) years of receiving a Certificate of Occupancy for the
additional two theaters, Landlord will require an security deposit in addition
to the deposit to be held pursuant to Paragraph 37 of the Lease to be held by
the Landlord on the following basis:
<PAGE>
(a) the period ending on the first anniversary of the
receipt of the Certificate of Occupancy - $50,000.00 total.
(b) for the period ending on the second anniversary of
the receipt of the Certificate of Occupancy - $40,000.00 total.
(c) for the period ending on the third anniversary of the
receipt of the Certificate of Occupancy - $30,000.00 total.
(d) for the period ending on the fourth anniversary of
the receipt of the Certificate of Occupancy - $20,000.00 total.
(e) for the period ending on the fifth anniversary of the
receipt of the Certificate of Occupancy - $10,000.00 total.
(f) fter five (5) years no security deposit will be
required of a sub-tenant or sub-lessee.
Any sub-tenant or sub-lessee may give the Landlord a letter of
credit in lieu of a cash security deposit for any of the above referenced
amounts. At the end of five (5) years after the date that a certificate of
occupancy is received for the additional two theaters, there will be no further
requirement to furnish the security deposit or a letter of credit as the case
may be with the Landlord. In the event that the security deposit is furnished to
the Landlord in accordance with the above schedule the Landlord will refund to
such sub-tenant or sub-lessee the sum of $10,000.00 per year so that at the end
of five (5) years after the date which the Tenant receives a
<PAGE>
certificate of occupancy on the additional two theaters, any sub-tenant would
have refunded to it the entire security previously furnished to the Landlord.
Under no circumstances will a security deposit or letter of credit be required
of the Tenant herein, except as provided by paragraph 37 of the lease.
All other terms of paragraph 37 shall remain in full force and
effect.
4. No Increase in Rent. The rent as set forth in the Lease remains
intact and all other terms of the Lease Agreement not specifically changed by
the terms of this Modification Agreement shall remain in full force and effect.
5. Payment of Legal Fees. The Tenant agrees to reimburse the Landlord
for all legal fees necessary in the review of this within document. The parties
hereby acknowledge that the Landlord's attorney, Frank Carlet, is billing the
Landlord at the rate of $210.00 per hour.
6. Theater Passes. During the term of the lease, Tenant further agrees
that it shall deliver to the Landlord at the beginning of each calendar year
four (4) theater passes. Each of the four (4) passes will permit the admittance
of four (4) individuals to the theater during all regularly scheduled motion
picture performances for that calendar year. These passes, which shall only be
good for twelve (12) months from the date of issuance, may be distributed at the
discretion of the Landlord; however, once distributed shall be non-transferable
to any other individuals. These passes shall not be valid during any engagement
of a motion picture advertised as a "no pass engagement". Landlord's right to
receive theater passes as set forth in this provision shall terminate at the
disposition of an interest in 96 Market Street Associates by the below mentioned
individuals or by the death of the below mentioned individuals:
<PAGE>
(a) Walter Calligaro;
(b) Thomas Cupo;
(c) Leon Gotleib; and
(d) Morris Diamond.
This right to receive passes shall also terminate in the event there is
a partial or complete assignment or disposition of either the partnership
interest of 96 Market Street Associates or the sale of the subject property by
96 Market Street Associates to any other party.
The passes although otherwise non-transferable may be used by the
children of the individuals listed in (a) through (d) above as long as the
individuals listed in (a) through (d) have a right to use the passes. In the
event that the passes are used by the children of the individuals listed in (a)
through (d) above, the passes shall then only admit two (2) individuals per
pass.
7. Successors and Assigns.
Subject to the restrictions on transfer set forth herein, this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto.
8. Waivers.
No waiver of any breach of this Agreement or of any of the terms
thereof shall be effective unless such waiver is in writing and signed by the
party against whom it is claimed. No waiver of any breach shall be deemed to be
a waiver of any other or subsequent breach.
9. Severability.
If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
<PAGE>
10. Limitation on Rights of Others.
Nothing in this Agreement, whether express or implied, shall be
construed to give to any person other than the parties any legal or equitable
right, remedy or claim under or in respect of this Agreement or any covenant,
condition or other provision contained herein.
11. Headings.
Paragraph headings herein are inserted for convenience only and
are not to be considered in the construction or interpretation of any provision
hereof.
12. Governing Law.
This Agreement shall be construed according to and governed by
the laws of the State of New Jersey.
13. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which shall constitute one
and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this LEASE
MODIFICATION AGREEMENT to be duly executed as of the 10th day of October, 1989.
WITNESS: 96 MARKET ASSOCIATES, a partnership
__________________________ By: _______________________________
ATTEST: ALLWOOD CLIFTON CINEMA, INC.
__________________________ ___________________________________
<PAGE>
RIDER TO LEASE MODIFICATION AGREEMENT
BETWEEN 96 MARKET ASSOCIATES AND
ALLWOOD CLIFTON CINEMA, INC.
Section 2 following is substituted in place of Section 2 as contained in
the Lease Modification Agreement.
2. Tax Increase.
In the event the interior alterations described in Section 1 above
results in an added or increased assessment being imposed on the subject
property, the Tenant shall pay 100% of all taxes resulting from said added or
increased assessment. In the event the property is revalued or reassessed and an
entirely new assessment is imposed thereon, the Tenant's obligation to pay a
percentage of taxes shall be determined as follows:
(a) The ratio between the increased or added assessment and the existing
assessment resulting from the interior renovations (if any) shall be determined
and the percentage of such increase established.
(b) In the event of a revaluation or reassessment, the Tenant shall pay
in total a percentage of the taxes resulting therefrom equal to the percentage
of increase in the total assessment resulting from the interior alterations.
By way of example, if the current assessment is $900,000.00 and an added
or increased assessment is $100,000.00, the percentage of increase will be
11.11%.
(c) The Tenant will then pay 76% of the difference between the 1986 base
year taxes as set forth in the Lease to which this is a modification and the
amount of taxes remaining after payment of the taxes resulting from the interior
alterations.
<PAGE>
The Tenant shall not be obligated to pay for any increase in real estate
taxes which result from added or increased assessments imposed because of
improvements or additions made to other parts of the building of which the
leased premises are a part. In the event that any added or increased assessment
results from improvements of other parts of the building and in the event of a
revaluation or reassessment, the percentage thereof to the current assessment
shall be determined in the same way as set forth above for determination of the
Tenant's obligation to pay taxes in the event of revaluation or reassessment,
and an amount of taxes in that percentage shall be deducted from the total taxes
before calculating the Tenant's share thereof.
Landlord represents that the subject property is currently assessed at
the same assessment as in the 1986 base year.
<PAGE>
Exhibit 10.49
New City, NY
ASSIGNMENT OF REAL ESTATE LEASE
In consideration of ten dollars and other good and valuable
consideration, to it in hand paid, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, New City Cinemas,
Inc., a New York corporation ("Assignor"), hereby sells, transfers, conveys,
assigns and delivers to CCC New City Cinema Corp., a Delaware corporation
("Assignee"), all of Assignor's right, title and interest as lessee under, to
and in that certain lease dated January 18, 1965 by and between Robert Nelson
and Leo Zucker doing business as Bridon Realty Co., a partnership, ("Lessor")
and Irving Sherman and David Sanders, as assigned by Irving Sherman and David
Sanders to New City Town Theatre, Inc. pursuant to an Assignment Agreement dated
February 1, 1966, as amended by Lessor and New City Town Theatre, Inc. pursuant
to an Addendum to Lease dated February 10, 1981, as further amended by Bridon
Realty Co. and New City Town Theatre, Inc. pursuant to an Addendum to Lease
dated November 14, 1990, as further assigned by New City Town Theatre, Inc. to
Assignor pursuant to an Assignment and Assumption of Lease dated November 14,
1990 (collectively, the "Lease") relating to the real property located at the
Clarkstown Plaza Shopping Centre, 202 South Main Street, New City, Rockland
County, New York and known as the New City Theater. Assignee hereby assumes all
of such right, title and interest and agrees to pay, perform and otherwise
satisfy the obligations of Assignor under the Lease to be performed on or after
the date of this Assignment other than any such obligations or any other
liability arising out of any failure by Assignor to pay, perform and satisfy all
its obligations arising thereunder prior to the date hereof.
This Assignment is being delivered pursuant to the Asset Purchase
Agreement dated as of May 29, 1996 by and among Clearview Cinema Group, Inc., a
Delaware corporation, CCC Washington Cinema Corp., a Delaware corporation, CCC
Allwood Cinema Corp., a Delaware corporation, and CCC New City Cinema Corp., a
Delaware corporation (collectively, the "Purchasers") and Township of Washington
Theater, Inc., a New Jersey corporation, Allwood Clifton Cinema, Inc., a New
Jersey corporation and New City Cinemas, Inc., a New York corporation
(collectively, the "Sellers") including the provisions of Articles III, IV and
VII thereof regarding representations and warranties and indemnification,
respectively.
<PAGE>
Witness the due execution hereof this the ____ day of May, 1996.
ATTEST: NEW CITY CINEMAS, INC.
By: __________________________ By: ___________________________
Title: _______________________ Title: ________________________
ATTEST: CCC NEW CITY CINEMA CORP.
By: __________________________ By: ___________________________
Title: _______________________ Title: ________________________
<PAGE>
STATE OF NEW JERSEY
SS.:
COUNTY OF _______________________
I CERTIFY that on May ____, 1996, ____________________________
personally came before me, and this person acknowledged under oath, to my
satisfaction, that:
(a) this person is the ______________ secretary of New City Cinemas,
Inc., the corporation named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is
_______________________________, the ____________ President of
the corporation;
(c) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board
of Directors; and
(d) this person signed this proof to attest to the truth of these
facts.
-------------------------------------------------
(Print name of attesting witness below signature)
Signed and sworn to before me on May _______, 1996.
- --------------------------------
<PAGE>
STATE OF ________________________
SS.:
COUNTY OF _______________________
I CERTIFY that on May ____, 1996, ____________________________
personally came before me, and this person acknowledged under oath, to my
satisfaction, that:
(a) this person is the ______________ secretary of CCC New City
Cinema Corp. the corporation named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is
_______________________________, the ____________ President of
the corporation;
(c) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board
of Directors; and
(d) this person signed this proof to attest to the truth of these
facts.
-------------------------------------------------
(Print name of attesting witness below signature)
Signed and sworn to before me on May _______, 1996.
- --------------------------------
<PAGE>
THIS AGREEMENT, dated the 18th day of January, 1965
BETWEEN ROBERT NELSON, residing at 591 Warwick Avenue,
West Englewood, New Jersey, and LEO ZUCKER,
residing at 241 Lyncrest Road, Englewood Cliffs,
New Jersey, doing business as,
BRIDON REALTY CO., a Partnership, having its
principal office at 207 Broad Avenue, Palisades
Park, New Jersey,
hereinafter referred to as "LANDLORD"
AND IRVING SHERMAN, residing at 30 Ehrhardt Road,
Pearl River, New York, and DAVID SANDERS, residing
at 232 Fairview Avenue, Englewood Cliffs, New
Jersey,
hereinafter referred to as "TENANTS"
W I T N E S S E T H:
The LANDLORD hereby leases to the TENANT the following premises:
"Building to be erected in the Clarkstown Plaza Shopping Center,
New City, New York, as shown on plot plan of the said shopping
center, initialled by the landlord and tenant and annexed hereto
and made a part hereof, which building shall be approximately 65'
x 135'." (Plan marked Exhibit A.)
The term of this demised premises shall be for Twenty-one (21) years starting on
the 1st day of the calendar month next following issuance of the Certificate of
Occupancy or temporary Certificate of Occupancy sufficient for the issuance of a
Theatre Permit by the appropriate authority having jurisdiction thereof and the
continuance thereof by the Municipal Authority having jurisdiction thereof for
the building of which the demised premises shall be a part. If the
<PAGE>
issuance of the Certificate of Occupancy shall be delayed through the fault or
neglect of the TENANT herein, in installation of any items in the demised
premises, which are the obligation of the TENANT to install, and which
installation is a prerequisite for the issuance of the CERTIFICATE OF OCCUPANCY,
then the term of this Lease shall commence on the 1st day of the calendar month
next following the date of completion by the LANDLORD or its Building Contractor
of all construction work in said premises, which is the obligation of the
LANDLORD. The parties hereto agree that a duly executed and acknowledged
recordable memorandum shall be entered into by them at the time of the
commencement of the term of this Lease, reciting therein, the date of
commencement and termination of the term herein demised, to be used and occupied
only for such purposes as are hereinafter specifically provided; the TENANT
shall, however, pay rent for the time from the date of the Certificate of
Occupancy, until the 1st day of the term of this Lease, in a pro rata amount.
1. The TENANT shall pay an annual minimum rent during the term hereof as
follows:
During the first 7 years of
this Lease ..................................$21,000.00 per year
During the 8th through the
14th year of the Lease .......................$22,000.00 per year
During the 15th through the
21st year of the Lease .......................$23,000.00 per year
Said rent to be paid in equal monthly payments in advance on the
1st day of each and every month during the term aforesaid
2. In addition to the minimum rents hereinabove stated to be paid
by the TENANT during the term herein demised, TENANT covenants and agrees to pay
additional or
<PAGE>
augmented rent unto the LANDLORD based upon the gross receipts of all business
conducted on or received from the theatre business to be conducted in the
demised premises. For the full term of this Lease, such additional or augmented
rent shall be equal to Fifteen (15%) percent of all such gross receipts in
excess of One Hundred and Fifty Thousand ($150,000.00) Dollars during the first
seven years of this Lease term. Such additional or augmented rent shall be equal
to Fifteen (15%) percent of all such gross receipts in excess of: $157,000.00
for the Second Seven year term of this Lease, $164,000.00 for the Third Seven
year term of this Lease, $178,000.00 for any extension or renewal term of this
Lease, except during any extension pursuant to Paragraph 7 of this Lease, in
which event the additional rent shall be as set forth therein. The term "year"
herein referred to shall be the period of Twelve (12) consecutive months
commencing on the date of the commencement of the term herein demised or on each
anniversary of such date. Within Thirty (30) days after the end of each year of
the term herein demised, TENANT shall submit to the LANDLORD, in writing
attested by a Certified Public Accountant, a monthly statement of the gross
receipts of the said theatre business, thereto, each such statement shall
itemize the revenue realized from particular admissions. Each such statements
shall be made at the TENANT'S expense, which shall be duly sworn to by the
TENANT. TENANT agrees that his accounting practices and tabulatory method shall
be consistent at all times with the best practices in the industry, and the
LANDLORD, or its ACCOUNTANTS, at the LANDLORD'S own cost and expense, shall be
privileged at any time, upon reasonable notice, to examine all books, records
and other data pertinent to the operation of the theatre and to revenues. If the
LANDLORD'S accountants shall find a discrepancy in such records which will
reflect a sum of FIVE HUNDRED ($500.00) Dollars gross revenue or more, then in
that event the TENANT shall pay for the accounting services rendered with this
audit. Any amusement or sales taxes or other similar taxes
<PAGE>
which may be imposed by any present or future laws of any municipal, state or
federal authority, or other lawfully constituted taxing authority, and which tax
shall be collected by the TENANT from its patrons shall not be included in the
gross receipts insofaras the computation of additional or augmented rent is
concerned, the additional rents referred to in this paragraph are to be paid by
the tenant to the landlord within Sixty (60) days after the end of each year of
the term herein defined.
3. The additional rent herein provided to be paid by the TENANT to the
LANDLORD in addition to the minimum rent provided herein, although based on
percentages of the gross receipts shall at all times be deemed additional rent
for the use of the demised premises, and the LANDLORD shall, in no event, be
deemed an associate of the TENANT in the conduct of the theatre business, nor
shall the LANDLORD be liable for any debts incurred by the TENANT in the conduct
of said business. The relation of the parties is, and shall at all times remain
that of LANDLORD and TENANT.
4. That the TENANT shall take good care of the premises and shall, at
the TENANT'S own cost and expense make all repairs, except structural repairs,
in and about the demised premises and all the equipment and fixtures therein
installed, also excepting such roof repairs as shall be necessitated through no
fault or negligence on the part of the TENANT, his employees, agents, invitees
and sub-tenants, and excepting further, such repairs and replacements as shall
be the duty and obligation of the LANDLORD to perform, as provided elsewhere
herein, and at the end or other expiration of the term, shall deliver up the
remised premises in good order or condition, damage by the elements or ordinary
wear and tear excepted.
5. The LANDLORD covenants that the premises herein demised, at the
commencement of the term herein demised shall have complied with all statutes,
ordinances, rules,
<PAGE>
orders, regulations and requirements of the Federal, State, County, City,
Village, and Town Government, and of any and all their Departments and Bureaus
applicable to said premises, for the correction, prevention and abatement of
nuisances or other grievances, in, upon, or connected with said premises with
respect to all of said premises, which, by ther terms hereof, it is the
LANDLORD'S duty and obligation to build, provide and supply, and to such extent
as may be necessary to comply and execute all rules, orders and regulations of
the New York Board of Fire Underwriters for the prevention of fires, with
respect thereto, at his own cost and expense. After the commencement of the term
of this Lease, and full performance of LANDLORD's covenant in this paragraph
above set forth, the TENANT shall promptly execute and comply with all Statutes
Ordinances, Rules, Orders, Regulations and Requirements of the Federal, State
and City Government and of any and all their Departments and Bureaus applicable
to said premises, for the Correction, prevention, and abatement of nuisances or
other grievances, in, upon, or connected with said premises during said term;
and shall also promptly comply with and execute all Rules Orders and regulations
of the New York Board of Fire Underwriters for the prevention of fires at the
TENANT's own cost and expense.
6. That the TENANT, successors, heirs, executors or administrators shall
not make any alterations costing in excess One Thousand ($1000.00) Dollars on
the premises without the LANDLORD's consent in writing, which consent will not
be unreasonably withheld; or occupy or permit or suffer the same to be occupied
for any business or purpose deemed disreputable or extra hazardous on account of
fire, under the penalty of damages and forfeiture, and in the event of a breach
thereof, the term hereof shall immediately cease and determine at the option of
the LANDLORD as if it were the expiration of the original term, provided TENANT
shall fail to cure the default or commence and proceed with due diligence to
cure said default
<PAGE>
within Thirty (30) days after notice thereof is given by LANDLORD to TENANT by
REGISTERED MAIL.
7. In case of damage by fire, or other factors which are insurable under
comprehensive or extended coverage policies, to the building in which the leased
premises are located, without the fault of the TENANT or of TENANT's agents or
employees, the LANDLORD shall repair the damage with reasonable dispatch after
notice of damage and if the damage has rendered the premises untenantable in
whole or in part, there shall be an apportionment or abatement in the rent in
proportion to the portion of the demised premises which are still usable for the
purpose intended under this Lease. In determining what constitutes reasonable
dispatch, due consideration shall be given to delays caused by strikes,
adjustment of insurance and other causes beyond the LANDLORD's control. If such
damage by fire, or other factors which are insurable under comprehensive or
extended coverage policies, shall occur after the Tenth (10th) year of the term
herein demised, shall be so extensive as to require repair and replacement by
the LANDLORD at an aggregate cost in excess of Seventy-five Thousand
($75,000.00) Dollars, then the TENANT expressly agrees that if, at the time that
repair to the premises shall have been fully completed, the then remaining
unexpired term of this Lease be less than Ten (10) years, that the term of this
Lease-hold shall be extended to terminate on the Tenth (10th anniversary of the
completion of fire repairs aforesaid, all the terms and conditions, sheerin
shall remain in full force and effect with the exception that the minimum annual
rental during each year of such further term shall be Twenty-four Thousand
($24,000.00) Dollars per annum, payable in like manner as is hereinabove
provided for such minimum rent and all additional or augmented rents hereinabove
provided for, shall likewise be payable during such further term, if any. In the
event the Landlord elects not to re-build, then the Landlord agrees not to rent
the
<PAGE>
subject premises to any tenant for the purposes of operating a theatre therein
during the remainder of what would have been the basic term of this Lease,
including any extension applicable thereto. In the event the term is extended
pursuant to the provisions of this paragraph, any such additional or augmented
rent shall be equal to 15% of all such gross receipts in excess of $171,000.00
per year throughout the term of such extension. The remaining term of the
original Lease shall be suspended from the time of such total or partial
destruction until the premises shall be fully repaired and tenantable, at which
time the term shall commence to run again and shall continue in all respects as
if the date of completion was the day next succeeding the date of destruction.
If, however, the cost of repairs shall exceed the said Seventy-five Thousand
($75,000.00) Dollars, and the term of this Lease shall have less than Five (5)
years to run, the LANDLORD may, at its option, elect not to rebuild; if under
such circumstances the LANDLORD shall elect not to rebuild; then this Lease
shall cease and come to an end and the rent shall be apportioned to the time of
the damage. In this event any security deposit due and owing ot the Tenant shall
be returned to the TENANT.
8. The said TENANT agrees that the said LANDLORD and the LANDLORD's
agents and other representatives shall have the right to enter into and upon
said premises, or any part thereof, at all reasonable hours for the purpose of
examining the same, making such repairs or alterations therein as may be
necessary for the safety and preservation thereof.
9. The TENANT also agrees to permit the LANDLORD or the LANDLORD's
agents to show the premises, during reasonable hours, to persons wishing to hire
or purchase the same; and the TENANT further agrees that on and after Six (6)
months next preceeding the expiration of the term hereby granted, the LANDLORD
the LANDLORD's agents
<PAGE>
shall have the right to place notices on the and front of said premises, or any
part thereof, offering the premises "To Let" or "For Sale" and the TENANT hereby
agrees to permit the same to remain thereon without any hindrance or
molestation.
10. If the said premises or any part thereof shall be deserted or become
vacant during said term, or if any default be made in the payment of the said
rent or any part thereof, and such default shall not be cured within Fifteen
(15) days, or if any default be made in the performance of any of the covenants
herein contained, and such default shall continue for Thirty (30) days after
notice thereof sent by LANDLORD, by Registered Mail, to TENANT unless TENANT,
within such Thirty (30) days corrects or commences and proceeds with due
diligence to correct such default within such Thirty (30) day period, the
LANDLORD or representatives may re-enter the said premises by force, summary
proceeding, or otherwise, and remove all persons therefrom, without being liable
to prosecution therefor, and the TENANT hereby expressly waives service of any
notice in writing of intention to re-enter, and the TENANT shall pay, at the
same time as the rent becomes payable under the terms hereof, a sum equivalent
to the rent reserved herein, and the LANDLORD may rent the premises on behalf of
the TENANT, reserving the right to rent the premises for a longer period of time
than fixed in the original Lease without releasing the original TENANT from any
liability, applying any monies collected, first to the expense of resuming or
obtaining possession, second to restoring the premises to a reasonable
condition, and then to the payment of the rent and all other changes due and to
grow due to the LANDLORD, any surplus to be paid to the TENANT who shall remain
liable for any deficiency.
11. That in case of any damage or injury occurring to the glass in the
demised premises, the TENANT shall cause said damage or injury to be repaired as
speedily as possible at the TENANTS own cost and expense.
<PAGE>
12. That the TENANT shall neither encumber nor obstruct the sidewalk in
front of, entrance to, or halls and stairs of said premises, nor allow the same
to be obstructed or encumbered in any manner, except as consistent with normal
business requirements in the operation of the TENANT's business.
13. The TENANT is given permission to erect signs on the exterior of the
demised premises, provided:
(A) Said signs shall comply with all rules and Regulations
of any governing authorities having jurisdiction thereof.
(B) Said signs shall be installed without damage to the
building, and
(C) Said signs shall be erected only in such place and manner
as is prescribed in the Plans and Specifications of the
Architect of the building. And in case the LANDLORD, or
the LANDLORD's representatives shall deem it necessary to
remove any such sign, or signs, in order to make any
repairs, alterations, or improvements in or upon said
premises or building, or any part thereof, the LANDLORD
shall have the right to do so, providing the same be
removed and replaced at the LANDLORD's expense, whenever
the said repairs, alterations, or improvements shall be
completed.
14. That the LANDLORD is exempt from any and all liability for any
damage or injury to person or property caused by or resulting from steam,
electricity, gas, water, rain, ice or snow, or any leak or flow from ot into any
part of said building or from any damage or injury resulting or arising from any
other cause or happening whatsoever.
15. Anything to the contrary herein not withstanding the TENANT shall
not assign this Lease or sub-let any part of the demised premises without the
prior written consent of the LANDLORD which consent will not be unreasonably
withheld.
Prior to requesting such consent the TENANT must present to the LANDLORD
a copy of the proposed assignment or sub-leasing agreement, which shall not in
any way violate the terms of this Agreement; and an assumption of all of the
terms and conditions herein on the part of the
<PAGE>
TENANT to be performed, by the assignee or sub-lessee; it is expressly
understood and agreed that no assignment or sub-letting will relieve the
original TENANT from any liability hereunder and that in no event will any
consent be given by the LANDLORD if the TENANT is in default of any of the
covenants or conditions of this Agreement.
16. It is expressly understood and agreed that in case the demised
premises shall be deserted or vacated, or if default be made in the payment of
the rent of any part thereof, as herein specified, or default, as herein
specified, be made in the performance of any of the covenants and agreements in
this lease contained, on the part of the TENANT to be performed, or if the
TENANT shall fail to comply with any of the Statutes, Ordinances, Rules, Orders,
Regulations and Requirements of the Federal, State and City Government, or of
any and all their Departments and Bureaus, applicable to said premises, or
hereafter established herein provided, or if the TENANT in possession shall file
a Petition in bankruptcy, or be adjudicated a bankrupt, or make an assignment
for the benefit of creditors to take advantage of an insolvency act, the
LANDLORD may, if the LANDLORD so elects, at any time thereafter, terminate this
Lease and the term hereof, on giving to the TENANT in possession, Five (5) days'
notice, in writing, of the LANDLORD's intention so to do, and this Lease and the
terms hereof shall expire and come to an end on the date fixed in such notice as
if the said date were the date originally fixed in this Lease for the expiration
hereof. Such notice may be given by mail to the TENANT in possession, addressed
to the demised premises.
17. The TENANT shall pay to the authorities having control over water in
the area all rents or charges which may, during the demised term, be assessed or
imposed for the water used or consumed in or on the said premises, whether
determined by meter or otherwise, as soon as and when the same may be assessed
or imposed, and will also pay the expenses for the setting of a
<PAGE>
water meter in the said premises, should the latter be required. If such rent or
charge or expenses are not so paid the same shall be added to the next month's
rent thereafter to become due.
In addition, if LANDLORD shall pay same, the TENANT shall pay the
LANDLORD an additional amount equal to Six (6%) percent of the amount so paid
together with the amounts so paid.
The TENANT has also deposited with the LANDLORD this day, an
additional security for the payment of water charge in the sum of One Hundred
($100.00) Dollars, which shall be repaid to the TENANT as soon after the end of
the term hereof is determined that all water charges have been paid. If they
have not so been paid, then the sum shall be applied to the payment of said
unpaid charges and the balance returned to the TENANT.
18. That the TENANT will not, nor with the TENANT permit undertenants,
or other persons, to do anything in said premises, or bring anything into said
premises, or permit anything to be brought into said premises, or to be kept
therein, which will in any way increase the rate of fire insurance on said
demised premises, nor use the demised premises, or any part thereof other than
as set forth herein, nor suffer or permit their use for any business or purpose
which would cause an increase in the rate of fire insurance on said building,
and the TENANT agrees to pay any such increase.
19. The failure of the LANDLORD to insist upon a strict performance of
any of the terms, conditions and covenants herein, shall not be deemed a waiver
of any rights or remedies that the LANDLORD may have, and shall not be deemed a
waiver of any subsequent breach or default in the terms, conditions and
covenants herein contained. This instrument may not be changed, modified or
discharged orally.
<PAGE>
20. That should the land whereon said building stands or any part
thereof, be condemned for public use, then in that event, upon the taking of the
same for such public use, this Lease, shall be null and void, and the term cease
and come to an end upon the date when the same shall be taken and the rent shall
be apportioned as of the said date, and any security due and owing to the TENANT
shall be returned to the TENANT. In the event that there be a partial
condemnation of such premises whereby the interior dimensions of the theatre
auditorium are not substantially diminished, the LANDLORD shall make such
repairs to said premises as may then be necessary, and the Lease shall continue
effective in all respects, except that there shall be an apportionment of rent
decreasing the amount thereof equal to the ratio between TENANT's gross receipts
from the operation of its theatre business in the One (1) year period following
commencement of operation after completion of repairs made necessary by said
condemnation, and the period of the One (1) year immediately preceding the
termination of its business by reason of said condemnation. TENANT shall
continue to pay the rent originally provided herein until such ratio is
established and thereafter shall pay such rent established by the application of
such ratio, and the LANDLORD shall thereupon refund to the TENANT the amount of
excess, if any, between the rent theretofore paid by TENANT and the rent
established by such ratio, and TENANT shall pay to LANDLORD any additional rent
found due. The TENANT shall in no event make any claim in any condemnation
proceeding and shall have no right to any part of any condemnation award, except
that TENANT may make claim for person property and trade fixtures which are the
property of the TENANT.
21. If after default in payment of rent or violation of any other
provision of this Lease, or upon the expiration of this Lease, the TENANT moves
out or is dispossessed and fails to remove any trade fixtures or other property
prior to said such default, removal, expiration of
<PAGE>
Lease, or prior to the issuance of the final order of execution of the warrant,
then, and in the event, the said fixtures and property shall be deemed abandoned
by the said TENANT and shall become the property of the LANDLORD.
22. In the event that the relation of the LANDLORD and TENANT may cease
or terminate by reason of the re-entry of the LANDLORD under the terms and
covenants contained in this Lease, by the ejectment of the TENANT by summary
proceedings or otherwise or after the abandonment of the premises by the TENANT,
it is hereby agreed that the TENANT shall remain liable and shall pay in monthly
installments, the rent which accrues subsequent to the re-entry by the LANDLORD,
and the TENANT expressly agrees to pay, as damages for the breach of the
covenants herein contained, the difference between the rent reserved and the
rent collected and received, if any, by the LANDLORD during the remainder of the
unexpired term, such difference or deficiency between the rent herein reserved
and the rent collected, if any, plus Six (6%) percent of this amount, shall
become due and payable in monthly payments during the remainder of the unexpired
term, as the amounts of such difference or deficiency shall from time to time be
ascertained, and the TENANT waives and will waive all rights to trial by jury in
any summary proceedings hereafter instituted by the LANDLORD against the TENANT
in respect to the demised premises or in any action brought to recover rent or
damages hereunder.
23. This Lease and the obligation of TENANT to pay rent hereunder and
perform all of the other covenants and agreements hereunder on part of TENANT to
be performed shall in no way be affected, impaired, or excused because LANDLORD
is unable to supply or is delayed in supplying any service expressly or
impliedly to be supplied or is unable to make, or is delayed in making repairs,
additions, alterations or decorations, or is unable to supply or is delayed in
supplying any equipment or fixtures if LANDLORD is prevented or delayed from so
doing by
<PAGE>
reason of governmental preemption in connection with any National Emergency
declared by the President of the United States or in connection with any Rule
Order, or Regulation of any department or sub-division thereof of any
governmental agency or by reason of the condition of supply and demand which
have been, or are affected by the war, or by reason of any labor dispute or
inability to obtain the materials from its normal sources of supply or for any
other reason beyond LANDLORD's control.
24. No diminution or abatement of rent, or other compensation, shall be
claimed or allowed for inconvenience or discomfort arising from the making of
repairs or improvements. In respect to the various "services", if any, herein
expressly or impliedly agreed to be furnished by the LANDLORD to the TENANT, it
is agreed that there shall be no diminution or abatement of the rent, or any
other compensation, for interruption or curtailment of such "service". No such
interruption or curtailment of any such "service" shall be deemed a constructive
eviction. The LANDLORD shall not be required to furnish, and the TENANT shall
not be entitled to receive, any of such "services" during any period wherein the
TENANT shall be in default in respect to the payment of rent. Neither shall
there by any abatement or diminution of rent because of making repairs,
improvements or decoration to the demised premises after the date above fixed
for the commencement of the term, it being understood that rent shall, in any
event, commence to run at such date so above fixed. The provisions of this
paragraph are predicated on LANDLORD diligently making the repairs or
improvements and resumption of "services" referred to therein.
25. The TENANT agrees to keep and maintain the sidewalks abutting the
premises free from any accumulation of ice or snow.
26. Upon the commencement of the term, and provided that the LANDLORD
has delivered same free from any substantial variations and defects, the TENANT
shall bear the entire
<PAGE>
cost and expense thereafter, during the term of the Lease, of each of the
following as shall be required in the demised premises: Heat, hot water, water,
Janitor service, gas, electricity, and Maintenance and repair of cesspools,
Sewer Utility Service, plumbing, heating and air-cooling systems, and all
electrical wiring and fixtures. The LANDLORD agrees and covenants that he will
do all that may be necessary to enforce contractors' liabilities for work, labor
and services supplied by contractors in the course of construction, of so much
of the demised premises as was LANDLORD's duty hereunder to construct,
including, but not limited to all covenants, warranties and guarantees with
respect thereto. The LANDLORD further agrees to guarantee all workmanship for a
period of one year after the commencement of the term of this Lease.
27. The TENANT shall procure and maintain throughout the term of this
Agreement, for the benefit of both LANDLORD and TENANT as their interests shall
appear, plate glass insurance covering the premises herein demised; said policy
shall name both LANDLORD and TENANT as insured thereby and the original policy
shall be deposited with the LANDLORD within Thirty (30) days of the commencement
of the term of this Agreement. Upon failure of the TENANT to so deposit said
policy, the LANDLORD shall have the privilege to procure said insurance on its
own application therefore, and the amount of the premium, if paid by the
LANDLORD, shall be due and payable with the rent installment next due and shall
be considered as additional rent reserved hereunder, collectible with the same
remedies as if originally reserved as rent hereunder, plus Six (6%) percent of
the amount so paid.
28. If any mechanic's lien or liens shall be filed against the premises
for work done or materials furnished to the TENANT, the latter shall; within
Thirty (30) days thereafter, at his own cost and expense, cause such lien or
liens to be discharged by filing the bond, or bonds, required for that purpose
by Law.
<PAGE>
29. The TENANT SHALL, at his own cost and expense, procure and maintain
during the entire term of this Agreement, public liability insurance from a
reputable company, which policy shall be in the sum of Five Hundred Thousand
($500,000.00) Dollars to One Million ($1,000,000,00) Dollars.
The TENANT shall deposit with the LANDLORD the original of all such
policies prior to taking possession of the demised premises and shall further
deposit with the LANDLORD the original of any renewal policies of at least
Twenty (20) days prior to the expiration date of the policy in effect. In the
event such policies are not delivered to the LANDLORD, the LANDLORD may secure
such insurance, and the TENANT agrees to pay for same, plus Six (6%) percent of
any amount paid by the LANDLORD for the said insurance.
30. There are no representatives, warranties, terms or obligations other
than those expressed in this Agreement. No variation of this Lease shall be
valid unless in writing and signed by the party to be charged. Any holding over
by the TENANT after the term of this Lease shall be unlawful and in no matter
constitute a renewal or extension of the Lease Agreement.
31. The LANDLORD shall not be liable for damage or injury to person or
property unless written notice of any defect, alleged to have caused such damage
or injury, shall have been given to the LANDLORD a sufficient time before such
occurrence to have reasonable enabled the LANDLORD to correct such defect.
Nothing herein contained shall impose any additional obligation on the LANDLORD
to make repairs, other than those repairs which the LANDLORD has specifically
agreed to make under the terms of this Lease.
32. Any notice by either party to the other shall be deemed duly given
only if in writing and delivered either personally, or by Registered Mail,
addressed (a) if to the TENANT, c/o Bram Studio at 630 Ninth Avenue, New York
City, and (b) if to the LANDLORD, at 207 Broad
<PAGE>
Avenue, Palisades Park, New Jersey, or any subsequent address which either of
the parties hereto may designate for such purpose in writing. If either party
admit receipt of such notice, evidence thereof shall not be necessary.
33. It is mutually covenanted that if the LANDLORD shall pay, or be
compelled to pay any sum of money, or shall perform any act, or be compelled to
perform any act, which act shall require the payment of any sum of money, by
reason of the failure of the TENANT to perform any one or more of the covenants
herein contained, the sum or sums so paid by the LANDLORD, together with all
interest, costs and damages, shall after TEN (10) days' written notice and
demand, be added to the rent installment next due and shall be collectible in
the same manner and with the same remedies as if originally reserved as rent
hereunder.
34. The LANDLORD covenants to commence construction within Two (2)
months after issuance of Building Permit and LANDLORD shall proceed with due
diligence to obtain said Building Permit, and complete construction within One
(1) year thereafter a theatre building for the use and occupancy of the TENANT,
such building to be erected in accordance with the approved plans and
specifications of William Ely Kohn as consultant, with a New York Architect of
LANDLORD's selection, which are to be identified and approved by the initialing
thereof by the parties to this Agreement and annexed hereto.
35. Said premises shall be used and occupied only for the following
purposes:
(A) The motion picture theatre auditorium shall be used only for the
display of motion pictures, closed-circuit television features,
and live stage presentations, meetings, lectures and similar
uses; the same to be shown or exhibited to the general public
upon paid admission and in confirmity with all laws, rules and
regulations and amendments thereto, applicable to the conduct of
such business, and to the premises herein demised, and TENANT
shall have the right to sell and dispense such merchandise and
services that are compatible with its business.
<PAGE>
36. As and for further consideration herein, the TENANT covenants and
agrees to provide, solely at his own cost and expense, and to install in the
demised premises, solely at his own cost and expense, all of the equipment
necessarily requisite to or incidental to the use and operation of the demised
premises as a motion picture theatre; the items which shall be so installed by
that TENANT are more particularly defined as follows, but not limited thereto:
(A) Notless than 550 theatre seats, to be spaced no less than 34
inches back to back.
(B) Two projection machines complete with lamps, rectifiers or
generators, including dual sound equipment.
(C) Carpeting or other material of equal value throughout the
lounge and aisle of the theatre.
(D) Poster frames for the display of attractions in the lobby and
immediately outside theatre lobby.
(E) Rubber mats in the lobby to be placed in floor recessors
provided by the LANDLORD.
(F) An attraction sign to be erected by the Tenant.
(G) A motion picture screen of the latest type, capable of
accommodating cinemascope, or any other modern projection system,
generally accepted for similar theatres.
(H) All fixtures and appointments necessary to be in the theatre
lounge.
(I) A ticket machine, ticket box and relative accessories. The
ticket machine shall be of such a nature that it will have an
automatic county device attached thereto which cannot be reset.
(J) Complete decoration and painting, to the extent that TENANT
may require of deem necessary such painting, except that all
painting in visual auditorium shall be done by LANDLORD at
LANDLORD's expense in colors selected by TENANT.
(K) All necessary lighting fixtures.
<PAGE>
(L) All other accessories properly requisite for the proper
operation of a motion picture theatre consistent with the most
modern prevailing practices.
All items aforesaid shall be new equipment, except projection
booth equipment and chairs which may be fully reconditioned modern equipment, of
the modern type and design and shall be installed in a good and workmanlike
manner without damage to the equipment or to the freehold; and upon annexation
to the freehold, the same shall be deemed part of the realty and be irrevocably
the property of the LANDLORD. All such items installed in the demised premised,
but not annexed to the realty shall become the property of the LANDLORD
irrevocably. The TENANT expressly covenants that he will install in the demised
premises all the aforesaid equipment and decorations which shall aggregate in
value not less than Forty Thousand ($40,000.00) Dollars at the time of its
installation, and the TENANT further covenants that the entire cost of all
equipment shall have been fully paid.
37. The TENANT covenants, at his own cost and expense during the entire
term of this Lease, to keep and maintain fire insurance on all the contents,
machinery, equipment and furnishings installed in the motion picture theatre
auditorium, loungd, lobby and projection room, with companies duly authorized by
the State of New York to do business therein to Eighty (80%) percent of the full
insurable value of said contents, machinery, equipment and furnishings. All of
such insurance shall provide that the loss, if any, shall be paid to the
LANDLORD and all of said policies shall be delivered to the LAND LORD not later
than Fifteen (15) days after the commencement of the term herein demised. All
payment on account of lossess made to the LANDLORD, the LANDLORD covenants to
hold such funds in Trst and to apply them solely to the cost of repairing and/or
replacing any items so damaged by fire, and to pay such surplus, if any, to the
TENANT; and if any deficit shall occur by virtue of the recovery pursuant to
said
<PAGE>
insurance be insufficient to meet the cost of such replacement and/or repair,
TENANT covenants immediately to pay such deficit necessary to effect full
rehabilitation or replacement of the contents of the building. The TENANT shall
have the exclusive right to adjust such loss and LANDLORD covenants to execute
any and all documents that may be required to accomplish that purpose. In case
of default by the TENANT in having such policy of insurance issued, the LANDLORD
may cause said policies to be issued at TENANT's expense. On default by the
TENANT IN the payment of any premium on any such policy when the payment thereof
shall be due, LANDLORD may thereupon pay such premium, and the TENANT covenants
to reimburse the LANDLORD for the entire amount so paid, plus Six (6%) percent
upon demand. Any sum of money paid by the LANDLORD in effecting such insurance,
or in remedying default of the TENANT in paying a premium thereon when due,
shall be collectible by the LANDLORD with the same remedies as if reserved
specifically as rent hereunder. Any such amount to be due and payable to the
LANDLORD on the rent-day next ensuing the date upon which the LANDLORD shall
make such payment.
38. The TENANT covenants that it shall, solely at its own cost and
expense, maintain throughout the entire term herein demised, all equipment,
machinery, furnishings, and contents necessarily installed in the demised
premises, in good working order and repair, and the TENANT further covenants
that any of such equipment shall be replaced by the TENANT from time to time
during the term hereof, solely at his own cost and expense, so that the
equipment employed in the said theatre shall, at all times be maintained with
the then existing standards for the conduct of a similar business or enterprise.
And the TENANT further covenants to provide thw said premises with such
equipment as may, from time, to time, during the term herein demised, become the
accepted standard for the operation of a similar business or enterprise. Such
old equipment as
<PAGE>
TENANT may replace with new equipment, pursuant to the terms hereof, shall
become the property of the TENANT immediately upon installation of such
replacement equipment. Upon the annexation or replacement of any equipment in
the demised premises, same shall immediately be deemed, solely and exclusively,
the property of the LANDLORD, free and clear of all liens and encumbrances, and
the TENANT covenants that such will be the case...In no event shall the
LANDLORD, have any obligation whatsoever with respect to the maintenance, repair
or replacement of any of the furnishings, equipment, machinery or other contents
in the demised premises.
39. The TENANT expressly agrees and covenants that the demised premises
shall be fully equipped as a motion picture theatre and shall commence normal
operations of business not later than sixty (60) days after the commencement of
the term of this Lease Agreement; and TENANT further covenants that the said
theatre premises shall be operated and maintained open for business in a
normally accepted manner during each day of not less than 335 days of each year
during the term herein demised, unless prevented by factors beyond its control;
and that each such day there shall be given at least one evening performance.
TENANT covenants that the theatre business shall be conducted in a manner
consistent with the best standards prevalent throughout upon the demised
premises for the purpose of financing the construction of same. The TENANT
AGREES that the LANDLORD is hereby made the TENANT's agent to sign any
SUBORDINATION Agreement to effectuate this clause, if required by the Mortgagee.
-----------------------
the term of the Lease herein demised, and that the TENANT shall employ adequate
and sufficient help requisite to the maintenance of the premises and the conduct
of the business, and that admittance to the theatre shall at all times be open
to the general public upon payment of fees
<PAGE>
which shall, at all times, be
consistent with standards governing and prevailing in the industry. TENANT
further covenants that it shall accept no consideration whatsoever in lieu of
payment of a full standard admission price from any patrons patronizing the said
theatre, except that TENANT shall be entitled to issue and honor a reasonable
number of free admission passes.
The TENANT shall have free access to the demised premises during
construction and prior to the date of possession as herein defined for the
purpose of inspection and installation of equipment.
40. It is understood and agreed between the parties hereto that no
broker or agent negotiated, was instrumental, or was in any way responsible for
the leasing of the within described premises. TENANT agrees to hold the LANDLORD
harmless and to indemnify the LANDLORD for any claims for renting of the demised
premises from any broker.
41. Notwithstanding anything herein to the contrary the subordination of
this Lease to any such existing or new mortgage is conditional upon the existing
or new mortgagee, simultaneously with the making of this Lease or of such new
mortgage, entering into an agreement in recordable form by its terms binding
upon the Mortgagee, its successors and assigns whereby the Mortgagee agrees that
in the event it should become necessary to foreclose said Mortgage, it will
cause the sale of said premises to be made subject to this Lease, provided that
the Tenant is not in default under any of the terms, conditions, or covenants of
this Lease at the time of such foreclosure.
42. LANDLORD covenants that it shall maintain adequate insurance
coverage for fire loss, including full comprehensive and extended coverage, on
the demised premises.
<PAGE>
43. The Tenant covenants and agrees that all labor and services to be
performed on the premises herein demised in connection with the installation of
TENANT's apparatus, fixtures and furnishings, shall all be done by Union help
only.
44. All duties and obligations herein of TENANT and LANDLORD and each of
them, shall be considered a covenant. All duties and obligations of the parties
hereto, which must be performed or undertaken within specific time limits,
performance of which have been delayed, shall have the time limits extended for
the duration of the delay caused by strikes, adjustment of insurance and other
causes which are beyond the control of the party charged with the obligation.
Whenever either of the parties hereto are required, by the terms hereof, to
perform or commence performance of any obligation or duty thereunder, and no
specific time limit is set forth with respect to the performance of such time
limit, a period of Sixty (60) days shall be the time within such duty and
obligation is to be performed.
45. And the said LANDLORD does covenant that the said TENANT, on paying
the said yearly rent, and performing the covenants aforesaid, shall and may
peacefully and quietly have, hold and enjoy the said demised premises for the
term aforesaid.
46. And it is mutually understood and agreed that the covenants and
agreements contained in the with Lease shall be binding upon the parties hereto
and upon their respective heirs, executors and administrators.
47. The TENANT shall be responsible for any tax increase over and above
the tax for the base tax year. The base tax year shall be considered that year
in which the property is first fully assessed and in which the building is
substantially completed. Any tax over and above such first full year's
assessment shall be paid by the TENANT pro rata as the area of his premises
bears to the over-all premises. The area of the parking lot shall not be
considered; the proportion being
<PAGE>
square footage of the theatre as against the square footage of the entire
building in the said shopping center.
48. Notwithstanding anything to the contrary contained herein, the
TENANT shall, within Thirty (30) days of the date hereof, assign this Lease to a
new corporation, which shall be formed for that purpose wherein DAVID SANDERS &
IRVING SHERMAN shall be the majority shareholders, and the TENANT need not
secure the LANDLORD's consent to such assignment. The new corporation shall
execute an assumption agreement of all of the terms and conditions on the part
of the TENANT to be performed and shall deliver same to the LANDLORD, at 207
Broad Avenue, Palisades Park, New Jersey, and TENANT shall from and after the
date of such assignment be released from any and all obligations under the terms
of this Lease.
49. TENANT has, this day, deposited with the LANDLORD the sum of Twenty
Thousand ($20,000.00) Dollars as security for the full and faithfullperformance
by the TENANT of all of the terms and conditions on the part of TENANT to be
performed. The LANDLORD shall pay the TENANT the sum of Two (2%) percent per
annum on the aforesaid security deposit of Twenty Thousand ($20,000.00) Dollars,
payable annually during the first Seven (7) years of the term of this Lease.
After the end of the Seventh (7th) year, no interest shall be paid by the
LANDLORD to the TENANT. Commencing with the end of the Eighth (8th) year of the
term of this Lease, the sum of One Thousand Four Hundred Twenty-Eight Dollars
and Fifty-seven Cents ($1,428.57) shall be returned to the TENANT annually until
the time fixed as the expiration of the term of the Lease, herein provided,
provided the TENANT has fully and faithfully carried out all of the terms,
covenants and conditions on his part to be performed. In the event LANDLORD
fails to return to the TENANT the amount of security annually due it within
Thirty (30) days after
<PAGE>
the same is due, the TENANT may reduce the next installment or installments of
rent by the amount due. It is the intention of the parties hereto that upon the
termination of Twenty-one (21) years from the commencement of the TENANT's
possession of the premises, the full sum of Twenty Thousand ($20,000.00) Dollars
shall have been returned to the Tenant.
50. The LANDLORD agrees that they or their families or any stockholders,
officers or directors will not directly or indirectly, individually, as partners
or as officers, directors, stockholders or employees or any corporation,
construct, maintain, conduct or operate a theatre within the radius of 7 miles
of the demised premises with the State of New York.
51. Patrons of TENANT shall have the right to common use of all parking
areas in the Shopping Center, of which the demised premises are a part and it
shall be the sole obligation of the LANDLORD to maintain such parking areas,
including but not limited to snow removal and LANDLORD shall provide adequate
lighting.
52. TENANT shall have and is hereby given the option renew this Lease
for an additional period of Ten (10) years, provided that written notice to that
effect is given to the LANDLORD by registered or certified mail Six (6) months
prior to the expiration of the Lease and provided further, ath at all the
covenants and conditions of the within Lease shall govern such renewal period,
except that the base rent for this period shall be Twenty-five thousand
($25,000.00) Dollars.
53. It is understood and agreed by and between the LANDLORD and TENANT
that this Lease is predicated on LANDLORD obtaining a Building Permit. In the
event LANDLORD fails to obtain said Permit, this Agreement shall be considered
null and void and the security paid thereunder shall be returned to TENANT
forthwith and upon return of same, neither party shall have any further rights
against the other.
<PAGE>
54. It is understood and agreed between the parties hereto that in the
event the number of chairs in the visual auditorium, which is the subject of
this Lease, shall exceed Six Hundred (600), the TENANT shall pay to the LANDLORD
an additional rent at the rate of Forty ($40.00) Dollars per year for each such
chair in excess of Six Hundred (600). Any such additional rent shall be due and
apyable on the last day of any year of the within term or extension thereof,
when such additional rental shall be payable. In the event that such chairs are
added to the auditorium, then the augmented rent payable under Paragraph 2 of
this Lease shall be paid pursuant to base gross receipts of $150,000.00, plus
$7,000.00 for each additional rent of One Thousand ($1,000.00) Dollars per year
payable under the terms of this paragraph.
54a. It is understood and agreed by the parties hereto that in no event
shall the term of the within Lease commence prior to the actual operation of
business by the Grand Union Super Market located in the shopping center.
55. It is understood and agreed between the parties hereto that the
TENANT shall pay to the LANDLORD the sum of Five Hundred ($500.00) Dollars per
year for the full term of this Lease or any extension thereof, in consideration
of the rights extended to it under the provisions of paragraph Fifty-one (51) of
the within Lease. This sum shall be payable on the last day of each year of the
Lease term or any extension thereof.
56. The additional rent based upon the percentage of gross receipts, set
forth in paragraph Two (2) of the within Lease shall be computed in order to
permit the TENANT to deduct the additional cost to the TENANT of any "specials"
that may be run at the demised premises from the gross admission receipts, as
defined herein, for the purpose of computing such additional rental. In no
event, however, shall such deduction be taken as would reduce such admission
receipts, for any such "special" to an amount lower than the gross receipts
would have
<PAGE>
been for a customary regular performance. For the purposes of this Paragraph a
special shall be any motion picture for which the TENANT pays at least Forty
(40%) percent of its income for exhibition rights.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals, or caused these presents to be signed by their corporate officers and
caused their proper corporate seals to be hereto affixed this 18th day of
January, 1965. WITNESS:
(L
---------------------------------
ROBERT NELSON d/b/a
- ----------------------------- BRIDON REALTY CO.
(AS TO ROBERT NELSON)
(L
---------------------------------
LEO ZUCKER, d/b/a
- ----------------------------- BRIDON REALTY CO.
(AS TO LEO ZUCKER)
(L
---------------------------------
IRVING SHERMAN
- -----------------------------
(AS TO IRVING SHERMAN)
(L
---------------------------------
DAVID SANDERS
- -----------------------------
(AS TO DAVID SANDERS)
<PAGE>
ASSIGNMENT OF LEASE
KNOW THAT, IRVING SHERMAN, residing at 30 Ehrhardt Road, Pearl
River, New York, and DAVID SANDERS, residing at 232 Fairview Avenue, Englewood
Cliffs, New Jersey, hereinafter called the Assignors, do hereby assign, transfer
and set over unto NEW CITY TOWN THEATRE, INC., a New York corporation having its
principal office c/o Norman Miller, 550 Fifth Avenue, Borough of Manhattan, City
of New York, hereinafter called the Assignee, all their right, title and
interest in and to and under a certain lease between the Assignors as Tenants
and ROBERT NELSON and LEO ZUCKER, doing business as BRIDON REALTY CO., a
partnership having its principal office at 207 Broad Avenue, Palisades Park, New
Jersey, as Landlord, dated January 18, 1965, covering the following premises:
" 'Building to be erected in the Clarkstown Plaza Shopping
Center, New City, New York, as shown on plot plan of the said
shopping center initialled by the landlord and tenants and
annexed hereto and made a part hereof, which building shall be
approximately 65' x 135'.' (Plan marked Exhibit A.)"
for the full term thereof, and the Assignee does hereby undertake and assume the
full, faithful and complete performance of all the terms, conditions and
provisions of said lease, including any and all obligations on the part of the
Lessee thereunder, for the entire term of said lease.
<PAGE>
IN WITNESS WHEREOF, the Assignee has caused these presents to be
executed by its proper corporate officer and has caused its seal to be hereto
affixed and the Assignors have hereunto set their hands and seals the 21st day
of February, 1966.
---------------------------------------
IRVING SHERMAN
---------------------------------------
DAVID SANDERS
NEW CITY TOWN THEATRE, INC.
BY:____________________________________
President
---------------------------------------
Secretary
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 21st day of February, 1966, before
me personally came IRVING SHERMAN and DAVID SANDERS, to me known and known to me
to be the individuals described in and who executed the foregoing instrument,
and duly acknowledged that they executed the same.
-----------------------------------
<PAGE>
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On the 21st day of February, 1966, before me came JANE ZADOROZNY,
to me known who being by me duly sworn, did depose and say that she resides at
115 Cliffside Drive, Yonkers, New York; that she is the Secretary of NEW CITY
TOWN THEATRE, INC., the corporation described in ad which executed the foregoing
instrument; that she knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it is so affixed by the order of
the Bord of Directors of said corporation and that she signed her name thereto
by like order.
-----------------------------------
<PAGE>
Addendum to Lease dated this 10th day of February, 1981, by and between
ROBERT NELSON, residing at Voorhis Point, South Nyack, New York, and LEO ZUCKER,
residing at 134 Hollywood Avenue, Englewood Cliffs, New Jersey, doing business
at BRIDON REALTY CO., a partnership, having its principal office at 207 Broad
Avenue, Palisades Park, New Jersey, hereinafter referred to herein as "Landlord"
and NEW CITY TOWN THEATRE, INC., a New York Corporation, having its principal
office c/o Bram Studio Inc., 229 West 42nd Street, New York, New York,
hereinafter referred to herein as "Tenant."
W I T N E S S E T H
WHEREAS, Landlord has heretofore and on or about January 18, 1965,
entered into a lease with IRVING SHERMAN and DAVID SANDERS, as Tenants, for the
rental of a certain building to be erected in the Clarkstown Plaza Shopping
Centre, hereinafter referred to herein as "Lease" for a period of twenty-one
years as therein set forth, and
WHEREAS, the said IRVING SHERMAN and DAVID SANDERS have heretofore, and
with Landlord's consent, assigned said Lease to the Tenant by assignment in
writing dated February 1, 1966, and recorded on the 11th day of April 1966, in
the office of the Clerk of Rockland Court in Liber 807 of Deeds, page 411; and
WHERAS, the Landlord has agreed with the Tenant to rent to the said
Tenant additional space to be improved by the Landlord as more particularly
hereinafter set forth; and
WHEREAS, the said Landlord and Tenant are also desirous of modifying the
terms and conditions of said Lease, as more particularly hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing, it is mutually agreed
as follows:
The Landlord hereby leases to the Tenant in addition to the premises
demised in the Lease the following premises:
<PAGE>
Building to be erected (or altered and modified) in the Clarkstown Plaza
Shopping Centre, New City, New York, adjoining the demised premises together
with the demised premises in lease, as shown on the plot plan of the
Shopping Centre, initialled by the Landlord and Tenant and annexed hereto
and made a part hereof, which buildings shall be approximately 120 feet by
38 feet. (Plan marked Exhibit "A")
The term of the Lease for both premises shall be for twenty-one (21)
years, starting on the 1st day of the calendar month next following the issuance
of the Certificate of Occupancy or temporary Certificate of Occupancy sufficient
for the issuance of a Theatre Permit by the appropriate authority having
jurisdiction thereof and the continuance thereof by the Municipal Authority
having jurisdiction thereof for the building of which the premises demised
herein by this Addendum shall be a part. If the issuance of the Certificate of
Occupancy shall be delayed solely through the fault or neglect of the Tenant
herein, in installation of any items in said premises demised herein, which are
the obligation of the Tenant to install, and which installation is a
prerequisite for the issuance of the Certificate of Occupancy, then the term of
this Addendum of Lease shall commence on the 1st day of the calendar month next
following the date of the completion by the Landlord or their building
contractor of all construction work in said new premises, which is the
obligation of the Landlord. The parties hereto agree that a duly executed and
acknowledged recordable memorandum of Lease shall be entered into by them at the
time of the commencement of the term of this Addendum of Lease, reciting therein
the date of commencement and termination of the term herein demised and the
purpose for its use and occupancy as more particularly set forth in the Lease.
The Tenant shall, however, pay rent for the time from the date of the
Certificate of Occupancy until the first day of the term of this Addendum of
Lease, in a pro rata amount.
<PAGE>
1. (New) The Tenant shall pay an annual minimum rent during the term of
the Addendum of Lease for the premises heretofore demised under the Lease and
the premises demised under this Addendum of Lease as follows:
The total sum of sixty-five thousand ($65,000.00) dollars per annum.
Said rent to be paid in equal monthly payments, in advance, on the 1st day of
each and every month during the term aforesaid.
2. Paragraph 2 of the Lease is modified to read as follows:
In addition to the minimum rents hereinabove set forth to be paid by the
Tenant during the term herein demised, Tenant covennats and agrees to pay
additional or augmented rent unto Landlord based upon the gross ticket receipts
from the theatre business to be conducted in both demised premises. Such
additional or augmented rent shall be equal to fifteen (15%) per cent of all
such gross receipts in excess of six hundred thousand ($600,000.00) dollars per
annum during the term of this Addendum of Lease. The term "year" herein referred
to shall be the period of twelve (12) consecutive months commencing on the date
of the commencement of the term herein demised or on each anniversary of such
date. Within thirty (30) days after the end of each year of the term herein
demised, Tenant shall submit to the Landlord, in writing, attested by a
Certified Public Accountant, a monthly statement of the gross receipts of the
said theatre business, each such statement shall itemize the revenue realized
from particular admissions. Each such statement shall be made at Tenant's
expense, which shall be duly sworn to by the Tenant. Tenant agrees that its
accounting practices and tabulatory method shall be consistent at all times with
the best practices in the industry, and the Landlord or their accountant, at
Landlord's own cost and expense, shall be privileged at any time, upon
reasonable notice, to examine all books, records or other data pertinent to the
operation of the theatres and to revenues. If the Landlord
<PAGE>
or their accountant shall find a discrepancy in such records which will reflect
a sum of $1,500.00 gross revenue or more, then and in that event the Tenant
shall pay for the accounting services rendered with this audit. Any amusement or
sales taxes or other similar taxes which may be imposed by any present or future
laws of any municipal, state or federal authority, or other lawfully constituted
taxing authority, and which tax shall be collected by the Tenant from its
patrons shall not be included in the gross receipts insofar as the computation
of additional or augmented rent is concerned. The additional rents referred to
in this paragraph are to be paid by the Tenant to the Landlord within sixty (60)
days after the end of each year of the term as herein defined.
3. Paragraph 5 of the Lease is modified to read as follows:
The Landlord covenants that the premises together with the
improvement erected or to be erected thereon demised by this Addendum of Lease,
at the commencement of the term herein demised, shall have complied with all
statutes, ordinances, rules, orders, regulations and requirements of the
Federal, State, County, City, Village and Town government, and of any and all
their Departments and Bureaus applicable to said premises, for the correction,
prevention and abatement of nuisances or other grievances, in, upon, or
connected with said premises with respect to all of said premises, which, by the
terms hereof, it is the Landlord's duty and obligation to build, provide and
supply, and to such extent as may be necessary to comply with and execute all
rules, orders and regulations of the New York Board of Fire Underwriters for the
prevention of fires, with respect thereto, at their own cost and expense. After
the commencement of the term of this Addendum of Lease, and full performance of
Landlord's covenant in this paragraph above set forth, the Tenant shall promptly
execute and comply with all statutes, ordinances, rules, orders, regulations and
requirements of the Federal, State and City government and of any and all
<PAGE>
their departments and bureaus applicable to said premises, for the correction,
prevention and abatement of nuisances or other grievances, in, upon, or
connected with said premises during said term, and shall also promptly comply
with and execute all rules, orders and regulations of the New York Board of Fire
Underwriters for the prevention of fires at the Tenant's own cost and expense.
4. Paragraph 6 of the Lease is modified to read as follows:
That the Tenant, its successors, heirs, executors or administrators
shall not make any alterations costing in excess of $5,000.00 dollars on the
premises demised by Lease or by this Addendum of Lease without the Landlord's
consent in writing, which consent will not be unreasonably withheld, or occupy
or permit or suffer the same to be occupied for any business or purpose deemed
disreputable or extra hazardous on account of fire, under the penalty of damages
and forfeiture and in the event of a breach thereof, the term herein shall
immediately cease and determine at the option of the Landlord as if it were the
expiration of the original term provided Tenant shall fail to cure the default
or commence and proceed with due diligence to cure said default within thirty
(30) days after notice thereof is given by the Landlord to the Tenant by
registered mail.
5. (New) This Addendum of Lease is subject to Landlord obtaining a
necessary Building Permit for the erection and completion of the building as
more particularly described in this Addendum. Tenant agrees to make application
for said building permit at Landlord's own cost and expense. In the event that a
building permit is not obtained this Addendum of Lease shall be null and void
and the terms and conditions set forth in the Lease shall be binding upon the
parties with the same force and effect as if this Addendum of Lease had not been
executed between the parties.
<PAGE>
6. (New) Until such time as the premises to be completed under this
Addendum of Lease are ready for occupancy as more particularly herein described,
the terms and conditions set forth in the Lease shall be binding upon the
parties with the same force and effect as if this Addendum of Lease had not been
executed between the parties.
Nothing contained in Paragraph 5 and 6 herein is intended to
abrogate, annul, void or cancel any claim or cause of action, legal, equitable
or otherwise that either party may have against the other by reason of any
breach of any of the terms and conditions of this Addendum of Lease.
7. (New) All the terms and conditions of the Lease not specifically
cancelled and/or deleted by this Addendum of Lease and which are not
inconsistent with the terms, conditions and sense of this Addendum of Lease,
shall be deemed incorporated into this Addendum of Lease and shall affect and be
binding upon both demised premises and the parties hereto and any reference to
the premises in said Lease or any similar allusion is intended to embrace both
the premises demised under the Lease and the premises demised under this
Addendum of Lease.
8. Paragraph 7 of the Lease is amended to read as follows:
In case of damage by fire, or other factors which are insurable under
comprehensive or extended coverage policies to the buildings in which the two
demised premises are located, without the fault of the Tenant or of Tenant's
agents or employees, the Landlord shall repair the damage with reasonable
dispatch after notice of damage and if the damage has rendered the premises
untenantable in whole or in part, there shall be an apportionment or abatement
in the rent in proportion to the portion of the demised premises which are still
usable for the purpose intended under this Lease. In determining what
constitutes reasonable dispatch, due consideration shall be given to delays
caused by strikes, adjustment of insurance and other causes beyond the
<PAGE>
Landlord's control. If such damage by fire, or other factors which are insurable
under comprehensive or extended coverage policies, shall occur after the Tenth
(10th) year of the term demised in this Addendum of Lease shall be so extensive
as to require repair and replacement by the Landlord at an aggregate cost in
excess of $150,000.00, then the Tenant expressly agrees that if, at the time
that repair to the premises shall have been fully completed, the then remaining
unexpired term of this Lease be less than Ten (10) years, that the term of this
lease-hold shall be extended to terminate on the Tenth (10th) anniversary of the
completion of fire repairs aforesaid, all the terms and conditions, therein
shall remain in full force and effect. The remaining term of the original Lease
shall be suspended from the time of such total or partial destruction until the
premises shall be fully repaired and tenantable, at which time the term shall
commence to run again and shall continue in all respects as if the date of
completion was the day next succeeding the date of destruction. If, however, the
cost of repairs shall exceed the said $150,000.00, and the term of this Lease
shall have less than Five (5) years to run, the Landlord may, at its option,
elect not to rebuild; if under such circumstances the Landlord shall elect not
to rebuild, then this Lease shall cease and come to an end and the rent shall be
apportioned to the time of the damage.
In the event the Landlord elects not to re-build, then the Landlord
agrees not to rent the subject premises to any Tenant for the purposes of
operating a theatre therein during the remainder of what would have been the
basic term of this Lease, not including any extension applicable thereto. In
this event any security deposit due and owing to the Tenant shall be returned to
the Tenant.
9. Paragraph 26 of the Lease is amended to read as follows:
Upon the commencement of the term herein provided, and provided that the
Landlord has delivered same free from any substantial variations and defects,
the Tenant shall bear
<PAGE>
the entire cost and expense thereafter, during the term of the Lease, of each of
the following as shall be required in the demised premises: Heat, hot water,
water, janitor service, gas, electricity, sewer utility service, plumbing,
heating and air-cooling systems, and all electrical wiring and fixtures. The
Landlord agrees and covenants that they will do all that may be necessary to
enforce contractors' liabilities for work, labor and services supplied by
contractors in the course of construction, of so much of the demised premises as
was Landlord's duty hereunder to construct, including, but not limited to all
covenants, warranties and guarantees with respect thereto. The Landlord further
agrees to guarantee all workmanship for a period of one (1) year after the
commencement of the term of this Addendum of Lease.
10. (New) The Landlord covenants to commence construction within two (2)
months after issuance of building permit for the premises more particularly
described in this Addendum of Lease and complete construction within One (1)
year thereafter a theatre building for the use and occupancy of the Tenant, such
building to be erected in accordance with the approved plans and specifications
of William Ely Kohn as consultant, which are to be identified and approved by
the initialling thereof by the parties to this Agreement and annexed hereto.
11. (New) As and for further consideration herein, the Tenant covenants
and agrees to provide solely at its own cost and expense, and to install in the
premises to be constructed pursuant to this Addendum of Lease, solely at its own
cost and expense, all of the equipment necessarily requisite to or incidental to
the use and operation of the demised premises as a motion picture theatre, the
items which shall be so installed by the Tenant are more particularly described
as follows, but not limited thereto.
A. Not less than 300 theatre seats, to be spaced no less than
____ inches back to back.
<PAGE>
B. One (1) additional projection machine, complete with lamps,
rectifier or generator, including dual sound equipment.
C. Carpeting or other material of equal value throughout the
lounge and aisle of the theatre.
D. A motion picture screen of the latest type, capable of
accommodating cinemascope, or any other modern projection system, generally
accepted for similar theatres.
E. Complete decoration and painting, to the extent that Tenant
may require or deem necessary except that all painting in visual auditorium
shall be done by Landlord at Landlord's expense in colors selected by Tenant.
F. All necessary lighting fixtures.
G. All other accessories properly requisite for the proper
operation of a motion picture theatre consistent with the most modern prevailing
practices.
All items aforesaid shall be new equipment, except projection booth
equipment and chairs which may be fully reconditioned modern equipment, of the
modern type and design and shall be installed in a good and workmanlike manner
without damage to equipment or to freehold, and upon annexation to the freehold,
the same shall be deemed a part of the realty and be irrevocably the property of
the Landlord. All such items installed in the demised premises but not annexed
to the realty shall become the property of the Landlord irrevocably. The Tenant
expressly covenants that he will install in the premises demised herein all the
aforesaid equipment and decorations which shall aggregate in value not less than
$50,000.00 dollars at the time of installation and the Tenant further covenants
that the entire cost of all equipment shall have been fully paid.
<PAGE>
12. (New) Paragraph 41a of the Lease is modified to read as follows:
Notwithstanding anything contained in the Lease to the contrary the
subordination of the Lease or Addendum of Lease to any existing or new mortgage
is conditional upon the existing or new mortgage simultaneously with the making
of the Lease or Addendum of Lease, or of such new Mortgage, entering into an
agreement in recordable form by its terms binding upon the Mortgagee, its
successors and assigns whereby the Mortgagee agrees that in the event it should
become necessary to foreclose said MOrtgage, it will cause the sale of said
premises to be made subject to the Lease or Addendum of Lease, provided that the
Tenant is not in default under any of the terms, conditions, or covenants of the
Lease or Addendum of Lease at the time of such foreclosure.
13. Paragraph 47 of the Lease is modified to read as follows:
The Tenant shall be responsible for any tax increase over and above the
tax for the base tax year of 1966. Any tax over and above such base Tax Year
shall be paid by the Tenant pro rata as the area of his premises bears to the
overall premises (13.5% of said overall premises). The area of the parking lot
shall not be considered; the proportion being square footage of the theatre as
against the square footage of the entire building in the said shopping center.
14. Paragraph 48 of the Lease shall not apply to this Addendum of Lease.
15. Paragraph 49 of the Lease shall be and hereby is deemed deleted from
the Lease and any remaining security due and owing the Tenant as of the
effective date of this Addendum of Lease shall become the property of the
Landlord.
16. Paragraph 52 of the Lease shall be and hereby is deemed deleted from
the Lease.
17. Paragraph 53 of the Lease shall not apply to this Addendum of Lease.
<PAGE>
18. Paragraph 54 of the Lease shall be and hereby is deleted from the
Lease.
19. Paragraph 55 of the Lease is modified to read as follows:
It is understood and agreed between the parties hereto that the Tenant
shall pay to the Landlord the sum of One Thousand ($1,000.00) Dollars per year
for the full term of this Lease or any extension thereof, in consideration of
the rights extended to it under the provisions of Paragraph 51 of the Lease.
This sum shall be payable on the last day of each year of the lease term or any
extension thereof.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals, or caused these presents to be signed by their corporate officers and
caused their proper corporate seals to be hereto affixed this 10th day of
February 1981.
WITNESS:
- --------------------------- ---------------------------
As to ROBERT NELSON ROBERT NELSON d/b/a
BRIDON REALTY CO.
- --------------------------- ---------------------------
As to LEO ZUCKER LEO ZUCKER d/b/a
BRIDON REALTY CO.
- --------------------------- ---------------------------
As to NEW CITY TOWN THEATRE, INC. NEW CITY TOWN THEATRE, INC.
<PAGE>
Landlord: BRIDON REALTY CO. Tenant: NEW CITY TOWN THEATRE, INC.
254 S. Main Street 232 Fairview Avenue
P.O. Box 1950 Englewood Cliffs NJ 07632
New City NY 10956
ADDENDUM TO LEASE BETWEEN BRIDON REALTY CO. AS LANDLORD,
and NEW CITY TOWN THEATRE, INC. AS TENANT DATED NOVEMBER 14, 1990
WHEREAS, a Lease was entered into on January 18, 1965 between Bridon
Realty Co., as landlord, (Landlord), and Irving Sherman and David Sanders as
Tenants, which Lease was extended and modified pursuant to an Addendum to Lease
dated February 10, 1981 (collectively sometimes hereinafter referred to as
Lease); and
WHEREAS, an assignment of the lease executed on February 1, 1966
resulted in New City Town Theatre, Inc., as tenant, (Tenant), which assignment
was consented to by the Landlord; and
WHEREAS, New City Town Theatre, Inc. as Tenant desires to assign the
Lease to New City Cinemas, Inc.; and
WHEREAS, New City Cinemas, Inc. wishes to accept the assignment subject
to a clarification and modifications of certain terms of the Lease; and
WHEREAS, the Landlord is willing to execute an addendum to the Lease
clarifying certain terms and modifying certain other provisions in order to
facilitate the assignment of the Lease to New City Cinemas, Inc. as hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and the sum of One ($1.00) Dollar, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
1. Controlling Terms. The terms of this rider shall supersede and
control over any inconsistent terms of the Lease dated January 18, 1965, and the
Addendum to the Lease dated February 10, 1981 and any other previously executed
agreement modifying any of the terms of these documents. All terms that are not
inconsistent shall be given full force and effect.
2. Extension. The Lease is hereby extended through December 31, 2017.
During this extended term of the Lease, the rent shall be due and payable as
follows:
(a) From the period of December 1, 1990 through December 31,
2002, rent shall be due and payable at the rate of Sixty-Five
Thousand Dollars and 00/100 Dollars ($65,000.00) per annum,
payable in equal monthly installments of Five Thousand Four
Hundred Sixteen and 66/100 Dollars ($5,416.66).
(b) From the period of January 1, 2003 through December 31, 2010,
rent shall be due and payable at the rate of Seventy-Seven
Thousand and 00/100 Dollars ($77,000.00) per annum, payable in
equal monthly installments of Six Thousand Four Hundred Sixteen
and 67/100 Dollars ($6,416.67).
(c) From the period of January 1, 2011 through December 31, 2017,
rent shall be due and payable at the rate of Eighty-Three
Thousand and 00/100 Dollars ($83,000.00) per annum, payable in
equal monthly installments of Six Thousand Nine Hundred Sixteen
and 67/100 Dollars ($6,916.67).
3. Additional Rent. Tenant shall be required to pay over and above the
base rent the following increases:
(a) Real estate tax increases - Tenant shall pay its pro rata
share of the real estate tax increases as it effects the leased
premises. Tenant agrees to pay all tax increases that are
directly attributable to any improvements that the Tenant makes
<PAGE>
to the demised premises. Accordingly, Tenant shall not be
responsible for any tax increases that are a direct result of the
Landlord or any other tenant making improvements to any other
portion of the shopping center of which the leased movie theatre
premises are a part.
(b) Sewer charges;
(c) Utility charges.
(d) Common Area Maintenance - Paragraph 55 of the lease is hereby
modified to read as follows: "It is understood and agreed between
the parties hereto that the Tenant shall pay to the Landlord the
sum of $1,000.00 per year for the full term of this lease or any
extension thereof, in consideration of the rights extended to it
under the provisions of Paragraph 51 of the lease. This amount
shall be paid in twelve (12) equal monthly installments of $83.33
on the 1st day of each month.
(e) In addition to the rent set forth herein, the Tenant hereby
agrees to pay to the Landlord within ninety (90) days after the
end of each fiscal year of the Tenant, an amount equal to seven
(7%) percent of the adjusted gross box office receipts for
tickets in excess of $1,400,000.00 per year. For the purpose of
this provision, adjusted gross box office receipts shall be
defined as gross box office receipts less any sales tax or
admission tax or charges imposed by any governmental authority.
Tenant shall have full authority to issue free passes except as
may be restricted by the film distribution companies. Landlord
shall therefore be entitled to seven (7%) percent of the amount
that the adjusted gross box office receipts exceed $1,400,000.00
per fiscal year of the Tenant. Under no circumstances are any
receipts or monies generated from the concession stands or any
other sales or rentals of products or merchandise included in
adjusted gross box office
<PAGE>
receipts for this calculation. Tenant shall forward a copy of
film buyer/booker report at the end of each calendar year.
4. Multiple Theaters. Nothing contained in the original Lease or any
modification to the original Lease shall prevent the Tenant from adding one or
more additional theaters to the demised premises during the term of this Lease.
If plans to add additional theaters is carried out by the Tenant, there shall be
no additional rent due and no additional charges of any kind assessed against
the Tenant as a result of this addition of more theaters in the subject premises
except as may be required pursuant to Paragraph 3 of this Rider above. Landlord
further agrees to cooperate and execute any and all documents that may
reasonably be necessary in order to carry out the addition of these new theaters
including, but not limited to the execution of Planning Board and Board of
Adjustment applications authorizing Tenant to make application for such
additional theaters.
5. Alterations. Paragraph 6 of the original Lease dated January 18, 1965
is hereby modified as follows:
After the completion of the work anticipated to be done in order
to multiply the theatres in accordance with Paragraph 4 above, the
Tenant, its successors, heirs, executors or administrators shall not
make any structural alterations costing in excess of $1,000.00 on the
premises without the Landlord's consent, which consent will not be
unreasonably withheld.
6. Use of Premises.
Paragraph 35 of the January 18, 1965 Lease is hereby modified as
follows: Said premises shall be used and occupied for only for
the following purposes:
<PAGE>
(a) The motion picture theater auditoriums shall be used only for
the display of motion pictures, closed circuit television
features, and live stage presentations, meetings, lectures and
similar use. The same shall be shown or exhibited to the general
public upon paid admission and in conformity with all laws, rules
and regulations and amendments thereto, applicable to the conduct
of such business, and to the premises herein demised, and the
Tenant shall have the right to sell and dispense such merchandise
and services that is reasonably acceptable to the Landlord. It is
specifically agreed and the Landlord specifically consents that
the dispensing of merchandise and services may include the sale
of soft drinks, popcorn, ice cream, pre-packaged candy, and other
types of food products for on-premises consumption during such
time that the theatre is open. The Tenant may also sell
film-related magazines. Notwithstanding the above, the Tenant
agrees that it shall not use or rent the premises to any person
or organization that want to use this space for the purpose of
playing bingo, games of chance, or for religious gatherings.
7. Theater Layout. Paragraph 36 of the Lease dated January 18, 1965 is
hereby deleted in its entirety.
8. Reduced Rates. Nothing contained in the Lease Agreement or any
amendments thereto shall prevent the Tenant from offering to show motion
pictures at reduced rates to be determined in the sole discretion of the Tenant.
Paragraph 39 of the Lease Agreement dated January 18, 1965 is specifically
deleted.
<PAGE>
9. Non-Union Labor. Paragraph 43 of the Lease Agreement dated January
18, 1965 is hereby specifically deleted and Tenant shall be specifically
permitted to utilize nonunion help in the construction or improvements to be
performed or constructed within the theater.
10. Subordination. Landlord hereby represents that it has complied fully
with Paragraph 41A, the Lease Agreement dated January 18, 1965. That
specifically, that there exists no mortgage on thesubject premises that does not
provide that in the event it should become necessary for a Mortgagee to
foreclose, the Mortgagee will cause the sale of the premises to be made subject
to this Lease provided that the Tenant is not in default of any material term,
condition or covenant of this Lease at the time of such foreclosure.
11. Sublease. Tenant shall be permitted to sublease a portion of the
premises to an independent company providing concession services without the
consent of the Landlord. In the event that Tenant subleases a portion of the
premises to an independent company providing concession services,
notwithstanding any provision in the lease or any addenda to the lease to the
contrary, such subtenant shall have the right to remove any and all equipment
and/or fixtures on either the termination of Tenant's lease with Landlord or
otherwise upon the subtenant's vacation of premises.
12. Certificate of Insurance. Tenant hereby agrees to furnish Landlord a
Certificate of Insurance evidencing that the Landlord is named as an additional
insured for work to be performed in accordance with Paragraph 4 of this Rider.
13. Lease of Equipment. Landlord hereby agrees that Tenant may lease
certain equipment and fixtures which are placed within the theater. The leased
property shall not become the property of the Landlord without the express
written consent of the lessor. However, if at the termination of the lease
agreement, Tenant exercises an option to purchase, if such provision is
<PAGE>
available in such lease, then upon such upon such exercise of the option to
purchase, the equipment and fixtures which were placed within the theatre shall
become the property of the Landlord. However, notwithstanding the above, in the
event that the lessor at the termination of any lease of such equipment and
fixtures, removes such equipment and fixtures from the theater premises, Tenant
shall be obligated to replace the equipment and fixtures removed with the
original equipment and fixtures contained within the premises as of the date of
this Addendum to the Lease.
14. Right to Remove Equipment. Other provisions of the Lease Agreement
notwithstanding, the Tenant shall be permitted at the expiration of the Lease or
extensions of the Lease to remove any and all fixtures and equipment without
further liability to the Tenant provided that the Tenant replaces any of the
fixtures with the fixtures that are the original fixtures that were replaced.
15. Environmental Issue. Therefore, upon termination of this Lease
Agreement or any extensions thereof, the New York Department of Environmental
Protection, or any other governmental agency requires cleanup and removal of any
hazardous materials or any other material, the Tenant's liability shall be
limited to cleanup and removal of any hazardous material generated by it from
the date of this Addendum through the end of such term or extended term of the
Lease.
16. Consent to Assignment. Landlord acknowledges that Tenant is in the
process of negotiating a sale of its business and the assignment of its Lease to
New City Cinemas, Inc. Landlord hereby specifically consents to such assignment
of the Lease upon such terms and conditions that may be agreed upon between
these parties.
<PAGE>
17. Insurance. Landlord covenants that it shall maintain at its sole
cost and expense, adequate insurance coverage for fire loss and all other damage
or loss that may be sustained by the property, including full comprehensive and
extended coverage, on the demised premises in an amount equal to the full
replacement cost on the premises. Landlord further agrees that it shall make the
Tenant an additional insured* for the purpose of notification as to the type and
nature of the insurance coverage and to receive notification of any termination
of the insurance coverage. Tenant shall have the right to examine all policies
of insurance covering the demised premises. Notwithstanding the above, Tenant
shall be responsible for securing its own insurance coverage as to betterments
and improvements.
18. Paragraph 7 of the Lease as modified by paragraph 8 by the
Addendum to the Lease is hereby further modified as follows:
In the case of damage by fire, or other factors which are
insurable under comprehensive or extended coverage policies to
the buildings in which the demised premises are located, the
Landlord shall repair the damage with reasonable dispatch after
notice of damage and if the damage has rendered the premises
untenantable in whole or in part, there shall be an apportionment
or abatement in the rent in proportion to the portion of the
demised premises which are still unusable for the purpose
intended under this Lease. In determining what constitutes
reasonable dispatch, due consideration shall be given to delays
caused by strikes, adjustment of insurance and other causes
beyond the Landlord's control. If such damage by fire or other
factors which are insurable under comprehensive or extended
coverage policies, shall occur after the 17th year of the term
demised in
- --------------
*with the consent of the insurance company provided that the Tenant pays any
additional premiums.
<PAGE>
this Addendum of Lease shall be so extensive as to require repair
and replacement by the Landlord at an aggregate cost in excess of
$150,000.00, then the Tenant expressly agrees that if, at the
time that repair to the premises shall have been fully completed,
the then remaining unexpired term of this Lease to be less than
10 years, that the term of this leasehold shall be extended to
terminate on the tenth anniversary of the completion of fire
repairs aforesaid, all the terms and conditions, therein shall
remain in full force and effect. The remaining term of the
original lease shall be suspended from the time of such total or
partial destruction until the premises shall be fully repaired
and tenantable, at which time the term shall commence to run
again and shall continue in all respects as if the date of
completion was the day next succeeding the date of destruction.
If, however, the cost of repairs exceed the said $150,000.00, and
the term of this Lease shall have less than five years to run,
the Landlord may, at its option, elect not to rebuild; if under
such circumstances the Landlord shall elect not to rebuild, then
this Lease shall cease and come to an end and the rent shall be
apportioned to the time of the damage.
In the event the Landlord elects not to rebuild, then the
Landlord agrees not to rent the subject premises to any tenant
for the purpose of operating a theater therein during the
remainder of what would have been the term of this Lease as
extended by this Addendum. In this event, any security deposit
due and owing to the Tenant shall be returned to the Tenant.
19. Survival of Covenants, Representations and Warranties. All
representations, warranties, indemnities and agreements shall survive the
execution and delivery of this agreement.
<PAGE>
20. Entire Understanding of the Parties. This agreement represents the
entire understanding of the parties hereto and there are no warranties,
representations or covenants made by any party to another party unless the same
are contained in this agreement. This agreement shall supercede any other
agreement between the parties with regard to the subject matter contained
herein.
21. Modification of Agreement. This agreement embodies the entire
agreement between the parties hereto and no change or addition thereto shall be
valid unless consented to in writing by the parties.
22. Alienation. This agreement may not be assigned, subordinated,
hypothecated, pledged or in any way encumbered by any of the parties hereto
without the written consent of the Landlord which consent shall not be
unreasonably withheld.
23. Law Governing Execution and Performance. This agreement has been
executed and performed in the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York.
24. Notices. All notices required under this agreement shall be sent by
Registered or Certified Mail, Return Receipt Requested, postage prepaid, to the
party who is to receive such notice at their address set forth on page 1 of this
agreement, or such other address as to which party may notify the other in
accordance with the terms of this paragraph.
25. Void or Unenforceable Provisions. If any provision or provisions in
this agreement are found to be void or unenforceable, the remaining provisions
in this agreement shall be enforceable as if the void or unenforceable provision
or provisions had not been included herein.
<PAGE>
26. Non-waiver for Failure to Insist Upon Strict Performance. Failure of
the parties hereto to insist upon strict performance of any of the terms,
conditions and/or covenants contained herein shall not be deemed a waiver of any
subsequent breach or default in the terms, conditions and covenants herein
contained.
27. Section Headings. All section headings herein contained are for
convenience only and do not constitute part of this agreement.
28. Reference to Parties. In all references herein to any parties,
person, entities or corporation, the use of any particular gender or the plural
or singular number is intended to include the appropriate gender or number as
the text of the within document may require.
29. Parties Bound. It is mutually understood and agreed that the
covenants and agreements contained in the within lease and addendums shall inure
to the benefit of and shall be binding upon the respective parties hereto, their
heirs, executors, administrators, personal and legal representatives, successors
and assigns, respectively.
30. Recording of Addendum. Landlord hereby consents that Tenant may
record this Addendum to Lease Agreement.
31. A. Authorization of Bridon Realty Co. It is represented by agent of
Bridon Realty Co. that is executing this Addendum to the Lease that it has full
authority to do so and that the present partners of Bridon Realty Co. are Robert
Nelson and Leo Zucker and that the agent of Bridon Realty Co. executing this
Addendum has secured the consent of all other partners.
B. Authorization of New City Towne Theatre, Inc. It is represented
by the President and Secretary of New City Town Theatre, Inc. that it has full
authority to execute this Addendum to the Lease and that all corporate consent
has been secured.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals this 14th day of November, 1990.
WITNESS: BRIDON REALTY CO., Landlord
___________________________ ___________________________________
ATTEST: NEW CITY TOWN THEATRE, Inc., Tenant
___________________________ ___________________________________
Secretary President
STATE OF NEW JERSEY )
ss:
COUNTY OF MORRIS )
BE IT REMEMBERED, that on this 14th day of November, 1990, before me, the
subscriber, a Notary Public of N. J., personally appeared David J. Sanders who,
being by me duly sworn on his oath deposes and makes proof to my satisfaction,
that he is President/Acting Secretary of NEW CITY TOWN THEATRE, INC., the
Corporation named in the within Instrument; that David Sanders is the President
of said Corporation; that the execution, as well as the making of this
Instrument, has been duly authorized by a proper resolution of the Board of
Directors of the said Corporation; that deponent well knows the corporate seal
of said Corporation; and that the seal affixed to said Instrument is the proper
corporate seal and was thereto affixed and said Instrument signed and delivered
by said President as and for the voluntary act and deed of said Corporation, in
presence of deponent, who thereupon subscribed his name thereto as attesting
witness.
Sworn to and subscribed before me,
the date aforesaid.
___________________________ ___________________________________
Notary Public
<PAGE>
STATE OF NEW JERSEY, COUNTY OF MORRIS SS.:
I CERTIFY that on November 14, 1990 LEO ZUCKER personally came before me
and acknowledged under oath, to my satisfaction, that this person (or if more
than one, each person):
(a) is named in and personally signed the attached document; and
(b) signed, sealed and delivered this document as his or her act and
deed.
(c) that he is a partner of Bridon Realty Co., and has authority to
execute the attached document.
_____________________________
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LEASE
The parties agree as follows:
Date: November 14th, 1990
Parties: Assignor: NEW CITY TOWN THEATRE, INC.
Address: c/o DAVID J. SANDERS, 232 Fairview Ave.,
Englewood Cliffs, NJ 076__
Assignee: NEW CITY CINEMAS, INC.
Address: Sunset Strip, Succasunna, NJ 07876
If there are more than one Assignor or Assignee, the words
"Assignor" and "Assignee" shall include them.
Lease assigned: The Lease which is assigned herein is identified as follows:
Landlord: ROBERT NELSON and LEO ZUCKER d/b/a Bridon
Realty Co.
Tenant: NEW CITY TOWN THEATRE, INC.
Date: January 18, 1965
Premises: CLARKSTOWN PLAZA SHOPPING CENTER
New City, New York
(This Lease was recorded on 19 in the office of the
of the County of in liber of
conveyances, at page
<PAGE>
together with extensions, modifications and assignments.
Consideration: Assignor has received ONE DOLLAR ($1.00) dollars and other
good and valuable consideration for this Assignment.
Assignment: Assignor assigns to the Assignee all the Assignor's right,
title and interest in a) the Lease and b) the security
deposit, if any, stated in the Lease.
Assumption: Assignee agrees to pay the rent promptly and perform all of
the terms of the Lease, together with extensions,
modifications, assignments and addendum, as of the date of
this Assignment. Assignee assumes full responsibility for
the Lease, together with extensions, modifications,
assignments and addendum, as if Assignee signed the Lease
originally as Tenant.
Indemnity: Assignee agrees to indemnify and hold Assignor harmless from
any legal actions, damages and expenses, including legal
fees that the Assignor may incur arising out of the Lease.
Benefit to Assignee agrees that the obligations assumed shall benefit
landlord: the landlord named in the Lease as well as the Assignor.
<PAGE>
Assignor's Assignor states that Assignor has the right to assign this
statements: Lease and that the premises are free and clear of any
judgments, executions, liens, taxes and assessments.
Assignee's Assignee states that the Assignee has read the Lease and has
statement: received the original or an exact copy of the Lease.
Successors: This assignment is binding on all parties who lawfully
succeed to the rights or take the place of the Assignor or
Assignee.
Margin headings: The margin headings are for convenience only.
Signatures: The Assignor and Assignee have signed this Assignment as of
the date at the top of the first page. The aforesaid lease
is in good standing and not in default and I hereby consent
to the foregoing Assignment.
ASSIGNOR
NEW CITY TOWN THEATRE, INC.
------------------------- ---------------------------
Landlord
WITNESS ASSIGNEE
NEW CITY CINEMAS, INC.
------------------------- ---------------------------
<PAGE>
STATE OF NEW JERSEY
COUNTY OF MORRIS
On the 14th day of November, 1990, before me personally came John Nelson
to me known, who, being by me duly sworn, did depose and say that he resides at
No. ; that he is the President of New City Cinemas, Inc.,
the corporation described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the board of
directors of said corporation, and that he signed his name thereto by like
order.
---------------------------
Notary Public
STATE OF NEW JERSEY
COUNTY OF MORRIS
On the 14th day of November, 1990, before me personally came David J.
Sanders to me known, who, being by me duly sworn, did depose and say that
resides at No. ; that he is the President of New City Town
Theatre, Inc., the corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
board of directors of said corporation, and that he signed his name thereto by
like order.
Sworn to and subscribed before me the date aforesaid.
---------------------------
Notary Public
<PAGE>
Exhibit 10.50
Emerson, NJ
ASSIGNMENT OF REAL ESTATE LEASE
In consideration of ten dollars and other good and valuable
consideration, to it in hand paid, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, Emerson Cinema,
Inc., a New Jersey corporation ("Assignor"), hereby sells, transfers, conveys,
assigns and delivers to CCC Emerson Cinema Corp., a Delaware corporation
("Assignee"), all of Assignor's right, title and interest as lessee under, to
and in that certain lease dated January 18, 1965 by and between Robert Nelson,
Bernat Nelson and Leo Zucker doing business as Robert Lee Realty Co., a
partnership ("Lessor") and Irving Sherman, David Sanders and Albert Margulies,
as assigned by Irving Sherman, David Sanders and Albert Margulies to Emerson
Town Theatre, Inc. pursuant to an Assignment Agreement dated September 15, 1965,
as amended by Lessor and Emerson Town Theatre, Inc. pursuant to an Extension and
Modification of Lease dated July 12, 1982, as amended by Lessor and Emerson Town
Theatre, Inc. pursuant to an Addendum to Lease dated June 1, 1986, and further
amended and assigned by Emerson Town Theatre, Inc. to Emerson Cinema, Inc.
pursuant to an Addendum to Lease dated November 18, 1988 among Lessor, Emerson
Town Theatre, Inc. and Assignor (collectively, the "Lease") relating to the real
property located at the Pascack Valley Shopping Center, 346 Kinderkamac Road,
Emerson, Bergen County, New Jersey 07630 and known as the Emerson Theater.
Assignee hereby assumes all of such right, title and interest and agrees to pay,
perform and otherwise satisfy the obligations of Assignor under the Lease to be
performed on or after the date of this Assignment other than any such
obligations or any other liability arising out of any failure by Assignor to
pay, perform and satisfy all its obligations arising thereunder prior to the
date hereof.
This Assignment is being delivered pursuant to the Agreement Plan
of Reorganization dated as of May 29, 1996 by and among Clearview Cinema Group,
Inc., a Delaware corporation and CCC Emerson Cinema Corp., a Delaware
corporation (collectively, the "Transferees") and Emerson Cinema, Inc. a New
Jersey corporation (the "Transferors") including the provisions of Articles III,
IV and VII thereof regarding representations and warranties and indemnification,
respectively.
<PAGE>
Witness the due execution hereof this the ____ day of May, 1996.
ATTEST: EMERSON CINEMA, INC.
By: __________________________ By: __________________________
Title: _______________________ Title: _______________________
ATTEST: CCC EMERSON CINEMA CORP.
By: __________________________ By: __________________________
Title: _______________________ Title: ________________________
<PAGE>
STATE OF NEW JERSEY
SS.:
COUNTY OF _______________________
I CERTIFY that on May ____, 1996, ____________________________
personally came before me, and this person acknowledged under oath, to my
satisfaction, that:
(a) this person is the ______________ secretary of Emerson Cinema,
Inc., the corporation named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is
_______________________________, the ____________ President of
the corporation;
(c) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board
of Directors; and
(d) this person signed this proof to attest to the truth of these
facts.
-------------------------------------------------
(Print name of attesting witness below signature)
Signed and sworn to before me on
May _______, 1996.
- --------------------------------
<PAGE>
STATE OF ________________________
SS.:
COUNTY OF _______________________
I CERTIFY that on May ____, 1996, ____________________________
personally came before me, and this person acknowledged under oath, to my
satisfaction, that:
(a) this person is the ______________ secretary of CCC Emerson Cinema
Corp. the corporation named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is
_______________________________, the ____________ President of
the corporation;
(c) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board
of Directors; and
(d) this person signed this proof to attest to the truth of these
facts.
-------------------------------------------------
(Print name of attesting witness below signature)
Signed and sworn to before me on
May _______, 1996.
- --------------------------------
<PAGE>
THIS AGREEMENT, dated the 18th day of January 1965,
BETWEEN ROBERT NELSON, residing at 591 Warwick Avenue, West Englewood,
New Jersey, BERNAT NELSON, residing at 2160 Center Avenue, Fort
Lee, New Jersey, and LEO ZUCKER, residing at 241 Lyncrest Road,
Englewood Cliffs, New Jersey, doing business as,
ROBERT LEE REALTY CO., A Partnership, having its principal office
at 207 Broad Avenue, Palisades Park, New Jersey,
hereinafter referred to as "LANDLORD"
AND IRVING SHERMAN, residing at 30 Ehrhardt Road, Pearl River, New
York, and DAVID SANDERS, residing at 232 Fairview Avenue,
Englewood Cliffs, New Jersey, and Albert Margulies, residing at
54 Cortland Place, Cliffside Park, New Jersey,
hereinafter referred to as "TENANTS".
W I T N E S S E T H:
The LANDLORD hereby leases to the TENANT the following premises:
"Building to be erected in the Pascack Shopping Center in Emerson, New
Jersey, as shown on a plot plan of the said shopping center, initialled
by the landlord and tenant and annexed hereto and made a part hereof,
which building shall be approximately 65' x 135'." (Plan marked Exhibit
A.)
The term of this demised premises shall be for Twenty-one (21) years starting on
the 1st day of the calendar month next following issuance of the Certificate of
Occupancy or temporary Certificate of Occupancy sufficient for the issuance of a
Theatre Permit by the appropriate authority having jurisdiction thereof and the
continuance thereof by the Municipal authority having jurisdiction thereof for
the building of which the demised premises shall be a part. If the issuance of
the Certificate of Occupancy shall be delayed through the fault or neglect of
the TENANT herein, in installation of any items in the demised premises, which
are the obligation of the TENANT to install, and which installation is a
prerequisite for the issuance of the
<PAGE>
CERTIFICATE OF OCCUPANCY, then the term of this Lease shall commence on the 1st
day of the calendar month next following the date of completion by the LANDLORD
or its Building Contractor of all construction work in said premises, which is
the obligation of the LANDLORD. The parties hereto agree that a duly executed
and acknowledged recordable memorandum shall be entered into by the parties at
the time of the commencement of the term of this lease, reciting therein, the
date of commencement and termination of the term herein demised, to be used and
occupied only for such purposes as are hereinafter specifically provided; the
TENANT shall, however, pay rent for the time from the date of the Certificate of
Occupancy, until the 1st day of the term of this Lease, in a pro rata amount.
1. The TENANT shall pay an annual minimum rent during the term
hereof as follows:
During the first 7 years
of the Lease.........................$21,000.00 per year.
During the 8th through the 14th
year of the Lease....................$22,000.00 per year.
During the 15th through the 21st
year of the Lease....................$23,000.00 per year.
Said rent to be paid in equal monthly payments in advance on the
1st day of each and every month during the term aforesaid.
2. In addition to the minimum rents hereinabove stated to be paid
by the TENANT during the term herein demised, TENANT covenants and agrees to pay
additional or augmented rent unto the LANDLORD based upon the gross receipts of
all business conducted on or received from the theatre business to be conducted
in the demised premises. For the full term of this Lease, such additional or
augmented rent shall be equal to Fifteen (15%) percent of all such gross
receipts in excess of One Hundred Fifty Thousand ($150,000.00) Dollars during
the
<PAGE>
first seven years of this Lease term. Such additional or augmented rent shall be
equal to Fifteen (15%) percent of all such gross receipts in excess of:
$157,000.00 for the Second Seven year term of this Lease
$164,000.00 for the Third Seven year term of this Lease
$178,000 for any extension or renewal term of this Lease, except
during any extension pursuant to Paragraph 7 of this Lease, in
which event the additional rent shall be as set forth herein.
The term year herein referred to shall be the period of Twelve (12) consecutive
months commencing on the date of the commencement of the term herein demised or
on each anniversary of such date. Within Thirty (30) days after the end of each
year of the term herein demised, TENANT shall submit to the LANDLORD, in
writing, attested by a Certified Public Accountant, a monthly statement of the
gross receipts of the said theatre business, thereto, each such statement shall
itemize the revenue realized from particular admissions. Each such statement
shall be made at the TENANT'S expense, which shall be duly sworn to by the
TENANT. TENANT's agrees that his accounting practices and tabulatory method
shall be consistent at all times with the best practices in the industry, and
the LANDLORD, or its ACCOUNTANTS, at the LANDLORD'S own cost and expense, shall
be privileged at any time, upon reasonable notice, to examine all books, records
and other data pertinent to the operation of the theatre and to revenues. If the
LANDLORD's Accountant shall find a discrepancy in such records which will
reflect a sum of Five Hundred ($500.00) Dollars gross revenue or more, then in
that event the TENANT shall pay for the accounting services rendered with this
audit. Any amusement or sales taxes or other similar taxes which may be imposed
by any present or future laws of any municipal, state or federal authority, or
other lawfully constituted taxing authority, and which tax shall be collected by
the TENANT from its patrons shall not be included in the gross receipts
insofaras the computation of additional or augmented rent is concerned, the
additional rents referred to in this
<PAGE>
paragraph are to be paid by the TENANT to the LANDLORD within 60 days after the
end of each year of the term herein defined.
3. The additional rent herein provided to be paid by the TENANT
to the LANDLORD in addition to the minimum rent provided herein, although based
on percentages of the gross receipts shall at all times be deemed additional
rent for the use of the demised premises, and the LANDLORD shall, in no event,
be deemed an associate of the TENANT in the conduct of the theatre business, nor
shall the LANDLORD be liable for any debts incurred by the TENANT in the conduct
of the said business. The relation of the parties is, and shall at all times
remain that of LANDLORD and TENANT.
4. That the TENANT shall take good care of the premises and
shall, at the TENANT'S own cost and expense make all repairs, except structural
repairs, in and about the demised premises and all the equipment and fixtures
therein installed, also excepting such roof repairs as shall be necessitated
through no fault or negligence on the part of the TENANT, his employees, agents,
invitees and sub-tenants, and excepting further, such repairs and replacements
as shall be the duty and obligation of the LANDLORD to perform, as provided
elsewhere herein, and at the end or other expiration of the term, shall deliver
up the demised premises in good order or condition, damage by the elements or
ordinary wear and tear excepted.
5. The LANDLORD covenants that the premises herein demised, at
the commencement of the term herein demised shall have complied with all
statutes, ordinances, rules, orders, regulations and requirements of the
Federal, State, County, City, Village and Town Government, and of any and all
their Departments and Bureaus applicable to said premises, for the correction,
prevention and abatement of nuisances or other grievances, in, upon, or
connected with said premises with respect to all of said premises, which, by the
terms hereof, it is the
<PAGE>
LANDLORD's duty and obligation to build, provide and supply, and to such extent
as may be necessary to comply and execute all rules, orders and regulations of
the New Jersey Board of Fire Underwriters for the prevention of fires, with
respect thereto, at his own cost and expense. After the commencement of the term
of this Lease, and full performance of LANDLORD's covenant in this paragraph
above set forth, the TENANT shall promptly execute and comply with all Statutes,
Ordinances, Rules, Orders, Regulations and Requirements of the Federal, State
and City Government and of any and all their Departments and Bureaus applicable
to said premises, for the correction, prevention, and abatement of nuisances or
other grievances, in, upon, or connected with said premises during said term;
and shall also promptly comply with and execute all Rules, Orders and
regulations of the New Jersey Board of Fire Underwriters for the prevention of
fires at the TENANT's own cost and expense.
6. That the TENANT, successors, heirs, executors or
administrators shall not make any alterations costing in excess of One Thousand
($1,000.00) Dollars on the premises without the LANDLORD's consent in writing
(which consent will not be unreasonably withheld); or occupy or permit or suffer
the same to be occupied for any business or purpose deemed disreputable or
extra-hazardous on account of fire, under the penalty of damages and forfeiture,
and in the event of a breach thereof, the term herein shall immediately cease
and determine at the option of the LANDLORD as if it were the expiration of the
original term, provided TENANT shall fail to cure the default or commence and
proceed with due diligence to cure said default within Thirty (30) days after
notice thereof is given by LANDLORD to TENANT by REGISTERED MAIL.
7. In case of damage by fire, or other factors which are
insurable under comprehensive or extended coverage policies, to the building in
which the leased premises are
<PAGE>
located, without the fault of the TENANT or of TENANT's agents or employees, the
LANDLORD shall repair the damage with reasonable dispatch after notice of damage
and if the damage has rendered the premises untenantable in whole or in part,
there shall be an apportionment or abatement in the rent in proportion to the
portion of the demised premises which are still usable for the purpose intended
under this lease. In determining what constitutes reasonable dispatch, due
consideration shall be given to delays caused by strikes, adjustment of
insurance and other causes beyond the LANDLORD's control. If such damage by
fire, or other factors which are insurable under comprehensive or extended
coverage policies shall occur after the Tenth (10th) year of the term herein
demised shall be so extensive as to require repair and replacement by the
LANDLORD at an aggregate cost in excess of Seventy-five Thousand ($75,000.00)
Dollars, then the TENANT expressly agrees that if, at the time that repair to
the premises shall have been fully completed, the then remaining unexpired term
of this Lease be less than Ten (10) years, that the term of this Lease-hold
shall be extended to terminate on the Tenth (10th) anniversary of the completion
of fire repairs aforesaid, all the terms and conditions herein shall remain in
full force and effect with the exception that the minimum annual rental during
each year of such further term shall be Twenty-four Thousand ($24,000.00)
Dollars per annum, payable in like manner as is hereinabove provided for such
minimum rent and all additional or augmented rents hereinabove provided for,
shall likewise be payable during such further term, if any. In the event the
term is extended pursuant to the provisions of this paragraph, any such
additional or augmented rent shall be equal to 15% of all such gross receipts in
excess of $171,000.00 per year throughout the term of such extension. The
remaining term of the original Lease shall be suspended from the time of such
total or partial destruction until the premises shall be fully repaired and
tenantable, at which time the term shall commence to run again and shall
<PAGE>
continue in all respects as if the date of completion was the day next
succeeding the date of destruction. If, however, the cost of repairs shall
exceed the said Seventy-five Thousand ($75,000.00) Dollars, and the term of this
Lease shall have less than Five (5) years to run, the LANDLORD may, at its
option, elect not to rebuild; if under such circumstances the LANDLORD shall
elect not to rebuild, then this Lease shall cease and come to an end and the
rent shall be apportioned to the time of the damage. In the event the Landlord
elects not to re-build, then the Landlord agrees not to rent the subject
premises to any tenant for the purposes of operating a theatre therein during
the remainder of what would have been the basic term of this Lease, including
any extension applicable thereto. In this event any security deposit due and
owing to the Tenant shall be returned to the Tenant.
8. The said TENANT agrees that the said LANDLORD and the
LANDLORD's agents and other representatives shall have the right to enter into
and upon said premises, or any part thereof, at all reasonable hours for the
purpose of examining the same, or making such repairs or alterations therein as
may be necessary for the safety and preservation thereof.
9. The TENANT also agrees to permit the LANDLORD or the
LANDLORD's agents to show the premises during reasonable hours to persons
wishing to hire or purchase the same; and the TENANT further agrees that on and
after Six (6) months next preceeding the expiration of the term hereby granted,
the LANDLORD or the LANDLORD's agents shall have the right to place notices on
the front of said premises, or any part thereof, offering the premises "To Let"
or "For Sale" and the TENANT hereby agrees to permit the same to remain thereon
without any hindrance or molestation.
10. If the said premises or any part thereof shall be deserted or
become vacant
<PAGE>
during said term, or if any default be made in the payment of the said rent or
any part thereof, and such default shall not be cured within Fifteen (15) days,
or if any default be made in the performance of any of the covenants herein
contained, and such default shall continue for Thirty (30) days after notice
thereof sent by the LANDLORD, by Registered Mail, to TENANT, unless TENANT,
within such Thirty (30) day period corrects or commences and proceeds with due
diligence to correct such default within such Thirty (30) day period, the
LANDLORD or representatives may re-enter the said premises by force, summary
proceeding, or otherwise, and remove all persons therefrom, without being liable
to prosecution therefor, and the TENANT hereby expressly waives the service of
any notice in writing of intention to re-enter, and the TENANT shall pay, at the
same time as the rent becomes payable under the terms hereof, a sum equivalent
to the rent reserved herein, and the LANDLORD may rent the premises on behalf of
the TENANT, reserving the right to rent the premises for a longer period of time
than fixed in the original Lease without releasing the original TENANT from any
liability, applying any monies collected, first to the expense of resuming or
obtaining possession, second to restoring the premises to a reasonable
condition, and then to the payment of the rent and all other charges due and to
grow due to the LANDLORD, any surplus to be paid to the TENANT, who shall remain
liable for any deficiency.
11. That in case of any damage or injury occurring to the glass
in the demised premises, the TENANT shall cause said damage or injury to be
repaired as speedily as possible at the TENANT's own cost and expense.
12. That the TENANT shall neither encumber nor obstruct the
sidewalk in front of, entrance to, or halls and stairs of said premises, nor
allow the same to be obstructed or encumbered in any manner, except as
consistent with normal business requirements in the operation of the Tenant's
business.
<PAGE>
13. The TENANT is given permission to erect signs on the
exterior of the demised premises, provided:
(A) Said signs shall comply with all Rules and
Regulations of any governing authorities having
jurisdiction thereof.
(B) Said signs shall be installed without damage to
the building, and
(C) Said signs shall be erected only in such place and
manner as is prescribed in the Plans and
Specifications of the Architect of the building.
And in case the LANDLORD, or the LANDLORD's
representatives shall deem it necessary to remove
any such sign, or signs, in order to make any
repairs, alterations, or improvements in or upon
said premises or building, or any part thereof,
the LANDLORD shall have the right to do so,
providing the same be removed and replaced at the
LANDLORD's expense, whenever the said repairs,
alterations, or improvements shall be completed.
14. That the LANDLORD is exempt from any and all liability for
any damage or injury to person or property caused by or resulting from steam,
electricity, gas, water, rain, ice or snow, or any leak or flow from or into any
part of said building or from any damage or injury resulting or arising from any
other cause or happening whatsoever.
15. Anything to the contrary herein not withstanding, the TENANT
shall not assign this Lease or sublet any part of the demised premises without
the prior written consent of the LANDLORD, which consent will not be
unreasonably withheld.
Prior to requesting such consent the TENANT must present to the
LANDLORD a copy of the proposed assignment or sub-leasing agreement, which shall
not in any way violate the terms of this Agreement; and an assumption of all of
the terms and conditions herein on the part
<PAGE>
of the TENANT to be performed, by the assignee sub-lessee; it is expressly
understood and agreed that no assignment or sub-letting will relieve the
original TENANT from any liability hereunder and that in no event will any
consent be given by the LANDLORD if the TENANT is in default of any of the
covenants or conditions of this Agreement.
16. It is expressly understood and agreed that in case the
demised premises shall be deserted or vacated, or if default be made in the
payment of the rent or any part thereof, as herein specified, or default, as
herein specified, be made in the performance of any of the covenants and
agreements in this Lease contained, on the part of the TENANT to be performed,
or if the TENANT shall fail to comply with any of the Statutes, Ordinances,
Rules, Orders, Regulations and Requirements of the Federal, State and City
Government, or of any and all their Departments and Bureaus, applicable to said
premises, or hereafter established, as herein provided, or if the TENANT in
possession shall file a Petition in bankruptcy, or be adjudicated a bankrupt, or
make an assignment for the benefit of creditors to take advantage of an
insolvency act, the LANDLORD may, if the LANDLORD so elects, at any time
thereafter, terminate this Lease and the term hereof, on giving to the TENANT in
possession, Five (5) days' notice, in writing, of the LANDLORD's intention so to
do, and this Lease and the terms hereof shall expire and come to an end on the
date fixed in such notice as if the said date were the date originally fixed in
this Lease for the expiration hereof. Such notice may be given by mail to the
TENANT in possession, addressed to the demised premises.
17. The TENANT shall pay to the authorities having control over
water in the area all rents or charges which may, during the demised term, be
assessed or imposed for the water used or consumed in or on the said premises,
whether determined by meter or otherwise, as soon as and when the same may be
assessed or imposed, and will also pay the expenses for the
<PAGE>
setting of a water meter in the said premises, should the latter be required. If
such rent or charge or expenses are not so paid, the same shall be added to the
next month's rent thereafter to become due.
In addition, if LANDLORD shall pay same, the TENANT shall pay the
LANDLORD an additional amount equal to Six (6%) percent of the amount so paid
together with the amounts so paid.
The TENANT has also deposited with the LANDLORD this day, an
additional security for the payment of water charges, in the sum of One Hundred
($100.00) Dollars, which shall be repaid to the TENANT as soon after the end of
the term hereof is determined that all water charges have been paid. If they
have not so been paid, then the sum shall be applied to the payment of said
unpaid charges and the balance returned to the TENANT.
18. That the TENANT will not, nor will the TENANT permit
undertenants, or other persons, to do anything in said premises, or bring
anything into said premises, or permit anything to be brought into said
premises, or to be kept therein, which will in any way increase the rate of fire
insurance on said demised premises, nor use the demised premises, or any part
thereof other than as set forth herein, nor suffer or permit their use for any
business or purpose which would cause an increase in the rate of fire insurance
on said building, and the TENANT agrees to pay any such increase.
19. The failure of the LANDLORD to insist upon a strict
performance of any of the terms, conditions and covenants herein, shall not be
deemed a waiver of any rights or remedies that the LANDLORD may have, and shall
not be deemed a waiver of any subsequent breach or default in the terms,
conditions and covenants herein contained. This instrument may not be changed,
modified or discharged orally.
<PAGE>
20. That should the land whereon said building stands or any part
thereof, be condemned for public use, then in that event, upon the taking of the
same for such public use, this Lease shall become null and void, and the term
cease and come to an end upon the date when the same shall be taken and the rent
shall be apportioned as of the said date, and any security due and owing to the
tenant shall be returned to the Tenant. In the event that there be a partial
condemnation of such premises whereby the interior dimensions of the theatre
auditorium are not substantially diminished, then the LANDLORD shall make such
repairs to said premises as may then be necessary, and the Lease shall continue
effective in all respects, except that there shall be an apportionment of rent
decreasing the amount thereof equal to the ratio between TENANT's gross receipts
from the operation of its theatre business in the One (1) year period following
commencement of operation after completion of repairs made necessary by said
condemnation, and the period of One (1) year immediately preceding the
termination of its business by reason of said condemnation. TENANT shall
continue to pay the rent originally provided herein until such ratio is
established and thereafter shall pay such rent established by the application of
such ratio, and the LANDLORD shall thereupon refund to the TENANT the amount of
excess, if any, between the rent theretofore paid by TENANT and the rent
established by such ratio, and TENANT shall pay to LANDLORD any additional rent
found due. The TENANT shall in no event make any claim in any condemnation
proceeding and shall have no right to any part of any condemnation award, except
that TENANT may make a claim for personal property and trade fixtures which are
the property of the TENANT.
21. If after default in payment of rent or violation of any other
provision of this Lease, or upon the expiration of this Lease, the TENANT moves
out or is dispossessed and fails to remove any trade fixtures or other property
prior to said such default, removal, expiration of
<PAGE>
Lease, or prior to the issuance of the final order or execution of the
warrant, then, and in that event, the said fixtures and property shall be deemed
abandoned by the said TENANT and shall become the property of the LANDLORD.
22. In the event that the relation of the Landlord and TENANT may
cease or terminate by reason of the re-entry of the LANDLORD under the terms and
covenants contained in this Lease, or by the ejectment of the TENANT by summary
proceedings or otherwise or after the abandonment of the premises by the TENANT,
it is hereby agreed that the TENANT shall remain liable and shall pay in monthly
installments, the rent which accrues subsequent to the re-entry by the LANDLORD,
and the TENANT expressly agrees to pay, as damages for the breach of the
covenants herein contained, the difference between the rent reserved and the
rent collected and received, if any, by the LANDLORD during the remainder of the
unexpired term, such difference or deficiency between the rent herein reserved
and the rent collected, if any, plus Six (6%) percent of this amount, shall
become due and payable in monthly payments during the remainder of the unexpired
term, as the amounts of such difference or deficiency shall from time to time be
ascertained, and the TENANT waives and will waive all rights to trial by jury in
any summary proceedings hereafter instituted by the LANDLORD against the TENANT
in respect to the demised premises or in any action brought to recover rent or
damages hereunder.
23. This Lease and the obligation of TENANT to pay rent hereunder
and perform all of the other covenants and agreements hereunder on part of
TENANT to be performed shall in no way be affected, impaired, or excused because
LANDLORD is unable to supply or is delayed in supplying any service expressly or
impliedly to be supplied or is unable to make, or is delayed in making any
repairs, additions, alterations or decorations, or is unable to supply or is
delayed in supplying any equipment or fixtures if LANDLORD is prevented or
<PAGE>
delayed from so doing by reason of governmental preemption in connection with
any National Emergency declared by the President of the United States or in
connection with any Rule, Order, or Regulation of any department or sub-division
thereof of any governmental agency or by reason of the condition of supply and
demand which have been, or are affected by the war, or by reason of any labor
dispute or inability to obtain the materials from its normal sources of supply
or for any other reason beyond LANDLORD's control.
24. No diminution or abatement of rent, or other compensation,
shall be claimed or allowed for inconvenience or discomfort arising from the
making of repairs or improvements. In respect to the various "services," if any,
herein expressly or impliedly agreed to be furnished by the LANDLORD to the
TENANT, it is agreed that there shall be no diminution or abatement of the rent,
of any other compensation, for interruption or curtailment of such "service". No
such interruption or curtailment of any such "service" shall be deemed a
constructive eviction. The LANDLORD shall not be required to furnish, and the
TENANT shall not be entitled to receive, any of such "services" during any
period wherein the TENANT shall be in default in respect to the payment of rent.
Neither shall there be any abatement or diminution of rent because of making
repairs, improvements or decorations to the demised premises after the date
above fixed for the commencement of the term, it being understood that rent
shall, in any event, commence to run at such date so above fixed. The provisions
of this paragraph are predicated on Landlord diligently making the repairs or
improvements and resumption of "Services" referred to therein.
25. The TENANT agrees to keep and maintain the sidewalks
abutting the premises free from any accumulation of ice or snow.
26. Upon the commencement of the term, and provided that the
LANDLORD
<PAGE>
has delivered same free from any substantial variations and defects, the TENANT
shall bear the entire cost and expense thereafter, during the term of the Lease,
of each of the following as shall be required in the demised premises: Heat, hot
water, water, Janitor service, gas, electricity, and maintenance and repair of
cesspools, Sewer Utility Service, plumbing, heating and air-cooling systems, and
all electrical wiring and fixtures. The LANDLORD agrees and covenants that he
will do all that may be necessary to enforce contractors' liabilities for work,
labor and services supplied by contractors in the course of construction, of so
much of the demised premises as was LANDLORD's duty hereunder to construct,
including, but not limited to all covenants, warranties and guarantees with
respect thereto. The LANDLORD further agrees to guarantee all workmanship for a
period of one year after the commencement of the term of this Lease.
27. The TENANT shall procure and maintain throughout the term of
this Agreement, for the benefit of both LANDLORD and TENANT as their interests
shall appear, plate glass insurance covering the premises herein demised; said
policy shall name both LANDLORD and TENANT as insured thereby and the original
policy shall be deposited with the LANDLORD within Thirty (30) days of the
commencement of the term of this Agreement. Upon failure of the TENANT to so
deposit said policy, the LANDLORD shall have the privilege to procure said
insurance on its own application therefor, and the amount of the premium, if
paid by the LANDLORD, shall be due and payable with the rent installment next
due and shall be considered as additional rent reserved hereunder, collectible
with the same remedies as if originally reserved as rent hereunder, plus Six
(6%) percent of the amount so paid.
28. If any mechanic's lien or liens shall be filed against the
premises for work done or materials furnished to the TENANT, the latter shall,
within Thirty (30) days thereafter, at his own cost and expense, cause such lien
or liens to be discharged by filing the bond, or bonds,
<PAGE>
required for that purpose by Law.
29. The TENANT shall, at his own cost and expense, procure and
maintain during the entire term of this Agreement, public liability insurance
from a reputable company, which policy shall be in the sum of Five Hundred
Thousand ($500,000.00) Dollars to One Million ($1,000,000.00) Dollars.
The TENANT shall deposit with the LANDLORD the original of all
such policies prior to taking possession of the demised premises and shall
further deposit with the LANDLORD the original of any renewal policies at least
Twenty (20) days prior to the expiration date of the policy in effect. In the
event such policies are not delivered to the LANDLORD, the LANDLORD may secure
such insurance and the TENANT agrees to pay for same, plus Six (6%) percent of
any amount paid by the LANDLORD for the said insurance.
30. There are no representatives, warranties, terms or
obligations other than those expressed in this Agreement. No variation of this
Lease shall be valid unless in writing and signed by the party to be charged.
Any holding over by the TENANT after the term of this Lease shall be unlawful
and in no matter constitute a renewal or extension of the Lease Agreement.
31. The LANDLORD shall not be liable for damage or injury to
person or property unless written notice of any defect, alleged to have caused
such damage or injury, shall have been given to the LANDLORD a sufficient time
before such occurrence to have reasonably enabled the LANDLORD to correct such
defect. Nothing herein contained shall impose any additional obligation on the
LANDLORD to make repairs, other than those repairs which the LANDLORD has
specifically agreed to make under the terms of this Lease.
32. Any notice by either party to the other shall be deemed duly
given only if in writing and delivered either personally, or by Registered Mail,
addressed (a) if to the TENANT,
<PAGE>
c/o Bram Studio at 630 Ninth Avenue, New York City, and (b) if to the LANDLORD,
at 207 Broad Avenue, Palisades Park, New Jersey, or any subsequent address which
either of the parties hereto may designate for such purpose in writing. If
either party admit receipt of such notice, evidence thereof shall not be
necessary.
33. It is mutually covenanted that if the LANDLORD shall pay, or
be compelled to pay any sum of money, or shall perform any act, or be compelled
to perform any act, which act shall require the payment of any sum of money, by
reason of the failure of the TENANT to perform any one or more of the covenants
herein contained, the sum or sums so paid by the LANDLORD, together with all
interest, costs and damages, shall after Ten (10) days' written notice and
demand, be added to the rent installment next due and shall be collectible in
the same manner and with the same remedies as if originally reserved as rent
hereunder.
34. The LANDLORD covenants to commence construction within Two
(2) months after issuance of Building Permit and LANDLORD shall proceed with due
diligence to obtain said Building Permit, and complete construction within One
(1) year thereafter a theatre building for the use and occupancy of the TENANT,
such building to be erected in accordance with the approved plans and
specifications of William Ely Kohn, as consultant, with a New Jersey Architect
of LANDLORD's selection, which are to be identified and approved by the
initialling thereof by the parties to this Agreement and annexed hereto.
35. Said premises shall be used and occupied only for the
following purposes:
(A) The motion picture theatre auditorium shall be used only for
the display of motion pictures, closed-circuit television
features and live stage presentations, meetings, lectures and
similar uses; the same to be shown or exhibited to the general
public upon paid admission and in conformity with all laws, rules
and regulations and amendments thereto, applicable to the conduct
of such business, and to the premises herein demised, and TENANT
shall have the right to sell and dispense such merchandise and
services that are compatible with its business.
<PAGE>
36. As and for further consideration herein, the TENANT covenants
and agrees to provide, solely at his own cost and expense, and to install in the
demised premises, solely at his own cost and expense, all of the equipment
necessarily requisite to or incidental to the use and operation of the demised
premises as a motion picture theatre; the items which shall be so installed by
the TENANT are more particularly defined as follows, but not limited thereto.
(A) Not less than 550 theatre seats, to be spaced no less than 34
inches back to back.
(B) Two projection machines complete with lamps, rectifiers or
generators, including dual sound equipment.
(C) Carpeting or other material of equal value throughout the
lounge and aisle of the theatre.
(D) Poster frames for the display of attractions in the lobby and
immediately outside the theatre lobby.
(E) Rubber mats in the lobby to be placed in floor recessors
provided by the LANDLORD.
(F) An attraction sign to be erected by the TENANT.
(G) A motion picture screen of the latest type, capable of
accommodating cinemascope, or any other modern projection system,
generally accepted for similar theatres.
(H) All fixtures and appointments necessary to be in the theatre
lounge.
(I) A ticket machine, ticket box and relative accessories. The
ticket machine shall be of such a nature that it will have an
automatic counting device attached thereto which cannot be reset.
(J) Complete decoration and painting, to the extent that TENANT
may require or deem necessary such painting, except that all
painting in visual auditorium shall be done by LANDLORD at
LANDLORD's expense in colors selected by TENANT.
(K) All necessary lighting fixtures.
(L) All other accessories properly requisite for the proper
operation of a motion picture theatre consistent with the most
modern prevailing practices.
<PAGE>
All items aforesaid shall be new equipment, except projection
booth equipment and chairs which may be fully reconditioned modern equipment, of
the modern type and design and shall be installed in a good and workmanlike
manner without damage to the equipment or to the freehold; and upon annexation
to the freehold, the same shall be deemed part of the realty and be irrevocably
the property of the LANDLORD. All such items installed in the demised premises,
but not annexed to the realty shall become the property of the LANDLORD
irrevocably. The TENANT expressly covenants that he will install in the demised
premises all the aforesaid equipment and decorations which shall aggregate in
value not less than Forty Thousand (40,000.00) Dollars at the time of its
installation, and the TENANT further covenants that the entire cost of all
equipment shall have been fully paid.
37. The TENANT covenants, at his own cost and expense during the
entire term of this Lease, to keep and maintain fire insurance on all the
contents, machinery, equipment and furnishings installed in the motion picture
theatre auditorium, lounge lobby and projection room, with companies duly
authorized by the State of New Jersey to do business therein to Eighty (80%)
percent of the full insurable value of said contents, machinery, equipment and
furnishings. All of such insurance shall provide that the loss, if any, shall be
paid to the LANDLORD and all of said policies shall be delivered to the LANDLORD
not later than Fifteen (15) days after the commencement of the term herein
demised. All payment on account of losses made to the LANDLORD, the LANDLORD
covenants to hold such funds in Trust and to apply them solely to the cost of
repairing and/or replacing any items so damaged by fire, and to pay such
surplus, if any, to the TENANT; and if any deficit shall occur by virtue of the
recovery pursuant to said insurance be insufficient to meet the cost of such
replacement and/or repair, TENANT covenants immediately to pay such deficit
necessary to effect full rehabilitation or replacement of the
<PAGE>
contents of the building. The TENANT shall have the exclusive right to adjust
such loss and LANDLORD covenants to execute any and all documents that may be
required to accomplish that purpose. In case of default by the TENANT in having
such policy of insurance issued, the LANDLORD may cause said policies to be
issued at TENANT's expense. On default by the TENANT in the payment of any
premium on any such policy when the payment thereof shallbe due, LANDLORD may
thereupon pay such premium, and the TENANT covenants to reimburse the LANDLORD
for the entire amount so paid, plus Six (6%) percent upon demand. Any sum of
money paid by the LANDLORD in effecting such insurance, or in remedying default
of the TENANT in paying a premium thereon when due, shallbe collectible by the
LANDLORD with the same remedies as if reserved specifically as rent hereunder.
Any such amount to be due and payable to the LANDLORD on rent-day next ensuing
the date upon which the LANDLORD shall make such payment.
38. The TENANT covenants that it shall, solely at its own cost
and expense, maintain throughout the entire term herein demised, all equipment,
machinery, furnishings, and contents necessarily installed in the demised
premises, in good working order and repair, and the TENANT further covenants
that any of such equipment shall be replaced by the TENANT from time to time
during the term hereof, solely at his own cost and expense, so that the
equipment employed in the said theatre shall, at all times be maintained with
the then existing standards for the conduct of a similar business or enterprise.
And the TENANT further covenants to provide the said premises with such
equipment as may, from time to time, during the term herein demised, become the
accepted standard for the operation of a similar business or enterprise. Such
old equipment as TENANT may replace with new equipment, pursuant to the terms
hereof, shall become the property of the TENANT immediately upon installation of
such replacement
<PAGE>
equipment. Upon the annexation or replacement of any equipment in the demised
premises, same shall immediately be deemed, solely and exclusively, the property
of the LANDLORD, free and clear of all liens and encumbrances, and the TENANT
covenants that such will be the case. In no event shall the LANDLORD have any
obligation whatsoever with respect to the maintenance, repair or replacement of
any of the furnishings, equipment, machinery or other contents in the demised
premises.
39. The TENANT expressly agrees and covenants that the demised
premises shall be fully equipped as a motion picture theatre and shall commence
normal operations of business not later than sixty (60) days after the
commencement of the term of this Lease Agreement; and TENANT further covenants
that the said theatre premises shall be operated and maintained open for
business in a normally accepted manner during each day of not less than 335 days
of each year during the term herein demised, unless prevented by factors beyond
its control; and that each such day there shall be given at least one evening
performance. TENANT covenants that the theatre business shall be conducted in a
manner consistent with the best standards prevalent throughout the term of the
Lease herein demised, and that the TENANT shall employ adequate and sufficient
help requisite to the maintenance of the premises and the conduct of the
business, and that admittance to the theatre shall, at all times, be open to the
general public upon payment of fees which shall, at all times, be consistent
with standards governing and prevailing in the industry. TENANT further
covenants that it shall accept no consideration whatsoever in lieu of payment of
a full standard admission price from any patrons patronizing the said theatre,
except that TENANT shall be entitled to issue and honor a reasonable number of
free admission passes. The TENANT shall have free access to the demised premises
during construction and prior to the date of possession as herein defined for
the purpose of inspection
<PAGE>
and installation of equipment.
40. It is understood and agreed between the parties hereto that
no broker or agent negotiated, was instrumental, or was in any way responsible
for the leasing of the within described premises. TENANT agrees to hold the
LANDLORD harmless and to indemnify the LANDLORD for any claims for renting of
the demised premises from any broker.
41. TENANT agrees that this Lease is subject and subordinate to
any encumbrances presently existing or to be placed upon the demised premises
for the purpose of financing the construction of same. The TENANT AGREES that
the LANDLORD is hereby made the TENANT's agent to sign any SUBORDINATION
Agreement to effectuate this clause, if required by the Mortgagee.
Notwithstanding anything herein to the contrary, the subordination of this Lease
to any such existing or new mortgage is conditional upon the existing or new
mortgagee, simultaneously with the making of this Lease or of such new mortgage,
entering into an agreement in recordable form by its terms binding upon the
Mortgagee, its successors and assigns whereby the Mortgagee agrees that in the
event it should become necessary to foreclose said Mortgage, it will cause the
sale of said premises to be made subject to this Lease, provided that the Tenant
is not in default under any of the terms, conditions, or covenants of this Lease
at the time of such foreclosure.
42. LANDLORD covenants that it shall maintain adequate insurance
coverage for fire loss, including full comprehensive and extended coverage, on
the demised premises.
43. The TENANT covenants and agrees that all labor and services
to be performed on the premises herein demised in connection with the
installation of TENANT's apparatus, fixtures and furnishings, shall all be done
by Union help only.
44. All duties and obligations herein of TENANT and LANDLORD and
each
<PAGE>
of them, shall be considered a covenant. All duties and obligations of the
parties hereto, which must be performed or undertaken within specific time
limits, performance of which have been delayed, shall have the time limits
extended for the duration of the delay caused by strikes, adjustment of
insurance and other causes which are beyond the control of the party charged
with the obligation. Whenever either of the parties hereto are required, by the
terms hereof, to perform or commence performance of any obligation or duty
thereunder, and no specific time limit is set forth with respect to the
performance of such time limit, a period of Sixty (60) days shall be the time
within such duty and obligation is to be performed.
45. And the said LANDLORD does covenant that the said TENANT, on
paying the said yearly rent, and performing the covenants aforesaid, shall and
may peacefully and quietly have, hold and enjoy the said demised premises for
the term aforesaid.
46. And it is mutually understood and agreed that the covenants
and agreements contained in the within Lease shall be binding upon the parties
hereto and upon their respective heirs, executors and administrators.
47. The TENANT shall be responsible for any tax increase over and
above the tax for the base tax year. The base tax year shall be considered that
year in which the property is first fully assessed and in which the building is
substantially completed. Any tax over and above such first full year's
assessment shall be paid by the TENANT pro rata as the area of his premises
bears to the over-all premises. The area of the parking lot shall not be
considered; the proportion being square footage of the theatre as against the
square footage of the entire building in the said shopping center.
48. Notwithstanding anything to the contrary contained herein,
the TENANT shall, within Thirty (30) days of the date hereof, assign this Lease
to a new corporation, which
<PAGE>
shall be formed for that purpose wherein DAVID SANDERS, IRVING SHERMAN and
ALBERT MARGULIES shall be the majority shareholders, and the TENANT need not
secure the LANDLORD's consent to such assignment. The new corporation shall
execute an assumption agreement of all of the terms and conditions on the part
of the TENANT to be performed and shall deliver same to the LANDLORD, at 207
Broad Avenue, Palisades Park, New Jersey, and TENANT shall from and after the
date of such assignment be released from any and all obligations under the terms
of this Lease.
49. TENANT has, this day, deposited with the LANDLORD the sum of
Twenty Thousand ($20,000.00) Dollars as security for the full and faithful
performance by the TENANT of all of the terms and conditions on the part of
TENANT to be performed. The LANDLORD shall pay the TENANT the sum of Two (2%)
percent per annum on the aforesaid security deposit of Twenty Thousand
($20,000.00) Dollars, payable annually during the first Seven (7) years of the
term of this Lease. After the end of the Seventh (7th) year, no interest shall
be paid by the LANDLORD to the TENANT. Commencing with the end of the Eighth
(8th) year of the term of this Lease, the sum of One Thousand Four Hundred
Twenty-eight Dollars and Fifty-seven Cents ($1,428.57) shall be returned to the
TENANT annually until the time fixed as the expiration of the term of the Lease,
herein provided, provided the TENANT has fully and faithfully carried out all of
the terms, covenants and conditions on his part to be performed. In the event
LANDLORD fails to return to the TENANT the amount of security annually due it
within Thirty (30) days after the same is due, the TENANT may reduce the next
installment or installments of rent by the amount due. It is the intention of
the parties hereto that upon the termination of Twenty-one (21) years from the
commencement of the TENANT's possession of the premises, the full sum of Twenty
Thousand ($20,000.00) Dollars shall have been returned to
<PAGE>
the TENANT.
50. The LANDLORD agrees that they or their families or any
stockholders, officers or directors will not directly or indirectly,
individually, as partners or as officers, directors stockholders or employees of
any corporation, construct, maintain, conduct or operate a theatre within the
radius of 7 miles of the demised premises within the State of New Jersey.
51. Patrons of TENANT shall have the right to common use of all
parking areas in the Shopping Center, of which the demised premises are a part
and it shall be the sole obligation of the LANDLORD to maintain such parking
areas, including but not limited to snow removal and LANDLORD shall provide
adequate lighting.
52. TENANT shall have and is hereby given the option to renew
this Lease for an additional period of Ten (10) years, provided that written
notice to that effect is given to the LANDLORD by registered or certified mail
Six (6) months prior to the expiration of the Lease and provided further, that
all of the covenants and conditions of the within Lease shall govern such
renewal period, except that the base rent for this period shall be Twenty-five
Thousand ($25,000.00) Dollars.
53. It is understood and agreed by and between the LANDLORD and
TENANT that this Lease is predicated on LANDLORD obtaining a Building Permit and
the consent of the first Mortgagee of the premises to the erection of the
Theatre building. In the event LANDLORD fails to obtain said Permit, this
Agreement shall be considered null and void and the security paid thereunder
shall be returned to TENANT forthwith and upon return of same, neither party
shall have any further rights against the other.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals, or caused these presents to be signed by their corporate
officers and caused their proper
<PAGE>
corporate seals to be hereto affixed this 18th day of January, 1965.
WITNESS:
_____________________________________(L.S.)
ROBERT NELSON, d/b/a
ROBERT LEE REALTY CO.
_______________________________
(AS TO ROBERT NELSON)
_____________________________________(L.S.)
BERNAT NELSON, d/b/a
ROBERT LEE REALTY CO.
_______________________________
(AS TO BERNAT NELSON
_____________________________________(L.S.)
LEO ZUCKER, d/b/a
ROBERT LEE REALTY CO.
_______________________________
(AS TO LEO ZUCKER)
_____________________________________(L.S.)
IRVING SHERMAN
_______________________________
(AS TO SHERMAN)
_____________________________________(L.S.)
DAVID SANDERS
_______________________________
(AS TO SANDERS)
_____________________________________(L.S.)
ALBERT MARGULIES
_______________________________
(AS TO MARGULIES)
<PAGE>
RIDER TO LEASE DATED JANUARY 18th, 1965, BETWEEN
ROBERT NELSON, BERNAT NELSON and LEO ZUCKER,
doing business as ROBERT LEE REALTY CO., as
LANDLORD, and IRVING SHERMAN, DAVID SANDERS
and ALBERT MARGULIES, as TENANTS
-------------------------------------------------
A. As an addition to the terms included in the body of the Lease
hereinabove referred to, it is understood and agreed between the parties hereto
that in the event the number of chairs in the visual auditorium, which is the
subject of this Lease, shall exceed Six Hundred (600), the TENANT shall pay to
the LANDLORD an additional rent at the rate of Forty ($40.00) Dollars per year
for each such chair in excess of Six Hundred (600). Any such additional rent
shall be due and payable on the last day of any year of the within term or
extension thereof, when such additional rental shall be payable. In the event
that such chairs are added to the auditorium, then the augmented rent payable
under Paragraph 2 of this Lease shall be paid pursuant to base gross receipts of
One Hundred Fifty Thousand ($150,000.00) Dollars, plus Seven Thousand
($7,000.00) Dollars for each additional rent of One Thousand ($1,000.00) Dollars
per year payable under the terms of this Paragraph.
___________________________________
ROBERT NELSON
___________________________________
IRVING SHERMAN
___________________________________
BERNAT NELSON
___________________________________ ___________________________________
DAVID SANDERS LEO ZUCKER
___________________________________
ALBERT MARGULIES
WITNESS: __________________________
(except as to Margulies)
<PAGE>
EXTENSION AND MODIFICATION OF LEASE
WHEREAS, ROBERT NELSON, residing at Voorhis Point, South Nyack,
New York, BERNAT NELSON, now deceased, and LEO ZUCKER, residing at 134 Hollywood
Avenue, Englewood Cliffs, New Jersey, doing business as ROBERT LEE REALTY CO., a
Partnership have heretofore and on or about January 18th, 1965 entered into a
lease as Landlord with IRVING SHERMAN, DAVID SANDERS and ALBERT MARGULIES as
Tenants for a certain theatre erected in the Pascack Shopping Center, Emerson,
New Jersey; and
WHEREAS, the Tenants with the Landlord's consent have heretofore
assigned the said lease to EMERSON TOWN THEATRE, INC., the present Tenant; and
WHEREAS, the Landlord and Tenant are desirous of extending and
modifying the said lease upon the terms and conditions more particularly
thereafter set forth.
NOW, THEREFORE, in consideration of the foregoing, it is mutually
agreed as follows:
1. The term of the said lease be and the same is hereby
extended to and including the 31st day of December, 1996.
2. The rental during said term, commencing July 1st, 1982 and
terminating December 31st, 1996, shall be Twenty-Five Thousand ($25,000.00)
Dollars per year payable in equal monthly installments of Two Thousand
Eighty-Three Dollars and Thirty-Three Cents ($2,083.33).
3. The Tenant shall have the option of further extending the
lease under the same terms and conditions of this modification and Extension
Agreement for a further period of ten (10) years except that the first five (5)
years of said option period be at a rental of Thirty Thousand ($30,000.00)
Dollars per annum, and the second five (5) years of said option to be at a
<PAGE>
rental of Thirty-Five Thousand ($35,000.00) Dollars per annum. Said option must
be exercised by the Tenant by notice in writing by Certified Mail to the
Landlord at least six (6) months prior to December 31, 1996.
4. That except for the provisions in said lease for additional
rent by reason of tax increases, sewer charges and all utility charges, there
shall be no other increase in the said rental of Twenty-Five Thousand
($25,000.00) Dollars per annum as herein provided, for any other reason set
forth in said lease of January 18th, 1965.
5. Nothing herein contained, however, shall prevent the Tenant
from "Twinning" (adding one or more additional theatres to the demised premises)
during the term of this lease. If such "Twinning" is carried out by the Landlord
on behalf of the Tenant, then and in that event the parties hereto mutually
agree to fix a new rental prior to the commencement of said "Twinning"
construction. All terms and conditions of this extension and modification of
lease shall remain in full force and effect.
If such "Twinning" is carried out by the Tenant, then this
extension agreement shall immediately cease and determine and all terms of the
original lease between the parties dated January 18, 1965 shall be revived and
reinstated and be of full force and effect. If such revival and reinstatement
shall take place after the time in which the Tenant should have exercised its
option under said former lease, then and in that event it shall be presumed that
the Tenant did timely exercise such option under said lease.
6. Except as above set forth, all of the other terms of the said
lease of January 18th, 1965, not inconsistent herewith shall remain in full
force and effect during the remaining term of said lease as herein extended and
modified.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and
seals this 12th day of July, 1982.
WITNESS: ROBERT LEE REALTY CO., Landlord
_____________________________ By:___________________________________
ROBERT NELSON, Surviving Partner
_____________________________ By:___________________________________
LEO ZUCKER, Surviving Partner
EMERSON TOWN THEATRE, INC., Tenant
_____________________________ By:___________________________________
<PAGE>
STATE OF NEW JERSEY )
: SS.:
COUNTY OF BERGEN )
BE IT REMEMBERED, that on this 12th day of July in the year of
our Lord One Thousand Nine Hundred and Eighty-Two, before me the subscriber, a
Notary Public of the State of New Jersey, personally appeared, ROBERT NELSON and
LEO ZUCKER, doing business as ROBERT LEE REALTY CO., the parties mentioned in
the within Instrument, and thereupon they acknowledged that they signed, sealed
and delivered the same as their act and deed for the uses and purposes therein
expressed.
------------------------------------
<PAGE>
STATE OF NEW YORK )
): SS.:
COUNTY OF NEW YORK )
On the 12th day of July 1982, before me personally came DAVID J.
SANDERS, to me known, who, being by me duly sworn, did depose and say that he
resides at No. 232 Fairview Avenue, Englewood Cliffs, NJ; that he is the
President of EMERSON TOWN THEATRE, INC., the corporation described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the board of directors of said corporation, and that he
signed his name thereto by like order.
___________________________________
<PAGE>
ADDENDUM TO LEASE
AGREEMENT entered into this first day of June, 1986, between
ROBERT LEE REALTY CO., as landlord, and EMERSON TOWN THEATRE, INC., as tenant,
for the theater premises located in the Pascack Valley Shopping Center, Emerson,
New Jersey as an addendum to a lease dated July 12, 1982 between the two
aforementioned parties:
Therefore, for the consideration of the sum of $1.00, it is
agreed upon between ROBERT LEE REALTY CO., as landlord and EMERSON TOWN THEATRE,
INC., as tenant, that as of this date, June 1, 1986, the base rent for the
premises located in the Pascack Valley Shopping Center in Emerson, New Jersey,
is increased for the full term of the lease at a rate of $833.33 per month.
IN WITNESS WHEREOF, the parties hereto have respectively executed
this agreement on the day and year first above written.
WITNESS: ROBERT LEE REALTY CO., Landlord
_____________________________ By: ___________________________________
THELMA Y. MYLES ROBERT NELSON, Surviving Partner
_____________________________ By: ___________________________________
THELMA Y. MYLES LEO ZUCKER, Surviving Partner
EMERSON TOWN THEATRE, INC., Tenant
_____________________________ By: ___________________________________
DAVID J. SANDERS
<PAGE>
STATE OF NEW JERSEY )
COUNTY OF MORRIS ) ss.:
TOWNSHIP OF ROXBURY )
On this 5 day of January, 1994, before me personally came John
Nelson, to me known, who being by me duly sworn, did depose and say that he
resides at 322 Center Grove Road, Randolph, NJ. 07869; that he is the President
of ALLWOOD CLIFTON CINEMAS, INC., the corporation described in and which
executed the above instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the board of directors of said corporation, and that he
signed his name thereto by like order.
---------------------------------
Shirley C. Brooks
Notary Public
STATE OF NEW JERSEY )
COUNTY OF MORRIS ) ss.:
TOWNSHIP OF ROXBURY )
On this 5 day of January, 1994, before me personally came John
Nelson, to me known, who being by me duly sworn, did depose and say that he
resides at 322 Center Grove Road, Randolph, N.J. 07869; that he is the President
of ROXBURY CINEMA, INC., the corporation described in and which executed the
above instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation, and that he signed his name
thereto by like order.
---------------------------------
Shirley C. Brooks
Notary Public
STATE OF NEW JERSEY )
COUNTY OF MORRIS ) ss.:
TOWNSHIP OF ROXBURY )
On this 5 day of January, 1994, before me personally came
_____________, to me known, who being by me duly sworn, did depose and say that
he resides at 322 Center Grove Road, Randolph, N.J. 07869; that he is the
President of TOWNSHIP OF WASHINGTON THEATRE, INC., the corporation described in
and which executed the above instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
---------------------------------
Shirley C. Brooks
Notary Public
<PAGE>
STATE OF NEW JERSEY )
COUNTY OF MORRIS ) ss.:
TOWNSHIP OF ROXBURY )
On this 5th day of January, 1994, before me personally came John
Nelson, to me known, who being by me duly sworn, did depose and say that he
resides at 322 Center Grove Road, Randolph, NJ; that he is the President of
EMERSON CINEMA, INC., the corporation described in and which executed the above
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
board of directors of said corporation; and that he signed his name thereto by
like order.
---------------------------------
Shirley C. Brooks
Notary Public
STATE OF NEW JERSEY )
COUNTY OF MORRIS ) ss.:
TOWNSHIP OF ROXBURY )
On this 5th day of January, 1994, before me personally came John
Nelson, to me known, who being by me duly sworn, did depose and say that he
resides at 322 Center Grove Road, Randolph, NJ 07869; that he is the President
of NEW CITY CINEMAS, INC., the corporation described in and which executed the
above instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation; and that he signed his name
thereto by like order.
---------------------------------
Shirley C. Brooks
Notary Public
<PAGE>
ADDENDUM TO LEASE BETWEEN ROBERT LEE REALTY CO.
AS LANDLORD, and EMERSON TOWN THEATRE, INC. AS TENANT
DATED NOVEMBER 18, 1988
-----------------------------------------------------
WHEREAS, a Lease was entered into on January 18, 1965 between Robert Lee
Realty Co. as Landlord, and Irving Sherman, David Sanders and Albert Margulies
as Tenants, which Lease was extended and modified and is signed pursuant to an
Extension and Modification of Lease Agreement dated July 12, 1982 which was
further modified pursuant to an Addendum to Lease dated June 1, 1986
(collectively sometimes hereinafter referred to as Lease); and
WHEREAS, an assignment of the lease executed on September 15, 1965
resulted in Emerson Town Theatre, Inc. as Tenant, which assignment was consented
to by the Landlord; and
WHEREAS, Emerson Town Theatre, Inc. as Tenant desires to assign the
Lease to Emerson Cinema, Inc.; and
WHEREAS, Emerson Cinema, Inc. wishes to accept the assignment subject
to a clarification of certain terms of the Lease; and
WHEREAS, the Landlord is willing to execute a rider to the Lease
clarifying certain terms and modifying certain other provisions in order to
facilitate the assignment of the Lease to Emerson Cinema, Inc. as hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and the sum of One ($1.00) Dollar, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Controlling Terms. The terms of this rider shall supercede and
control over any inconsistent terms of the Lease dated January 18, 1965, the
Extension and Modification Agreement dated July 12, 1982, and the Addendum to
the Lease dated June 1, 1986 and any other previously executed agreement
modifying any of the terms of these documents. All terms that are not
inconsistent shall be given full force and effect.
2. Term of Lease. The term of said Lease has been extended to and
including the 31st day of December, 1996. The rental until December 31, 1996
shall be Thirty-Five Thousand and 00/100 Dollars ($35,000.00) per year payable
in equal monthly installments of Two Thousand Nine Hundred Sixteen and 66/100
Dollars ($2,916.66).
3. Automatic Renewal. This Lease shall automatically be extended for an
additional ten (10) year term unless the Tenant notifies the Landlord in writing
by certified mail at least six (6) months prior to December 31, 1996 that it
wishes to terminate the Lease effective December 31, 1996. In the event the
notice is received by the Landlord in accordance with the requirements set forth
herein, the Lease shall terminate on December 31, 1996.
<PAGE>
In the event no notice is given by the Tenant to terminate this Lease,
the Lease shall automatically be extended for an additional (10) year term
terminating on December 31, 2006. During this ten year extension of the Lease,
the rent shall be due and payable as follows:
(a) From the period of January 1, 1997 through December 31, 2001,
rent shall be due and payable at the rate of Thirty Thousand
Dollars and 00/100 Dollars ($30,000.00) per annum, payable in
equal monthly installments of Two Thousand Five Hundred and
00/100 Dollars ($2,500.00).
(b) From the period of January 1, 2002 through December 31, 2006,
rent shall be due and payable at the rate of Thirty-Five Thousand
and 00/100 Dollars ($35,000.00) per annum, payable in equal
monthly installments of Two Thousand Nine Hundred Sixteen and
66/100 Dollars ($2,916.66).
4. Additional Rent. All references in the Lease Agreement dated January
18, 1965 relating to additional rent based on a percentage of gross profits
including, but not limited to paragraph 2 of the January 18, 1965 Lease
Agreement are hereby specifically deleted. Tenant shall not be required under
any circumstances to pay any additional rent based on a percentage of gross
receipts or income of the Tenant. The only additional amounts that Tenant shall
be required to pay over and above the base rent shall be the following
increases:
(a) Real estate tax increases;
(b) Increase in sewer charges;
(c) Increase in utility charges.
5. Multiple Theaters. Nothing contained in the original Lease or any
modification of the original Lease shall prevent the Tenant from adding one or
more additional theaters to the demised premises during the term of this Lease.
If a plan to add additional theaters is carried out by the Tenant, there shall
be no additional rent due and no additional charges of any kind assessed against
the Tenant as a result of this addition of more theaters in the subject
premises. Landlord further agrees to cooperate and execute any and all documents
that may reasonably be necessary in order to carry out the addition of these new
theaters including, but not limited to the execution of a Planning Board and
Board of Adjustment applications authorizing Tenant to make application for such
additional theaters. All equipment and fixtures installed by the Tenant shall
become the property of the Landlord at the termination of the Lease and will not
be removed from premises.
6. Sublease. Tenant shall be permitted to sublease a portion of the
premises to an independent company providing concession services without the
consent of the Landlord. In the event that Tenant subleases a portion of the
premises to an independent company providing concession services,
notwithstanding any provision in the lease or any addendums to the lease to the
contrary, such subtenant shall have the right to remove only equipment and/or
fixtures the concession company installed or placed within the premises on
either the termination of Tenant's lease with Landlord or otherwise upon the
subtenant's vacation of premises. The concession
<PAGE>
company shall provide to the Landlord an inventory of all equipment and fixtures
it is installing or placing within the leased premises.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals this ____ day of ________________, 1988.
WITNESS: ROBERT LEE REALTY CO., Landlord
- -------------------------------- -----------------------------------
ATTEST: EMERSON TOWN THEATRE, INC., Tenant
- -------------------------------- -----------------------------------
Secretary President
ATTEST: EMERSON CINEMA, INC., Tenant
- -------------------------------- -----------------------------------
Secretary President
<PAGE>
ASSIGNMENT OF LEASE
FOR VALUE RECEIVED, EMERSON TOWN THEATRE, INC., a New Jersey
corporation, with its principal office located c/o DAVID J. SANDERS, 232
Fairview Avenue, Englewood Cliffs, New Jersey, acting herein by DAVID J.
SANDERS, its President, hereunto duly authorized, does hereby assign, set over,
transfer and convey to EMERSON CINEMA, INC., a New Jersey corporation, with its
principal office located at Sunset Strip, Succasunna, New Jersey 07876, all of
its right, title and interest in and to the annexed Lease, dated January 18,
1965, between ROBERT NELSON, BERNAT NELSON and LEO ZUCKER (Landlords) and IRVING
SHERMAN, DAVID J. SANDERS and ALBERT MARGOLIES (Tenants), together with all
assignments, modifications and extensions of said Lease of premises known as the
EMERSON TOWN TWIN THEATRE, a motion picture theatre, located in Pascack Shopping
Center, at Emerson, New Jersey, as more particularly described in said Lease.
NOTWITHSTANDING the within Assignment, EMERSON TOWN THEATRE, INC.
agrees to continue liable to the Landlord for the rent reserved in said Lease,
and the terms, conditions and provisions thereunder.
The undersigned assignee, EMERSON CINEMA, INC., does hereby
assume the aforementioned Lease and covenants with EMERSON TOWN THEATRE, INC.
and ROBERT LEE REALTY CO. that it will fully and faithfully perform all of the
terms, conditions and provisions of said Lease.
Dated: November 18, 1988 EMERSON TOWN THEATRE, INC.
ATTEST:
By: ___________________________
President
_________________________________
EMERSON CINEMA, INC.
_________________________________ By: _________________________
Secretary President
<PAGE>
STATE OF NEW JERSEY )
) SS.:
COUNTY OF MORRIS )
BE IT REMEMBERED, that on this ___ day of January in the year of
our Lord One Thousand Nine Hundred and Eighty-Nine, before me the subscriber, an
Attorney at Law of the State of New Jersey, personally appeared, DAVID J.
SANDERS, who being by me duly sworn on his oath, does depose and make proof to
my satisfaction that he is the President of EMERSON TOWN THEATRE, INC., the
party mentioned in the within instrument; that the execution, as well as the
making of this instrument has been duly authorized by a proper resolution of the
Board of Directors of said Corporation; that deponent well knows the corporate
seal of said Corporation and the seal affixed to said instrument is such
corporate seal and was thereto affixed, and said instrument signed and delivered
by said President, as and for his voluntary act and deed and as and for the
voluntary act and deed of said Corporation, in presence of deponent, who
thereupon subscribed his name thereto as witness.
Sworn to and Subscribed _________________________________
before me at Succasunna, NJ DAVID J. SANDERS
the day and year aforesaid.
_____________________________
<PAGE>
STATE OF NEW JERSEY )
) SS.:
COUNTY OF MORRIS )
BE IT REMEMBERED, that on this ___ day of January in the year of
our Lord One Thousand Nine Hundred and Eighty-Nine, before me the subscriber, an
Attorney at Law of the State of New Jersey, personally appeared,
_______________, who being by me duly sworn on his oath, does depose and make
proof to my satisfaction that he is the _______________of EMERSON CINEMA, INC.,
the party mentioned in the within instrument; that the execution, as well as the
making of this instrument haw been duly authorized by a proper resolution of the
Board of Directors of said Corporation; that deponent well knows the corporate
seal of said Corporation and the seal affixed to said instrument is such
corporate seal and was thereto affixed, and said instrument signed and delivered
by said President, as and for his voluntary act and deed and as and for the
voluntary act and deed of said Corporation, in presence of deponent, who
thereupon subscribed his name thereto as witness.
Sworn to and Subscribed _________________________________
before me at Succasunna, NJ JOHN NELSON
the day and year aforesaid.
_______________________________
<PAGE>
Exhibit 10.51
SUBORDINATION AGREEMENT
This Subordination agreement is made this 13th day of December 1996 by
and among CLEARVIEW CINEMA GROUP, INC., a Delaware corporation ("Borrower" or
the "Company"), THE PROVIDENT BANK, an Ohio banking corporation, as Agent for
itself and various lenders under the Credit Agreement ("Bank") and MAGIC
CINEMAS, L.L.C. ("Subordinated Lender").
W I T N E S S E T H :
WHEREAS, the Borrower and the Bank propose to make certain loans to the
Borrower and to issue a Letter of Credit for the benefit of Subordinated Lender
pursuant to the Credit Agreement (capitalized terms having the meanings set
forth in Exhibit A hereto and incorporated herein by reference, unless otherwise
defined within the text of this Agreement);
WHEREAS, one of the conditions to the Bank's obligations to make the
Loans is the acceptance by Subordinated Lender of a Subordinated Promissory Note
issued contemporaneously herewith by the Borrower in the principal amount of Six
Hundred Thousand and 00/100 Dollars ($600,000.00) (such note, as the same may
from time to time be transferred or assigned, referred to as the "Subordinated
Note");
WHEREAS, in order to induce the Bank to extend credit, make the Loans,
and issue the Letter of Credit, and for an in consideration of such credit,
Loans, and Letter of Credit the Borrower and Subordinated Lender have agreed
that the Subordinated Note shall be subordinated to the Obligations in the
manner and to the extent set forth in this Agreement; and
WHEREAS, a condition to the bank's execution of the Credit Agreement is
the execution and delivery of this Subordination Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties agree as follows:
ARTICLE 1
DEFINITIONS
In addition to other words and terms defined elsewhere in this
Agreement, capitalized terms used herein and not otherwise defined shall have
the meanings given in the Credit Agreement.
<PAGE>
ARTICLE 2
SUBORDINATION
Section 2.1 Agreement to Subordinate. The Company and Subordinated
Lender, for themselves and their successors and assigns, hereby agree that the
payment of the indebtedness and other obligations evidenced by the Subordinated
Note is subordinated to the Obligations and subject in right of payment to the
prior payment in full of the Obligations.
Each holder of the Subordinated Note, whether upon original issue or
upon transfer or assignment, by accepting such Subordinated Note further agrees
that the Bank has advanced funds and may from time to time advance additional
funds in reliance upon the subordination of the Subordinated Note to the
Obligations and that the provisions of this Agreement are for the benefit of the
Bank.
Section 2.2 Endorsement on Instruments. The Subordinated Note, and any
instrument issued by the Company in replacement, renewal, exchange for or
substitution thereof, or evidencing the transfer thereof, shall be endorsed with
a legend in the following form:
"The payment of this instrument, both principal and interest, and
all other indebtedness evidenced hereby, is subordinate, subject
and made junior in right of payment to the prior rights of The
Provident Bank, its successors and assigns, in the manner and to
the extent set forth in a certain Subordination Agreement dated
as of December 13, 1996, which Agreement is incorporated herein
by reference."
Section 2.3 Payment Upon Maturity, Liquidation, Dissolution or
Reorganization.
(a) On December 31, 2001, or upon the earlier maturity of any
Obligations by lapse of time, acceleration or otherwise, all such Obligations
shall first be paid in full, before any payment is made on account of principal
of or interest on the Subordinated Note or to acquire or redeem the Subordinated
Note.
(b) In the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company or its property, or any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings, or
any assignment by the Company for the benefit of creditors, or any other
marshaling of the assets of the Company, then and in any such event:
(i) all Obligations shall first be paid in full, or
provision made for such payment, together with, to the extent
provided for by law, interest thereon from the date such
Obligations were due as provided in the Credit Agreement, if
payment in full is not received, before any payment or
distribution of any character,
<PAGE>
whether in cash, securities or other property, shall be made on
account of or applied on the Subordinated Note;
(ii) any property or distribution of any character,
whether in cash, securities or other property, which would
otherwise (but for this clause) be payable and deliverable in
respect of the Subordinated Note shall be paid or delivered
directly to the Bank, or the holders of such Note shall pay to
the Bank such amounts promptly upon receipt, until all
Obligations shall have been paid in full, together with, to the
extent provided for by law, interest as provided herein from the
date such Obligations were due if payment in full is not
received, to the Bank; and
(iii) all holders of the Subordinated Note irrevocably
authorize and empower the Bank to demand, sue for, collect and
receive all such payments and distributions and to receipt
therefor, and to file and prove all such claims and take all such
other actions in the name of the Bank as it may determine to be
necessary or appropriate.
Section 2.4 Borrower Not to Make Payments with Respect to Subordinated
Note in Certain Circumstances.
(a) Except for the restrictions set forth in Section 2.5 hereof,
nothing contained in this Agreement shall limit the right of the holders of the
Subordinated Note to take any action to accelerate the maturity of the
Subordinated Note or to exercise any remedy available to it under applicable
law, including without limitation, the commencement or continuation of any
action or proceeding against the Company, whether to reduce the claims of the
holders of the Subordinated Note to judgment or to enforce the terms of the
Subordinated Note or otherwise, provided, however, that after the occurrence of
any proceeding referred to in Section 2.3(b) or the receipt of a Bank's Notice
(as defined below) any amounts received by such holders to any such action from
any source whatsoever will be received by them in trust for the Bank, and they
will pay over such amounts to the Bank until the payment of the entire principal
of and premium, if any, and interest on all the Obligations then owing to the
Bank.
(b) With respect to any default in payment on Obligations, if any
default shall occur and be continuing with respect to any Obligations permitting
the Bank to accelerate the maturity thereof, the holders of the Subordinated
Note shall not be entitled to receive any payment on account of principal
thereof or interest thereon (including any such payment which would cause such a
default) (i) while judicial proceedings shall be pending in respect of such
default with respect to which written notice of the commencement of such
proceedings shall have been given to the holders by the Bank or by the Company
or (ii) in the absence of such proceedings, if written notice of such default
shall have been given to Subordinated Lender or the then holders of the
Subordinated Note ("a Bank's Notice"). Notwithstanding the immediately preceding
sentence, unless the Subordinated Lender has actual notice of a default under
the Credit Agreement, the Company shall be permitted to pay, and the
Subordinated Lender shall be permitted to receive, use, enjoy and retain, free
and clear of all claims of the Bank, any payment
<PAGE>
of principal or interest under the Subordinated Note, so long as, at the time
of the payment, the Subordinated Lender has not received a Bank's Notice.
Section 2.5 Standstill. If and when the holders of the Subordinated Note
have received a Bank's Notice, the holders of the Subordinated Note shall not
(a) accelerate the maturity of the Subordinated Note until they have first so
notified the Bank in writing, or (b) take any of the following actions for a
period of one hundred twenty (120) days after the receipt of a Bank's Notice by
the holders of the Subordinated Note:
(a) the commencement of any action or proceeding against the
Company, whether to reduce the claims of the holders to judgment or to enforce
the terms of the Subordinated Note or otherwise;
(b) any act to obtain possession of property of the Company or to
exercise control over property of the Company; or
(c) any act to create, perfect or enforce any lien against
property of the Company.
Subject to the provisions of this Section 2.5, nothing shall prevent the
holders of the Subordinated Note from exercising any remedy available to it
under applicable law, including without limitation, exercising any right of
setoff or counterclaim, the commencement of any action or proceeding against the
Company, whether to reduce the claims of the holders of the Subordinated Note to
judgment or to enforce the terms of the Subordinated Note or otherwise.
Section 2.6 Subrogation. Upon the payment in full of all Obligations,
the holders of the Subordinated Note shall be surrogated to the rights of the
Bank to receive payments or distributions of assets of the Company made on the
Obligations until the Bank shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the Bank of any cash, property or
securities to which holders of the Subordinated Note would be entitled except
for the provisions of this Article 2, and no payment over pursuant to the
provisions of this Article 2 to the Bank by the holders of the Subordinated
Note, shall, as between the Company, its creditors other than the Bank and the
holders of the Subordinated Note, be deemed to be a payment by the Company to or
on account of Obligations owed to the Bank, it being understood that the
provisions of this Article are solely for the purpose of defining the relative
rights of the Bank, on the one hand, and the holders of the Subordinated Note,
on the other hand.
If any payment or distribution to which the holders of the Subordinated
Note would otherwise have been entitled but for the provisions of this Article 2
shall have been applied, pursuant to the provisions of this Article 2, to the
payment of Obligations, then and in such case, the holders of the Subordinated
Note shall be entitled to receive from the Bank at the time outstanding any
payments or distributions received by the Bank in excess of the amount
sufficient to pay all Obligations in full.
<PAGE>
Section 2.7 Relative Rights. This Article is intended solely to define
the relative rights of the holders of the Subordinated Note, on the one hand,
and the Bank, on the other hand. Nothing in this Article shall:
(a) impair, as between the Company and the holders of the
Subordinated Note, the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on the Subordinated
Note in accordance with its terms; or
(b) affect the relative rights of the holders of the
Subordinated Note and creditors of the Company other than the Bank; or
(c) prevent any holder of the Subordinated Note from
exercising all its available remedies hereunder or under applicable law
upon an Event of Default, subject to the rights of the Bank under this
Article 2 to receive payments or distributions otherwise payable or
distributable to holders of such securities.
Upon any distribution of assets of the Company referred to in this
Article 2, the holders of the Subordinated Note shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the liquidating trustee or agent or other person making any
distribution to the holders of such assets, for the purpose of ascertaining the
persons entitled to participate in such distribution, the Bank and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article 2.
If the Company fails because of this Article to pay principal of or
interest on the Subordinated Note on the due date (after taking into account any
applicable grace periods), the failure is still an Event of Default under the
Subordinated Note.
Section 2.8 Subordination May Not Be Impaired By the Company. No right
of the Bank to enforce the subordination of the indebtedness evidenced by the
Subordinated Note shall be impaired by any act or failure to act by the Company
or the Bank or by the failure by the Company to comply with this Agreement,
regardless of any knowledge which the Bank may have or be otherwise charged
with.
Section 2.9 Moneys Held in Trust for Bank. In the event that any holder
of the Subordinated Note shall receive any payment or distribution with respect
to such Note from any source whatsoever which such holder is not at the time
entitled to receive under the provisions of this Article 2, such holder will
hold any amount so received in trust for the Bank and will pay over such payment
to the Bank on account of the principal of and premium, if any, and interest on
such Obligations, until all such Obligations are paid in full.
<PAGE>
Payments of principal and interest on the Subordinated Note in
accordance with the terms thereof when none of the events prohibiting such
payment described in section 2.3 or section 2.4 shall have occurred and be
continuing may be retained by such holders.
Section 2.10 Grant of Security Interest. The Company shall not grant to
the holders of the Subordinated Note any lien, mortgage, assignment or other
security interest, or enter into any transaction having the effect of securing
the repayment of the Subordinated Note with any property owned or used by the
Company.
ARTICLE 3
MISCELLANEOUS
Section 3.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement shall be effective unless in a written instrument
executed by the Bank, the holders of the Subordinated Note and all parties
affected by such amendment or waiver.
Section 3.2 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder, or under the Credit Agreement, shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, remedy,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in this Agreement and the Credit Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
Section 3.3 Notices. All notices, consents, requests and demands to or
upon the respective parties hereto shall be in writing and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand, or when deposited in the mail, postage prepaid, or, in the
case of telex, telegraphic or telecopy notice, five (5) days after being sent,
addressed as follows:
If to the Bank:
The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45202
Phone: (513) 579-2750
Telecopy: (513) 579-2858
Attn: Christopher B. Gribble
<PAGE>
With a copy to:
Keating, Muething & Klekamp, P.L.L.
1800 Provident Tower
Cincinnati, Ohio 45202
Phone: (513) 579-6400
Telecopy: (513) 579-6457
If to the Company:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, New Jersey 07940
Attn: A. Dale May, President
Telecopy: (201) 377-4303
With a copy to:
Kirkpatrick & Lockhart, LLP
1251 Avenue of the Americas
New York, New York 10028
Attn: Warren H. Colodner
Telecopy: (212) 536-3901
If to the Subordinated Creditor:
Magic Cinemas, L.L.C.
513 West Mount Pleasant Avenue
Livingston, New Jersey 07039
Phone: (201) 535-1227
Telecopy: (201) 535-1228
Attn: Jeffrey Dandson
With a copy to:
Orloff, Lowenbach, Stifelman & Siegel, P.A.
101 Eisenhower Parkway
Roland, New Jersey 07068
Phone: (201) 622-6200
Telecopy: (202) 622-3073
Attn: Stanley Schwartz, Esq.
<PAGE>
Notices of changes of address shall be given in the same manner.
Section 3.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
Section 3.5 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
Section 3.6 WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR THE BANK TO EXTEND CREDIT TO THE BORROWER, AND AFTER HAVING THE
OPPORTUNITY TO CONSULT COUNSEL, EACH PARTY HEREBY EXPRESSLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR ARISING
IN ANY WAY FROM THE OBLIGATIONS.
[Remainder of page intentionally left blank. Signature page follows.]
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their duly authorized officers as of the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By: /s/
-----------------------------
Name: A. Dale Mayo
Title: Pres.
THE PROVIDENT BANK
By: /s/
-----------------------------
Name: Christopher B. Gribble
Title: AVP
MAGIC CINEMAS, L.L.C.
By: /s/
-----------------------------
Name: Jeffrey Dandson
Title: _____________________________
<PAGE>
EXHIBIT A
DEFINITIONS
As used in this Subordination Agreement, the following terms shall have
the meanings ascribed hereto to them:
"Borrowers" means Clearview Cinema Group, Inc., CCC Madison Triple
Cinema Corp., CCC Chester Twin Cinema Corporation, CCC Manasquan Cinema
Corporation, Clearview Theatre Group, Inc., CCC Herricks Cinema Corp., CCC Port
Washington Cinema Corp., CCC Grand Avenue Cinema Corp., CCC Washington Cinema
Corp., CCC Allwood Cinema Corp., CCC Emerson Cinema Corp., CCC New City Cinema
Corp., 343-349 Springfield Avenue Corp. CCC Bedford Cinema Corp., CCC Kisco
Cinema Corp., CCC Closter Cinema Corp., CCC Bergenfield Cinema Corp., CCC
Tenafly Cinema Corp., and CCC B.C. Realty Corp.
"Credit Agreement" means a certain Credit Agreement dated as of May 29,
1996 by and among Borrowers, The Provident Bank, as "Agent," and the lenders
from time to time thereunder, as amended by the Joinder Agreement dated as of
July 18, 1996, as further amended by the Joinder Agreement and First Amendment
to Credit Agreement, dated as of December 13, 1996, as the same may be amended,
modified or supplemented from time to time (the "Credit Agreement").
"Loans" mean, collectively, the Revolving Credit Loan and each of the
Term Loans, each singly a "Loan" made or to be made to Borrowers by the Lenders
pursuant to the Credit Agreement in an aggregate principal amount available
thereunder on the date hereof of $8,900,000.
"Obligations" means, collectively, all of the indebtedness, obligations,
covenants, promises, agreements, and liabilities existing on the date hereof or
arising from time to time hereafter, whether direct, indirect, absolute,
contingent, joint or several, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise, of
Borrowers to the Bank or any Lenders under the Credit Agreement (i) in respect
of the Loans made pursuant to the Credit Agreement; or (ii) under or in respect
of any one or more of the loan documents executed in connection therewith.
Obligations shall also include all interest, charges and other fees chargeable
hereunder to Borrowers or due hereunder from Borrowers to lenders thereunder
from time to time and all costs and expenses of Agent authorized under the
Credit Agreement.
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 or our reports dated February 10, 1997
relating to the consolidated financial statements of Clearview Cinema Group,
Inc.; April 1, 1997 relating to the combined financial statements of the Nelson
Ferman Theaters at Emerson, New City, Allwood and Washington Township; April 10,
1997 relating to the combined financial statements of Magic Cinemas at
Bergenfield, Tenafly and Closter; and June 4, 1997 relating to the combined
financial statement of United Artists Theaters at Bronxville, Larchmont, Wayne,
New City and Mamaroneck which appear in such Prospectus.
We also consent to reference to us under the headings "Experts" and "Summary
Consolidated Financial Data" which appear in such Prospectus. However, it should
be noted that Wiss and Company, LLP did not prepare or certify such "Summary
Consolidated Financial Data."
WISS & COMPANY, LLP
Woodbridge, New Jersey
July 18, 1997
