Asset Purchase Agreement
Dated as of November 14, 1997
Among
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Galleria Cinemas, Inc.
CCC ▇▇▇▇▇▇▇▇▇▇▇ Cinema Corp.
and
Clearview Cinema Group, Inc.
ARTICLE I. DEFINITIONS; CONSTRUCTION........................................1
1.1. Definitions...........................................................1
1.2. Construction..........................................................5
ARTICLE II. THE TRANSACTION..................................................5
2.1. Sale and Purchase of Assets...........................................5
2.2. Cash; Etc.............................................................6
2.3. Retained Assets......................................................6
2.4. [not used]...........................................................6
2.5. Retained Liabilities..................................................6
2.6. Purchase Price; Deposit...............................................7
2.7. Closing...............................................................7
2.8. Payment of Purchase Price.............................................7
2.9. Allocation of Purchase Price..........................................7
2.10. Title................................................................7
2.11. Certain Consents.....................................................8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER........................8
3.1. Organization..........................................................8
3.2. Authorization; Enforceability.........................................8
3.3. No Violation of Laws or Agreements; Consents..........................8
3.4. Cinema Income Statements..............................................9
3.5. No Changes............................................................9
3.6. Taxes.................................................................9
3.7. Undisclosed Liabilities...............................................9
3.8. Condition of Assets; Title; Business..................................9
3.9. No Pending Litigation or Proceedings.................................10
3.10. Contracts...........................................................10
3.11. Permits; Compliance with Law........................................10
3.12. Leased Real Estate..................................................10
3.13. Labor Relations.....................................................11
3.14. Insurance...........................................................11
3.15. Intellectual Property Rights........................................11
3.16. Employee Benefits...................................................12
3.17. Environmental Matters...............................................12
3.18. Additional Theaters. Neither.......................................13
3.19. Finders' Fees.......................................................13
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER.........................13
4.1. Organization.........................................................13
4.2. Authorization and Enforceability.....................................13
4.3. No Violation of Laws; Consents.......................................14
4.4. No Pending Litigation or Proceedings.................................14
4.5. Finders' Fees........................................................14
4.6. Stock Ownership......................................................14
ARTICLE V. CERTAIN COVENANTS................................................14
5.1. Conduct of Business Pending Closing..................................14
5.2. Fulfillment of Agreements............................................15
5.3. Employment, Severance and Termination Payments.......................16
5.4. Seller's Employees...................................................16
5.5. Workers' Compensation and Disability Claims..........................16
5.6. Covenant Not to Compete..............................................16
5.7. Publicity............................................................17
5.8. Transitional Matters.................................................17
5.9. Books and Records....................................................17
5.10. Permits; N.J. ISRA..................................................17
5.11. Right of First Refusal..............................................17
ARTICLE VI. CONDITIONS TO CLOSING; TERMINATION..............................18
6.1. Conditions Precedent to Obligation of Buyer..........................18
6.2. Conditions Precedent to Obligation of Seller and ▇▇. ▇▇▇▇▇▇..........19
6.3. Deliveries and Proceedings at Closing................................20
6.4. Termination..........................................................22
ARTICLE VII. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION...................23
7.1. Survival of Representations..........................................23
7.2. Indemnification by Seller and ▇▇. ▇▇▇▇▇▇.............................23
7.3. Indemnification by Buyer.............................................24
7.4. Waiver of Statute of Limitations.....................................24
7.5. Notice of Claims.....................................................24
7.6. Third Party Claims...................................................24
7.7. Limitation on Indemnification........................................24
7.8. Payment..............................................................25
ARTICLE VIII. MISCELLANEOUS.................................................25
8.1. Costs and Expenses...................................................25
8.2. Proration of Expenses................................................25
8.3. Bulk Sales...........................................................25
8.4. Further Assurances...................................................25
8.5. Notices..............................................................25
8.6. Currency.............................................................26
8.7. Offset; Assignment; Governing Law....................................26
8.8. Amendment and Waiver; Cumulative Effect..............................27
8.9. Entire Agreement; No Third Party Beneficiaries.......................27
8.10. Third Party Beneficiary.............................................27
8.11. Severability........................................................27
8.12. Counterparts........................................................27
Asset Purchase Agreement ("AGREEMENT"), dated as
of November 14, 1997, by and among ▇▇▇▇▇ ▇▇▇▇▇▇,
an individual residing in _________, New Jersey
("▇▇. ▇▇▇▇▇▇"), ▇▇▇▇▇▇▇▇▇▇▇ Galleria Cinemas,
Inc., a New Jersey corporation ("SELLER"), CCC
▇▇▇▇▇▇▇▇▇▇▇ Cinema Corp., a Delaware corporation
("BUYER"), and Clearview Cinema Group, Inc., a
Delaware corporation ("CCG").
Seller currently owns and operates a ten-screen movie cinema located at
▇▇▇▇▇▇▇▇▇▇▇, New Jersey (the "CINEMA"). Buyer is a wholly owned subsidiary of
CCG.
▇▇. ▇▇▇▇▇▇ leases the real estate on which the Cinema is located, as such
real estate and lease are more particularly described on Exhibit A hereto (the
"LEASED REAL ESTATE").
Seller desires to sell and assign to Buyer, and Buyer desire to purchase
and assume from Seller, the Cinema and the Leased Real Estate on the terms and
subject to the conditions set forth below.
In consideration of the representations, warranties, covenants and
agreements contained herein, Seller, Buyer, ▇▇. ▇▇▇▇▇▇ and CCG, each intending
to be legally bound hereby, agree as set forth below.
ARTICLE I.
DEFINITIONS; CONSTRUCTION
1.1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings specified in this Section 1.1. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"AGREEMENT" means this Asset Purchase Agreement, as it may be amended from
time to time.
"BASKET AMOUNT" has the meaning given that term in Section 7.7.
"BENEFIT PLAN" means any written and unwritten "employee benefit plans"
within the meaning of Section 3(3) of ERISA, and any other written and unwritten
profit sharing, pension, savings, deferred compensation, fringe benefit,
insurance, medical, medical reimbursement, life, disability, accident,
post-retirement health or welfare benefit, stock option, stock purchase, sick
pay, vacation, employment, severance, termination or other plan, agreement,
contract, policy, trust fund or arrangement, whether or not funded and whether
or not terminated, (i) maintained or sponsored by Seller, or (ii) with respect
to which Seller has or may have Liability or is obligated to contribute, or
(iii) that otherwise covers any of the current or former employees of Seller or
their beneficiaries, or (iv) as to which any such current or former employees of
Seller or their beneficiaries participated or were entitled to participate or
accrue or have accrued any rights thereunder.
"BUSINESS" means the operation of the Cinema.
"BUYER" has the meaning given that term in the heading of this
Agreement.
"BUYER DAMAGES" has the meaning given that term in Section 7.2.
"BUYER INDEMNITEES" has the meaning given that term in Section 7.2.
"CCG" has the meaning given that term in the heading of this Agreement.
"CERCLIS" means the United States Comprehensive Environmental Response
Compensation Liability Information System List pursuant to Superfund.
"CINEMA" has the meaning given that term in the first introductory
paragraph of this Agreement.
"CLOSING" has the meaning given that term in Section 2.7.
"CLOSING DATE" has the meaning given that term in Section 2.7.
"CODE" means the United States Internal Revenue Code of 1986, as amended,
and the applicable rulings and regulations thereunder.
"DAMAGES" means Buyer Damages or Seller Damages, as the case may be.
"DEPOSIT" has the meaning given that term in Section 2.6.
"ENCUMBRANCE" means any liability, debt, mortgage, deed of trust, pledge,
security interest, encumbrance, option, right of first refusal, agreement of
sale, adverse claim, easement, lien, assessment, restrictive covenant,
encroachment, burden or charge of any kind or nature whatsoever or any item
similar or related to the foregoing.
"ENVIRONMENTAL LAW" means any applicable Law relating to public health and
safety or protection of the environment, including common law nuisance, property
damage and similar common law theories.
"ERISA" means the United States Employee Retirement Income Security Act of
1974, as amended, and the applicable rulings and regulations thereunder.
"GAAP" means United States generally accepted accounting principles as
they would be applied to the Cinema.
"GOVERNING DOCUMENTS" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing
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agreement and other charter documents or organization or governing documents or
instruments of such Person.
"GOVERNMENTAL BODY" means any court, government (federal, state, local or
foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality.
"INCOME STATEMENTS" has the meaning given that term in Section 3.4.
"INDEMNIFIED PARTY" has the meaning given that term in Section 7.5.
"INDEMNIFYING PARTY" has the meaning given that term in Section 7.5.
"INTELLECTUAL PROPERTY RIGHTS" means trademark and service ▇▇▇▇ rights,
applications and registrations, trade names, fictitious names, service marks,
logos and brand names, copyrights, copyright applications, letters patent,
patent applications and licenses of any of the foregoing, improvements,
blueprints, specifications, drawings, designs and other intellectual property
and proprietary rights.
"IRS" means the United States Internal Revenue Service.
"LAW" means any applicable federal, state, municipal, local or foreign
statute, law, ordinance, rule, regulation, judgment or order of any kind or
nature whatsoever including any public policy, judgment or order of any
Governmental Body or principle of common law.
"LEASE AGREEMENT" mean the Lease Agreement for the Cinema identified on
Exhibit A hereto.
"LEASED REAL ESTATE" has the meaning given that term in the second
introductory paragraph of this Agreement.
"LIABILITIES" with respect to any Person, means all debts, liabilities and
obligations of such Person of any nature or kind whatsoever, whether or not due
or to become due, accrued, fixed, absolute, matured, determined, determinable or
contingent and whether or not incurred directly by such Person or by any
predecessor of such Person, and whether or not arising out of any act, omission,
transaction, circumstance, sale of goods or service or otherwise.
"LITIGATION" has the meaning given that term in Section 3.9.
"OTHER AGREEMENTS" means the Subordinated Note and the other agreements
and instruments of title, assignment or assumption hereunder.
"PERMITS" has the meaning given that term in Section 3.11.
"PERMITTED ENCUMBRANCES" means liens for current taxes not yet due and
liens of public record on personal property identified on Schedule 1.1P.
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"PERSON" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, a Governmental Body and any
other legal entity.
"PURCHASE PRICE" has the meaning given that term in Section 2.6.
"PURCHASED ASSETS" has the meaning given that term in Section 2.1(d).
"REGULATED MATERIAL" means any hazardous substance as defined by any
Environmental Law and any other material regulated by any applicable
Environmental Law, including petroleum, petroleum-related material, crude oil or
any fraction thereof, PCBs and friable asbestos.
"RELATED PARTY" means (i) Seller, (ii) any Affiliate of Seller, (iii) any
officer or director of any Person identified in clauses (i) or (ii) preceding,
and (iv) any spouse, sibling, ancestor or lineal descendant of any natural
Person identified in any one of the preceding clauses.
"RETAINED ASSETS" has the meaning given that term in Section 2.3.
"RETAINED LIABILITIES" has the meaning given that term in Section 2.5.
"SELLER" has the meaning given that term in the heading of this
Agreement.
"SELLER DAMAGES" has the meaning given that term in Section 7.3.
"SELLER GROUP" means Seller and any corporation that may be aggregated
with Seller under Sections 414(b), (c), (m) or (o) of the Code.
"SELLER INDEMNITEES" has the meaning given that term in Section 7.3.
"SELLER'S PREDECESSOR" means any predecessor in interest to Seller,
whether by merger, combination, reorganization or otherwise.
"SUBORDINATED NOTE" means CCG's 10% Subordinated Promissory Note payable
to Seller in the principal amount of $540,000 in the form attached hereto as
Exhibit B.
"SUPERFUND" means the United States Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as
amended.
"TAX" means any domestic or foreign federal, state, county or local tax,
levy, impost or other charge of any kind whatsoever, including any interest or
penalty thereon or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
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1.2. CONSTRUCTION. As used herein, unless the context otherwise
requires: (i) references to "Article" or "Section" are to an article or section
hereof; (ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits
and Schedules attached hereto and are incorporated herein by reference and made
a part hereof; (iii) "include", "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
ARTICLE II.
THE TRANSACTION
2.1. SALE AND PURCHASE OF ASSETS. Except as otherwise provided in
Sections 2.2 and 2.3, at the Closing, Seller shall sell, transfer and assign to
Buyer, and Buyer shall purchase from Seller, all of Seller's properties and
business as a going concern, and goodwill and tangible or intangible assets of
every kind, nature and description existing on the Closing Date located at or
used in connection with the Cinema, whether personal, in electronic form or
otherwise, and whether or not any of such assets have any value for accounting
purposes or are carried or reflected on or specifically referred to in its books
or financial statements, free and clear of all Encumbrances (collectively, the
"PURCHASED ASSETS"). Without limiting the foregoing, the Purchased Assets shall
include the following:
(i) All of Seller's tangible assets, including office furniture,
office equipment and supplies, computer hardware and software, projectors,
projector bulbs, ticketing machines, leasehold improvements on or related to the
Leased Real Estate or related to the Business;
(ii) All of Seller's books, records, manuals, documents, books of
account, correspondence, sales reports, literature, brochures, advertising
material and the like related to the Business (other than accounting records and
corporate books and records as defined in Section 2.3);
(iii) All of Seller's inventory and supplies, including concession
products, candy items and paper goods for the Business;
(iv) All of Seller's rights under leases for personal property, if
any;
(v) All of Seller's rights under the Permits;
(vi) All of Seller's goodwill and rights in and to the name
"▇▇▇▇▇▇▇▇▇▇▇";
(vii) Seller's rights to the telephone numbers for Cinema location;
and
(viii) The goodwill of the Business.
▇▇. ▇▇▇▇▇▇ shall at Closing assign all of his interests in the Leased Real
Estate and the Lease Agreement to Buyer, and Buyer shall assume the Lease
Agreement, for no additional consideration.
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2.2. CASH; ETC. Buyer shall purchase ▇▇▇▇▇ cash on hand at the Cinema
at the close of business on the date immediately preceding the Closing Date, the
purchase price of cash to be face value, subject to a physical count of such
cash by Buyer and Seller. If the use by customers of the Cinema of pre-sold
tickets sold by Seller shall exceed $100 in the aggregate, Seller shall promptly
pay to Buyer an amount equal to such use in excess of $100.
2.3. RETAINED ASSETS. Except for the Purchased Assets, Buyer is not
purchasing and Seller is not selling the name "CJM Enterprises" or any variant
or derivative of such name and Seller's accounting records and corporate minute
books, stock books and corporate seal (collectively, the "RETAINED ASSETS").
Accounting Records of Seller shall remain the exclusive property of Seller in
accord with this Section, and shall mean any and all books of original entry,
including any register or computer tapes, all journals or ledgers, all canceled
checks, payroll records, bank or other account statements, including account
statements or reports to or from any vendors, suppliers, film companies, or
otherwise, including any correspondence relating to same or to any other items
designated as an accounting record hereunder, and including all financial
statements, records, tax returns, and all workpapers or supporting information
relating thereto, including all information gathered or compiled by Seller or
Seller's agents or accountants therefor, or summaries of same, including all
disks, print-outs, or other digital or analog, written or electronic recording
thereof. The Purchased Assets shall not include any permits that are
non-transferable. Seller knows of no reason why any permit issued to Seller for
use in its business would not be issued to Buyer for use by it after the
Closing, assuming only Buyer is qualified to receive same.
2.4. [NOT USED].
2.5. RETAINED LIABILITIES. Buyer does not hereby and shall not assume or
in any way undertake to pay, perform, satisfy or discharge any other Liability
of Seller, whether existing on, before or after the Closing Date or arising out
of any transactions entered into, or any state of facts existing on, prior to or
after the Closing Date (the "RETAINED LIABILITIES"), and Seller agrees to pay
and satisfy when due all Retained Liabilities. Without limiting the foregoing,
the term "RETAINED LIABILITIES" shall include Liabilities:
(i) to any Related Party;
(ii) for or under any Benefit Plan;
(iii) for any Taxes, whether or not by reason of, or in connection
with, the transactions contemplated by this Agreement;
(iv) with respect to Seller's administrative and corporate
operations; and
(v) to any film distributor.
Buyer acknowledges that Buyer is responsible for any and all liabilities of the
Business first occurring after the Closing Date.
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2.6. PURCHASE PRICE; DEPOSIT. The aggregate purchase price for all of
the Purchased Assets shall be $2.25 million, plus amounts payable for the
inventory and ▇▇▇▇▇ cash (the "PURCHASE PRICE"). At the close of business on the
last business day prior to the Closing Date, Seller and Buyer shall take a
physical count of Seller's inventory being sold by Seller to Buyer under this
Agreement. Seller's inventory shall include concession products, candy items,
paper goods and other similar items, but shall not include projector bulbs which
shall be deemed to be equipment for purposes of this Agreement. Inventory shall
be valued at Seller's cost, determined on a first-in-first-out basis. Buyer
shall pay Seller for all inventory at the Closing, provided that such
inventories do not exceed amounts that would be expected as customary in the
ordinary course of business. Buyer shall deliver to Seller within three business
days after obtaining landlord's consent to the assignment to Buyer of the Lease
Agreement on terms acceptable to both Buyer and Seller a good faith deposit
equal to $15,000 (the "DEPOSIT"). The Deposit shall be applied against the cash
portion of the Purchase Price if there is a Closing hereunder. If there is no
Closing hereunder, then the Deposit shall be promptly returned to Buyer, unless
Buyer is in material breach hereof and such material breach was the sole cause
of the failure to Close hereunder. The Deposit shall be held in escrow by
Seller's counsel (as a fiduciary) subject to the terms of this Agreement.
2.7. CLOSING. The consummation of the purchase and sale of the Purchased
Assets and the consummation of the other transactions contemplated hereby (the
"CLOSING") shall take place at 10:00 a.m., local time, on December 12, 1997 at
the offices of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, 1251 Avenue of the Americas, New
York, New York, 10020-1104 or at such other time, date or place as the parties
agree (the "CLOSING DATE"). Closing shall be effective at 12:01 a.m. on the
Closing Date.
2.8. PAYMENT OF PURCHASE PRICE. At Closing, the Purchase Price shall be
paid by Buyer and CCG to Seller as follows:
(i) by Buyer's delivery to Seller immediately available funds equal
to $1.71 million, minus the amount of the Deposit; and
(ii) by delivery of the Subordinated Note.
2.9. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets as follows: $450,000 shall be allocated to equipment,
furniture and fixtures for the Cinema and $1,800,000 shall be allocated to the
remaining assets of the Cinema. Buyer and Seller shall report the federal, state
and local income and other tax consequences of the purchase and sale
contemplated hereby in a manner consistent with such allocation and shall not
take any position inconsistent therewith upon examination of any Tax Return, in
any refund claim, in any litigation, or otherwise.
2.10. TITLE. Title to all Purchased Assets shall pass from Seller to Buyer
at Closing, subject to the terms and conditions of this Agreement. Buyer assume
no risk of loss to the Purchased Assets prior to Closing.
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2.11. CERTAIN CONSENTS. Nothing in this Agreement shall be construed as
an attempt to assign any Permit included in the Purchased Assets which is
by its terms or in law nonassignable without the consent of the other party or
parties thereto, unless such consent shall have been given, or as to which all
the remedies for the enforcement thereof enjoyed by Seller would not, as a
matter of law, pass to Buyer as an incident of the assignments provided for by
this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer and CCG to enter into this Agreement and
consummate the transactions contemplated hereby, Seller and ▇▇. ▇▇▇▇▇▇ jointly
and severally represent and warrant to Buyer and CCG as follows:
3.1. ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey, and has
the power and authority to own or lease its properties, carry on the Business as
now conducted, enter into this Agreement and the Other Agreements to which it is
or is to become a party and perform its obligations hereunder and thereunder.
3.2. AUTHORIZATION; ENFORCEABILITY. This Agreement and each Other
Agreement to which Seller is a party have been duly executed and delivered by
and constitute the legal, valid and binding obligations of Seller and ▇▇.
▇▇▇▇▇▇, enforceable against them in accordance with their respective terms. Each
Other Agreement to which Seller and ▇▇. ▇▇▇▇▇▇ are to become a party pursuant to
the provisions hereof, when executed and delivered by Seller and ▇▇. ▇▇▇▇▇▇,
will constitute the legal, valid and binding obligation of Seller and ▇▇.
▇▇▇▇▇▇, enforceable against them in accordance with the terms of such Other
Agreement. All actions contemplated by this Section have been duly and validly
authorized by all necessary proceedings by Seller.
3.3. NO VIOLATION OF LAWS OR AGREEMENTS; CONSENTS. Neither the execution
and delivery of this Agreement or any Other Agreement to which Seller or ▇▇.
▇▇▇▇▇▇ is or is to become a party, the consummation of the transactions
contemplated hereby or thereby nor the compliance with or fulfillment of the
terms, conditions or provisions hereof or thereof by Seller or ▇▇. ▇▇▇▇▇▇ will:
(i) contravene any provision of any Governing Document of Seller, (ii) conflict
with, result in a breach of, constitute a default or an event of default (or an
event that might, with the passage of time or the giving of notice or both,
constitute a default or event of default) under any of the terms of, result in
the termination of, result in the loss of any right under, or give to any other
Person the right to cause such a termination of or loss under, any Purchased
Asset or any other material contract, agreement or instrument to which Seller or
▇▇. ▇▇▇▇▇▇ is a party or by which any of their assets may be bound or affected,
(iii) result in the creation, maturation or acceleration of any Liability of
Seller or ▇▇. ▇▇▇▇▇▇ (or give to any other Person the right to cause such a
creation, maturation or acceleration), (iv) violate any Law or violate any
judgment or order of any Governmental Body to which Seller is subject or by
which any of the Purchased Assets or any of its other assets may be bound or
affected, or (v) result in the creation or imposition of any Encumbrance upon
any of the Purchased Assets or give to any other Person any interest or right
therein. Except for the consents of the landlord under the Lease Agreement, no
consent, approval or authorization of, or registration or filing with, any
Person is required in
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connection with the execution and delivery by Seller or ▇▇. ▇▇▇▇▇▇ of this
Agreement or any of the Other Agreements to which it is or is to become a party
pursuant to the provisions hereof or the consummation by Seller or ▇▇. ▇▇▇▇▇▇ of
the transactions contemplated hereby or thereby.
3.4. CINEMA INCOME STATEMENTS. Attached hereto as Exhibit D are the
income statements for the Cinema for the years ended December 31, 1995, and
December 31, 1996 and for the nine month period ended August 31, 1997 (the
"INCOME STATEMENTS"). The Income Statements (i) are correct and complete, (ii)
have been prepared in accordance with GAAP on a consistent basis, and (iii)
fairly present the results of operation of the Cinema for the periods then ended
in accordance with GAAP. Seller has no money due and owing to any film
distributor in connection with the Cinema except for money owing in the normal
course of business for which an amount is not ascertainable to pay or which is
not due prior to Closing. The aggregate gross box office revenues for the Cinema
for calendar year 1996 was $________ and for the period from January 1, 1997
through August 31, 1997 was $1,249,268. The aggregate gross concession revenues
for the Cinema for calendar year 1996 was $________ and for the period from
January 1, 1997 through August 31, 1997, was $522,316. Earnings before interest,
taxes and depreciation and amortization for the Cinema for the period from
January 1, 1997 through August 31, 1997 was at least $411,000.
3.5. NO CHANGES. Since September 30, 1996, Seller has conducted the
Business only in the ordinary course. Without limiting the generality of the
foregoing sentence, since September 30, 1996, there has not been any: (i)
material adverse change in the Purchased Assets or Leased Real Estate; (ii)
damage or destruction to any Purchased Asset or Leased Real Estate, whether or
not covered by insurance; (iii) strike or other labor trouble at the Cinema;
(iv) increase in the salary, wage or bonus of any employee of the Cinema; or (v)
agreement or commitment to do any of the foregoing. Except as provided on
Schedule 3.5, since September 30, 1996, Seller has not made any material
changes, substitutions or replacements to the equipment, furniture or fixtures
at the Cinema.
3.6. TAXES. Seller, its Affiliates and Seller's Predecessor, have filed or
caused to be filed on a timely basis, or will file or cause to be filed on a
timely basis, all Tax Returns that are required to be filed by it prior to or on
the Closing Date, pursuant to the Law of each governmental authority with taxing
power over it. All such Tax Returns were or will be, as the case may be, correct
and complete. Seller and Seller's Predecessor have paid or will pay all Taxes
that have or will become due as shown on such Tax Returns or pursuant to any
assessment received as an adjustment to such Tax Returns (subject to all rights
of appeal by Buyer). Seller and Seller's Predecessor have withheld and paid all
Taxes required to have been withheld in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other third
party.
3.7. UNDISCLOSED LIABILITIES. Except as disclosed on Schedule 3.7,
Seller has no, and after Closing shall have no, Liabilities of any kind or
nature whatsoever that would attach to the Purchased Assets or for which any
Buyer or CCG may become liable.
3.8. CONDITION OF ASSETS; TITLE; BUSINESS. Seller has good, marketable and
exclusive title to all of the Purchased Assets. The tangible Purchased Assets
are in good operating
9
condition and repair suitable for the purposes for which they are used in the
Business, and all equipment included in the Purchased Assets have been
maintained in the normal course of business by qualified professionals. Except
as disclosed on Schedule 3.8 and except for Permitted Encumbrances, none of the
Purchased Assets is subject to any Encumbrance. Schedule 3.8 identifies any
property located on the Leased Real Estate that is not owned by Seller. The
Encumbrances identified on Schedule 3.8 will be removed by Seller on or prior to
Closing. The Purchased Assets do not contain any shares of capital stock of or
other equity interest in any Person. On the Closing Date, the Purchased Assets
will include at a minimum (i) one functioning xenon projector bulb for each
auditorium in the Cinema, and (ii) one new, unused, spare xenon projector bulb
for each type of projector at the Cinema location.
3.9. NO PENDING LITIGATION OR PROCEEDINGS. No action, suit, investigation,
claim or proceeding of any nature or kind whatsoever, whether civil, criminal or
administrative, by or before any Governmental Body or arbitrator ("LITIGATION")
is pending or, to the knowledge of Seller and ▇▇. ▇▇▇▇▇▇, threatened against or
affecting Seller, ▇▇. ▇▇▇▇▇▇, the Business, any of the Purchased Assets, the
Leased Real Estate, or any of the transactions contemplated by this Agreement or
any Other Agreement except for claims for personal injury and workers
compensation and further except for claims for property damage identified on
Schedule 3.9 and claims by Governmental Bodies identified on Schedule 3.9. There
is presently no outstanding judgment, decree or order of any Governmental Body
against or affecting Seller, ▇▇. ▇▇▇▇▇▇, the Business, any of the Purchased
Assets, the Leased Real Estate, or any of the transactions contemplated by this
Agreement or any Other Agreement. Neither Seller nor ▇▇. ▇▇▇▇▇▇ has any pending
any Litigation against any third party related to the Business.
3.10. CONTRACTS. There is no contract, lease or other agreement, that
materially affects or is used in the Business or the Leased Real Estate other
than the Lease Agreement. The Lease Agreement is a legal, valid and binding
obligation of Seller and is in full force and effect. Seller and each other
party to the Lease Agreement has performed all obligations required to be
performed by it thereunder and is not in breach or default, and is not alleged
to be in breach or default, in any respect thereunder, and, to the knowledge of
Seller and ▇▇. ▇▇▇▇▇▇, no event has occurred and no condition or state of facts
exists (or would exist upon the giving of notice or the lapse of time or both)
that would become or cause a breach, default or event of default thereunder,
would give to any Person the right to cause such a termination or would cause an
acceleration of any obligation thereunder. Seller is not currently renegotiating
the Lease Agreement.
3.11. PERMITS; COMPLIANCE WITH LAW. Subject to Section 5.10, Seller holds
all health department and certificates of occupancy required under any
applicable Law in connection with the operation of the Business and use and
occupancy of the Leased Real Estate ("PERMITS"). The Purchased Assets include
all Permits other than the occupancy permit which must be obtained under local
law by Buyer. Seller has received no notice of any violation of Law which has
not been remedied or rectified.
3.12. LEASED REAL ESTATE. ▇▇. ▇▇▇▇▇▇ has the right to quiet enjoyment of
all Leased Real Estate, including all renewal rights under the Lease Agreement.
▇▇. ▇▇▇▇▇▇ has not received any written or oral notice of assessments for public
improvements against any Leased Real Estate
10
or any written or oral notice or order by any Governmental Body, any insurance
company that has issued a policy with respect to any of such properties or any
board of fire underwriters or other body exercising similar functions that
relates to violations of building, safety or fire ordinances or regulations,
claims any defect or deficiency with respect to any of such properties or
requests the performance of any repairs, alterations or other work to or in any
of such properties or in the streets bounding the same, which in each case has
not been remedied or rectified. There is no pending condemnation, expropriation,
eminent domain or similar proceeding affecting all or any portion of the Leased
Real Estate. ▇▇. ▇▇▇▇▇▇ has not received any written notice of any proposed,
planned or actual curtailment of service of any utility supplied to the Leased
Real Estate. None of the Leased Real Estate is subleased to any person. The Real
Estate Leases are in full force and effect in accordance with their terms, and
have not been modified or amended (other than as disclosed on Exhibit A) and, to
the knowledge of Seller and ▇▇. ▇▇▇▇▇▇, no party thereto is in default under any
of the terms contained therein.
3.13. LABOR RELATIONS. No employee of Seller is represented by any union
or other labor organization. No representation election, arbitration proceeding,
grievance, labor strike, dispute, slowdown, stoppage or other labor trouble is
pending or, to the knowledge of Seller and ▇▇. ▇▇▇▇▇▇, threatened against,
involving, affecting or potentially affecting Seller. No complaint against
Seller or Seller's Predecessor is pending or, to the knowledge of Seller and ▇▇.
▇▇▇▇▇▇, threatened before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any similar state or local agency, by or on
behalf of any employee of Seller or Seller's Predecessor. To the knowledge of
Seller and ▇▇. ▇▇▇▇▇▇, Seller has no Liability for any occupational disease of
any of its employees, former employees or others.
3.14. INSURANCE. Schedule 3.14 discloses all insurance policies on an
"occurrence" basis with respect to which Seller or Seller's Predecessor is the
owner, insured or beneficiary.
3.15. INTELLECTUAL PROPERTY RIGHTS. Seller neither owns nor is licensee to
any form of Intellectual Property Rights related to the Cinema other than the
names "CJM Enterprises", which is a Retained Asset, and rights to show films to
the public according to agreements which are Retained Assets and Retained
Liabilities. To the knowledge of Seller and ▇▇. ▇▇▇▇▇▇, no other Person has any
rights to the names "▇▇▇▇▇▇▇▇▇▇▇" in connection with the use of a cinema in
▇▇▇▇▇▇▇▇▇▇▇, New Jersey. To the knowledge of Seller and ▇▇. ▇▇▇▇▇▇, Seller is
not infringing upon the intellectual property rights of any other Person.
Schedule 3.14 identifies all computer software owned by Seller. With respect to
any such computer software, the Seller makes no agreement or other warranties or
representations hereunder other than that Seller a licensee of certain computer
software used by it in connection with certain computer hardware that Seller is
selling to Buyer hereunder and as to any license for software used with respect
to said computer hardware,
(a) Seller will assign to Buyer at Closing any rights, title, or interest
in said software, but without warranty,
(b) Seller's obligation to sell, transfer, or assign any such software as
is otherwise called for above shall be void if prohibited by any such license,
and
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(c) At Closing, regardless of whether (a) or (b) is the case, the price
paid by Buyer to Seller will remain as is otherwise called for in the agreement.
3.16. EMPLOYEE BENEFITS. Except for medical and dental coverage, life
insurance, and long-term disability plans described on Schedule 3.16 for those
managers of the Cinema identified on Schedule 3.16, Seller does not maintain any
Benefit Plan for any employees employed at the Cinema. After the Closing,
neither Buyer or CCG will have any Liability, with respect to any Benefit Plan
of Seller or any other member of the Seller Group, whether as a result of
delinquent contributions, distress terminations, fraudulent transfers, failure
to pay premiums to the PBGC, withdrawal Liability or otherwise. Schedule 3.16
identifies the names of all employees of Seller employed at the Cinema,
including each listed employee's address, current compensation, vacation time to
which he or she is entitled and vacation time so far taken. Schedule 3.16 also
includes copies of Seller's payroll records for all persons currently employed
by Seller at the Cinema. There are no written or oral agreements or arrangements
providing for the employment by Seller of any person at the Cinema other than
"at will" agreements. All employees of Seller at the Cinema are employees at
will. Seller does not provide a motor vehicle to any employee of Seller at the
Cinema.
3.17. ENVIRONMENTAL MATTERS. The representations and warranties contained
in this Section are qualified by (i) the disclosures on Schedule 3.17, (ii) the
knowledge of Seller and ▇▇. ▇▇▇▇▇▇ as to the activities of Seller's
Predecessors, and (iii) the knowledge of Seller and ▇▇. ▇▇▇▇▇▇ as to the
activities of third parties prior to the time that Seller took possession of the
property subject to the Lease Agreement.
(a) COMPLIANCE; NO LIABILITY. Seller and Seller's Predecessor have
operated the Business and each parcel of Leased Real Estate in compliance with
all applicable Environmental Laws. Seller is not subject to any Liability,
penalty or expense (including legal fees) in connection with the Business or
ownership or leasing of the Leased Real Estate by virtue of any violation of any
Environmental Law, any environmental activity conducted on or with respect to
any property or any environmental condition existing on or with respect to any
property, in each case whether or not Seller or Seller's Predecessors permitted
or participated in such act or omission.
(b) TREATMENT; CERCLIS. Neither Seller nor Seller's Predecessors have
treated, stored, recycled or disposed of any Regulated Material on any Leased
Real Estate in violation of applicable Environmental Laws, and, to the knowledge
of Seller and ▇▇. ▇▇▇▇▇▇, no other Person has treated, stored, recycled or
disposed of any Regulated Material on any part of the Leased Real Estate in
violation of applicable Environmental Laws. There has been no release of any
Regulated Material at, on or under any Leased Real Estate. Neither Seller nor
Seller's Predecessors have transported or arranged for the transportation of any
Regulated Material from the Cinema to any location that is listed or proposed
for listing on the National Priorities List pursuant to Superfund, on CERCLIS or
any other location that is the subject of federal, state or local enforcement
action or other investigation that may lead to claims against Seller or Seller's
Predecessor for cleanup costs, remedial action, damages to natural resources, to
other property or for personal injury including claims under Superfund.
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(c) NOTICES; EXISTING CLAIMS; CERTAIN REGULATED MATERIALS; STORAGE TANKS.
Neither Seller nor Seller's Predecessors have received any request for
information, notice of claim, demand or other notification that it is or may be
potentially responsible with respect to any investigation, abatement or cleanup
of any threatened or actual release of any Regulated Material. To the knowledge
of Seller and ▇▇. ▇▇▇▇▇▇, Seller is not required to place any notice or
restriction relating to the presence of any Regulated Material at any Leased
Real Estate. There has been no past, and there is no pending or contemplated,
claim by Seller or Seller's Predecessor under any Environmental Law or Laws
based on actions of others that may have impacted on the Leased Real Estate, and
neither Seller nor Seller's Predecessors has entered into any agreement with any
Person regarding any remedial action or existing environmental Liability or
expense with respect to any of the Real Property or any real property adjacent
to the Real Property. To the knowledge of Seller and ▇▇. ▇▇▇▇▇▇, all storage
tanks located on the Leased Real Estate, whether underground or aboveground, are
disclosed on Schedule 3.17. Seller has not closed or caused to be closed any
underground storage tank on the Leased Real Estate.
3.18. ADDITIONAL THEATERS. Neither Seller nor ▇▇. ▇▇▇▇▇▇ has any knowledge
of the intention by any person to construct or open any movie theater within a
five-mile radius of the Cinema.
3.19. FINDERS' FEES. Neither Seller nor any of its officers, managers or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby or by any Other Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer and CCG jointly and severally represent
and warrant to Seller and ▇▇. ▇▇▇▇▇▇ as follows:
4.1. ORGANIZATION. Buyer and CCG is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the corporate power and authority to own or lease its properties, carry on its
business, enter into this Agreement and the Other Agreements to which it is or
is to become a party and perform its obligations hereunder and thereunder.
4.2. AUTHORIZATION AND ENFORCEABILITY. This Agreement and each Other
Agreement to which Buyer and CCG is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of Buyer
and CCG, enforceable against it in accordance with their respective terms. Each
Other Agreement to which Buyer and CCG is to become a party pursuant to the
provisions hereof, when executed and delivered by Buyer and CCG, will constitute
the legal, valid and binding obligation of Buyer and CCG, enforceable against
Buyer and CCG in accordance with the terms of such Other Agreement. All actions
contemplated by this Section have been duly and validly authorized by all
necessary proceedings by Buyer and CCG.
13
4.3. NO VIOLATION OF LAWS; CONSENTS. Neither the execution and
delivery of this Agreement or any Other Agreement to which Buyer or CCG is or is
to become a party, the consummation of the transactions contemplated hereby or
thereby nor the compliance with or fulfillment of the terms, conditions or
provisions hereof or thereof by Buyer or CCG will: (i) contravene any provision
of the Governing Documents of any Buyer or CCG, (ii) conflict with, result in a
breach of, constitute a default or an event of default (or an event that might,
with the passage of time or the giving of notice or both, constitute a default
or event of default) under any of the terms of, result in the termination of,
result in the loss of any right under, or give to any other Person the right to
cause such a termination of or loss under, any contract, agreement or instrument
to which any Buyer or CCG is a party or by which any of their assets may be
bound or affected, (iii) result in the creation, maturation or acceleration of
any Liability of any Buyer or CCG (or give to any other Person the right to
cause such a creation, maturation or acceleration), or (iv) violate any Law or
any judgment or order of any Governmental Body to which any Buyer or CCG is
subject or by which any of its assets may be bound or affected. Except for the
consent of Provident Bank, no consent, approval or authorization of, or
registration or filing with, any Person is required in connection with the
execution or delivery by Buyer or CCG of this Agreement or any of the Other
Agreements to which Buyer or CCG is or is to become a party pursuant to the
provisions hereof or the consummation by Buyer or CCG of the transactions
contemplated hereby or thereby.
4.4. NO PENDING LITIGATION OR PROCEEDINGS. No Litigation is pending or, to
the knowledge of any Buyer or CCG, threatened against or affecting CCG or any
Affiliate of CCG in connection with any of the transactions contemplated by this
Agreement or any Other Agreement to which Buyer and CCG is or is to become a
party or that would, to CCG's knowledge, have a material adverse effect on CCG's
business considered as a whole. There is presently no outstanding judgment,
decree or order of any Governmental Body against or affecting CCG or any
Affiliate of CCG in connection with the transactions contemplated by this
Agreement or any Other Agreement to which any Buyer or CCG is or is to become a
party or that would, to CCG's knowledge, have a material adverse effect on CCG's
ability to pay the Subordinated Note.
4.5. FINDERS' FEES. Neither Buyer, CCG nor any of their officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby.
4.6. STOCK OWNERSHIP. CCG owns all of the issued and outstanding capital
stock of the Buyer.
ARTICLE V.
CERTAIN COVENANTS
5.1. CONDUCT OF BUSINESS PENDING CLOSING. From and after the date hereof
and until the Closing Date, unless Buyer shall otherwise consent in writing,
Seller shall (and ▇▇. ▇▇▇▇▇▇ shall cause Seller to) conduct its affairs as
follows:
(a) ORDINARY COURSE; COMPLIANCE. The Business shall be conducted only in
the ordinary course and consistent with past practice. Seller and ▇▇. ▇▇▇▇▇▇
shall maintain the
14
Purchased Assets and the Leased Real Estate consistent with past practice and
shall comply in a timely fashion with the provisions of all Permits and its
other agreements and commitments. Seller shall use its best efforts to keep the
Business organization intact, keep available the services of its present
employees and preserve the goodwill of its suppliers, patrons and others having
business relations with it. Seller shall maintain in full force and effect its
policies of insurance, subject only to variations required by the ordinary
operations of the Business, or else shall obtain, prior to the lapse of any such
policy, substantially similar coverage with insurers of recognized standing.
(b) PROHIBITED TRANSACTIONS. Seller shall not: (i) amend or terminate any
Permit; (ii) fail to pay any Liability or charge when due, other than
Liabilities contested in good faith by appropriate proceedings; (iii) enter into
any employment or consulting contract or arrangement with any employee of the
Cinema; (iii) take any action or omit to take any action that is reasonably
likely to result in the occurrence of any event described in Section 3.5; or
(vi) take any action or omit to take any action that will cause a breach or
termination of any Permit, other than termination by fulfillment of the terms
thereunder.
(c) ACCESS, INFORMATION AND DOCUMENTS. Seller shall give to Buyer and to
Buyer's employees and representatives (including accountants, attorneys,
environmental consultants and engineers) access during normal business hours to
all of the properties, books, contracts, commitments, records, officers,
personnel and accountants (including independent public accountants and their
workpapers) of Seller solely as they relate to the Cinema and shall furnish to
Buyer all such documents and copies of documents and all information with
respect to the properties, Liabilities and affairs of Seller (solely as they
relate to the Cinema) as Buyer may reasonably request, including but not limited
to weekly reports of gross box office and concession receipts at the Cinema, at
the same time such reports are available to Seller's management.
(d) CONFIDENTIALITY. Buyer and CCG (for itself and for any affiliate of
itself or of Buyer) hereby agree that they will not disclose to any person any
information they may have gained with regard to the operation or the finances of
the business sold by Seller hereunder which information was gained by
disclosures made to them by Seller and that this obligation of confidentiality
shall survive the Closing. Without otherwise limiting the information subject to
the obligation of confidentiality set forth above, the information to be kept
confidential by Buyer and Buyer's affiliates, as is set forth above, shall
include the financial statements annexed to this agreement and the financial
representations made hereunder and any information contained in any accounting
records of Seller as may have been disclosed or made available to Buyer in
Buyer's review of Seller's business prior to Closing.
5.2. FULFILLMENT OF AGREEMENTS. Each party hereto shall use its best
efforts to cause all of those conditions to the obligations of the other under
Article VI that are not beyond its reasonable control to be satisfied on or
prior to the Closing and shall use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement. Seller shall, prior to Closing, obtain the consents referred to
in Section 3.3.
15
5.3. EMPLOYMENT, SEVERANCE AND TERMINATION PAYMENTS. Seller agrees to pay,
perform and discharge any and all severance payments, payroll and employment
related Liabilities with respect to employees of Seller at the Cinema accruing
up to the close of business on the date immediately preceding the Closing Date
or which result from the transfer of the Purchased Assets hereunder and the
employment by Buyer of those employees and shall indemnify and hold harmless
Buyer and its directors, officers and Affiliates from and against any and all
losses, Liabilities, damages, costs and expenses, including reasonable legal
fees and disbursements, that any of the aforesaid may suffer or incur by reason
of or relating to any such Liabilities.
5.4. SELLER'S EMPLOYEES. Buyer shall have the right, but not the
obligation, to offer employment to any of the employees of Seller who are
employed at the Cinema. At or prior to the Closing, Seller shall fully
compensate all employees of Seller at the Cinema for all work performed through
and including the Closing Date. Seller does not guaranty that any of the
employees to which Buyer or CCG will offer employment will accept such offer of
employment.
5.5. WORKERS' COMPENSATION AND DISABILITY CLAIMS.
(a) SELLER'S LIABILITY. Seller shall remain liable for all Liability for
all workers' compensation, disability and occupational diseases of or with
respect to all of Seller's employees attributable to injuries, claims,
conditions, events and occurrences occurring on or before the Closing Date.
(b) BUYER'S LIABILITY. Buyer shall be liable for all Liability for all
workers' compensation, disability and occupational diseases of or with respect
to all of employees of Seller hired by Buyer attributable to injuries, claims,
conditions, events and occurrences first occurring after the Closing Date.
5.6. COVENANT NOT TO COMPETE.
(a) RESTRICTION. For a period of five years from and after the Closing
Date, neither Seller nor ▇▇. ▇▇▇▇▇▇ shall not, directly or indirectly, own,
manage, operate, join, control or participate in the ownership, management,
operation or control of, or be employed or otherwise connected as an officer,
employer, stockholder, partner or otherwise with, the Cinema within a seven mile
radius of any theatre owned directly or indirectly by CCG on the date
immediately following the Closing Date. Ownership of not more than 2% of the
outstanding stock of any publicly traded company or operation of the projects
identified in Section 5.11 shall not be a violation of this Section.
(b) ENFORCEMENT. The restrictive covenant contained in this Section is a
covenant independent of any other provision of this Agreement and the existence
of any claim that Seller may allege against any other party to this Agreement,
whether based on this Agreement or otherwise, shall not prevent the enforcement
of this covenant. Seller agrees that Buyer's remedies at law for any breach or
threat of breach by Seller of the provisions of this Section will be inadequate,
and that Buyer shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Section and to enforce specifically the terms
and provisions hereof, in addition to any other remedy to which Buyer may be
entitled at law or equity. In the event of
16
litigation regarding this covenant not to compete, the prevailing party in such
litigation shall, in addition to any other remedies the prevailing party may
obtain in such litigation, be entitled to recover from the other party its
reasonable legal fees and out of pocket costs incurred by such party in
enforcing or defending its rights hereunder. The length of time for which this
covenant not to compete shall be in force shall not include any period of
violation or any other period required for litigation during which Buyer seek to
enforce this covenant. Should any provision of this Section be adjudged to any
extent invalid by any competent tribunal, such provision will be deemed modified
to the extent necessary to make it enforceable.
5.7. PUBLICITY. Seller and Buyer shall not issue any press release or
otherwise make any announcements to the public or the employees of Seller with
respect to this Agreement prior to the Closing Date without the prior written
consent of the other, except as required by Law. If Buyer believes that a public
disclosure of the transactions contemplated hereby is required by law, Buyer
shall give to Seller notice thereof at least 24 hours prior to making such
disclosure.
5.8. TRANSITIONAL MATTERS. Seller and ▇▇. ▇▇▇▇▇▇ shall cooperate with
and assist Buyer and its authorized representatives in order to provide, to the
extent reasonably requested by Buyer, an efficient transfer of control of the
Purchased Assets and the Leased Real Estate and to avoid any undue interruption
in the activities and operations of the Business and the Leased Real Estate
following the Closing Date. Seller shall not cause any utilities to be
disconnected until the Buyer shall have established an account for such utility
in Buyer's own name. Seller shall assist in transferring to Buyer the telephone
numbers for the Cinema location. Buyer shall be liable to Seller for the utility
payments for any utility maintained by the Seller after the Closing Date. Seller
shall cooperate with Buyer's lender, Provident Bank, in connection with the
consummation by Buyer of the transactions provided hereunder, as reasonably
requested by such lender. Such cooperation shall include the execution and
delivery of a subordination agreement in favor of Provident Bank and its assigns
with respect to the Subordinated Note and shall permit Provident Bank to rely on
the legal opinion be delivered by Seller's counsel hereunder. Prior to Closing,
Seller shall remove all of its movie trailers from films at the Cinema.
5.9. BOOKS AND RECORDS. Seller shall not destroy or dispose of any books,
records, and files relating to the Business to the extent that they pertain to
the Business prior to the Closing Date.
5.10. PERMITS; N.J. ISRA. Seller shall use its best efforts to provide to
Buyer valid Permits for the Cinema prior to Closing. In the event that Seller is
unable to do so by Closing, then Seller shall provide Buyer with such Permits
within 30 days after Closing. Sellers shall obtain prior to Closing letters of
Non-Applicability with respect to the Leased Real Estate under the New Jersey
Site Recovery Act (PL 1993, ch. 39).
5.11. RIGHT OF FIRST REFUSAL. ▇▇. ▇▇▇▇▇▇ hereby grants to CCG a right of
first refusal to purchase any movie theater property (whether in corporate
solution or otherwise) proposed to be sold by ▇▇. ▇▇▇▇▇▇ within the three year
period ending on the third anniversary of the Closing Date. The terms of such
right for each theater property are hereby forth in the Right of First Refusal
Agreement in substantially the form of Exhibit E hereto. As each such theater
property is identified, ▇▇. ▇▇▇▇▇▇ shall notify CCG of such property and CCG and
▇▇. ▇▇▇▇▇▇ shall, as a
17
formality, promptly memorialize their agreement with respect to such theater by
completing the information in the form of such Right of First Refusal Agreement
and executing and delivering such completed Right of First Refusal Agreement.
The parties agreement set forth in this Section is intended to be legally
binding notwithstanding that the theater properties subject to this right have
not yet been specifically identified herein.
ARTICLE VI.
CONDITIONS TO CLOSING; TERMINATION
6.1. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER. The obligation of Buyer
and CCG to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Buyer or CCG at Buyer's or CCG's
sole option:
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
representations and warranties of Seller and ▇▇. ▇▇▇▇▇▇ contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date.
Seller and ▇▇. ▇▇▇▇▇▇ shall have performed in all respects all of the covenants
and complied with all of the provisions required by this Agreement to be
performed or complied with by it at or before the Closing.
(b) LITIGATION. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby or that would, after Closing, limit or adversely affect Buyer's ownership
of the Purchased Assets or the Leased Real Estate in a manner different from
Seller's, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any Governmental Body challenging the
lawfulness of or seeking to prevent or delay any of the transactions
contemplated by this Agreement or any of the Other Agreements or seeking
monetary or other relief by reason of the consummation of any of such
transactions.
(c) NO MATERIAL ADVERSE CHANGE. Between the date hereof and the Closing
Date, there shall have been no material adverse change, regardless of insurance
coverage therefor, in the Business or any of the Purchased Assets, results of
operations, prospects or condition, of the Cinema or the Leased Real Estate.
(d) CLOSING CERTIFICATE. If Closing occurs after the date hereof, Seller
shall have delivered a certificate, dated the Closing Date certifying to the
fulfillment of the conditions set forth in subparagraphs (a), (b) and (c) of
this Section. Such certificate shall constitute a representation and warranty of
Seller with regard to the matters therein for purposes of this Agreement.
(e) CLOSING DOCUMENTS. Buyer and CCG shall have received the other
documents referred to in Section 6.3(a). All agreements, certificates, opinions
and other documents delivered by Seller to Buyer and CCG hereunder shall be in
form and substance reasonably satisfactory to Buyer and CCG.
18
(f) TITLE INSURANCE. Buyer, at their sole cost and expense, shall have
obtained for all Leased Real Estate final marked commitments to issue to Buyer
ALTA (1990-Form B with appropriate state endorsements) owner's policies of title
insurance in coverage amounts equal to the fair market values of the Leased Real
Estate, insuring good title to the Leased Real Estate with mechanic's liens
coverage and such endorsements as Buyer may have reasonably requested and with
exceptions only for ALTA standard printed exceptions (other than mechanic's and
materialmen's liens and rights of possession), and Permitted Encumbrances.
(g) BOARD APPROVAL; BANK APPROVAL. Buyer and CCG shall have received the
approval of its Board of Directors and its lender, Provident Bank, to the
transactions contemplated hereunder.
(h) OTHER AGREEMENTS. CCG shall have closed under the agreements to
purchase Cinema 23 in Cedar Grove, New Jersey and the Bellevue Theatre in
Montclair, New Jersey or the Kin Mall Cinemas in Kinnelon, New Jersey.
(i) RELEASE OR TERMINATION OF MORTGAGE AND OTHER ENCUMBRANCES. Seller
shall have caused [Bank's] mortgage on the Leased Real Estate and all of its
other Encumbrances on the Purchased Assets to be released.
(j) LEASED REAL ESTATE. Buyer shall have received from the lessor of the
Lease Agreement consent to assignment of leasehold interest, consent to
leasehold mortgage, and estoppel certificates, nondisturbance agreements, and
other documents as shall be reasonably requested by Provident Bank, all in form
and substance satisfactory to Buyer and Provident Bank.
(k) CONSENTS. Seller shall have received the other consents, approvals and
actions of the Persons identified in Section 3.3.
(l) NEW THEATER TRANSITION FORMS. Buyer shall have received a New Theater
Transition Form from Seller.
(m) DUE DILIGENCE. CCG shall have been satisfied with its due diligence
investigation of the Cinema.
6.2. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER AND ▇▇. ▇▇▇▇▇▇. The
obligation of Seller and ▇▇. ▇▇▇▇▇▇ to proceed with the Closing under this
Agreement is subject to the fulfillment prior to or at Closing of the following
conditions, any one or more of which may be waived in whole or in part by Seller
or ▇▇. ▇▇▇▇▇▇ at Seller's or ▇▇. ▇▇▇▇▇▇'▇ sole option:
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
representations and warranties of Buyer and CCG contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date. Buyer
and CCG shall have performed all of the covenants and complied in all respects
with all of the provisions required by this Agreement to be performed or
complied with by it at or before the Closing.
19
(b) LITIGATION. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any Governmental Body challenging the
lawfulness of or seeking to prevent or delay any of the transactions
contemplated by this Agreement or the Other Agreements or seeking monetary or
other relief by reason of the consummation of such transactions.
(c) CLOSING CERTIFICATE. If Closing occurs after the date hereof, Buyer
and CCG shall have delivered a certificate, dated the Closing Date certifying to
the fulfillment of the conditions set forth in subparagraphs (a) and (b) of this
Section 6.2. Such certificate shall constitute a representation and warranty of
Buyer with regard to the matters therein for purposes of this Agreement.
(d) CLOSING DOCUMENTS. Seller shall also have received the other documents
referred to in Section 6.3(b). All agreements, certificates, opinions and other
documents delivered by Buyer to Seller hereunder shall be in form and substance
reasonably acceptable to counsel for Seller, in the exercise of such counsel's
reasonable professional judgment.
(e) LEASE AGREEMENT. Seller shall have received from the lessor of the
Lease Agreement consent to the assignment of the Lease Agreement to Buyer. If
▇▇. ▇▇▇▇▇▇ is not released from his obligations under the Lease Agreement, then
CCG shall indemnify and hold ▇▇. ▇▇▇▇▇▇ harmless from and against any damages
incurred by ▇▇. ▇▇▇▇▇▇ as a consequence of the breach of the Lease Agreement by
Buyer after Closing.
6.3. DELIVERIES AND PROCEEDINGS AT CLOSING.
(a) DELIVERIES BY SELLER AND ▇▇. ▇▇▇▇▇▇. Seller and ▇▇. ▇▇▇▇▇▇ shall
deliver or cause to be delivered to Buyer at the Closing:
(i) General warranty bills of sale and instrument of assignment to
the Purchased Assets in the form attached hereto as Exhibit F.
(ii) Assignments of all transferable or assignable licenses, Permits
and warranties relating to the Purchased Assets and of any Intellectual Property
included in the Purchased Assets, duly executed and in forms acceptable to
Buyer.
(iii) [not used].
(iv) Assignments of the Lease Agreement in the form attached hereto
as Exhibit G.
(v) Certificates of the appropriate public officials to the effect
that Seller was a validly existing corporation in good standing in its state of
formation as of a date not more than 15 business days prior to the Closing Date.
20
(vi) Incumbency and specimen signature certificates dated the
Closing Date, signed by the officers of Seller and certified by its Chief
Executive Officer or Executive Vice President.
(vii) True and correct copies of the Seller's Certificate of
Incorporation certified by the Secretary of State as of the Closing Date.
(viii) Certificates of Seller (A) setting forth all resolutions of
the Directors of Seller and the stockholders of Seller authorizing the execution
and delivery of this Agreement and the Other Agreements and the performance by
Seller of the transactions contemplated hereby and thereby, and (B) to the
effect that the Certificate of Incorporation of Seller delivered pursuant to
Section 6.3(a)(vii) were in effect at the date of adoption of such resolutions,
the date of execution of this Agreement and the Closing Date.
(ix) The opinion of Buklad & Buklad, legal counsel to Seller, in
substantially the form of Exhibit H.
(x) Keys for the Cinema location.
(xi) All vendor warranties (including those for the roofs on the
Cinema) respecting the Purchased Assets.
(xii) Such other agreements and documents as Buyer may reasonably
request.
(b) DELIVERIES BY BUYER. Buyer shall deliver or cause to be delivered to
Seller at the Closing:
(i) The Subordinated Note.
(ii) [not used].
(iii) A certificate of the appropriate public official to the effect
that Buyer and CCG is a validly existing corporation in the State of Delaware as
of a date not more than 15 business days prior to the Closing Date.
(iv) Incumbency and specimen signature certificates signed by the
officers of Buyer and CCG and certified by the Secretary of Buyer and CCG.
(v) True and correct copies of the Certificates of Incorporation of
Buyer and CCG as of a date not more than 15 business days prior to the Closing
Date, certified by the Secretary of State of Delaware.
(vi) A certificate of the Secretary of Buyer and CCG (A) setting
forth all resolutions of the Board of Directors of Buyer and CCG authorizing the
execution and delivery of this Agreement and Other Agreements and the
performance by Buyer and CCG of the transactions contemplated hereby and
thereby, certified by the Secretary of Buyer and CCG and (B) to the effect that
the Certificates of Incorporation of Buyer delivered pursuant to Section
21
6.3(b)(v) were in effect at the date of adoption of such resolutions, the date
of execution of this Agreement and the Closing Date.
(vii) The opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to Buyer
and CCG, in substantially the form of Exhibit F.
(viii) Such other agreements and documents as Seller may reasonably
request.
6.4. TERMINATION.
(a) MUTUAL CONSENT; FAILURE OF CONDITIONS. Except as provided in Section
6.4(b), this Agreement may be terminated at any time prior to Closing by: (i)
mutual consent of Buyer, CCG and Seller; (ii) Buyer and CCG, if any of the
conditions specified in Section 6.1 hereof shall not have been fulfilled by
January 19, 1998 and shall not have been waived by Buyer and CCG; or (iii)
Seller, if any of the conditions specified in Section 6.2 hereof shall not have
been fulfilled by January 19, 1998 and shall not have been waived by Seller. In
the event of termination of this Agreement by either Buyer, CCG or Seller
pursuant to clause (ii) or (iii) of the immediately preceding sentence, Buyer
and CCG, on the one hand, and Seller on the other hand shall be liable to the
other for any breach hereof by such party, which breach led to such termination,
and the rights and obligations of the parties set forth in Sections 7.2, 7.3 and
8.1 shall survive such termination. Buyer, CCG and Seller shall also be entitled
to seek any other remedy to which it may be entitled at law or in equity in the
event of such termination, which remedies shall include injunctive relief and
specific performance. Notwithstanding the foregoing, in the event that this
Agreement is terminated by one party hereto pursuant to clause (ii) or (iii) of
the first sentence of this Section solely as a result of a breach by the other
party hereto of a representation or warranty of such other party as of a date
after the date of this Agreement, which breach could not have been reasonably
anticipated by such other party and was beyond the reasonable control of such
other party, then the remedy of the party terminating this Agreement shall be
limited solely to recovery of all of such party's costs and expenses incurred in
connection herewith.
(b) CASUALTY DAMAGE. Notwithstanding anything else herein to the contrary,
if prior to Closing the Purchased Assets (or any portion thereof) are damaged by
fire or any other cause, the reasonable estimate of the immediate repair of
which would cost more than $50,000, Buyer at their option, which may be
exercised by written notice given to Seller within ten business days after
Buyer's receipt of notice of such loss, may declare this Agreement null and
void, or Buyer may Close subject to reduction of the Purchase Price by the
amount of any applicable insurance deductible which shall be paid by Buyer and
assignment to Buyer of the proceeds from any insurance carried by Seller
covering such loss. If prior to Closing the Purchased Assets (or any portion
thereof) are damaged by fire or any other cause, the reasonable estimate of the
repair of which would cost $50,000 or less, such event shall not excuse Buyer
from its obligations under this Agreement, but the Purchase Price shall be
reduced by an amount equal to the amount of such cost and Seller shall be
entitled to retain the net insurance proceeds collected or to be collected by
Seller.
(c) FAILURE TO OBTAIN LANDLORD'S CONSENT. Notwithstanding anything else
herein to the contrary, failure to obtain the consent of the landlord to the
assignment of the Lease
22
Agreement from Seller to Buyer shall not be a breach of any party hereto. In the
event that the Seller or ▇▇. ▇▇▇▇▇▇ determines to pursue the landlord for any
damages for wrongfully withholding or conditioning its consent to the assignment
of the Lease, the Buyer shall not be a party to nor have any rights of recovery
in any such action and the Seller and ▇▇. ▇▇▇▇▇▇ will be free to pursue or
abandon any such action against the landlord as they see fit without including
or otherwise allowing for the participation of Buyer. In the event, the Closing
does not proceed and the Agreement is terminated, then the Buyer shall thereupon
have no further rights to buy the Purchased Assets otherwise to have been sold
hereunder, and the Seller will thereupon be free to hold, operate, sell, or
dispose of same to any person at any time thereafter.
ARTICLE VII.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1. SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing; provided, however, that, representations and warranties hereunder
shall survive for a period of three years after the Closing Date, with the
exception of the representations and warranties contained in Sections 3.1, 3.2,
3.3 and 3.6, the first sentence of Section 3.8, and Sections 4.1, 4.2 and 4.3,
all of which shall survive for the period of the applicable statute of
limitations plus 90 days. All claims for damages made by virtue of any
representations, warranties and agreements herein shall be made under, and
subject to the limitations set forth in, this Article VII. The representations
and warranties set forth in Articles III and IV are cumulative, and any
limitation or qualification set forth in any one representation and warranty
therein shall not limit or qualify any other representation and warranty
therein. Except the representations and warranties of each party hereto
expressly contained in this Agreement or the Other Agreements, no party hereto
is making and specifically disclaims any representations or warranties of any
kind or character, express or implied.
7.2. INDEMNIFICATION BY SELLER AND ▇▇. ▇▇▇▇▇▇. Seller and ▇▇. ▇▇▇▇▇▇ shall
jointly and severally indemnify, defend, save and hold Buyer, CCG and their
officers, directors, employees, agents and Affiliates (collectively, "BUYER
INDEMNITEES") harmless from and against all demands, claims, actions or causes
of action, assessments, losses, damages, deficiencies, Liabilities, costs and
expenses (including reasonable legal fees, interest, penalties, and all
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing; collectively, "BUYER DAMAGES") asserted against, imposed upon,
resulting to, required to be paid by, or incurred by any Buyer Indemnitees,
directly or indirectly, in connection with, arising out of, resulting from, or
which would not have occurred but for, (i) a material breach of any
representation or warranty made by Seller in this Agreement, in any certificate
or document furnished pursuant hereto by Seller or any Other Agreement to which
Seller is or is to become a party, (ii) a breach or nonfulfillment of any
covenant or agreement made by Seller in or pursuant to this Agreement and in any
Other Agreement to which Seller is or is to become a party, (iii) any Retained
Liability, (iv) any successor liability (or Liabilities based on similar
theories) arising out of any facts or circumstances occurring prior to the
Closing Date or Liability arising out of or attaching by virtue of Seller being
a member of a controlled group or affiliated group of entities,
23
and (v) the provisions of 29 U.S.C. ss. 1161-1168, as same may be amended from
time to time, and the regulations and rulings thereunder, with respect to the
employees of Seller at the Cinema.
7.3. INDEMNIFICATION BY BUYER. Buyer and CCG shall indemnify, defend, save
and hold ▇▇. ▇▇▇▇▇▇ and Seller and its officers, directors, employees,
Affiliates and agents (collectively, "SELLER INDEMNITEES") harmless from and
against any and all demands, claims, actions or causes of action, assessments,
losses, damages, deficiencies, Liabilities, costs and expenses (including
reasonable legal fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing; collectively,
"SELLER DAMAGES") asserted against, imposed upon, resulting to, required to be
paid by, or incurred by any Seller Indemnitees, directly or indirectly, in
connection with, arising out of, resulting from, or which would not have
occurred but for, (i) a material breach of any representation or warranty made
by Buyer or CCG in this Agreement or in any certificate or document furnished
pursuant hereto by Buyer or CCG or any Other Agreement to which Buyer or CCG is
or is to become a party, and (ii) a breach or nonfulfillment of any covenant or
agreement made by any Buyer or CCG in or pursuant to this Agreement and in any
Other Agreement to which any Buyer or CCG is or is to become a party.
7.4. WAIVER OF STATUTE OF LIMITATIONS. Each party hereto waives any
applicable statute of limitations that may be applicable to Damages arising
under clauses (iii), (iv) and (v) of Section 7.2 and clause (iii) of Section
7.3.
7.5. NOTICE OF CLAIMS. If any Buyer Indemnitee or Seller Indemnitee (an
"INDEMNIFIED PARTY") believes that it has suffered or incurred or will suffer or
incur any Damages for which it is entitled to indemnification under this Article
VII, such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "INDEMNIFYING PARTY") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this Section shall not affect any of such party's rights under this
Article VII or otherwise except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnified Party.
7.6. THIRD PARTY CLAIMS. The Indemnifying Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnifying Party may compromise or settle
the same, provided that the Indemnifying Party shall give the Indemnified Party
advance notice of any proposed compromise or settlement. The Indemnifying Party
shall permit the Indemnified Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnified Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnified Party
(subject to reimbursement pursuant to Section 7.1 or 7.2, as the case may be).
7.7. LIMITATION ON INDEMNIFICATION. No Indemnified Party shall be
entitled to make a claim for indemnification for inaccuracy in or breach of
representation or warranty pursuant to clause (i) of Section 7.2 until the
cumulative and aggregate amount of all Damages as a result of
24
all matters covered by clause (i) of Section 7.2 exceeds $10,000 (the "BASKET
AMOUNT"). If and when such damages do exceed the Basket Amount, then the
Indemnified Party shall be entitled to indemnification for all such damages in
excess of the Basket Amount. Any indemnification payment under this Agreement
shall take into account any insurance proceeds or other third party
reimbursement actually received (other than the proceeds of any self insurance
or, to the extent it is the economic equivalent of self insurance, any insurance
that is retrospectively rated).
7.8. PAYMENT. All indemnification payments under this Article VII shall
be made promptly in cash.
ARTICLE VIII.
MISCELLANEOUS
8.1. COSTS AND EXPENSES.
Buyer and CCG, on the one hand, and Seller and ▇▇. ▇▇▇▇▇▇, on the other hand,
shall each pay its respective expenses, brokers' fees and commissions and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including all accounting, legal and appraisal fees and
settlement charges. All transfer taxes, if any, incurred as a result of the
transfer of the Purchased Assets shall be paid by Seller.
8.2. PRORATION OF EXPENSES. All accrued expenses associated with the
Leased Real Estate included in the Purchased Assets, such as rents and other
charges under the Lease Agreement, electricity, gas, water, sewer, telephone,
property taxes, security services and similar items, shall be prorated between
Buyer and Seller as of the Closing Date. Buyer and Seller shall settle such
amounts within 30 days after Closing.
8.3. BULK SALES. The parties hereto waive compliance with the provisions
of any bulk sales law applicable to the transactions contemplated hereby, and,
notwithstanding anything else in this Agreement to the contrary, Seller shall
hold Buyer harmless from and against all claims asserted against the Purchased
Assets or the Buyer pursuant to such bulk sales laws. Seller agrees to pay
timely its account creditors with respect to liabilities not being assumed by
Buyer hereunder.
8.4. FURTHER ASSURANCES. Seller shall, at any time and from time to time
on and after the Closing Date, upon the reasonable request by Buyer and without
further consideration, take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments, documents, transfers, conveyances and assurances as may be
required or desirable for the better conveying, transferring, assigning,
delivering, assuring and confirming the Purchased Assets to Buyer.
8.5. NOTICES. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made (i) the fifth business day after the date of mailing, if delivered
by registered or certified mail, postage prepaid, (ii) upon delivery, if sent by
hand delivery, (iii) upon delivery, if sent by prepaid courier, with a record of
receipt, or (iv) the next day after the date of dispatch, if sent by cable,
telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested), to the parties at
the following addresses:
25
(i) IF TO BUYER, TO:
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: A. ▇▇▇▇ ▇▇▇▇, President
with a required copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) IF TO SELLER, TO:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Rialto Theatre of Westfield, Inc.
▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy:
with a required copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esquire
Buklad & Buklad
▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
8.6. CURRENCY. All currency references herein are to United States
dollars.
8.7. OFFSET; ASSIGNMENT; GOVERNING LAW. Buyer and CCG shall be entitled
to offset or recoup from amounts due to Seller from Buyer or CCG hereunder or
under any Other Agreement (including the Subordinated Note) against any
obligations of Seller to Buyer or CCG hereunder or under any Other Agreement
(including Buyer Damages). This Agreement and all the rights and powers granted
hereby shall bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns. This Agreement and the rights,
interests and obligations hereunder may not be assigned by any party hereto
without the prior written consent of the other parties hereto, except that Buyer
or CCG may make such assignments to any Affiliate of Buyer or CCG provided that
Buyer or CCG remain liable hereunder, and, further, Buyer and CCG may
collaterally assign their rights hereunder to Provident Bank or other commercial
lending
26
institution. This Agreement shall be governed by and construed in accordance
with the laws of New Jersey without regard to its conflict of law doctrines.
8.8. AMENDMENT AND WAIVER; CUMULATIVE EFFECT. To be effective, any
amendment or waiver under this Agreement must be in writing and be signed by the
party against whom enforcement of the same is sought. Neither the failure of any
party hereto to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by any other party with its obligations
hereunder, nor any custom or practice of the parties at variance with the terms
hereof shall constitute a waiver by such party of its right to exercise any such
right, power or remedy or to demand such compliance. The rights and remedies of
the parties hereto are cumulative and not exclusive of the rights and remedies
that they otherwise might have now or hereafter, at law, in equity, by statute
or otherwise.
8.9. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the Schedules and Exhibits set forth all of the promises, covenants, agreements,
conditions and undertakings between the parties hereto with respect to the
subject matter hereof, and supersede all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express or implied,
oral or written. This Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder, except the provisions
of Sections 7.2 and 7.3 relating to Buyer Indemnitees and Seller Indemnitees and
Section 8.10.
8.10. THIRD PARTY BENEFICIARY. No Person is an intended third party
beneficiary of this Agreement.
8.11. SEVERABILITY. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇▇▇▇ GALLERIA CINEMAS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
CLEARVIEW CINEMA GROUP, INC.
By: /s/ A. ▇▇▇▇ ▇▇▇▇
------------------------------
A. ▇▇▇▇ ▇▇▇▇
Title: President
CCC ▇▇▇▇▇▇▇▇▇▇▇ CINEMA CORP.
By: /s/ A. ▇▇▇▇ ▇▇▇▇
------------------------------
A. ▇▇▇▇ ▇▇▇▇
Title: President
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.1P Permitted Encumbrances
Schedule 3.5 No Changes
Schedule 3.7 Undisclosed Liabilities
Schedule 3.8 Title; Business
Schedule 3.9 Litigation or Proceedings
Schedule 3.12 Leased Real Estate
Schedule 3.14 Insurance
Schedule 3.16 Employee Benefits
Schedule 3.17 Environmental Matters
Exhibit A Leased Real Estate/Lease Agreement
Exhibit B Subordinated Note
Exhibit C [not used]
Exhibit D Income Statements
Exhibit E Right of First Refusal Agreement
Exhibit F Form of General Warranty Bills of Sale; Instrument of
Assignment
Exhibit G Form of Assignments Lease Agreement
Exhibit H Form of Opinion of Buklad & Buklad
Exhibit I Form of Opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
[Schedules and Exhibits will be provided upon request.]
Amendment No. 1 to Asset Purchase Agreement
("AMENDMENT NO. 1"), dated as of December 12,
1997, by and among ▇▇▇▇▇ ▇▇▇▇▇▇, an individual
residing in Kinnelon, New Jersey ("▇▇.
▇▇▇▇▇▇"), ▇▇▇▇▇▇▇▇▇▇▇ Galleria Cinemas, Inc., a
New Jersey corporation ("SELLER"), CCC
▇▇▇▇▇▇▇▇▇▇▇ Cinema Corp., a Delaware
corporation ("BUYER"), and Clearview Cinema
Group, Inc., a Delaware corporation ("CCG").
The parties hereto entered into that certain Asset Purchase Agreement
dated as of November 14, 1997 (the "Asset Purchase Agreement") and desire to
amend the Asset Purchase Agreement pursuant to the terms contained herein.
In consideration of the representations, warranties, covenants and
agreements contained herein and in the Asset Purchase Agreement, Seller, Buyer,
▇▇. ▇▇▇▇▇▇, CJM and CCG, each intending to be legally bound hereby, agree as set
forth below.
1. DEFINITIONS. All capitalized terms used in this Amendment not otherwise
defined in this Amendment have the meanings given them in the Asset Purchase
Agreement.
2. AMENDMENT. The Asset Purchase Agreement is hereby amended as provided
below.
3. SUBORDINATED NOTE; PREFERRED STOCK; ETC. All references in the Asset
Purchase Agreement to the Subordinated Note are hereby deleted. Except as
provided in Sections 4 and 5 below and subject to Sections 8 and 9 below, and
subject to Sections 8 and 9 below, CCG shall deliver to Seller by March 31,
1998, 540 shares of Class B Nonvoting Cumulative Redeemable Preferred Stock
having terms substantially set forth in the Certificate of Designations,
Preferences, Rights and Limitations attached hereto as EXHIBIT A (the "Class B
Preferred Stock"). The shares of Class B Nonvoting Cumulative Redeemable
Preferred Stock shall be included within the definition of "Other Agreements"
for all purposes in the Asset Purchase Agreement. CCG shall not issue any
additional shares of Class B Preferred Stock at any time during which CCG has
outstanding dividend arrearges on the Class B Preferred Stock held by Seller.
CCG shall not issue any shares of Preferred Stock that have rights senior to the
Class B Preferred Stock as to dividends and redemptions so long as Seller or its
affiliates hold more than 100 outstanding shares of Class B Preferred Stock.
4. CASH IN LIEU OF CLASS B PREFERRED STOCK. If by March 31, 1998 CCG
completes the issuance of debt securities aggregating at least $70 million in an
offering governed by Rule 144A issued by the Securities Exchange Commission
under the Securities Act, then CCG shall deliver to Seller $540,000 in cash on
March 31, 1998 in lieu of delivery of the Class B Preferred Stock.
5. INTEREST. On March 31, 1998, CCG shall deliver to Seller an amount of
cash equal to that amount of interest that would have accrued on a loan by
Seller to CCG in the principal amount of $540,000 using an annual interest rate
of 10 1/2 %, compounded annually.
6. SUBORDINATION. All obligations of CCG and Buyer to deliver any cash
after the Closing Date pursuant to this Amendment shall be subordinate and
subject in right of payment, to the prior payment in full of all Indebtedness of
CCG and Buyer to the extent provided in one or more subordination agreements by
and among CCG and Buyer, Seller and the holder of the Indebtedness. For purposes
hereof, "Indebtedness" means the principal of, premium, if any, and interest
(including any interest accruing after the filing of a petition in bankruptcy)
on and other amounts due on or in connection with any indebtedness of CCG and
Buyer as defined in and arising under any loan, credit, security or similar
agreement with any bank, insurance company, or other commercial financial
institution, in any case whether arising prior to, on or after the Closing Date,
and all renewals, extensions, and refundings thereof. As a condition to CCG's
obligation hereunder to issue Class B Preferred Stock to Seller, Seller shall
have first executed and delivered in favor of CCG's senior lender such senior
lender's standard form of subordination agreement with respect to the Class B
Preferred Stock.
7. CLASS B PREFERRED STOCK. All Class B Preferred Stock promised to be
delivered pursuant hereto shall not be registered under the U.S. Securities Act
of 1933, as amended (the "Securities Act"). Seller covenants that it will not
sell or dispose of the Class B Preferred Stock except in accordance with the
rules set forth in Rule 144 issued by the Securities and Exchange Commission
under the Securities Act and shall not sell, transfer or pledge the Class B
Preferred Stock in the absence of a registration under the Securities Act or
unless CCG receives an opinion of counsel (which may be counsel for CCG)
reasonably acceptable to it stating that such sale or transfer is exempt from
the registration and prospectus delivery requirements of the Securities Act.
Seller agrees and consents that the certificates representing the Class B
Preferred Stock shall contain the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS CLEARVIEW CINEMA GROUP, INC. RECEIVES AN
OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR CLEARVIEW CINEMA GROUP, INC.)
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT AND
THAT SUCH SALE OR TRANSFER IS MADE IN ACCORDANCE WITH THE RULE SET FORTH
IN RULE 144 ISSUED BY THE SECURITIES EXCHANGE COMMISSION UNDER SAID ACT.
8. SECURITIES LAWS REPRESENTATION. ▇▇. ▇▇▇▇▇▇ and Seller represent and
warrant to Buyer and CCG the matters set forth in this Section 8, and such
representations and warranties shall be deemed to be included within Article III
of the Asset Purchase Agreement. ▇▇. ▇▇▇▇▇▇ and Seller acknowledge that they and
their representatives have received and reviewed all of the documents filed by
CCG through the date hereof with the Securities and Exchange Commission. ▇▇.
▇▇▇▇▇▇ and Seller and their representatives have had, at their discretion, an
opportunity to meet with the officers CCG to discuss CCG's business. ▇▇. ▇▇▇▇▇▇
and Seller are each acquiring the Class B Preferred Stock for his or its own
account with the intention of holding the Class B
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Preferred Stock for purposes
of investment, and not as a nominee or agent for any other party, and not with a
view to the resale or distribution of any of the Class B Preferred Stock, and no
Seller or Stockholder has any intention of selling the Class B preferred Stock
or any interest therein in violation of the federal securities laws or any
applicable state securities laws. ▇▇. ▇▇▇▇▇▇ and Seller understand that the
Class B Preferred Stock are not registered under the Securities Act, or under
any state securities laws. Each of ▇▇. ▇▇▇▇▇▇ and Seller is an "accredited
investor" within the meaning of that term as set forth in Rule 501 issued by the
Securities and Exchange Commission under the Securities Act. It shall be a
condition precedent to CCG's obligation to issue the Class B Preferred Shares
that the representation and warranty contained in this Section 8 be true and
correct on the date of issuance of the Class B Preferred Stock, and CCG shall
have been satisfied that the issuance of the Class B Preferred Stock shall be
exempt from registration under the Securities Act.
9. COOPERATION WITH FINANCIAL RECORDS. After Closing, Seller and ▇▇.
▇▇▇▇▇▇ shall cooperate with Buyer and CCG by providing CCG, Buyer and their
accountants and other representatives with whatever access and review of
Seller's financial records for each calendar quarter ending within the year
immediately prior to the Closing Date, as CCG, Buyer and their advisors deem
appropriate in order for CCG to make adequate financial disclosures to CCG's
stockholders and to the Securities Exchange Commission and to make adequate
financial disclosures in any filings by CCG with the Securities Exchange
Commission.
10. NO OTHER AMENDMENTS. Except as amended by the foregoing, the Asset
Purchase Agreement shall remain in full force and effect.
11. SUCCESSORS AND ASSIGNS. This Amendment and all the rights and powers
granted hereby shall bind and inure to the benefit of the parties hereto and
their respective permitted successors and assigns. This Amendment and the
rights, interests and obligations hereunder may not be assigned by any party
hereto without the prior written consent of the other parties hereto, except
that Buyer or CCG may make such assignments to any Affiliate of Buyer or CCG
provided that Buyer or CCG remain liable hereunder, and, further, Buyer and CCG
may collaterally assign their rights hereunder to Provident Bank or other
commercial lending institution. This Amendment shall be governed by and
construed in accordance with the laws of New Jersey without regard to its
conflict of law doctrines.
12. AMENDMENT AND WAIVER; CUMULATIVE EFFECT. To be effective, any
amendment or waiver under this Amendment must be in writing and be signed by the
party against whom enforcement of the same is sought. Neither the failure of any
party hereto to exercise any right, power or remedy provided under this
Amendment or to insist upon compliance by any other party with its obligations
hereunder, nor any custom or practice of the parties at variance with the terms
hereof shall constitute a waiver by such party of its right to exercise any such
right, power or remedy or to demand such compliance. The rights and remedies of
the parties hereto are cumulative and not exclusive of the rights and remedies
that they otherwise might have now or hereafter, at law, in equity, by statute
or otherwise.
13. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Amendment sets
forth all of the promises, covenants, agreements, conditions and undertakings
between the parties hereto with
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respect to the subject matter hereof, and supersede all prior or contemporaneous
agreements and understandings, negotiations, inducements or conditions, express
or implied, oral or written. This Amendment is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder, except
the provisions of SECTIONS 7.2 AND 7.3 relating to Buyer Indemnitees and Seller
Indemnitees and SECTION 8.10 of the Asset Purchase Agreement.
14. SEVERABILITY. If any term or other provision of this Amendment is held
by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Amendment shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Amendment so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
15. COUNTERPARTS.
This Amendment may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which together shall be deemed to
be one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇▇▇▇ GALLERIA CINEMAS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
CLEARVIEW CINEMA GROUP, INC.
By: /s/ A. ▇▇▇▇ ▇▇▇▇
------------------------------
A. ▇▇▇▇ ▇▇▇▇
Title: President
CCC ▇▇▇▇▇▇▇▇▇▇▇ CINEMA CORP.
By: /s/ A. ▇▇▇▇ ▇▇▇▇
--------------------------
A. ▇▇▇▇ ▇▇▇▇
Title: President
Exhibit A
CERTIFICATE OF DESIGNATIONS, PREFERENCES, RIGHTS
AND LIMITATIONS
OF
CLASS B NONVOTING CUMULATIVE REDEEMABLE PREFERRED STOCK
("Certificate of Designations")
OF
CLEARVIEW CINEMA GROUP, INC.
a Delaware corporation
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Clearview Cinema Group, Inc., a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority contained in Section 4
of Article IV of its Amended and Restated Certificate of Incorporation dated
August 18, 1997 (the "Amended and Restated Certificate of Incorporation"), and
in accordance with the provisions of Section 151 of the General Corporation Law
of the State of Delaware, its Board of Directors has adopted the following
resolution creating a new class of its Preferred Stock, $.01 par value,
designated as Class B Nonvoting Cumulative Redeemable Preferred Stock:
RESOLVED, that a new class of authorized Preferred Stock of the
Corporation be hereby created and established, and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such class, and the
qualifications, limitations or restrictions thereof are as follows:
(a) DESIGNATION AND AMOUNT. The shares of such class shall be designated
as "Class B Nonvoting Cumulative Redeemable Preferred Stock" (referred to herein
as, the "Class B Redeemable Preferred Stock") and the number of shares
constituting such class shall be 20,000.
(b) DIVIDENDS. The holder of each share of Class B Redeemable Preferred
Stock shall be entitled to receive on the 15th day of April, July, October and
January, or the next business day if such 15th business day is not a business
day (each such date being referred to herein as a "Dividend Payment Date"), out
of funds legally available for such purpose, and as declared by the Board of
Directors, cumulative quarterly cash dividends in a per share amount equal to
$.291667 for each day during which such share was outstanding during the
calendar quarter immediately preceding the Dividend Payment Date. In case the
Corporation shall (i) pay a dividend on the Class B Redeemable Preferred Stock
in shares of Class B Redeemable Preferred Stock, (ii) subdivide the outstanding
shares of Class B Redeemable Preferred Stock, or (ii) combine the outstanding
shares of Class B Redeemable Preferred Stock into a smaller number of shares,
the per share dividend rate in effect immediately prior thereto shall be
proportionately adjusted so that the aggregate dividend rate of all shares of
Class B Redeemable Preferred Stock immediately after such event shall equal the
aggregate dividend rate of all shares of Class B Redeemable Preferred Stock
immediately prior thereto. An adjustment made pursuant to this section shall
become effective (x) upon the effective date in the case of a subdivision or
combination or (y) upon the record date in the case of a dividend of shares.
Quarterly dividends shall be paid on the basis of 90 days in each full quarter
regardless of the number of actual days in each quarter, but dividends for less
than a full quarter shall be based on the actual number of days during which
each share is outstanding. Each dividend declared by the Board of Directors
shall be paid to
the holders of shares of the Class B Redeemable Preferred Stock as such holders'
names appear on the stock books on the related record date. Such record date
shall be the last day of the calendar quarter immediately preceding the
applicable Dividend Payment Date. Dividends in arrears with respect to any past
Dividend Payment Date with respect to shares of Class B Redeemable Preferred
Stock may be declared by the Board of Directors and paid on the outstanding
shares of the Class B Redeemable Preferred Stock on any date fixed by the Board
of Directors, whether or not a regular Dividend Payment Date, to the holder of
the shares of the Class B Redeemable Preferred Stock on the related record date
fixed by the Board of Directors, which shall not be less than 10 nor more than
45 days before the date fixed for the payment of such dividend. Any dividend
payment made on shares of the Class B Redeemable Preferred Stock shall first be
credited against the dividends accrued with respect to the earliest Dividend
Payment Date for which dividends have not been paid. If full cumulative
dividends have not been paid or declared and set aside for payment on the shares
of the Class B Redeemable Preferred Stock, all cumulative dividends on the
shares of the Class B Redeemable Preferred Stock shall be declared and paid pro
rata to the holders of the outstanding shares of the Class B Redeemable
Preferred Stock entitled thereto, so that in all cases the amount of dividends
declared per share on the shares of the Class B Redeemable Preferred Stock bear
to each other the same ratio that accumulated dividends per share on all shares
of Class B Redeemable Preferred Stock bear to each other. No holder of shares of
Class B Redeemable Preferred Stock shall be entitled to any dividends, whether
payable in cash, property or stock, in excess of full cumulative dividends, as
provided in this section (b). No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment on the shares of Class B
Redeemable Preferred Stock that may be in arrears. Except as set forth above,
for so long as any shares of the Class B Redeemable Preferred Stock are
outstanding, no dividends may be paid or declared and set aside for payment or
other distribution made upon the Class A Convertible Preferred Stock, Common
Stock or any other stock of the Corporation ranking junior to the shares of the
Class B Redeemable Preferred Stock as to dividends ("Junior Stock"), nor may any
shares of Junior Stock be redeemed, purchased or otherwise acquired by the
Corporation for consideration (or any payment made to or available for a sinking
fund for the redemption of any shares of such stock), unless full cumulative
dividends on all shares of Class B Redeemable Preferred Stock for all Dividend
Payment Dates accruing on or prior to the date of such transaction have been or
contemporaneously are declared and paid through the most recent Dividend Payment
Date. If dividends are not paid on a Dividend Payment Date, then such dividends
shall accrue and be cumulative from and after such Dividend Payment Date.
Notwithstanding the foregoing, no dividends shall be paid or payable with
respect to any shares of Class B Redeemable Preferred Stock if such payment is
otherwise prohibited by section (h) of this Certificate of Designations or by
the Delaware General Corporation Law. Dividends with respect to shares of Class
B Redeemable Preferred Stock may also be subject to setoff and recoupment as
contemplated by section (k) hereof.
(c) LIQUIDATION RIGHTS. In the event of any Liquidation Event (as defined
herein), the holders of shares of Class B Redeemable Preferred Stock shall be
entitled to receive from the assets of the Corporation, whether represented by
capital stock, paid-in capital or retained earnings, payment in cash of an
amount equal to the aggregate Liquidation Value (as defined herein) of such
Class B Redeemable Preferred Stock, plus a further amount equal to any dividends
that have been (or, pursuant to Section (b) hereof, were required to have been)
declared on the Class B Redeemable Preferred Stock but which remain unpaid,
before any distribution of assets shall be made to the holders of the Class A
Convertible Preferred Stock, Common Stock, or other Junior Stock. If, upon such
Liquidation Event, the assets distributable to the holders of shares of Class B
Redeemable Preferred Stock shall be insufficient to permit the payment in full
to such holders of the preferential amounts to which they are entitled, then
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such assets shall be distributed ratably among the shares of Class B Redeemable
Preferred Stock. The "Liquidation Value" of each share of Class B Redeemable
Preferred Stock shall be equal to $1,000. In case the Corporation shall (i) pay
a dividend on the Class B Redeemable Preferred Stock in shares of Class B
Redeemable Preferred Stock, (ii) subdivide the outstanding shares of Class B
Redeemable Preferred Stock, or (ii) combine the outstanding shares of Class B
Redeemable Preferred Stock into a smaller number of shares, the "Liquidation
Value" in effect immediately prior thereto shall be proportionately adjusted so
that the aggregate Liquidation Value of all shares of Class B Redeemable
Preferred Stock immediately after such event shall equal the aggregate
Liquidation Value of all shares of Class B Redeemable Preferred Stock
immediately prior thereto. An adjustment made pursuant to this section shall
become effective (x) upon the effective date in the case of a subdivision or
combination or (y) upon the record date in the case of a dividend of shares.
After payment in full of the aggregate Liquidation Value and dividends, as set
forth above, to the holders of shares of Class B Redeemable Preferred Stock, the
remaining assets of the Corporation available for payment and distribution to
stockholders may be paid and distributed to the holders of the Class A
Convertible Preferred Stock, Common Stock and any other Junior Stock. For
purposes hereof, the term "Liquidation Event" shall mean any (A) merger or
consolidation other than a merger or consolidation in which persons who,
immediately prior to the closing of such transaction, were the holders of voting
securities of the Corporation having more than fifty percent (50%) of the voting
power of the outstanding voting securities of the Corporation (which includes
all Common Stock, all Class A Convertible Preferred Stock and all other voting
securities created in or under the Amended and Restated Certificate of
Incorporation) hold, immediately after such transaction, voting securities of
the surviving entity having more than fifty percent (50%) of the voting power of
the outstanding voting securities of the surviving entity, (B) sale of all or
substantially all of the assets of the Corporation, or (C) liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.
(d) VOTING RIGHTS. Holders of shares of Class B Redeemable Preferred Stock
shall not be entitled to any voting rights except upon matters with respect to
which the holders of shares of Class A Convertible Preferred Stock, Class B
Redeemable Preferred Stock and Common Stock have separate voting rights as
expressly provided in this section (d), the Corporation's Amended and Restated
Certificate of Incorporation or as required by Delaware law. The affirmative
vote of the holders of more than fifty percent (50%) of the outstanding shares
of Class B Redeemable Preferred Stock, voting separately as a single class,
shall be required to authorize any amendment to this Certificate of Designations
or the Corporation's Amended and Restated Certificate of Incorporation if such
amendment would adversely affect the powers, preferences or rights of the Class
B Redeemable Preferred Stock.
(e) REDEEMABLE AT OPTION OF THE CORPORATION. The Corporation shall have
the right to redeem any one or more shares of Class B Redeemable Preferred Stock
at any time and from time to time at a redemption price of $1,000 per share plus
an amount equal to all unpaid dividends thereon, including accrued dividends,
whether or not declared, to the redemption date. Notice of any redemption of the
Class B Redeemable Preferred Stock shall be mailed at least 30 days prior to the
date fixed for redemption to each holder of Class B Redeemable Preferred Stock
to be redeemed, at such holder's address as it appears on the books of the
Corporation. In order to facilitate the redemption of the Class B Redeemable
Preferred Stock, the Board of Directors may fix a record date for the
determination of holders of Class B Redeemable Preferred Stock to be redeemed,
or may cause the transfer books of the Corporation to be closed for the transfer
of the Class B Redeemable Preferred Stock, not more than 20 days nor less than
10 days prior to the date fixed for such redemption. Whenever shares of Class B
Redeemable Preferred Stock are to be redeemed, the Corporation shall cause to be
mailed, within the time period specified in this section, a written notice of
redemption (a "Notice of Redemption") by first-class mail, postage prepaid, to
each holder of shares of Class B Redeemable Preferred Stock to be redeemed as
its
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name and address appear on the stock books of the Corporation. Each Notice of
Redemption shall state (i) the redemption date, (ii) the redemption price, (iii)
the number of shares of Class B Redeemable Preferred Stock to be redeemed and
identification (by certificate number, CUSIP number or otherwise) of the shares
of Class B Redeemable Preferred Stock to be redeemed, (iv) the place or places
where shares of Class B Redeemable Preferred Stock are to be surrendered for
payment of the redemption price, (v) that dividends on the shares to be redeemed
will cease to accumulate on such redemption date, and (vi) the provision of this
Certificate of Designations under which the redemption is being made. A Notice
of Redemption shall be deemed given on the day that it is mailed. On or after
the redemption date each holder of shares of Class B Redeemable Preferred Stock
that were called for redemption shall surrender the certificate evidencing such
shares, properly endorsed in blank for transfer or accompanied by proper
instruments of assignment or transfer in blank, and bearing all necessary
transfer tax stamps thereto affixed and cancel led, to the Corporation at the
place designated in the Notice of Redemption and shall then be entitled to
receive payment of the redemption price for each share. If fewer than all of the
shares are to be redeemed, the Corporation shall issue new certificates for the
shares not redeemed. If fewer than all of the outstanding shares of the Class B
Redeemable Preferred Stock are to be redeemed, the number of shares to be
redeemed shall be determined by the Corporation ratably, by lot or by holder or
by such other method as the Corporation shall deem appropriate. Solely for the
purpose of determining the number of shares of Class B Redeemable Preferred
Stock to be stated in a Notice of Redemption as subject to an optional
redemption, the amount of funds legally available for such redemption shall be
determined as of the date of such Notice of Redemption. The Corporation shall
declare and pay any and all dividends that are due or are in arrears prior to
any such redemption.
(f) REDEMPTION AT OPTION OF THE HOLDER. Each holder of shares of Class B
Redeemable Preferred Stock shall have the right to cause the Corporation to
redeem, and upon exercise of such right, the Corporation shall redeem, any
shares of Class B Redeemable Preferred Stock held by such holder at a redemption
price equal to its Liquidation Value plus an amount equal to all unpaid
dividends thereon, including accrued dividends, whether or not declared, to the
redemption date, at any time after the occurrence of any one or more of the
following events:
(i) the Corporation shall (A) file, or consent by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy or insolvency law of any
jurisdiction, (B) make an assignment for the benefit of its creditors, (C)
consent to the appointment of a custodian, receiver, trustee or other officer
with similar powers of itself or of any substantial part of its property, (D) be
adjudicated insolvent or be liquidated, or (E) take corporate action for the
purpose of any of the foregoing;
(ii) a court or governmental authority of competent
jurisdiction shall enter an order appointing, without consent by the
Corporation, a custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its property, or
if an order for relief shall be entered in any case or proceeding for
liquidation or reorganization or otherwise to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution, winding-up
or liquidations of the Corporation, or if any petition for any such relief shall
be filed against the Corporation and such petition shall not be dismissed within
60 days;
(iii) the date five years after the date such shares of shall
have been issued; and
(iv) within ten business days after the date of closing of the
issuance by the Corporation of debt securities aggregating at least $70 million
in an offering governed by Rule 144A issued by the Securities Exchange
Commission under the Securities Act of 1933.
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Notice of any such redemption of the Class B Redeemable Preferred Stock shall be
delivered in writing to the Corporation at least 10 business days prior to the
date fixed for redemption. The record date for the determination of holders of
Class B Redeemable Preferred Stock to be redeemed and the date that the
Corporation may cause the transfer books of the Corporation to be closed for the
transfer of the Class B Redeemable Preferred Stock, shall be the date of
redemption set forth in such written notice. The place or places where shares of
Class B Redeemable Preferred Stock are to be surrendered for payment of the
redemption price shall be the Corporation's executive offices. Dividends on the
shares to be redeemed will cease to accumulate on the redemption date. On or
after the redemption date each holder of shares of Class B Redeemable Preferred
Stock that were required to be redeemed shall surrender the certificate
evidencing such shares, properly endorsed in blank for transfer or accompanied
by proper instruments of assignment or transfer in blank, and bearing all
necessary transfer tax stamps thereto affixed and cancel led, to the Corporation
at its executive offices and shall then be entitled to receive payment of the
redemption price for each share. The Corporation shall declare and pay any and
all dividends that are due or are in arrears prior to any such redemption.
(g) RESTRICTIONS ON REDEMPTION. Notwithstanding the foregoing, no shares
of Class B Redeemable Preferred Stock may be redeemed if such redemption is
otherwise prohibited by section (h) of this Certificate of Designations or by
the Delaware General Corporation Law. Payments in respect of redemptions with
respect to shares of Class B Redeemable Preferred Stock may also be subject to
setoff and recoupment as contemplated by section (k) hereof.
(h) SUBORDINATION TO INDEBTEDNESS; RESTRICTIONS ON TRANSFER. All dividend
payments on and payments for redemptions with respect to shares of Class B
Redeemable Preferred Stock are subordinate and subject in right of payment, to
the prior payment in full of all Indebtedness of the Corporation to the extent
provided in one or more subordination agreements by and among the Corporation,
the holder of the Class B Redeemable Preferred Stock and the holder of the
Indebtedness. For purposes hereof, "Indebtedness" means the principal of,
premium, if any, and interest (including any interest accruing after the filing
of a petition in bankruptcy) on and other amounts due on or in connection with
any indebtedness of the Corporation as defined in and arising under any loan,
credit, security or similar agreement with any bank, insurance company, or other
commercial financial institution, in any case whether arising prior to, on or
after the date of issuance of the Class B Redeemable Preferred Stock, and all
renewals, extensions, and refundings thereof. The certificates representing
outstanding shares of Class B Redeemable Preferred Stock may contain a legend
referring to the subordination agreement or agreements among the Corporation,
the holder of the Class B Redeemable Preferred Stock and the holder of the
Indebtedness. If a holder shares of Class B Redeemable Preferred Stock has
entered into such a subordination agreement and the identity of the holder of
the Indebtedness subsequently changes, then the holder of the Class B Redeemable
Preferred Stock shall from time to time at the Corporation's request enter into
a new subordination agreement or agreements containing terms substantially
similar to the terms of such holder's then existing subordination agreement, and
if such holder fails to do so, then upon notice by the Corporation to such
holder, all dividend payments on and payments for redemptions with respect to
the shares of Class B Redeemable Preferred Stock held by such holder shall be
suspended. Also, if a holder of shares of Class B Redeemable Preferred Stock has
entered into such a subordination agreement, then such holder may not assign any
shares of Class B Redeemable Preferred Stock that are subject to such
subordination agreement unless and until the proposed assignee executes and
delivers a subordination agreement containing terms substantially similar to the
terms of such holder's then existing subordination agreement, and any attempted
transfer of shares of Class B Redeemable Preferred Stock without complying with
the terms hereof shall be null and void.
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(i) APPROVAL OF HOLDERS OF CLASS A CONVERTIBLE PREFERRED STOCK; INCREASE
IN AUTHORIZED SHARES; ADDITIONAL CLASSES OF PREFERRED STOCK. The issuance by the
Corporation of any shares of Class B Redeemable Preferred Stock shall first be
approved by the holders of the Class A Convertible Preferred Stock in the manner
and to the extent provided in the Corporation's Amended and Restated Certificate
of Incorporation. Subject to the rights of the holders of the Corporation's
Class A Convertible Preferred Stock as provided in the Corporation's Amended and
Restated Certificate of Incorporation, the Corporation may at any time and from
time to time increase the number of authorized shares of Class B Redeemable
Preferred Stock and create and issue any shares of any series or class of the
Corporation's Preferred Stock that have dividend and liquidation rights that are
senior to or pari passu with the Class B Redeemable Preferred Stock.
(j) REACQUIRED SHARES. Any shares of Class B Redeemable Preferred Stock
redeemed or purchased or otherwise acquired by the Corporation in any manner
whatsoever shall not be reissued as Class B Redeemable Preferred Stock and shall
be retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new class of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject to the
conditions or restrictions on issuance set forth herein.
(k) SETOFF RIGHTS. Shares of Class B Redeemable Preferred Stock may be
issued in connection with the acquisition by the Corporation or its subsidiaries
of certain businesses, and, notwithstanding anything else herein to the
contrary, payments of dividends on such shares of Class B Redeemable Preferred
Stock and payments in respect of redemptions of such shares of Class B
Redeemable Preferred Stock may be subject to the Corporation's rights of setoff
and recoupment to the extent and in the manner expressly set forth in any
agreement related to such acquisition. Any such right of setoff or recoupment
shall survive any transfer or assignment of such shares of Class B Redeemable
Preferred Stock.
IN WITNESS WHEREOF, Clearview Cinema Group, Inc. has caused this
Certificate of Designations, Preferences, Rights and Limitations of Class B
Nonvoting Cumulative Redeemable Preferred Stock to be duly executed by its
President and attested to by its Secretary and has caused its corporate seal to
be affixed hereto this __ day of _______, 199_.
CLEARVIEW CINEMA GROUP, INC.
By ______________________________
A. ▇▇▇▇ ▇▇▇▇, President
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