Exhibit 10.41
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is
dated as of May 29, 1996, by and among Clearview Cinema Group, Inc., a Delaware
corporation ("CCG "); CCC Emerson Cinema Corp., a Delaware Corporation ("CCC
Emerson " and collectively with CCG, the "Transferees"); and Emerson Cinema,
Inc., a New Jersey corporation (the "Transferor").
The Transferor currently owns and operates the Theater, as
hereinafter defined.
The Transferor desires to transfer to the Transferees, and the
Transferees desire to receive from the Transferor, certain of the assets owned
by the Transferor and utilized in the operation of the Theater, upon the terms
and subject to the conditions set forth below.
For federal income tax purposes, it is intended that this
transaction shall qualify as a reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code ").
In consideration of the representations, warranties, covenants,
and agreements contained in this Agreement, the parties, each intending to be
legally bound hereby, agree as set forth below:
I ARTICLE
DEFINITIONS; CONSTRUCTION
1.01. Definitions. As used in this Agreement, the following terms have
the meanings specified in this Section. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"Agreement" means this Agreement and Plan of Reorganization, as it may
be amended from time to time.
"Benefit Plan" has the meaning given that term in Section 3.19(a).
"Business" means business of the operation of the Theater conducted by
Transferor.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List pursuant to Superfund.
"Closing" has the meaning given that term in Section 2.05.
"Closing Date" has the meaning given that term in Section 2.05.
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
"Contract" and "Contracts" have the respective meanings given those
terms in Section 3.10.
"Damages" has the meaning given that term in Section 7.04.
"Defined Benefit Plan" has the meaning given that term in Section
3.19(e).
"Encumbrance" means any mortgage, deed of trust, pledge, security
interest, encumbrance, option, right of first refusal, agreement of sale,
adverse claim, easement, lien, lease, assessment, restrictive covenant,
encroachment, right-of-way, burden or charge of any kind or nature whatsoever or
any item similar or related to the foregoing.
"Environmental Law" means any applicable Law relating to public health
and safety or protection of the environment, including common law nuisance,
property damage and similar common law theories.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the applicable rulings and regulations thereunder.
"FASB" means the Financial Accounting Standards Board or its successor.
"Financial Statements" has the meaning given that term in Section
3.04(a).
"GAAP" means United States generally accepted accounting principles.
"Governing Documents" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter documents or
organization or governing documents or instruments of such Person.
"Governmental Body" means any court, government (federal, state, local
or foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality.
"Indemnified Party" has the meaning given that term in Section 7.05.
"Indemnifying Party" has the meaning given that term in Section 7.05.
"Intellectual Property" has the meaning given that term in Section 3.18.
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"IRS" means the Internal Revenue Service.
"knowledge" as to any person means, as to a natural person, the actual
knowledge of such person and, as to any other person, the actual knowledge of an
executive officer of such person.
"Law" means any applicable federal, state, municipal, local or foreign
statute, law, ordinance, rule, regulation, judgment or order of any kind or
nature whatsoever including any public policy, judgment or order of any
Governmental Body or principle of common law.
"Leases" has the meaning given that term in Section 3.12.
"Liabilities" with respect to any Person, means all debts, liabilities
and obligations of such Person of any nature or kind whatsoever, whether or not
due or to become due, accrued, fixed, absolute, matured, determined,
determinable or contingent and whether or not incurred directly by such Person
or by any predecessor of such Person, and whether or not arising out of any act,
omission, transaction, circumstance, sale of goods or service or otherwise.
"Litigation" has the meaning given that term in Section 3.09.
"Multiemployer Plan" has the meaning given that term in Section 3.19(f).
"Other Agreement" means each other agreement or document to be executed
and delivered in connection with the transactions contemplated by this Agreement
on or before Closing.
"Permit" and "Permits" have the respective meanings given those terms in
Section 3.11.
"Permitted Encumbrances" means (i) liens for current taxes not yet due,
and (ii) Encumbrances that do not or will not either individually or in the
aggregate adversely affect the value of the property encumbered or prohibit or
interfere with the operations of the Business.
"Person" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any other legal entity, or
a Governmental Body.
"Transferred Assets" has the meaning given that term in Section 2.01.
"Transferee Damages" has the meaning given that term in Section 7.02.
"Transferee Indemnitees" has the meaning given that term in Section
7.02.
"Qualified Plan" has the meaning given that term in Section 3.19(d).
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"Real Property" has the meaning given that term in Section 3.12.
"Regulated Material" means any hazardous substance as defined by any
Environmental Law and any other material regulated by any applicable
Environmental Law, including petroleum, petroleum-related material, crude oil or
any fraction thereof, polychlorinated biphenyls, and any friable asbestos.
"Related Party" means (i) Transferor, (ii) any Affiliate of Transferor,
(iii) any officer or director of any Person identified in clauses (i) or (ii)
preceding, and (iv) any spouse, sibling, ancestor or lineal descendant of any
natural Person identified in any one of the preceding clauses.
"Retained Liabilities" has the meaning given that term in Section 2.03.
"Security Deposits" has the meaning given that term in Section 2.01(b).
"Security Right" means, with respect to any security, any option,
warrant, subscription right, preemptive right, other right, proxy, put, call,
demand, plan, commitment, agreement, understanding or arrangement of any kind
relating to such security, whether issued or unissued, or any other security
convertible into or exchangeable for any such security. "Security Right"
includes any right relating to issuance, sale, assignment, transfer, purchase,
redemption, conversion, exchange, registration or voting and includes rights
conferred by statute, by the issuer's Governing Documents or by agreement.
"Transferor Damages" has the meaning given that term in Section 7.03.
"Transferor Indemnitees" has the meaning given that term in Section
7.03.
"Transferor Plan" has the meaning given that term in Section 3.19(a).
"Superfund" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as amended.
"Tax" means any domestic or foreign federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
"Theater" means the movie theater operated by the Transferor at the
location set forth in the Lease.
"12-31-95 Balance Sheet" means the balance sheet of Transferor dated
12-31-95.
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1.02. Construction. As used herein, unless the context otherwise
requires: (i) references to "Article" or "Section" are to an article or section
hereof; (ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits
and Schedules attached hereto and are incorporated herein by reference and made
a part hereof; (iii) "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
ARTICLE II
TRANSFER
2.01. Exchange of Assets. At the Closing, Transferor shall transfer to
Transferees, and Transferees shall receive from Transferor, all of Transferor's
properties and business as a going concern and goodwill and assets of every
kind, nature and description existing on the Closing Date, wherever such assets
are located and whether real, personal or mixed, tangible or intangible, in
electronic form or otherwise, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements, except those assets
specifically excluded pursuant to Section 2.02, free and clear of all
Encumbrances other than Permitted Encumbrances. The properties, business,
goodwill and assets of Transferor to be transferred hereunder (collectively, the
"Transferred Assets") shall include but not be limited to the following:
(a) All of Transferor's furniture, fixtures, equipment, paper concession
goods, and supplies including the items listed on Schedule 2.01(a);
(b) All of Transferor's rights under the Lease (as defined in Section
3.12) and all of Transferor's rights under all other leases, contracts,
agreements and purchase and sale orders (collectively, the "Contracts")
including any and all security deposits paid under the Lease and the Contracts
(the "Security Deposits") and all of Transferor's rights in and to the telephone
numbers currently used for the Theater;
(c) All of Transferor's goodwill and rights in and to the name of the
Theater and in any other tradename, trademark, fictitious name or service mark,
or any variant of any of them, and any applications therefor or registrations
thereof, and any other forms of Intellectual Property;
(d) To the extent not described above, all of the assets reflected on
the Balance Sheet.
2.02. Retained Assets. Transferor shall retain and the Transferred
Assets shall not include the following assets: (i) the consideration to be
delivered to Transferor pursuant to this Agreement, (ii) Transferor's other
rights hereunder, (iii) Transferor's minute book, stock book and seal, (iv) all
claims, choses in action, causes of action and judgments in respect of any
litigation matter identified on Schedule 3.12 and with respect to any other
Retained Liability, and (v) all of Transferor's cash, cash in banks, cash
equivalents, bank and mutual
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fund accounts, trade and other notes and accounts receivable, deposits (other
than the Security Deposits), investments, securities, advance payments, prepaid
items and expenses, deferred charges, rights of offset and credits and claims
for refund (collectively, the "Retained Assets").
2.03. Assumption of Certain Obligations; Retained Liabilities. At the
Closing, each of ECC shall assume the liabilities and obligations of Emerson
arising from the Lease (as defined in Section 3.12) and the Contracts. Except as
expressly provided in this Agreement, the Transferees do not and shall not
assume or in any way undertake to pay, perform, satisfy or discharge any other
liabilities or obligations of the Transferor (the "Retained Liabilities") and
the Transferor shall pay and satisfy when due all Retained Liabilities.
2.04. Exchange of Stock for Assets.
(a) Exchange of Stock. In exchange for the Transferred Assets,
the Transferor shall receive 347 shares of Common Stock of CCG ("CCG Shares"),
par value $.01 per share, 174 of which shall be delivered to Transferor at
Closing and 173 of which shall be delivered to Jack Wenarsky, Esq., as Escrow
Agent under the Indemnification Escrow Agreement in substantially the form
attached hereto as Exhibit A. CCG hereby acknowledges that the Common Stock
possesses voting rights. The CCG Shares shall be subject to a voting trust
agreement in favor of A. Dale Mayo, in form attached hereto as Exhibit G.
(b) Section 3.68. This transaction is intended to be a
reorganization within the meaning of Section 368 of the Code. The CCG Common
Shares to be issued as the hereunder will be issued solely in exchange for the
Transferred Assets, and no agreement contained herein or contemplated hereby
represents, provides for, or is intended to be consideration for the Transferred
Assets. The parties hereto shall take reasonable steps including but not limited
to compliance with IRS Regulation Section 1.368-3 necessary to ensure that the
transaction contemplated herein is treated for federal income tax purposes as
set forth in this Section.
2.05. Closing. Subject to the terms and conditions of this Agreement,
the transfer of the Transferred Assets and the assumption of the Assumed
Liabilities contemplated hereby shall take place at a closing (the "Closing") at
the offices of Kirkpatrick & Lockhart LLP, 1251 Avenue of the Americas, 45th
Floor, New York, New York 10020 at such time or on such date as the Transferor
and the Transferees may mutually agree (the day on which the Closing takes place
being the "Closing Date"), but in no event later than July 31, 1996.
2.06. Proration of Expenses. All accrued expenses associated with the
Leases included in the Transferred Assets, such as electricity, gas, water,
sewer, telephone, property taxes, security services and similar items, shall be
prorated between Transferees and Transferor as of the Closing Date. Transferees
and Transferor shall settle such amounts on or before forty-five days after the
Closing Date.
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2.07. Passage of Title. Title to all Transferred Assets shall pass from
the Transferor to Transferees at Closing, subject to the terms and conditions of
this Agreement. Transferees assume no risk of loss to the Transferred Assets
prior to Closing.
2.08. Certain Consents. Nothing in this Agreement shall be construed as
an attempt to assign any contract, agreement, Permit, franchise, or claim
included in the Transferred Assets which is by its terms or in law nonassignable
without the consent of the other party or parties thereto, unless such consent
shall have been given, or as to which all the remedies for the enforcement
thereof enjoyed by Transferor would not, as a matter of law, pass to Transferees
as an incident of the assignments provided for by this Agreement. In order,
however, to provide Transferees with the full realization and value of every
contract, agreement, Permit, franchise and claim of the character described in
the immediately preceding sentence, Transferor agrees that on and after the
Closing, they will, at the request and under the direction of Transferees, in
the name of Transferor or otherwise as Transferees shall specify take all
reasonable action (including without limitation the appointment of the
appropriate Transferee as attorney-in-fact for Transferor) and do or cause to be
done all such things as shall in the opinion of Transferees or their counsel be
necessary or proper (i) to assure that the rights of Transferor under such
contracts, agreements, Permits, franchises and claims shall be preserved for the
benefit of Transferees and (ii) to facilitate receipt of the consideration to be
received by Transferor in and under every such contract, agreement, Permit,
franchise and claim, which consideration shall be held for the benefit of, and
shall be delivered to, Transferees. Nothing in this Section shall in any way
diminish Transferor's obligations hereunder to obtain all consents and approvals
and to take all such other actions prior to or at Closing as are necessary to
enable Transferor to convey or assign valid title to all the Transferred Assets
to Transferees.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE Transferor
The Transferor represents and warrants, jointly and severally, to the
Transferees as follows:
3.01. Organization, Qualification; Capitalization. The Transferor is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has the corporate power and authority
to own or lease its properties, and carry on the Business as now conducted, and
the Transferor has the power and authority to enter into this Agreement and the
Other Agreements to which it is or is to become a party and perform its
obligations hereunder and thereunder. The Transferor is duly qualified and in
good standing as a foreign corporation and is duly authorized to transact
business in each jurisdiction wherein the character of the properties owned or
leased by it, or the nature of the activities conducted by it make such
qualification and good standing necessary, except in those jurisdictions where
the failure to be so qualified and in good standing would not have a material
adverse effect on the Transferor. The authorized capital stock of the Transferor
and the issued and outstanding shares and the record owners thereof,
respectively, are as set forth on Schedule 3.01.
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3.02. Authorization; Enforceability. This Agreement and each Other
Agreement to which the Transferor is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of the
Transferor, enforceable against the Transferor in accordance with their
respective terms and each Other Agreement to which the Transferor is to become a
party pursuant to the provisions hereof, when executed and delivered by the
Transferor, will constitute the legal, valid and binding obligation of the
Transferor, enforceable against the Transferor in accordance with the terms of
such Other Agreement, except as may be limited by applicable bankruptcy,
insolvency, moratorium, fraudulent transfer, preference and other laws and
equitable principles affecting the scope and enforcement to creditors' rights
generally, and are also limited by Transferee's implied covenants of good faith,
fair dealing and commercially reasonable conduct, and by the effects of judicial
discretion on the availability of remedies and realization of benefits under and
enforceability of this Agreement and the Other Agreements in all respects as
written. All actions contemplated by this Agreement have been duly and validly
authorized by all necessary proceedings by the Transferor.
3.03. No Violation of Laws or Agreements; Consents. Neither the
execution and delivery of this Agreement or any Other Agreement to which the
Transferor is or is to become a party, the consummation of the transactions
contemplated hereby or thereby nor the compliance with or fulfillment of the
terms, conditions or provisions hereof or thereof by the Transferor will: (i)
contravene any provision of any Governing Document of the Transferor, (ii)
conflict with, result in a breach of, constitute a default or an event of
default (or an event that might, with the passage of time or the giving of
notice or both, constitute a default or event of default) under any of the terms
of, result in the termination of, result in the loss of any right under, or give
to any other Person the right to cause such a termination of or loss under, any
Transferred Asset or any other contract, agreement or instrument to which the
Transferor is a party or by which any of its assets may be bound or affected,
(iii) result in the creation, maturation or acceleration of any Assumed
Liability or any other Liability of the Transferor (or give to any other Person
the right to cause such a creation, maturation or acceleration), (iv) violate
any Law or violate any judgment or order of any Governmental Body to which the
Transferor is subject or by which any of the Transferred Assets or any of its
other assets may be bound or affected, or (v) result in the creation or
imposition of any Encumbrance upon any of the Transferred Assets or give to any
other Person any interest or right therein. Except as set forth on Schedule
3.03, no consent, approval or authorization of, or registration or filing with,
any Person is required in connection with the execution and delivery by the
Transferor of this Agreement or any of the Other Agreements to which the
Transferor is or is to become a party pursuant to the provisions hereof or the
consummation by the Transferor of the transactions contemplated hereby or
thereby.
3.04. Financial Information.
(a) Financial Statements. The Transferor has previously provided
to the Transferees a balance sheet, income statement and statement of cash flows
for each Transferor at December 31, 1995 and for the year then ended, and income
statements and statements of cash flows for the Transferor at December 31, 1993
and December 31, 1994 and for the years then ended (collectively, the "Financial
Statements"). The Financial
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Statements: (i) have been prepared in accordance with GAAP on a consistent basis
throughout the indicated periods, and (ii) fairly present the financial
condition, assets and liabilities and results of operation of Transferor at the
dates and for the relevant periods indicated in GAAP. All references in this
Agreement to Transferor's "12-31-95 Balance Sheet" mean Transferor's balance
sheet dated 12-31-95.
(b) The aggregate gross box office and concession revenues for the
period from January 1, 1995 through December 31, 1995 are in excess of $765,000.
3.05. Undisclosed Liabilities. The Transferor has no debt, obligation or
liability, absolute, fixed, contingent or otherwise, of any nature whatsoever,
whether due or to become due, including any unasserted claim, whether incurred
directly or by any predecessor thereto, and whether arising out of any act,
omission, transaction, circumstance, sale of goods or services, state of facts
or other condition, except: (i) those reflected or reserved against on the
12-31-95 Balance Sheet in the amounts shown therein; (ii) those not required
under GAAP to be reflected or reserved against in the 12-31-95 Balance Sheet
that are expressly quantified and set forth in the Contracts identified pursuant
to Section 3.15; (iii) those disclosed on Schedule 3.05; and (iv) those of the
same nature as those set forth on the 12-31-95 Balance Sheet that have arisen in
the ordinary course of business of the Company after December 31, 1995 through
the date hereof, all of which have been consistent in amount and character with
past practice and experience, and none of which, individually or in the
aggregate, has had or will have an adverse effect on the business, financial
condition or prospects of the Transferor and none of which is a liability for
breach of contract or warranty or has arisen out of tort, infringement of any
intellectual property rights, or violation of Law or is claimed in any pending
or threatened legal proceeding.
3.06. No Changes. Since December 31, 1995, the Transferor has conducted
the Business only in the ordinary course. Without limiting the generality of the
foregoing sentence, since December 31, 1995, except as set forth on Schedule
3.06, there has not been any: (i) adverse change in the assets, Liabilities,
earning power, Business or prospects of the Transferor; (ii) damage or
destruction to or loss of any asset of the Transferor, whether or not covered by
insurance; (iii) strike or other labor trouble at the Transferor; (iv) creation
of any Encumbrance on any asset of the Transferor other than any Permitted
Encumbrance; (v) increase in the salary, wage or bonus of any employee of any
Transferor; (vi) asset acquisition in excess of $1000 for any individual
acquisition, including capital expenditure, other than the purchase of inventory
in the ordinary course of business; (vii) disposition of any asset (other than
inventory in the ordinary course of business) for less than fair market value;
(viii) any failure to pay any Liability when due; (ix) creation, termination or
amendment of, or waiver of any right under, any material agreement of the
Transferor; (x) or agreement or commitment to do any of the foregoing.
3.07. Taxes. The Transferor has filed or caused to be filed on a timely
basis, or will file or cause to be filed on a timely basis or within a
timely-obtained extension, all Tax Returns that are required to be filed by it
prior to or on the Closing Date, pursuant to the Law of each governmental
authority with taxing power over it. The Transferor has no Liability for any Tax
except Taxes disclosed on Schedule 3.07.
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3.08. Condition of Assets; Title; Business. The Transferor is engaged in
the Business and no other business. The Transferred Assets have been
professionally maintained and are in good working order and are suitable for the
purposes for which they are used in the Business. The Transferor has good,
marketable and exclusive title to all of the Transferred Assets; the Transferred
Assets include all assets that are necessary for use in and operation of the
Business subject to the terms of the Leases; and none of the Transferred Assets
is subject to any Encumbrance or impairment, whether due to its condition,
utility, collectability or otherwise, other than Permitted Encumbrances.
3.09. No Pending Litigation or Proceedings. No action, suit,
investigation, claim or proceeding of any nature or kind whatsoever, whether
civil, criminal or administrative, by or before any Governmental Body or
arbitrator ("Litigation") is pending or, to the knowledge of the Transferor,
threatened against or affecting the Transferor, the Business, any of the
Transferred Assets, the Assumed Liabilities, or any of the transactions
contemplated by this Agreement or any Other Agreement, and there is no basis for
any such Litigation. There is presently no outstanding judgment, decree or order
of any Governmental Body against or affecting the Transferor, the Business, any
of the Transferred Assets, the Assumed Liabilities, or any of the transactions
contemplated by this Agreement or any Other Agreement. Transferor has no pending
Litigation against any third party.
3.10. Contracts; Compliance. Disclosed on Schedule 3.10 and 3.12 is a
brief description of each contract, lease, indenture, mortgage, instrument,
commitment or other agreement, arrangement or understanding, oral or written,
formal or informal, that is included in the Transferred Assets (each, a
"Contract" and collectively, the "Contracts"). Each Contract is a legal, valid
and binding obligation of the Transferor and is in full force and effect. The
Transferor and each other party to each Contract has performed all obligations
required to be performed by it thereunder and is not in breach or default, and
is not alleged to be in breach or default, in any respect thereunder, and no
event has occurred and no condition or state of facts exists (or would exist
upon the giving of notice or the lapse of time or both) that would become or
cause a breach, default or event of default thereunder, would give to any Person
the right to cause such a termination or would cause an acceleration of any
obligation thereunder. Transferor is not currently renegotiating any Contract
nor has the Transferor received any notice of non-renewal or price increase or
sales or production allocation with respect to any Contract.
3.11. Permits; Compliance With Law. Schedule 3.11 sets forth the
permits, certificates, licenses, franchises, privileges, approvals,
registrations and authorizations held by the Transferor (each, a "Permit" and
collectively, "Permits"). The Permits are all such permits required under any
applicable Law or otherwise advisable in connection with the operation of the
Transferred Assets and Business. Each Permit is valid, subsisting and in full
force and effect. The Transferor is in compliance with and has fulfilled and
performed its obligations under each Permit held by it, and no event or
condition or state of facts exists (or would exist upon the giving of notice or
lapse of time or both) that could constitute a breach or default under any
Permit. Transferor is not currently in violation of any Law nor has Transferor
received any notice of any violation of Law, and no event has occurred or
condition or state of facts exists that could give rise to any such violation.
Transferor has not received any notice of non-renewal of any Permit.
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3.12. Real Property. Schedule 3.12 sets forth the agreements of lease
(the "Leases") pursuant to which the Transferor leases real property
(collectively, the "Real Property") and identifies the record title holder of
all of the Real Property. The Transferor has the right to quiet enjoyment of all
Real Property in which it holds a leasehold interest for the full term,
including all renewal rights, of the lease or similar agreement relating
thereto. The use and operation of all Real Property conform to all applicable
building, zoning, safety and subdivision Laws, Environmental Laws and other
Laws, and all restrictive covenants and restrictions and conditions affecting
title. The Transferor has not received any written or oral notice of assessments
for public improvements against any Real Property or any written or oral notice
or order by any Governmental Body, any insurance company that has issued a
policy with respect to any of such properties or any board of fire underwriters
or other body exercising similar functions that (i) relates to violations of
building, safety or fire ordinances or regulations, (ii) claims any defect or
deficiency with respect to any of such properties or (iii) requests the
performance of any repairs, alterations or other work to or in any of such
properties or in the streets bounding the same. Such public utilities are all
connected pursuant to valid permits, are all in good working order and are
adequate to service the operations of such facilities as currently conducted and
permit full compliance with all requirements of Law. Transferor has not received
any written notice of any proposed, planned or actual curtailment of service of
any utility supplied to any facility of the Transferor.
13.3. Environmental Matters. Except as disclosed in Schedule 3.13:
(a) Compliance; No Liability. The Transferor has operated the
Business and each parcel of Real Property in compliance with all applicable
Environmental Laws. Transferor is not subject to any Liability, penalty or
expense (including legal fees), and no Transferee will suffer or incur any loss,
Liability, penalty or expense (including legal fees) by virtue of any violation
of any Environmental Law occurring prior to the Closing, any environmental
activity conducted on or with respect to any property at or prior to the Closing
or any environmental condition existing on or with respect to any property at or
prior to the Closing, in each case whether or not any Transferor permitted or
participated in such act or omission.
(b) Treatment; CERCLIS. Transferor has not treated, stored, generated,
recycled or disposed of any Regulated Material on any real property, and no
other Person has treated, stored, recycled or disposed of any Regulated Material
on any part of the Real Property. There has been no release of any Regulated
Material at, on or under any Real Property. Transferor has not transported any
Regulated Material or arranged for the transportation of any Regulated Material
to any location that is listed or proposed for listing on the National
Priorities List pursuant to Superfund, on CERCLIS or any other location that is
the subject of federal, state or local enforcement action or other investigation
that may lead to claims against such Transferor for cleanup costs, remedial
action, damages to natural resources, to other property or for personal injury
including claims under Superfund. None of the Real Property is listed or, to the
knowledge of the Transferor, proposed for listing on the National Priorities
List pursuant to Superfund, CERCLIS or any state or local list of sites
requiring investigation or cleanup.
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(c) Notices; Existing Claims; Certain Regulated Materials;
Storage Tanks. Transferor has not received any request for information, notice
of claim, demand or other notification that it is or may be potentially
responsible with respect to any investigation, abatement or cleanup of any
threatened or actual release of any Regulated Material. Transferor is not
required to place any notice or restriction relating to the presence of any
Regulated Material at any Real Property or in any deed to any Real Property.
Schedule 3.14(c) sets forth a list of all sites to which Transferors transported
any Regulated Material for recycling, treatment, disposal, other handling or
otherwise. There has been no past, and there is no pending or contemplated,
claim by Transferor under any Environmental Law or Laws based on actions of
others that may have impacted on the Real Property, and Transferor has not
entered into any agreement with any Person regarding any Environmental Law,
remedial action or other environmental Liability or expense. There are no
storage tanks located on the Real Property, whether underground or aboveground.
3.14. Customer Relations. There exists no condition or state of facts or
circumstances involving Transferor's customers, suppliers, distributors or
representatives that Transferor can reasonably foresee could adversely affect
the Business or the Transferred Assets after the Closing Date.
3.15. Transactions With Related Parties. No Related Party has any claim
of any nature, including any inchoate claim, against any of the Transferred
Assets or the Business. Except as expressly provided herein or in any Other
Agreement or as otherwise may be mutually agreed after Closing, (i) no Related
Party will at any time after Closing for any reason, directly or indirectly, be
or become entitled to receive any payment or transfer of money or other property
of any kind from Transferees, and (ii) Transferees will not at any time after
Closing for any reason, directly or indirectly, be or become subject to any
obligation to any Related Party; provided, however, that nothing in this Section
3.15 shall prohibit any post-closing transactions between Related Parties that
do not affect the Transferees, the Transferred Assets or the Business.
3.16. Labor Relations. The relations of the Transferor with its
employees are good. No employee of the Transferor is represented by any union or
other labor organization other than IATSE LOCAL #642. A true and correct copy
of the Union Agreement is attached as Schedule 3.16. No representation election,
arbitration proceeding, grievance, labor strike, dispute, slowdown, stoppage or
other labor trouble is pending or, to the knowledge of the Transferor,
threatened against, involving, affecting or potentially affecting the
Transferor. No complaint against the Transferor is pending or, to the knowledge
of the Transferor, threatened before the National Labor Relations Board, the
Equal Employment Opportunity Commission or any similar state or local agency, by
or on behalf of any employee of the Transferor. The Transferor has no Liability
for any occupational disease of any of its employees, former employees or
others.
3.17. Insurance. The Transferees have been provided with a copy of each
insurance policy as to which the Transferor is the owner, insured or
beneficiary, whether on an "occurrence" or a "claims made" basis, together with
a summary of such policies and copies of certificates of insurance executed by
each insurer or its authorized agent evidencing such insurance.
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3.18. Intellectual Property Rights. Schedule 3.18 contains a complete
list and description of all of the trademark and service mark rights,
applications and registrations, trade names, fictitious names, service marks,
logos and brand names, copyrights, copyright applications, letters patent,
patent applications and licenses of any of the foregoing owned or used by the
Transferor in or applicable to the Business. The Transferor has the entire
right, title and interest in and to, or has the exclusive perpetual royalty-free
right to use, the intellectual property rights disclosed on Schedule 3.18 and
all other processes, know-how, show-how, formulae, trade secrets, inventions,
discoveries, improvements, blueprints, specifications, drawings, designs, and
other proprietary rights necessary or applicable to or advisable for use in the
Business ("Intellectual Property"), free and clear of all Encumbrances. Schedule
3.18 separately discloses all Intellectual Property under license. The
Intellectual Property is valid and not the subject of any interference,
opposition, reexamination or cancellation. To the knowledge of the Transferor,
no Person is infringing upon nor has any Person misappropriated any Intellectual
Property. No Transferor is infringing upon the intellectual property rights of
any other Person.
3.19. Employee Benefits.
(a) Benefit Plans; Transferor Plans. Schedule 3.19 discloses all written
and unwritten "employee benefit plans" within the meaning of Section 3(3) of
ERISA, and any other written and unwritten profit sharing, pension, savings,
deferred compensation, fringe benefit, insurance, medical, medical
reimbursement, life, disability, accident, post-retirement health or welfare
benefit, stock option, stock purchase, sick pay, vacation, employment,
severance, termination or other plan, agreement, contract, policy, trust fund or
arrangement (each, a "Benefit Plan"), whether or not funded and whether or not
terminated, (i) maintained or sponsored by the Transferor, or (ii) with respect
to which the Transferor has or may have Liability or is obligated to contribute,
or (iii) that otherwise covers any of the current or former employees of the
Transferor or its beneficiaries, or (iv) as to which any such current or former
employees or their beneficiaries participated or were entitled to participate or
accrue or have accrued any rights thereunder (each, a "Transferor Plan").
(b) Transferor Group Matters; Funding. Neither the Transferor nor any
corporation that may be aggregated with the Transferor under Sections 414(b),
(c), (m) or (o) of the Code (the "Transferor Group") has any obligation to
contribute to or any Liability under or with respect to any Benefit Plan of the
type described in Sections 4063 and 4064 of ERISA or Section 413(c) of the Code.
The Transferor has no Liability, and after the Closing, no Transferee will have
any Liability, with respect to any Benefit Plan of any other member of the
Transferor Group, whether as a result of delinquent contributions, distress
terminations, fraudulent transfers, failure to pay premiums to the PBGC,
withdrawal Liability or otherwise. No accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code) exists nor has any funding
waiver from the IRS been received or requested with respect to any Transferor
Plan or any Benefit Plan of any member of the Transferor Group, and no excise or
other Tax is due or owing because of any failure to comply with the minimum
funding standards of the Code or ERISA with respect to any of such plans.
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(c) Compliance. Each Transferor Plan and all related trusts, insurance
contracts and funds have been created, maintained, funded and administered in
all respects in compliance with all applicable Laws and in compliance with the
plan document, trust agreement, insurance policy or other writing creating the
same or applicable thereto. No Transferor Plan is or is proposed to be under
audit or investigation, and no completed audit of any Transferor Plan has
resulted in the imposition of any Tax, fine or penalty.
(d) Qualified Plans. Schedule 3.19 discloses each Transferor Plan that
purports to be a qualified plan under Section 401(a) of the Code and exempt from
United States federal income tax under Section 501(a) of the Code (a "Qualified
Plan"). With respect to each Qualified Plan, a determination letter (or opinion
or notification letter, if applicable) has been received from the IRS that such
plan is qualified under Section 401(a) of the Code and exempt from federal
income tax under Section 501(a) of the Code. No Qualified Plan has been amended
since the date of the most recent such letter. No member of the Transferor
Group, nor any fiduciary of any Qualified Plan, nor any agent of any of the
foregoing, has done anything that would adversely affect the qualified status of
a Qualified Plan or the qualified status of any related trust.
(e) No Defined Benefit Plans. No Transferor Plan is a defined benefit
plan within the meaning of Section 3(35) of ERISA (a "Defined Benefit Plan"). No
Defined Benefit Plan sponsored or maintained by any member of the Transferor
Group has been terminated or partially terminated after September 1, 1974,
except as set forth on Schedule 3.19. Each Defined Benefit Plan listed as
terminated on Schedule 3.19 has met the requirement for standard termination of
single-employer plans contained in Section 4041(b) of ERISA. During the
five-year period ending on the Closing Date, no member of the Transferor Group
has transferred a Defined Benefit Plan to a corporation that was not, at the
time of transfer, related to the transferor in any manner described in Sections
414(b), (c), (m) or (o) of the Code.
(f) Multiemployer Plans. Except as set forth on Schedule 3.19 hereto, no
Transferor Plan is a multiemployer plan within the meaning of Section 3(37) or
Section 4001(a)(3) of ERISA (a "Multiemployer Plan"). No member of the
Transferor Group has withdrawn from any Multiemployer Plan or incurred any
withdrawal Liability to or under any Multiemployer Plan. No Transferor Plan
covers any employees of any member of the Transferor Group in any foreign
country or territory.
(g) Prohibited Transactions; Fiduciary Duties; Post-Retirement Benefits.
No prohibited transaction (within the meaning of Section 406 of ERISA and
Section 4975 of the Code) with respect to any Transferor Plan exists or has
occurred that could subject the Transferor to any Liability or Tax under Part 5
of Title I of ERISA or Section 4975 of the Code. No member of the Transferor
Group, nor any administrator or fiduciary of any Transferor Plan, nor any agent
of any of the foregoing, has engaged in any transaction or acted or failed to
act in a manner that will subject the Transferor to any Liability for a breach
of fiduciary or other duty under ERISA or any other applicable Law. With the
exception of the requirements of Section 4980B of the Code, no post-retirement
benefits are provided under any Transferor Plan that is a welfare benefit plan
as described in ERISA Section 3(1).
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3.20. Subsidiaries and Investments. The Transferred Assets do not
contain any shares of capital stock of or other equity interest in any
corporation, partnership, joint venture or other entity.
3.21. Finders' Fees. Neither the Transferor nor any of its officers,
directors or employees has employed any broker or finder or incurred any
Liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby or by any Other Agreement.
3.22. Payments to Craig Zeltner. The rate of compensation to be paid to
Mr. Zeltner doing business as Cinema Services pursuant to Section 5.06 is no
greater than the lowest rate of compensation that the Transferor paid to Mr.
Zeltner during the twelve-month period ending on the Closing Date.
3.23. Disclosure. None of the representations or warranties of the
Transferor contained herein and none of the information contained in the
Schedules referred to herein or the other information or documents furnished or
to be furnished to CCG or any of its representatives by the Transferor expressly
pursuant to the terms of this Agreement is false or misleading in any material
respect or omits to state a fact herein or therein necessary to make the
statements herein or therein not misleading in any material respect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TransfereeS
As an inducement to the Transferor to enter into this Agreement and
consummate the transactions contemplated hereby, the Transferees, jointly and
severally, represent and warrant to the Transferor as follows:
4.01. Organization. Each Transferee is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to own or lease its
properties, carry on its business, enter into this Agreement and the Other
Agreements to which it is or is to become a party and perform its obligations
hereunder and thereunder.
4.02. Authorization; Enforceability. This Agreement and each Other
Agreement to which each Transferee is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of such
Transferee, enforceable against it in accordance with their respective terms and
each Other Agreement to which such Transferee is to become a party pursuant to
the provisions hereof, when executed and delivered by such Transferee, will
constitute the legal, valid and binding obligation of such Transferee,
enforceable against such Transferee in accordance with the terms of such Other
Agreement except as may be limited by applicable bankruptcy, insolvency,
moratorium, fraudulent transfer, preference and other laws and equitable
principles affecting the scope and enforcement to creditors' rights generally,
and are also limited by Transferors' implied covenants of good faith, fair
dealing and commercially reasonable conduct, and by the effects of judicial
discretion on the availability of remedies and realization of benefits under and
enforceability of this Agreement
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and the Other Agreements in all respects as written. All actions contemplated by
this Agreement have been duly and validly authorized by all necessary
proceedings by such Transferee.
4.03. No Violation of Laws; Consents. Neither the execution and delivery
of this Agreement or any Other Agreement to which any Transferee is or is to
become a party, the consummation of the transactions contemplated hereby or
thereby nor the compliance with or fulfillment of the terms, conditions or
provisions hereof or thereof by such Transferee will: (i) contravene any
provision of any Governing Document of such Transferee, or (ii) violate any Law
or any judgment or order of any Governmental Body to which such Transferee is
subject or by which any of its assets may be bound or affected. Except as set
forth on Schedule 4.03 no consent, approval or authorization of, or registration
or filing with, any Person is required in connection with the execution and
delivery by such Transferee of this Agreement or any of the Other Agreements to
which such Transferee is or is to become a party pursuant to the provisions
hereof or the consummation by such Transferee of the transactions contemplated
hereby or thereby.
4.04. No Pending Litigation or Proceedings. No Litigation is pending or,
to the knowledge of any Transferee, threatened against or affecting any
Transferee in connection with any of the transactions contemplated by this
Agreement or any Other Agreement to which any Transferee is or is to become a
party.
4.05. Finders' Fees. No Transferee nor any of its officers, directors or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby.
ARTICLE V
CERTAIN COVENANTS
5.01. Conduct of Business Pending Closing. From and after the date
hereof and until the Closing Date or earlier termination hereof, unless the
Transferees shall otherwise consent in writing, the Transferor shall conduct
their affairs as follows:
(a) Ordinary Course; Compliance. The Business shall be conducted
only in the ordinary course and consistent with past practice. The Transferor
shall professionally maintain the Transferred Assets and Assumed Liabilities in
good condition and shall comply in a timely fashion with the provisions of all
Contracts and Permits and its other agreements and commitments. The Transferor
shall preserve its Business organization intact, keep available the services of
its present employees and preserve the goodwill of its suppliers, customers and
others having business relations with it. The Transferor shall maintain in full
force and effect their policies of insurance, subject only to variations
required by the ordinary operations of the Business, or else shall obtain, prior
to the lapse of any such policy, substantially similar coverage with insurers of
recognized standing.
(b) Transactions. The Transferor shall not: (i) transfer or
dispose of any asset except in the ordinary course of business; (ii) enter into
any contract or commitment the performance of which may extend beyond the
Closing, except those made in the ordinary
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course of business, the terms of which are consistent with past practice; (iii)
enter into any employment or consulting contract or arrangement that is not
terminable at will and without penalty or continuing obligation; (iv) fail to
pay any Liability or charge when due, other than Liabilities contested in good
faith by appropriate proceedings; or (v) take any action or omit to take any
action that will cause a breach or termination of any Permit or Contract, other
than termination by fulfillment of the terms thereunder; or take any other
actions that would cause the representations and warranties in this Agreement
not to be true in any material respect on the Closing Date.
(c) Access, Information and Documents. The Transferor shall give
to Transferees and to Transferees' employees and representatives (including
accountants, actuaries, attorneys, environmental consultants and engineers)
access during normal business hours to all of the properties, books, Tax
Returns, contracts, commitments, records, officers, personnel and accountants
(including independent public accountants and their workpapers concerning
Transferor) of Transferor and shall furnish to Transferees all such documents
and copies of documents and all information with respect to the properties,
Liabilities and affairs of Transferor as Transferees may reasonably request,
including but not limited to weekly reports of gross box office and concession
receipts, at the same time such reports are available to Transferors'
management.
5.02. Publicity. The Transferor and Transferees shall not issue any
press release or otherwise make any announcements to the public or the employees
of Transferors with respect to this Agreement prior to the Closing Date without
the prior written consent of the other, except as required by Law.
5.03. The Transferor shall not (nor shall it permit any of its
affiliates to) directly or indirectly, solicit, initiate or encourage any
inquiries or the making of any proposals from, engage or participate in any
negotiations or discussions with, provide any confidential information or data
to, or enter into (or authorize) any agreement or agreement in principle with
any person or announce any intention to do any of the foregoing, with respect to
any offer or proposal to acquire all or any part of the Transferor's assets,
properties, or Business whether by merger, purchase of capital stock or assets
or otherwise.
5.04. Fulfillment of Agreements. Each party hereto shall use its best
efforts to cause all of those conditions to the obligations of the other under
Article VI that are not beyond its reasonable control to be satisfied on or
prior to the Closing and shall use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement. Without limiting the foregoing, the Transferor shall, prior to
Closing, obtain the Consents identified in Schedule 3.03.
5.05. Certain Transitional Matters. The Transferor shall cooperate with
and assist Transferees and their authorized representatives in order to provide,
to the extent reasonably requested by any Transferee, an efficient transfer of
control of the Transferred Assets and to avoid any undue interruption in the
activities and operations of the Business following the Closing Date.
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5.06. Transferees shall have the right, but not the obligation on or
after the Closing Date to employ any or all of the employees of Transferor.
5.07. Transferees shall continue to use the services of Craig Zeltner
doing business as Cinema Services as film buyer and booker for a period of one
year, at the rate of $150.00 per week with a year-end bonus of $500.00;
provided, however, that the agreement set forth in this Section 5.07 shall be
enforceable solely by the Transferor and shall not constitute an employment
agreement as to Mr. Zeltner nor grant to Mr. Zeltner any rights to enforce such
provision or otherwise.
5.08. To accord to Transferees the full value of their purchase,
Transferor shall not, directly or indirectly, (i) for a period of five years
after the Closing Date, directly or indirectly, engage or become interested in
(as owner, stockholder, partner or otherwise) the operation of any movie theater
within a seven and one-half mile radius of any Theater, or (ii) disclose to
anyone, or use in competition with any Transferee, any information with respect
to any confidential or secret aspect of the operations of the Business. It is
acknowledged that stockholders, officers, and/or directors of the Transferor
currently operate certain movie theaters and nothing in subsection (ii) of the
previous sentence shall prohibit the Transferor from operating such theaters.
The Transferor acknowledges that the remedy at law for breach of the provisions
of this Section 5.08 will be inadequate and that, in addition to any other
remedy Transferees may have, they will be entitled to an injunction restraining
any such breach or threatened breach, without any bond or other security being
required. If any court construes the covenant in this Section 5.08 or any part
thereof, to be unenforceable because of its duration or the area covered
thereby, the court shall have the power to reduce the duration or area to the
extent necessary so that such provision is enforceable. Until the third
anniversary of the Closing Date, the Transferor shall not directly or indirectly
solicit or offer employment to any person who is then an employee of any
Transferee or was an employee of any Transferee at any time after the Closing to
engage in any business similar to or in competition with the business of any
Transferor as it has been conducted prior to Closing.
5.09. As soon as shall be reasonably practicable following the Closing
Date, the Transferor shall file with the appropriate authorities such documents
as may be required to (i) change the Transferor's name to another name bearing
no similarity to the Transferor's current name and (ii) withdraw any other
fictitious names used in the Business. It is acknowledged that no trade names of
the Transferor are currently registered.
5.10. The Transferor shall not destroy or dispose of any books, records,
and files relating to the business, properties, assets or operations of the
Transferor to the extent that they pertain to the operations of the Transferor
prior to the Closing Date for a period of five years from the Closing Date or
for the applicable statute of limitations for any tax liability.
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ARTICLE VI
CONDITIONS TO CLOSING; TERMINATION
6.01. Conditions Precedent to Obligation of Transferees. The obligation
of Transferees to proceed with the Closing under this Agreement is subject to
the fulfillment prior to or at Closing of the following conditions, any one or
more of which may be waived in whole or in part by Transferees at Transferees'
sole option:
(a) Bringdown of Representations and Warranties; Covenants. Each
of the representations and warranties of the Transferor contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date. The
Transferor shall have performed in all respects all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by it at or before the Closing.
(b) Litigation. No statute, regulation or order of any
Governmental Body shall be in effect that restrains or prohibits the
transactions contemplated hereby or that would limit or adversely affect
Transferees' ownership of the Transferred Assets or assumption of the Assumed
Liabilities, and there shall not have been threatened, nor shall there be
pending, any action or proceeding challenging the lawfulness of or seeking to
prevent or delay any of the transactions contemplated by this Agreement or any
of the Other Agreements or seeking monetary or other relief by reason of the
consummation of any of such transactions.
(c) No Material Adverse Change. Between the date hereof and the
Closing Date, there shall have been no material adverse change, regardless of
insurance coverage therefor, in the Business or any of the assets, results of
operations, Liabilities, prospects or condition, financial or otherwise, of the
Transferor.
(d) Closing Certificate. The Transferor shall have delivered a
certificate, dated the Closing Date, in the form of Exhibit B hereto, certifying
to the fulfillment of the conditions set forth in subparagraphs (a), (b) and (c)
of this Section. Such certificate shall constitute a representation and warranty
of the Transferor with regard to the matters therein for purposes of this
Agreement.
(e) Closing Documents. Transferees shall have received the
documents referred to in Section 6.03(a). All agreements, certificates, opinions
and other documents delivered by Transferors to Transferees hereunder shall be
in form and substance satisfactory to Transferees.
(f) Documents Concerning Leasehold Interests. Transferees shall
have received from each lessor of each leasehold estate included in the
Transferred Assets consents to assignment of leasehold interest, consents to
leasehold mortgage, and estoppel certificates, and from each existing mortgagee
with respect to Real Property all consents, nondisturbance agreements, and other
documents as shall be requested by Provident Bank with respect to Provident's
security interest in the leasehold mortgage, all in form and substance
satisfactory to Transferees and Provident Bank.
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(g) Consents. The Transferor shall have received the consents,
approvals and actions of the Persons referred to in Schedule 3.03.
(h) Non-Competition Agreement. Each of John Nelson, Pamela Ferman
and Seth Ferman shall have entered into a Non-Competition Agreement in the form
attached as Exhibit C.
(i) Concessionaire Agreements. Each Transferor shall have
terminated, on or prior to the Closing Date, any and all concessionaire or other
agreements between such Transferor and Theater Confections, Inc. ("TCI"), and
shall have delivered to Transferees a release granted by TCI to each respective
Transferor from any liability under such concessionaire or other agreements.
(j) Payment of Obligations. Each Transferor shall have paid any
and all amounts owed by such Transferor to the Estate of David Sanders.
6.02. Conditions Precedent to Obligation of Transferor. The obligation
of Transferor to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Transferor at Transferor's sole
option:
(a) Bringdown of Representations and Warranties; Covenants. Each
of the representations and warranties of Transferees contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made on, as of and with reference to the Closing Date. Each
Transferee shall have performed all of the covenants and complied in all
respects with all of the provisions required by this Agreement to be performed
or complied with by it at or before the Closing.
(b) Litigation. No statute, regulation or order of any
Governmental Body shall be in effect that restrains or prohibits the
transactions contemplated hereby, and there shall not have been threatened, nor
shall there be pending, any action or proceeding by or before any Governmental
Body challenging the lawfulness of or seeking to prevent or delay any of the
transactions contemplated by this Agreement or the Other Agreements or seeking
monetary or other relief by reason of the consummation of such transactions.
(c) Closing Certificate. Each Transferee shall have delivered a
certificate, dated the Closing Date, in the form of Exhibit D, certifying to the
fulfillment of the conditions set forth in subparagraphs (a) and (b) of this
Section. Such certificate shall constitute a representation and warranty of such
Transferee with regard to the matters therein for purposes of this Agreement.
(d) Closing Documents. Transferor shall have received the
documents referred to in Section 6.03(b). All agreements, certificates, opinions
and other documents delivered by Transferees to Transferor hereunder shall be in
form and substance satisfactory to Transferor.
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6.03. Deliveries and Proceedings at Closing.
(a) Deliveries by Transferors. Transferor shall deliver or cause
to be delivered to Transferees at the Closing:
i) For each Transferor, a general warranty bill of sale and
instrument of assignment to the Transferred Assets in a form acceptable to
Transferees, duly executed by such Transferor.
ii) Assignments of all transferable or assignable licenses,
Permits and warranties relating to the Transferred Assets and of any trademarks,
trade names, patents and other Intellectual Property, duly executed and in form
acceptable to Transferees.
iii) Certificates of the appropriate public officials to the
effect that each Transferor was a validly existing corporation in good standing
in its state of incorporation as of a date not more than 10 days prior to the
Closing Date.
iv) Incumbency and specimen signature certificates dated the
Closing Date, signed by the officers of each Transferor and certified by their
respective Secretaries.
v) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Transferor as of a date not more than 10 days prior to
the Closing Date, certified by the Secretaries of State of their respective
states of incorporation and (B) the bylaws of each Transferor as of the Closing
Date, certified by their respective Secretaries.
vi) Certificates of the respective Secretaries of Transferors (A)
setting forth resolutions of the Board of Directors of each Transferor and, if
required by applicable law, the stockholders of each Transferor authorizing the
execution and delivery of this Agreement and the performance by such Transferor
of the transactions contemplated hereby, and (B) to the effect that the
Governing Documents of Transferor delivered pursuant to Section 6.03(a)(v) were
in effect at the date of adoption of such resolutions, the date of execution of
this Agreement and the Closing Date.
vii) The Stockholders and Registration Rights Agreement (in
substantially the form attached hereto as Exhibit E) executed by the Transferor.
viii) A Voting Trust Agreement (in substantially the form
attached hereto as Exhibit G), executed by the Stockholder.
ix) The opinion of Jack Wenarsky, legal counsel to Transferor, in
substantially the form of Exhibit H.
x) For each Transferor, a completed New Theater Transition Form,
in the form attached hereto as Exhibit I.
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xi) Such other agreements and documents as Transferees may
reasonably request.
(b) Deliveries by Transferees. Transferees shall deliver or cause
to be delivered to Transferors at the Closing:
i) Delivery by the Escrow Agent of the Escrowed Funds and a wire
transfer of federal funds in accordance with Section 2.05 pursuant to complete
wire transfer instructions delivered by Transferors to Transferees in writing at
least five days prior to Closing.
ii) Certificates of the appropriate public official to the effect
that each Transferee was a validly existing corporation in its state of
incorporation as of a date not more than 10 days prior to the Closing Date.
iii) Incumbency and specimen signature certificates dated the
Closing Date signed by the officers of each Transferee and certified by their
respective Secretaries.
iv) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Transferee as of a date not more than 10 days prior to
the Closing Date, certified by the Secretary of State of their respective states
of incorporation and (B) the bylaws of each Transferee as of the Closing Date,
certified by their respective Secretaries.
v) Certificate of the respective Secretaries of the Transferees
(A) setting forth resolutions of the Board of Directors of each Transferee
authorizing the execution and delivery of this Agreement and the performance by
such Transferee of the transactions contemplated hereby, certified by the
Secretary of such Transferee and (B) to the effect that the Governing Documents
of Transferees delivered pursuant to Section 6.03(b)(v) were in effect at the
date of adoption of such resolutions, the date of execution of this Agreement
and the Closing Date.
vi) The opinion of Kirkpatrick & Lockhart LLP, Transferees' legal
counsel, in substantially the form of Exhibit J.
vii) Such other agreements and documents as Transferor may
reasonably request.
6.04. Termination.
(a) Mutual Consent; Failure of Conditions. Except as provided in
Section 6.04(b), this Agreement may be terminated at any time prior to Closing
by: (i) mutual consent of Transferees and Transferors; (ii) Transferees, if any
of the conditions specified in Section 6.01 hereof shall not have been fulfilled
by July 31, 1996 and shall not have been waived by Transferees; or (iii)
Transferors, if any of the conditions specified in Section 6.02 hereof shall not
have been fulfilled by July 31, 1996 and shall not have been waived by
Transferors.
(b) Liquidated Damages. In the event of termination of this
Agreement by Transferors pursuant to clause (iii) of 6.04(a), Transferors shall
receive upon demand, as liquidated damages for and in full settlement of all
claims by Transferors and
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Transferor Indemnitees against Transferees in connection with this Agreement,
the amount of $50,000 in immediately available funds, the nature of this
transaction being such as will not permit any exact determination of the damage
that may be suffered by Transferors under such circumstances. In the event of
termination of this Agreement by Transferees pursuant to clause (ii) of 6.04(a),
Transferees shall receive upon demand, as liquidated damages for and in full
settlement of all claims of Transferees and Transferee Indemnitees against
Transferors in connection with this Agreement, the amount of $50,000 in
immediately available funds, the nature of this transaction being such as will
not permit any exact determination of the damage that may be suffered by
Transferees under such circumstances.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.01. Survival of Representations. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing, but all claims for damages made by virtue of such representations,
warranties and agreements shall be made under, and subject to the limitations
set forth in, this Article VII.
7.02. Indemnification by Transferors. Transferors, jointly and severally
shall indemnify, defend, save and hold Transferees and their officers,
directors, employees, agents and Affiliates (collectively, "Transferee
Indemnitees") harmless from and against all demands, claims, allegations,
assertions, actions or causes of action, assessments, losses, damages,
deficiencies, Liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing) and whether or not any such demands,
claims, allegations, etc., of third parties are meritorious (collectively,
"Transferee Damages") asserted against, imposed upon, resulting to, required to
be paid by, or incurred by any Transferee Indemnitees, directly or indirectly,
in connection with, arising out of, that could result in, or which would not
have occurred but for (i) a breach of any representation or warranty made by any
Transferor in this Agreement, in any certificate or document furnished pursuant
hereto by Transferors or any Other Agreement to which any Transferor is or is to
become a party, (ii) a breach or nonfulfillment of any covenant or agreement
made by any Transferor in or pursuant to this Agreement and in any Other
Agreement to which any Transferor is or is to become a party, and (iii) any
Retained Liability.
7.03. Indemnification by Transferees. Transferees shall indemnify,
defend, save and hold Transferors and their officers, directors, employees,
Affiliates and agents (collectively, "Transferor Indemnitees") harmless from and
against any and all demands, claims, actions or causes of action, assessments,
losses, damages, deficiencies, Liabilities, costs and expenses (including
reasonable legal fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing) and whether or not
any such demands, claims, allegations, etc., of third parties are meritorious
(collectively, "Transferor Damages") asserted against, imposed upon, resulting
to, required to be paid by, or incurred by any Transferor Indemnitees, directly
or indirectly, in connection with, arising out of, that could result in, or
which would not have occurred but for (i) a breach of any representation or
warranty made by any Transferee in this Agreement or in any certificate or
document furnished pursuant hereto by any Transferee or any Other Agreement to
which any
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Transferee is a party, (ii) a breach or nonfulfillment of any covenant or
agreement made by any Transferee in or pursuant to this Agreement and in any
Other Agreement to which any Transferee is a party, and (iii) any Assumed
Liability.
7.04. Limitations.
(a) Time Period. Transferors shall be obligated to indemnify
Transferee Indemnitees and Transferees shall be obligated to indemnify
Transferor Indemnitees only for those Transferee Damages or Transferor Damages
(as the case may be) as to which any Transferee or Transferor has given the
other written notice thereof within one year after the Closing Date.
(b) Cap. Notwithstanding anything else herein to the contrary,
Transferors' obligation to indemnify Transferee Indemnitees for any Transferee
Damages shall not exceed the aggregate value of the Indemnification Escrow.
(c) Basket. Except with regard to any Transferee Damages in
connection with, arising out of, that could result in, or which would not have
occurred but for a breach of the representations and warranties set forth in
Section 3.08 hereof which Transferee Damages shall not be subject to the
limitation set forth in this Section 7.04(c), Transferors shall not be obligated
to indemnify any Transferee Indemnitee against any Transferee Damages until the
aggregate amount of the Transferee Damages thereunder exceeds $12,500 and then
only to the extent of such excess.
(d) No Shareholder Liability. The shareholders, officers,
directors, and/or employees of any Transferor hereunder shall be under no
personal liability with respect to any of the provisions or representations in
this Agreement and if any of such shareholders, officers, directors, and/or
employees is in breach or in default with respect to its obligations or
otherwise under this Agreement, Transferees shall look solely to (i) assets of
the Transferors which said corporations own at the time said claim is made and
(ii) the assets subject to the Indemnification Escrow Agreement for the
satisfaction of such Transferees' remedies, and no property or assets of such
Shareholder shall be subject to levy, execution, or other enforcement procedures
for such satisfaction. Furthermore, no shareholder, officer, director or
employee of any Transferor shall have any liability for any breach, action, or
inaction or other misrepresentation of any Transferor under this Agreement.
(e) Fraud. The limitations set forth in Section 7.04 shall not
apply to Transferor Damages or Transferee Damages arising out of fraud.
7.05. Notice of Claims. If any Transferee Indemnitee or Transferor
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or
will suffer or incur any Transferee Damages or Transferor Damages, as the case
may be ("Damages") for which it is entitled to indemnification under this
Article VII, such Indemnified Party shall so notify the party or parties from
whom indemnification is being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified
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Party shall promptly notify the Indemnifying Party of such action or suit. The
failure of an Indemnified Party to give any notice required by this Section
shall not affect any of such party's rights under this Article VII or otherwise
except and to the extent that such failure is actually prejudicial to the rights
or obligations of the Indemnified Party.
7.06. Third Party Claims. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to undertake, conduct
and control the conduct and settlement of such action or suit, (i) the
Indemnifying Party shall not thereby permit to exist any Encumbrance upon any
asset of the Indemnified Party; (ii) the Indemnifying Party shall not consent to
any settlement that does not include as an unconditional term thereof the giving
of a complete release from liability with respect to such action or suit to the
Indemnified Party; (iii) the Indemnifying Party shall permit the Indemnified
Party to participate in such conduct or settlement through counsel chosen by the
Indemnified Party; and (iv) the Indemnifying Party shall agree promptly to
reimburse the Indemnified Party for the full amount of any Damages including
fees and expenses of counsel for the Indemnified Party incurred after giving the
foregoing notice to the Indemnifying Party and prior to the assumption of the
conduct and control of such action or suit by the Indemnifying Party.
ARTICLE VIII
MISCELLANEOUS
8.01. Costs and Expenses. Transferees and Transferors shall each pay its
respective expenses, brokers' fees and commissions, and Transferors shall pay
all of the pre-Closing expenses of Transferors incurred in connection with this
Agreement and the transactions contemplated hereby, including all accounting,
legal and appraisal fees and settlement charges. All transfer taxes incurred as
a result of the transfer of the Transferred Assets shall be paid by Transferors.
8.02. Further Assurances. Transferors shall, at any time and from time
to time on and after the Closing Date, upon request by Transferees and without
further consideration, take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments, documents, transfers, conveyances and assurances as may be
required or desirable for the better conveying, transferring, assigning,
delivering, assuring and confirming the Transferred Assets to Transferees.
8.03. Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or (i) made the second business day after the date of mailing, if
delivered by registered or certified mail, postage prepaid, (ii) upon delivery,
if sent by hand delivery, (iii) upon delivery, if sent by prepaid courier, with
a record of receipt, or (iv) the next day after the date of dispatch, if sent
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by cable, telegram, facsimile or telecopy (with a copy simultaneously sent by
registered or certified mail, postage prepaid, return receipt requested), to the
parties at the following addresses:
(a) if to Transferees, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
Attention: A. Dale Mayo, President
with a required copy to:
Warren H. Colodner, Esq.
Kirkpatrick & Lockhart LLP
1251 Avenue of the Americas
45th Floor
New York, New York 10020
Telecopy: (212) 536-3901
(b) if to Transferor, to:
John Nelson
93 Hope Road
Blairstown, New Jersey 07825
with a required copy to:
Jack Wenarsky, Esq.
225 Route 10
Succasunna, New Jersey 07876
Telecopy: (201) 927-5252
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
8.04. Offset; Assignment; Governing Law. Transferees shall be entitled
to offset or recoup from any amounts due to Transferors from Transferees
hereunder or under any Other Agreement against any obligation of Transferors to
Transferees hereunder or under any Other Agreement. This Agreement and all the
rights and powers granted hereby shall bind and inure to the benefit of the
parties hereto and their respective permitted successors and assigns. This
Agreement and the rights, interests and obligations hereunder may not be
assigned by any party hereto without the prior written consent of the other
parties hereto, except that Transferees may make such assignments to any
Affiliate of Transferees provided that Transferees remains liable hereunder.
This Agreement shall be governed by and
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construed in accordance with the laws of the state of New Jersey without regard
to its conflict of law doctrines.
8.05. Amendment and Waiver; Cumulative Effect. To be effective, any
amendment or waiver under this Agreement must be in writing and be signed by the
party against whom enforcement of the same is sought. Neither the failure of any
party hereto to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by any other party with its obligations
hereunder, nor any custom or practice of the parties at variance with the terms
hereof shall constitute a waiver by such party of its right to exercise any such
right, power or remedy or to demand such compliance. Except as provided in
Section 6.04, the rights and remedies of the parties hereto are cumulative and
not exclusive of the rights and remedies that they otherwise might have now or
hereafter, at law, in equity, by statute or otherwise.
8.06. Entire Agreement; No Third Party Beneficiaries. Except as set
forth in this Section 8.06, this Agreement and the Schedules and Exhibits set
forth all of the promises, covenants, agreements, conditions and undertakings
between the parties hereto with respect to the subject matter hereof, and
supersede all prior or contemporaneous agreements and understandings,
negotiations, inducements or conditions, express or implied, oral or written.
This Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder, except the provisions of Sections 7.02
and 7.03 relating to Transferee Indemnitees and Transferor Indemnitees.
8.07. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.08. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CLEARVIEW CINEMA GROUP, INC.
By:______________________________
A. Dale Mayo
Title: President
CCC EMERSON CORP.
By:______________________________
A. Dale Mayo
Title: President
EMERSON CINEMA, INC.
By:______________________________
John Nelson
Title: President
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SCHEDULES
Schedule 2.01(a) - Exchange of Assets
Schedule 3.03 - Consents
Schedule 3.05 - Undisclosed Liabilities
Schedule 3.06 - No changes
Schedule 3.07 - Taxes
Schedule 3.10 - Description of Contracts
Schedule 3.12 - Description of Property
Schedule 3.11 - Permits
Schedule 3.13 - Environmental Matters
Schedule 3.16 - Union Agreement
Schedule 3.18 - Intellectual Property Rights
Schedule 3.19 - Benefit Plans; Transferor Plans
Schedule 4.03 - Consents
[Schedules are not included herewith, but will be provided
by the Company upon request.]
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EXHIBITS
Exhibit A - Indemnification Escrow Agreement
Exhibit B - Transferor Closing Certificate
Exhibit C - Non-Competition Agreement
Exhibit D - Transferee Closing Certificate
Exhibit E - Shareholders Agreement
Exhibit F - Intentionally Deleted
Exhibit G - Voting Trust Agreement
Exhibit H - Opinion of Jack Wenarsky
Exhibit I - New Theater Transition Form
Exhibit J - Opinion of Kirkpatrick & Lockhart LLP
[Exhibits are not included herewith, but will be provided
by the Company upon request.]