ASSET PURCHASE AGREEMENT
This Agreement (this "AGREEMENT") is dated as of November 21, 1997, by and
among Clearview Cinema Group, Inc., a Delaware Corporation ("CCG"); CCC
Succasunna Cinema Corp., a Delaware corporation ("SUCCASUNNA PURCHASER"); CCC
Parsippany Cinema Corp., a Delaware corporation ("PARSIPPANY PURCHASER";
Parsippany Purchaser and Succasunna Purchaser collectively, the "Purchasers");
F&N Cinema, Inc., a New Jersey corporation ("PARSIPPANY Seller"); Roxbury
Cinema, Inc., a New Jersey corporation, ("SUCCASUNNA SELLER"; Parsippany Seller
and Succasunna Seller collectively, the "Sellers"); and John Nelson, Pamela
Ferman and Seth Ferman (collectively, the "STOCKHOLDERS").
The Sellers currently own and operate the Theaters, as hereinafter
defined.
The Sellers desire to sell to the Purchasers, and the Purchasers desire to
purchase from the Sellers, substantially all of the assets (including the Leases
(as hereinafter defined)) owned or held by the Sellers and utilized in the
operation of the Theaters, upon the terms and subject to the conditions set
forth below.
In consideration of the representations, warranties, covenants, and
agreements contained in this Agreement, the parties, each intending to be
legally bound hereby, agree as set forth below:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
1.1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings specified in this Section. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
"12-31-96 BALANCE SHEET" has the meaning given that term in Section 3.4.
"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"AGREEMENT" means this Agreement, as it may be amended from time to time.
"ASSUMED LIABILITIES" has the meaning given that term in Section 2.4.
"BENEFIT PLAN" has the meaning given that term in Section 3.19(a).
"BUSINESS" means business of the operation of the Theaters conducted by
Sellers.
"CCG" has the meaning given that term in the heading of this Agreement.
"CCG SHARES" means the shares of Common Stock of CCG being delivered by
Purchasers to Sellers pursuant to this Agreement.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List pursuant to Superfund.
"CLOSING" has the meaning given that term in Section 2.8.
"CLOSING DATE" has the meaning given that term in Section 2.8.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
"CONTRACT" and "CONTRACTS" have the respective meanings given those terms
in Section 3.10.
"DAMAGES" has the meaning given that term in Section 7.5.
"DEFINED BENEFIT PLAN" has the meaning given that term in Section 3.19(e).
"ENCUMBRANCE" means any mortgage, deed of trust, pledge, security
interest, encumbrance, option, right of first refusal, agreement of sale,
adverse claim, easement, lien, lease, assessment, restrictive covenant,
encroachment, right-of-way, burden or charge of any kind or nature whatsoever or
any item similar or related to the foregoing.
"ENVIRONMENTAL LAW" means any applicable Law relating to public health and
safety or protection of the environment, including common law nuisance, property
damage and similar common law theories.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the applicable rulings and regulations thereunder.
"FINANCIAL STATEMENTS" has the meaning given that term in Section 3.4.
"GAAP" means United States generally accepted accounting principles.
"GOVERNING DOCUMENTS" means, with respect to any Person who is not a
natural Person, the certificate or articles of incorporation, bylaws, deed of
trust, formation or governing agreement and other charter documents or
organization or governing documents or instruments of such Person.
"GOVERNMENTAL BODY" means any court, government (federal, state, local or
foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority or instrumentality.
"INDEMNIFICATION ESCROW AGREEMENT" means the indemnification escrow
agreement attached as Exhibit A.
"INDEMNIFICATION ESCROW FUND" has the meaning given that term in Section
2.6.
"INDEMNIFIED PARTY" has the meaning given that term in Section 7.5.
"INDEMNIFYING PARTY" has the meaning given that term in Section 7.5.
"INTELLECTUAL PROPERTY" has the meaning given that term in Section 3.18.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" as to any person means, as to a natural person, the actual
knowledge of such person and, as to any other person, the actual knowledge of an
executive officer of such person.
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"LANDLORDS' CONSENTS" means the consent of the respective landlords as
provided for in the Succasunna Lease and the Parsippany Lease.
"LAW" means any applicable federal, state, municipal, local or foreign
statute, law, ordinance, rule, regulation, judgment or order of any kind or
nature whatsoever including any public policy, judgment or order of any
Governmental Body or principle of common law.
"LEASES" means the Succasunna Lease and the Parsippany Lease,
collectively.
"LIABILITIES" with respect to any Person, means all debts, liabilities and
obligations of such Person of any nature or kind whatsoever, whether or not due
or to become due, accrued, fixed, absolute, matured, determined, determinable or
contingent and whether or not incurred directly by such Person or by any
predecessor of such Person, and whether or not arising out of any act, omission,
transaction, circumstance, sale of goods or service or otherwise.
"LITIGATION" has the meaning given that term in Section 3.9.
"MULTIEMPLOYER PLAN" has the meaning given that term in Section 3.19(f).
"OTHER AGREEMENTS" means each other agreement or document to be executed
and delivered in connection with the transactions contemplated by this Agreement
on or before Closing, including the Promissory Notes.
"PARSIPPANY BALANCE SHEET" means the balance sheet of Parsippany Seller
dated 9-30-97 attached as "Exhibit B".
"PARSIPPANY CONTRACTS" has the meaning given that term in Section 2.2(b).
"PARSIPPANY LEASE" means the lease agreement attached as "Exhibit C".
"PARSIPPANY PURCHASED ASSETS" has the meaning given that term in
Section 2.2.
"PARSIPPANY PURCHASER" has the meaning given that term in the heading
of this Agreement.
"PARSIPPANY SECURITY DEPOSIT" means the limited Guarantee of Lease
executed and delivered by John Nelson and Robert Ferman in accordance with
paragraph 19 of the Parsippany Lease.
"PARSIPPANY SELLER" has the meaning given that term in the heading of this
Agreement.
"PARSIPPANY THEATER" means the 12 screen movie theater operated by
Parsippany Seller at the location set forth in the Parsippany Lease.
"PERMIT" and "PERMITS" have the respective meanings given those terms
in Section 3.11.
"PERMITTED ENCUMBRANCES" means (i) liens for current taxes not yet due,
and (ii) Encumbrances that do not or will not either individually or in the
aggregate adversely affect the value of the property encumbered or prohibit or
interfere with the operations of the Business, and (iii) with respect to the
Succasunna Lease the R.C. Leasehold Mortgage.
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"PERSON" means and includes a natural person, a corporation, an
association, a partnership, a limited liability company, a trust, a joint
venture, an unincorporated organization, a business, any other legal entity, or
a Governmental Body.
"PROMISSORY NOTE A" means the $4 million 10 1/2 % Promissory Note of the
Purchasers in substantially the form of "Exhibit D".
"PROMISSORY NOTE B" means the $2 million 10 1/2 % Promissory Note of the
Purchasers in substantially the form of "Exhibit E".
"PROMISSORY NOTES" means the Promissory Note A and the Promissory Note B,
collectively.
"PURCHASE PRICE" has the meaning given that term in Section 2.5.
"PURCHASED ASSETS" means the Succasunna Purchased Assets and the
Parsippany Purchased Assets, collectively.
"PURCHASERS" has the meaning given that term in the heading of this
Agreement.
"PURCHASERS DAMAGES" has the meaning given that term in Section 7.2.
"PURCHASERS INDEMNITEES" has the meaning given that term in Section 7.2.
"QUALIFIED PLAN" has the meaning given that term in Section 3.19(d).
"REAL PROPERTY" has the meaning given that term in Section 3.12.
"R.C. LEASEHOLD MORTGAGE" means that Leasehold Mortgage made by Cinema 10,
Inc. to Robert Ferman, Harold Taylor and Louis Allerhand dated July 1, 1969,
recorded August 18, 1970 in the Morris County Clerk's Office in Mortgage Book
1286 page 854 as modified by various amendments and agreements including but not
limited to that certain Agreement dated June 28, 1985 between the Succasunna
Seller and Robert Ferman, Harold Taylor and Louis Allerhand.
"REGULATED MATERIAL" means any hazardous substance as defined by any
Environmental Law and any other material regulated by any applicable
Environmental Law, including petroleum, petroleum-related material, crude oil or
any fraction thereof, polychlorinated biphenyls, and any friable asbestos.
"RELATED PARTY" means (i) Sellers, (ii) any Affiliate of Sellers, (iii)
any officer or director of any Person identified in clauses (i) or (ii)
preceding, and (iv) any spouse, sibling, ancestor or lineal descendant of any
natural Person identified in any one of the preceding clauses.
"RETAINED ASSETS" has the meaning given that term in Section 2.3.
"RETAINED LIABILITIES" has the meaning given that term in Section 2.4.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SELLERS" has the meaning given that term in the heading of this
Agreement.
"SELLERS DAMAGES" has the meaning given that term in Section 7.3.
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"SELLERS GROUP" has the meaning given that term in Section 3.19(b).
"SELLERS INDEMNITEES" has the meaning given that term in Section 7.3.
"SELLER PLAN" has the meaning given that term in Section 3.19(a).
"SOLD TICKETS" has the meaning given that term in Section 2.5.
"STOCKHOLDERS" has the meaning given that term in the heading of this
Agreement.
"SUCCASUNNA BALANCE SHEET" means the balance sheet of Succasunna Seller
attached as "Exhibit F".
"SUCCASUNNA CONTRACTS" has the meaning given that term in Section 2.1(b).
"SUCCASUNNA LEASE" means the lease agreement attached as "Exhibit G".
"SUCCASUNNA PURCHASED ASSETS" has the meaning given that term in Section
2.1.
"SUCCASUNNA PURCHASER" has the meaning given that term in the heading of
this Agreement.
"SUCCASUNNA SELLER" has the meaning given that term in the heading of this
Agreement.
"SUCCASUNNA THEATER" means the 10 screen movie theater operated by
Succasunna Seller at the location set forth in the Succasunna Lease.
"SUPERFUND" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Sections 6901 et seq., as amended.
"TAX" means any domestic or foreign federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof.
"TCI" has the meaning given that term in Section 6.1(h).
"THEATERS" means the Parsippany Theater and the Succasunna Theater,
collectively.
"VOTING TRUST AGREEMENT" means the Voting Trust Agreement in the form of
"Exhibit H".
1.2. CONSTRUCTION. As used herein, unless the context otherwise requires:
(i) references to "Article" or "Section" are to an article or section hereof;
(ii) all "Exhibits" and "Schedules" referred to herein are to Exhibits and
Schedules attached hereto and are incorporated herein by reference and made a
part hereof; (iii) "include," "includes" and "including" are deemed to be
followed by "without limitation" whether or not they are in fact followed by
such words or words of like import; and (iv) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
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ARTICLE II.
PURCHASE AND SALE
2.1. PURCHASE AND SALE OF SUCCASUNNA ASSETS. At the Closing, Succasunna
Seller shall sell, convey and transfer to Succasunna Purchaser, and Succasunna
Purchaser shall purchase from Succasunna Seller, all of Succasunna Seller's
properties and business as a going concern and goodwill and assets of every
kind, nature and description existing on the Closing Date, wherever such assets
are located and whether real, personal or mixed, tangible or intangible, in
electronic form or otherwise, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements, except those assets
specifically excluded pursuant to Section 2.3, free and clear of all
Encumbrances other than Permitted Encumbrances. Except as excluded pursuant to
Section 2.3, the properties, business, goodwill and assets of Succasunna Seller
to be transferred hereunder (collectively, the "SUCCASUNNA PURCHASED ASSETS")
shall include but not be limited to the following:
(a) All of Succasunna Seller's furniture, fixtures, equipment, and
concession stands, including the items listed on Schedule 2.1(a);
(b) All of Succasunna Seller's rights under the Succasunna Lease and all
of Succasunna Seller's rights under all other leases, contracts, agreements and
purchase and sale orders (collectively, the "SUCCASUNNA CONTRACTS") including
any and all of Succasunna Seller's rights in and to the telephone numbers
currently used for the Succasunna Theater;
(c) All of Succasunna Seller's goodwill and rights in and to the name of
the Succasunna Theater and in any other tradename, trademark, fictitious name or
service mark, or any variant of any of them, and any applications therefor or
registrations thereof, and any other forms of Intellectual Property; and
(d) To the extent not described above, all of the assets reflected on the
Succasunna Balance Sheet.
2.2. PURCHASE AND SALE OF PARSIPPANY ASSETS. At the Closing, Parsippany
Seller shall sell, convey and transfer to Parsippany Purchaser, and Parsippany
Purchaser shall purchase from Parsippany Seller, all of Parsippany Seller's
properties and business as a going concern and goodwill and assets of every
kind, nature and description existing on the Closing Date, wherever such assets
are located and whether real, personal or mixed, tangible or intangible, in
electronic form or otherwise, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements, except those assets
specifically excluded pursuant to Section 2.3, free and clear of all
Encumbrances other than Permitted Encumbrances. Except as excluded pursuant to
Section 2.3, the properties, business, goodwill and assets of Parsippany Seller
to be transferred hereunder (collectively, the "PARSIPPANY PURCHASED ASSETS")
shall include but not be limited to the following:
(a) All of Parsippany Seller's furniture, fixtures, equipment and
concession stands, including the items listed on Schedule 3.1(a);
(b) All of Parsippany Seller's rights under the Parsippany Lease and all
of Parsippany Seller's rights under all other leases, contracts, agreements and
purchase and sale orders (collectively, the "PARSIPPANY CONTRACTS") including
any and all of Parsippany Seller's rights in and to the telephone numbers
currently used for the Parsippany Theater;
(c) All of Parsippany Seller's goodwill and rights in and to the name of
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the Parsippany Theater and in any other tradename, trademark, fictitious name or
service mark, or any variant of any of them, and any applications therefor or
registrations thereof, and any other forms of Intellectual Property; and
(d) To the extent not described above, all of the assets reflected on the
Parsippany Balance Sheet.
2.3. RETAINED ASSETS. Sellers shall retain and the Purchased Assets shall
not include the following assets: (i) the consideration to be delivered to
Sellers pursuant to this Agreement, (ii) Sellers' other rights hereunder, (iii)
Sellers' respective minute book, stock book and seal, (iv) all claims, choses in
action, causes of action and judgments in respect of any litigation matter and
with respect to any other Retained Liability, and (v) all of Sellers' cash in
banks, cash equivalents, bank and mutual fund accounts, trade and other notes
and accounts receivable, deposits, investments, securities, advance payments,
prepaid items and expenses, deferred charges, rights of offset and credits and
claims for refund (collectively, the "RETAINED ASSETS").
2.4. ASSUMPTION OF CERTAIN OBLIGATIONS; RETAINED LIABILITIES. At the
Closing, Succasunna Purchaser shall assume from Succasunna Seller the
liabilities and obligations of arising from the Succasunna Lease and the
Succasunna Contracts and the R.L. Leasehold Mortgage subject to the provisions
of the Indemnification Escrow Agreement. At the Closing, Parsippany Purchaser
shall assume from Parsippany Seller the liabilities and obligations of arising
from the Parsippany Lease, including the obligations under the Parsippany
Security Deposit and the Parsippany Contracts. All of the foregoing named
obligations assumed by Purchasers are referred to herein as the "ASSUMED
LIABILITIES". Except as expressly provided in this Section, the Purchasers do
not and shall not assume or in any way undertake to pay, perform, satisfy or
discharge any other liabilities or obligations of the Sellers (the "RETAINED
LIABILITIES") and the Sellers shall pay and satisfy when due all Retained
Liabilities.
2.5. PURCHASE PRICE; CASH; ETC. The aggregate purchase price for all of
the Purchased Assets shall be $18,500,000, plus the assumption of the Assumed
Liabilities (the "PURCHASE PRICE"). Each Purchaser shall purchase petty cash on
hand at the Theaters at the close of business on the date immediately preceding
the Closing Date, the purchase price of cash to be face value, subject to a
physical count of such cash by each Purchaser and each Seller. Purchasers shall
honor all season passes and presold tickets through December 31, 1997 sold or
distributed by Sellers to non-charities prior to Closing, and Purchasers shall
honor all season passes and presold tickets through March 31, 1998 sold or
distributed by Sellers to charities prior to Closing. If Sellers received any
compensation for any such tickets ("SOLD TICKETS"), Sellers shall reimburse
Purchasers for all Sold Tickets used at the Theaters after the Closing Date
through December 31, 1997 for Sold Tickets used by non-charities and after the
Closing Date through March 31, 1998 for Sold Tickets used by charities. Such
reimbursement shall occur by January 31, 1998 and April 30, 1998, respectively,
upon an accounting thereof by Purchasers.
2.6. PAYMENT OF PURCHASE PRICE. At Closing, the Purchase Price shall be
paid by Purchasers to Sellers as follows:
(i) wire transfer of federal funds in the amount of $400,000 to be held in
Escrow (the "INDEMNIFICATION ESCROW FUND") by Alter Bartfeld & Mantel LLP, as
Escrow Agent pursuant to the Indemnification Escrow Agreement;
(ii) by Purchasers' delivery to Sellers immediately available funds equal
to $11,600,000;
(iii) by Purchasers' delivery to Sellers of CCG's Promissory Note A and
Promissory Note B;
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(iv) by Purchasers' delivery to A. Dale Mayo, as trustee of the Voting
Trust Agreement, of the CCG Shares, as determined in Section 2.7; and
(v) by Purchasers' assumption of the Assumed Liabilities pursuant to the
Assumption Agreement.
2.7. CCG SHARES. The CCG Shares to be delivered hereunder shall equal that
number of shares of CCG Common Stock equal to the result obtained by dividing
$500,000 by the average closing price of the CCG Shares for the ten most recent
trading days immediately prior to the Closing Date as reported by the American
Stock Exchange; provided, however, that in no event shall the number of CCG
Shares delivered pursuant hereto be greater than 45,455 or less than 38,461. The
CCG Shares being delivered pursuant hereto shall not be registered under the
Securities Act and shall be subject to the Voting Trust Agreement. The Sellers
covenant that they will not sell or dispose of the CCG Shares except in
accordance with the rules set forth in Rule 144 issued by the Securities and
Exchange Commission under the Securities Act and shall not sell, transfer or
pledge the CCG Shares in the absence of a registration under the Securities Act
or unless CCG receives an opinion of counsel (which may be counsel for CCG)
reasonably acceptable to it stating that such sale or transfer is exempt from
the registration and prospectus delivery requirements of the Securities Act. The
Sellers agree and consent that the certificates representing the CCG Share shall
contain the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS CLEARVIEW CINEMA GROUP, INC. RECEIVES AN
OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR CLEARVIEW CINEMA GROUP, INC.)
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT AND
THAT SUCH SALE OR TRANSFER IS MADE IN ACCORDANCE WITH THE RULE SET FORTH
IN RULE 144 ISSUED BY THE SECURITIES EXCHANGE COMMISSION UNDER SAID ACT.
2.8. CLOSING. The transfer of the Purchased Assets and the assumption of
the Assumed Liabilities contemplated hereby is taking place at a closing (the
"CLOSING") at the offices of Kirkpatrick & Lockhart LLP, 1251 Avenue of the
Americas, 45th Floor, New York, New York 10020 on the date hereof ("CLOSING
DATE").
2.9. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets as follows: $500,000 (payable in cash) shall be
allocated to furniture, fixtures and equipment for the Succasunna Theater, and
$7,000,000 shall be allocated to the remaining assets of the Succasunna Theater;
and $3,900,000 (payable in cash) shall be allocated to furniture, fixtures,
equipment, and leasehold improvements for the Parsippany Theater, and $7,100,000
shall be allocated to the remaining assets of the Parsippany Theater. Purchasers
and Sellers shall report the federal, state and local income and other tax
consequences of the purchase and sale contemplated hereby in a manner consistent
with such allocation and shall not take any position inconsistent therewith upon
examination of any Tax Return, in any refund claim, in any litigation, or
otherwise.
2.10. PRORATION OF EXPENSES. All accrued expenses associated with the
Leases included in the Purchased Assets, such as electricity, gas, water, sewer,
telephone, property taxes, security services and similar items, shall be
prorated between Purchasers and Sellers as of the Closing Date. Purchasers and
Sellers shall settle such amounts on or before forty-five days after
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the Closing Date.
2.11. PASSAGE OF TITLE. Title to all Purchased Assets shall pass from the
Sellers to Purchasers at Closing, subject to the terms and conditions of this
Agreement. Purchasers assume no risk of loss to the Purchased Assets prior to
Closing.
2.12. CERTAIN CONSENTS. Nothing in this Agreement shall be construed as an
attempt to assign any contract, agreement, Permit, franchise, or claim included
in the Purchased Assets which is by its terms or in law nonassignable without
the consent of the other party or parties thereto, unless such consent shall
have been given, or as to which all the remedies for the enforcement thereof
enjoyed by Sellers would not, as a matter of law, pass to Purchasers as an
incident of the assignments provided for by this Agreement. In order, however,
to provide Purchasers with the full realization and value of every contract,
agreement, Permit, franchise and claim of the character described in the
immediately preceding sentence and under the circumstances described in the
immediately preceding sentence, Sellers agrees that on and after the Closing,
they will, provided that Purchasers and Sellers split equally any out of pocket
expenses at the request and under the direction of Purchasers, in the name of
Sellers or otherwise as Purchasers shall specify take all reasonable action
(including without limitation the appointment of the appropriate Purchasers as
attorney-in-fact for Sellers) and do or cause to be done all such things as
shall in the opinion of Purchasers or their counsel be necessary or proper (i)
to assure that the rights of Sellers under such contracts, agreements, Permits,
franchises and claims shall be preserved for the benefit of Purchasers and (ii)
to facilitate receipt of the consideration to be received by Sellers in and
under every such contract, agreement, Permit, franchise and claim, which
consideration shall be held for the benefit of, and shall be delivered to,
Purchasers. Nothing in this Section shall in any way diminish Sellers'
obligations hereunder to obtain all consents and approvals and to take all such
other actions prior to or at Closing as are necessary to enable Sellers to
convey or assign valid title to all the Purchased Assets to Purchasers.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers and the Stockholders represent and warrant, jointly and
severally, to the Purchasers as follows:
3.1. ORGANIZATION, QUALIFICATION; CAPITALIZATION. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has the corporate power and authority
to own or lease its properties, and carry on the Business as now conducted, and
each Seller has the power and authority to enter into this Agreement and the
Other Agreements to which it is or is to become a party and perform its
obligations hereunder and thereunder.
3.2. AUTHORIZATION; ENFORCEABILITY. This Agreement and each Other
Agreement to which the Sellers are a party have been duly executed and delivered
by and constitute the legal, valid and binding obligations of the Sellers,
enforceable against the Sellers in accordance with their respective terms and
each Other Agreement to which the Sellers are to become a party pursuant to the
provisions hereof, when executed and delivered by the Sellers, will constitute
the legal, valid and binding obligation of the Sellers, enforceable against the
Sellers in accordance with the terms of such Other Agreement, except as may be
limited by applicable bankruptcy, insolvency, moratorium, fraudulent transfer,
preference and other laws and equitable principles affecting the scope and
enforcement to creditors' rights generally, and are also limited by Purchasers'
implied covenants of good faith, fair dealing and commercially reasonable
conduct, and by the effects of judicial discretion on the availability of
remedies and realization of benefits under and enforceability of this Agreement
and the Other Agreements in all respects as written.
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All actions contemplated by this Agreement have been duly and validly authorized
by all necessary proceedings by the Sellers.
3.3. NO VIOLATION OF LAWS OR AGREEMENTS; CONSENTS. Neither the execution
and delivery of this Agreement or any Other Agreement to which the Sellers are
or are to become a party, the consummation of the transactions contemplated
hereby or thereby nor the compliance with or fulfillment of the terms,
conditions or provisions hereof or thereof by Sellers will: (i) contravene any
provision of any Governing Document of the Sellers, (ii) conflict with, result
in a breach of, constitute a default or an event of default (or an event that
might, with the passage of time or the giving of notice or both, constitute a
default or event of default) under any of the terms of, result in the
termination of, result in the loss of any right under, or give to any other
Person the right to cause such a termination of or loss under, any Purchased
Asset or any other contract, agreement or instrument to which the Sellers is a
party or by which any of its assets may be bound or affected, (iii) result in
the creation, maturation or acceleration of any Assumed Liability or any other
Liability of the Sellers (or give to any other Person the right to cause such a
creation, maturation or acceleration), (iv) violate any Law or violate any
judgment or order of any Governmental Body to which the Sellers is subject or by
which any of the Purchased Assets or any of its other assets may be bound or
affected, or (v) result in the creation or imposition of any Encumbrance upon
any of the Purchased Assets or give to any other Person any interest or right
therein. Except for the Landlord Consents, the provisions of the R.C. Leasehold
Mortgage and as set forth on Schedule 3.3, no consent, approval or authorization
of, or registration or filing with, any Person is required in connection with
the execution and delivery by the Sellers of this Agreement or any of the Other
Agreements to which the Sellers is or is to become a party pursuant to the
provisions hereof or the consummation by the Sellers of the transactions
contemplated hereby or thereby.
3.4. FINANCIAL INFORMATION. The Sellers have previously provided to the
Purchasers a balance sheet, income statement and statement of cash flows for
each Seller at December 31, 1996 and for the year then ended, and income
statements and statements of cash flows for the Sellers at December 31, 1995 and
December 31, 1996 and for the years then ended (collectively, the "FINANCIAL
STATEMENTS"). The Financial Statements: (i) have been prepared in accordance
with GAAP on a consistent basis throughout the indicated periods, and (ii)
fairly present the financial condition, assets and liabilities and results of
operation of Sellers at the dates and for the relevant periods indicated in
GAAP. All references in this Agreement to Sellers' "12-31-96 BALANCE SHEET" mean
Sellers' balance sheet dated 12-31-96. The combined earnings before interest,
taxes, depreciation and amortization for the Theaters for the one-year period
ended September 30, 1997 is not less than $2.8 million (calculated as if
concession revenues and expenses were determined without regard to the agreement
with TCI).
3.5. UNDISCLOSED LIABILITIES. The Sellers have no debt, obligation or
liability, absolute, fixed, contingent or otherwise, of any nature whatsoever,
whether due or to become due, including any unasserted claim, whether incurred
directly or by any predecessor thereto, and whether arising out of any act,
omission, transaction, circumstance, sale of goods or services, state of facts
or other condition, except: (i) those reflected or reserved against on the
12-31-96 Balance Sheet in the amounts shown therein; (ii) those not required
under GAAP to be reflected or reserved against in the 12-31-96 Balance Sheet
that are expressly quantified and set forth in the Contracts identified pursuant
to Section 3.15; (iii) those disclosed on Schedule 3.5; and (iv) those of the
same nature as those set forth on the 12-31-96 Balance Sheet that have arisen in
the ordinary course of business of the Company after December 31, 1996 through
the date hereof, all of which have been consistent in amount and character with
past practice and experience, and none of which, individually or in the
aggregate, has had or will have an adverse effect on the business, financial
condition or prospects of the Sellers and none of which is a liability for
breach of contract or warranty or has arisen out of tort, infringement of any
intellectual property rights, or violation of Law or is claimed in any pending
or threatened legal proceeding.
10
3.6. NO CHANGES. Since December 31, 1996, the Sellers have conducted the
Business only in the ordinary course. Without limiting the generality of the
foregoing sentence, since December 31, 1996, except as set forth on Schedule
3.6, there has not been any: i) adverse change in the assets, Liabilities,
earning power, Business or prospects of the Sellers; ii) damage or destruction
to or loss of any asset of the Sellers, whether or not covered by insurance;
iii) strike or other labor trouble at the Sellers; iv) creation of any
Encumbrance on any asset of the Sellers other than any Permitted Encumbrance; v)
increase in the salary, wage or bonus of any employee of any Seller; vi) asset
acquisition in excess of $1000 for any individual acquisition, including capital
expenditure, other than the purchase of inventory in the ordinary course of
business; vii) disposition of any asset (other than inventory in the ordinary
course of business) for less than fair market value; viii) any failure to pay
any Liability when due; ix) creation, termination or amendment of, or waiver of
any right under, any material agreement of the Sellers; or x) agreement or
commitment to do any of the foregoing.
3.7. TAXES. The Sellers have filed or caused to be filed on a timely
basis, or will file or cause to be filed on a timely basis or within a
timely-obtained extension, all Tax Returns that are required to be filed by it
prior to or on the Closing Date, pursuant to the Law of each governmental
authority with taxing power over it. The Sellers have no Liability for any Tax
except Taxes disclosed on Schedule 3.7.
3.8. CONDITION OF ASSETS; TITLE; BUSINESS. The Sellers are engaged in the
Business and no other business. The Purchased Assets have been professionally
maintained and are in good working order and are suitable for the purposes for
which they are used in the Business. The Sellers have good, marketable and
exclusive title to all of the Purchased Assets; the Purchased Assets include all
assets that are necessary for use in and operation of the Business subject to
the terms of the Leases; and none of the Purchased Assets is subject to any
Encumbrance or impairment, whether due to its condition, utility, collectability
or otherwise, other than Permitted Encumbrances. The concession stands located
at the Theaters are currently owned by Theaters Confections, Inc., but shall be
purchased by Sellers on or before Closing, free of any Encumbrance, and shall be
included in the Purchased Assets.
3.9. NO PENDING LITIGATION OR PROCEEDINGS. Except as disclosed on Schedule
3.9, and except for "slip and fall" cases fully covered by insurance, no action,
suit, investigation, claim or proceeding of any nature or kind whatsoever,
whether civil, criminal or administrative, by or before any Governmental Body or
arbitrator ("LITIGATION") is pending or, to the knowledge of the Sellers,
threatened against or affecting the Sellers, the Business, any of the Purchased
Assets, the Assumed Liabilities, or any of the transactions contemplated by this
Agreement or any Other Agreement, and there is no basis for any such Litigation.
There is presently no outstanding judgment, decree or order of any Governmental
Body against or affecting the Sellers, the Business, any of the Purchased
Assets, the Assumed Liabilities, or any of the transactions contemplated by this
Agreement or any Other Agreement. Sellers have no pending Litigation against any
third party.
3.10. CONTRACTS; COMPLIANCE. Disclosed on Schedule 3.10 and 3.12 is a
brief description of each material contract, lease, indenture, mortgage,
instrument, commitment or other agreement, arrangement or understanding, oral or
written, formal or informal, that is included in the Purchased Assets (each, a
"CONTRACT" and collectively, the "CONTRACTS"). Each Contract is the legal, valid
and binding obligation of each Seller and is in full force and effect. The
Sellers have performed all obligations required to be performed by them under
each Contract and are not in breach or default, and are not alleged to be in
breach or default, in any respect thereunder, and no event has occurred and no
condition or state of facts exists (or would exist upon the giving of notice or
the lapse of time or both) that would become or cause a breach, default or event
of default thereunder, would give to any Person the right to cause such a
termination or would cause an acceleration of any obligation thereunder. Sellers
are not
11
currently renegotiating any Contract nor has the Sellers received any notice of
non-renewal or price increase or sales or production allocation with respect to
any Contract.
3.11. PERMITS; COMPLIANCE WITH LAW. Schedule 3.11 sets forth the permits,
certificates, licenses, franchises, privileges, approvals, registrations and
authorizations held by the Sellers (each, a "PERMIT" and collectively,
"PERMITS"). The Permits are all such permits required under any applicable Law
or otherwise advisable in connection with the operation of the Purchased Assets
and Business. Each Permit is valid, subsisting and in full force and effect. The
Sellers are in compliance with and has fulfilled and performed its obligations
under each Permit held by them, and no event or condition or state of facts
exists (or would exist upon the giving of notice or lapse of time or both) that
could constitute a breach or default under any Permit. Sellers are not currently
in violation of any Law nor have Sellers received any notice of any violation of
Law, and no event has occurred or condition or state of facts exists that could
give rise to any such violation. Sellers have not received any notice of
non-renewal of any Permit.
3.12. REAL PROPERTY. Schedule 3.12 identifies the real estate subject to
the Leases (collectively, the "REAL PROPERTY") and identifies the record title
holder of all of the Real Property. The Sellers have the right to quiet
enjoyment of all Real Property in which they hold a leasehold interest for the
full term, including all renewal rights, of the lease or similar agreement
relating thereto. The use and operation of all Real Property conform to all
applicable building, zoning, safety and subdivision Laws, Environmental Laws and
other Laws, and all restrictive covenants and restrictions and conditions
affecting title. The Sellers have not received any written or oral notice of
assessments for public improvements against any Real Property or any written or
oral notice or order by any Governmental Body, any insurance company that has
issued a policy with respect to any of such properties or any board of fire
underwriters or other body exercising similar functions that i) relates to
violations of building, safety or fire ordinances or regulations, ii) claims any
defect or deficiency with respect to any of such properties or iii) requests the
performance of any repairs, alterations or other work to or in any of such
properties or in the streets bounding the same. Such public utilities are all
connected pursuant to valid permits, are all in good working order and are
adequate to service the operations of such facilities as currently conducted and
permit full compliance with all requirements of Law. Sellers have not received
any written notice of any proposed, planned or actual curtailment of service of
any utility supplied to any facility of the Sellers.
3.13. ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 3.13:
(a) COMPLIANCE; NO LIABILITY. The Sellers have operated the Business and
each parcel of Real Property in compliance with all applicable Environmental
Laws. Sellers are not subject to any Liability, penalty or expense (including
legal fees), and no Purchasers will suffer or incur any loss, Liability, penalty
or expense (including legal fees) by virtue of any violation of any
Environmental Law occurring prior to the Closing, any environmental activity
conducted on or with respect to any property at or prior to the Closing or any
environmental condition existing on or with respect to any property at or prior
to the Closing, in each case whether or not any Seller permitted or participated
in such act or omission.
(b) TREATMENT; CERCLIS. Sellers have not treated, stored, generated,
recycled or disposed of any Regulated Material on any real property, and no
other Person has treated, stored, recycled or disposed of any Regulated Material
on any part of the Real Property. There has been no release of any Regulated
Material at, on or under any Real Property. Sellers have not transported any
Regulated Material or arranged for the transportation of any Regulated Material
to any location that is listed or proposed for listing on the National
Priorities List pursuant to Superfund, on CERCLIS or any other location that is
the subject of federal, state or local enforcement action or other investigation
that may lead to claims against such Sellers for cleanup costs, remedial action,
damages to natural resources, to other property or for personal injury
12
including claims under Superfund. None of the Real Property is listed or, to the
knowledge of the Sellers, proposed for listing on the National Priorities List
pursuant to Superfund, CERCLIS or any state or local list of sites requiring
investigation or cleanup.
(c) NOTICES; EXISTING CLAIMS; CERTAIN REGULATED MATERIALS; STORAGE TANKS.
Sellers have not received any request for information, notice of claim, demand
or other notification that it is or may be potentially responsible with respect
to any investigation, abatement or cleanup of any threatened or actual release
of any Regulated Material. Sellers are not required to place any notice or
restriction relating to the presence of any Regulated Material at any Real
Property or in any deed to any Real Property. Schedule 3.13(c) sets forth a list
of all sites to which Sellers transported any Regulated Material for recycling,
treatment, disposal, other handling or otherwise. There has been no past, and
there is no pending or contemplated, claim by Sellers under any Environmental
Law or Laws based on actions of others that may have impacted on the Real
Property, and Sellers have not entered into any agreement with any Person
regarding any Environmental Law, remedial action or other environmental
Liability or expense. There are no storage tanks located on the Real Property,
whether underground or aboveground.
3.14. CUSTOMER RELATIONS. There exists no condition or state of facts or
circumstances involving Sellers' customers, suppliers, distributors or
representatives that Sellers can reasonably foresee could adversely affect the
Business or the Purchased Assets after the Closing Date.
3.15. TRANSACTIONS WITH RELATED PARTIES. No Related Party has any claim of
any nature, including any inchoate claim, against any of the Purchased Assets or
the Business. Except as expressly provided herein or in any Other Agreement or
as otherwise may be mutually agreed after Closing, (i) no Related Party will at
any time after Closing for any reason, directly or indirectly, be or become
entitled to receive any payment or transfer of money or other property of any
kind from Purchasers, and (ii) Purchasers will not at any time after Closing for
any reason, directly or indirectly, be or become subject to any obligation to
any Related Party; provided, however, that nothing in this Section 3.15 shall
prohibit any post-closing transactions between Related Parties that do not
affect the Purchasers, the Purchased Assets or the Business.
3.16. LABOR RELATIONS. The relations of the Sellers with their employees
are good. No employee of the Sellers is represented by any union or other labor
organization other than IATSE Local #642, IATSE Local #645 and IATSE Local #362,
and a copy of the collective bargaining agreement for such union employees has
been delivered to Sellers. No representation election, arbitration proceeding,
grievance, labor strike, dispute, slowdown, stoppage or other labor trouble is
pending or, to the knowledge of the Sellers, threatened against, involving,
affecting or potentially affecting the Sellers. No complaint against the Sellers
is pending or, to the knowledge of the Sellers, threatened before the National
Labor Relations Board, the Equal Employment Opportunity Commission or any
similar state or local agency, by or on behalf of any employee of the Sellers.
The Seller have no Liability for any occupational disease of any of its
employees, former employees or others.
3.17. INSURANCE. The Purchasers have been provided with a copy of each
insurance policy as to which the Sellers are the owner, insured or beneficiary,
whether on an "occurrence" or a "claims made" basis, together with a summary of
such policies and copies of certificates of insurance executed by each insurer
or its authorized agent evidencing such insurance.
3.18. INTELLECTUAL PROPERTY RIGHTS. Schedule 3.18 contains a complete list
and description of all of the trademark and service mark rights, applications
and registrations, trade names, fictitious names, service marks, logos and brand
names, copyrights, copyright applications, letters patent, patent applications
and licenses of any of the foregoing owned or used by the Sellers in or
applicable to the Business. The Sellers have the entire right, title and
13
interest in and to, or has the exclusive perpetual royalty-free right to use,
the intellectual property rights disclosed on Schedule 3.18 and all other
processes, know-how, show-how, formulae, trade secrets, inventions, discoveries,
improvements, blueprints, specifications, drawings, designs, and other
proprietary rights necessary or applicable to or advisable for use in the
Business ("INTELLECTUAL PROPERTY"), free and clear of all Encumbrances. Schedule
3.18 separately discloses all Intellectual Property under license. The
Intellectual Property is valid and not the subject of any interference,
opposition, reexamination or cancellation. To the knowledge of the Sellers, no
Person is infringing upon nor has any Person misappropriated any Intellectual
Property. No Sellers are infringing upon the intellectual property rights of any
other Person.
3.19. EMPLOYEE BENEFITS.
(a) BENEFIT PLANS; SELLER PLAN. Schedule 3.19 discloses all written and
unwritten "employee benefit plans" within the meaning of Section 3(3) of ERISA,
and any other written and unwritten profit sharing, pension, savings, deferred
compensation, fringe benefit, insurance, medical, medical reimbursement, life,
disability, accident, post-retirement health or welfare benefit, stock option,
stock purchase, sick pay, vacation, employment, severance, termination or other
plan, agreement, contract, policy, trust fund or arrangement (each, a "BENEFIT
PLAN"), whether or not funded and whether or not terminated, (i) maintained or
sponsored by the Sellers, or (ii) with respect to which the Sellers have or may
have Liability or is obligated to contribute, or (iii) that otherwise covers any
of the current or former employees of the Sellers or their beneficiaries, or
(iv) as to which any such current or former employees or their beneficiaries
participated or were entitled to participate or accrue or have accrued any
rights thereunder (each, a "SELLER PLAN").
(b) SELLERS GROUP MATTERS; FUNDING. Neither the Sellers nor any
corporation that may be aggregated with the Sellers under Sections 414(b), (c),
(m) or (o) of the Code (the "SELLERS GROUP") has any obligation to contribute to
or any Liability under or with respect to any Benefit Plan of the type described
in Sections 4063 and 4064 of ERISA or Section 413(c) of the Code. The Sellers
have no Liability, and after the Closing, no Purchasers will have any Liability,
with respect to any Benefit Plan of any other member of the Sellers Group,
whether as a result of delinquent contributions, distress terminations,
fraudulent transfers, failure to pay premiums to the PBGC, withdrawal Liability
or otherwise. No accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code) exists nor has any funding waiver from the
IRS been received or requested with respect to any Seller Plan or any Benefit
Plan of any member of the Sellers Group, and no excise or other Tax is due or
owing because of any failure to comply with the minimum funding standards of the
Code or ERISA with respect to any of such plans.
(c) COMPLIANCE. Each Seller Plan and all related trusts, insurance
contracts and funds have been created, maintained, funded and administered in
all respects in compliance with all applicable Laws and in compliance with the
plan document, trust agreement, insurance policy or other writing creating the
same or applicable thereto. No Seller Plan is or is proposed to be under audit
or investigation, and no completed audit of any Seller Plan has resulted in the
imposition of any Tax, fine or penalty.
(d) QUALIFIED PLANS. Schedule 3.19 discloses each Seller Plan that
purports to be a qualified plan under Section 401(a) of the Code and exempt from
United States federal income tax under Section 501(a) of the Code (a "QUALIFIED
PLAN"). With respect to each Qualified Plan, a determination letter (or opinion
or notification letter, if applicable) has been received from the IRS that such
plan is qualified under Section 401(a) of the Code and exempt from federal
income tax under Section 501(a) of the Code. No Qualified Plan has been amended
since the date of the most recent such letter. No member of the Sellers Group,
nor any fiduciary of any Qualified
14
Plan, nor any agent of any of the foregoing, has done anything that would
adversely affect the qualified status of a Qualified Plan or the qualified
status of any related trust.
(e) NO DEFINED BENEFIT PLANS. No Seller Plan is a defined benefit plan
within the meaning of Section 3(35) of ERISA (a "DEFINED BENEFIT Plan"). No
Defined Benefit Plan sponsored or maintained by any member of the Sellers Group
has been terminated or partially terminated after September 1, 1974, except as
set forth on Schedule 3.19. Each Defined Benefit Plan listed as terminated on
Schedule 3.19 has met the requirement for standard termination of
single-employer plans contained in Section 4041(b) of ERISA. During the
five-year period ending on the Closing Date, no member of the Sellers Group has
transferred a Defined Benefit Plan to a corporation that was not, at the time of
transfer, related to the Sellers in any manner described in Sections 414(b),
(c), (m) or (o) of the Code.
(f) MULTIEMPLOYER PLANS. Except as set forth on Schedule 3.19 hereto, no
Seller Plan is a multiemployer plan within the meaning of Section 3(37) or
Section 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN"). No member of the Sellers
Group has withdrawn from any Multiemployer Plan or incurred any withdrawal
Liability to or under any Multiemployer Plan. No Seller Plan covers any
employees of any member of the Sellers Group in any foreign country or
territory.
(g) PROHIBITED TRANSACTIONS; FIDUCIARY DUTIES; POST-RETIREMENT BENEFITS.
No prohibited transaction (within the meaning of Section 406 of ERISA and
Section 4975 of the Code) with respect to any Seller Plan exists or has occurred
that could subject the Sellers to any Liability or Tax under Part 5 of Title I
of ERISA or Section 4975 of the Code. No member of the Sellers Group, nor any
administrator or fiduciary of any Seller Plan, nor any agent of any of the
foregoing, has engaged in any transaction or acted or failed to act in a manner
that will subject the Sellers to any Liability for a breach of fiduciary or
other duty under ERISA or any other applicable Law. With the exception of the
requirements of Section 4980B of the Code, no post-retirement benefits are
provided under any Seller Plan that is a welfare benefit plan as described in
ERISA Section 3(1).
3.20. SUBSIDIARIES AND INVESTMENTS. The Purchased Assets do not contain
any shares of capital stock of or other equity interest in any corporation,
partnership, joint venture or other entity.
3.21. ADDITIONAL THEATERS. Neither Seller nor the Stockholders have any
knowledge of the intention by any person to construct or open any movie theater
within a five-mile radius of the Theaters.
3.22. FINDERS FEES. Neither the Sellers nor any of its officers, directors
or employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby or by any Other Agreement.
3.23. SECURITIES MATTERS. Sellers and Stockholders acknowledge that they
and their representatives have received and reviewed all of the documents filed
by CCG through the date hereof (and on the Closing Date, through the Closing)
with the Securities and Exchange Commission. Sellers and Stockholders and their
representatives have had, at their discretion, an opportunity to meet with the
officers CCG to discuss CCG's business. Sellers and Stockholders are each
acquiring the CCG Shares for his or its own account with the intention of
holding the CCG Shares for purposes of investment, and not as a nominee or agent
for any other party, and not with a view to the resale or distribution of any of
the CCG Shares, and no Seller or Stockholder or has any intention of selling the
CCG Shares or any interest therein in violation of
15
the federal securities laws or any applicable state securities laws. Sellers and
Stockholders understand that the CCG Shares are not registered under the
Securities Act of 1933, as amended (the "1933 Act"), or under any state
securities laws. Each of the Sellers and Stockholders is an "accredited
investor" within the meaning of that term as set forth in Rule 501 issued by the
Securities and Exchange Commission under the 1933 Act.
3.24. HART-SCOTT-RODINO. Neither Sellers, Stockholders nor their
affiliated entities have in excess of $100 million in assets or $100 in annual
revenues.
3.25. DISCLOSURE. None of the representations or warranties of the Sellers
contained herein and none of the information contained in the Schedules referred
to herein or the other information or documents furnished or to be furnished to
CCG or any of its representatives by the Sellers expressly pursuant to the terms
of this Agreement is false or misleading in any material respect or omits to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As an inducement to the Sellers to enter into this Agreement and
consummate the transactions contemplated hereby, the Purchasers, jointly and
severally, represent and warrant to the Sellers and the Stockholders as follows:
4.1. ORGANIZATION. Each Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to own or lease its
properties, carry on its business, enter into this Agreement and the Other
Agreements to which it is or is to become a party and perform its obligations
hereunder and thereunder.
4.2. AUTHORIZATION; ENFORCEABILITY. This Agreement and each Other
Agreement to which each Purchaser is a party have been duly executed and
delivered by and constitute the legal, valid and binding obligations of such
Purchasers, enforceable against it in accordance with their respective terms and
each Other Agreement to which such Purchasers are to become a party pursuant to
the provisions hereof, when executed and delivered by such Purchasers, will
constitute the legal, valid and binding obligation of such Purchasers,
enforceable against such Purchasers in accordance with the terms of such Other
Agreement except as may be limited by applicable bankruptcy, insolvency,
moratorium, fraudulent transfer, preference and other laws and equitable
principles affecting the scope and enforcement to creditors' rights generally,
and are also limited by Sellers' implied covenants of good faith, fair dealing
and commercially reasonable conduct, and by the effects of judicial discretion
on the availability of remedies and realization of benefits under and
enforceability of this Agreement and the Other Agreements in all respects as
written. All actions contemplated by this Agreement have been duly and validly
authorized by all necessary proceedings by such Purchasers.
4.3. NO VIOLATION OF LAWS; CONSENTS. Neither the execution and delivery of
this Agreement or any Other Agreement to which any Purchaser is or is to become
a party, the consummation of the transactions contemplated hereby or thereby nor
the compliance with or fulfillment of the terms, conditions or provisions hereof
or thereof by such Purchasers will: i) contravene any provision of any Governing
Document of such Purchasers, or ii) violate any Law or any judgment or order of
any Governmental Body to which such Purchasers is subject or by which any of its
assets may be bound or affected. Except as set forth on Schedule 4.3 no consent,
approval or authorization of, or registration or filing with, any Person is
required in connection with the execution and delivery by such Purchasers of
this Agreement or any of the Other Agreements to which such Purchasers is or is
to become a party pursuant to the provisions
16
hereof or the consummation by such Purchasers of the transactions contemplated
hereby or thereby.
4.4. NO PENDING LITIGATION OR PROCEEDINGS. No Litigation is pending or, to
the knowledge of any Purchasers, threatened against or affecting any Purchasers
in connection with any of the transactions contemplated by this Agreement or any
Other Agreement to which any Purchasers is or is to become a party.
4.5. FINDERS' FEES. No Purchasers nor any of its officers, directors or
employees has employed any broker or finder or incurred any Liability for any
brokerage fee, commission or finders' fee in connection with any of the
transactions contemplated hereby.
4.6. CCG SHARES. At Closing, the CCG Shares shall be duly authorized,
validly issued and fully paid and non-assessable.
4.7. CCG FINANCIAL STATEMENTS.
CCG's historical financial statements contained in the reports filed by
it with the Securities Exchange Commission are true and correct in all material
respects.
ARTICLE V.
CERTAIN COVENANTS
5.1. CONDUCT OF BUSINESS PENDING CLOSING. From and after the date hereof
and until the Closing Date or earlier termination hereof, unless the Purchasers
shall otherwise consent in writing, the Sellers shall conduct their affairs as
follows:
(a) ORDINARY COURSE; COMPLIANCE. The Business shall be conducted only in
the ordinary course and consistent with past practice. Each of the Sellers shall
professionally maintain their respective Purchased Assets and Assumed
Liabilities in good condition and shall comply in a timely fashion with the
provisions of all Contracts and Permits and its other agreements and
commitments. Each of the Sellers shall preserve its Business organization
intact, keep available the services of its present employees and preserve the
goodwill of its suppliers, customers and others having business relations with
it. Each of the Sellers shall maintain in full force and effect their policies
of insurance, subject only to variations required by the ordinary operations of
the Business, or else shall obtain, prior to the lapse of any such policy,
substantially similar coverage with insurers of recognized standing.
(b) TRANSACTIONS. The Sellers shall not: (i) transfer or dispose of any
asset except in the ordinary course of business; (ii) enter into any contract or
commitment the performance of which may extend beyond the Closing, except those
made in the ordinary course of business, the terms of which are consistent with
past practice; (iii) enter into any employment or consulting contract or
arrangement that is not terminable at will and without penalty or continuing
obligation; (iv) fail to pay any Liability or charge when due, other than
Liabilities contested in good faith by appropriate proceedings; or (v) take any
action or omit to take any action that will cause a breach or termination of any
Permit or Contract, other than termination by fulfillment of the terms
thereunder; or take any other actions that would cause the representations and
warranties in this Agreement not to be true in any material respect on the
Closing Date.
(c) ACCESS, INFORMATION AND DOCUMENTS. The Sellers shall give to
Purchasers and to Purchasers' employees and representatives (including
accountants, actuaries, attorneys, environmental consultants and engineers)
access during normal business hours to all of the properties, books, Tax
Returns, contracts, commitments, records, officers, personnel and accountants
(including independent public accountants and their workpapers concerning
Sellers)
17
of Sellers and shall furnish to Purchasers all such documents and copies of
documents and all information with respect to the properties, Liabilities and
affairs of Sellers as Purchasers may reasonably request, including but not
limited to weekly reports of gross box office and concession receipts, at the
same time such reports are available to Sellers' management.
5.2. ACQUISITION PROPOSALS. The Sellers and the Stockholders shall not
(nor shall they permit any of their affiliates to) directly or indirectly,
solicit, initiate or encourage any inquiries or the making of any proposals
from, engage or participate in any negotiations or discussions with, provide any
confidential information or data to, or enter into (or authorize) any agreement
or agreement in principle with any person or announce any intention to do any of
the foregoing, with respect to any offer or proposal to acquire all or any part
of the Sellers' assets, properties, or Business whether by merger, purchase of
capital stock or assets or otherwise.
5.3. FULFILLMENT OF AGREEMENTS. The Purchasers and Sellers shall use
commercially reasonable efforts to cause all of those conditions to the
obligations of the other under Article VI that are not beyond its reasonable
control to be satisfied on or prior to the Closing and shall use its
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement. Without
limiting the foregoing, the Sellers shall, prior to Closing, obtain the Landlord
Consents and the Consents identified in Schedule 3.3.
5.4. CERTAIN TRANSITIONAL MATTERS. The Sellers shall cooperate with and
assist Purchasers and their authorized representatives in order to provide, to
the extent reasonably requested by any Purchasers, an efficient transfer of
control of the Purchased Assets and to avoid any undue interruption in the
activities and operations of the Business following the Closing Date.
5.5. SELLERS' EMPLOYEES. Purchasers shall have the right, but not the
obligation on or after the Closing Date to employ any or all of the employees of
Sellers.
5.6. COVENANT AGAINST COMPETITION AND DISCLOSURE. To accord to Purchasers
the full value of their purchase, Sellers and the Stockholders shall not,
directly or indirectly, (i) for a period of five years after the Closing Date,
directly or indirectly, engage or become interested in (as owner, stockholder,
partner or otherwise) the operation of any movie theater within a five mile
radius of the Leased Property, (ii) for a period of two years after the Closing
Date, directly or indirectly, engage or become interested in (as owner,
stockholder, partner or otherwise) the operation of any movie theater within a
five mile radius of any theater owned directly or indirectly by CCG on the date
immediately following the Closing Date, or (iii) disclose to anyone, or use in
competition with any Purchasers, any information with respect to any
confidential or secret aspect of the operations of the Business. It is
acknowledged that stockholders, officers, and/or directors of the Sellers
currently operate certain movie theaters and nothing in subsection (ii) of the
previous sentence shall prohibit the Sellers from operating such theaters. The
Sellers and the Stockholders acknowledge that the remedy at law for breach of
the provisions of this Section 5.7 will be inadequate and that, in addition to
any other remedy Purchasers may have, they will be entitled to an injunction
restraining any such breach or threatened breach, without any bond or other
security being required. If any court construes the covenant in this Section 5.7
or any part thereof, to be unenforceable because of its duration or the area
covered thereby, the court shall have the power to reduce the duration or area
to the extent necessary so that such provision is enforceable. Until the third
anniversary of the Closing Date, the Sellers and the Stockholders shall not
directly or indirectly solicit or offer employment to any person (other than
William Andrew Nelson) who is then an employee of any Purchasers or was an
employee of any Purchasers at any time after the Closing to engage in any
business similar to or in competition with the business of any Seller as it has
been conducted prior to Closing.
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5.7. BOOKS AND RECORDS. The Sellers shall not destroy or dispose of any
books, records, and files relating to the business, properties, assets or
operations of the Sellers to the extent that they pertain to the operations of
the Sellers prior to the Closing Date for a period of five years from the
Closing Date or for the applicable statute of limitations for any tax liability.
5.8. PERFORMANCE OF LEASE OBLIGATIONS. From and after the Closing Date the
Purchasers shall perform the obligations of the tenant under the terms of the
Leases, and CCG will use its best efforts to remove Sellers and Stockholders
from any post-Closing obligations under the Leases.
5.9. BULBS. On the Closing Date, the Purchased Assets will include at a
minimum (i) one functioning xenon projector bulb for each auditorium in the
Theater, and (ii) six new, unused, spare xenon projector bulbs for the
Parsippany Theater and five new, unused, spare xenon projector bulbs for the
Succasunna Theater and Sellers shall reimburse Purchasers after Closing for the
cost of any missing or non-functioning bulbs on the Closing Date.
5.10. OFFICE SPACE. Succasunna Purchaser shall permit Stockholders to use
rent free the office located on the mezzanine level of the Succasunna Theater
for six months commencing on the Closing Date. Stockholders shall be responsible
for all telephone charges related to their activities at such office.
Stockholders shall not remove the office furniture in such office (which shall
be property of Succasunna Purchaser) but may remove the file cabinets in such
office.
ARTICLE VI.
CONDITIONS TO CLOSING; TERMINATION
6.1. CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASERS. The obligation of
Purchasers to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Purchasers at Purchasers' sole
option:
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
representations and warranties of the Sellers contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and warranties had been
made on, as of and with reference to the Closing Date. The Sellers shall have
performed in all respects all of the covenants and complied with all of the
provisions required by this Agreement to be performed or complied with by it at
or before the Closing.
(b) LITIGATION. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby or that would limit or adversely affect Purchasers' ownership of the
Purchased Assets or assumption of the Assumed Liabilities, and except with
respect to the R.C. Leasehold Mortgage there shall not have been threatened, nor
shall there be pending, any action or proceeding challenging the lawfulness of
or seeking to prevent or delay any of the transactions contemplated by this
Agreement or any of the Other Agreements or seeking monetary or other relief by
reason of the consummation of any of such transactions.
(c) NO MATERIAL ADVERSE CHANGE. Between the date hereof and the Closing
Date, there shall have been no material adverse change, regardless of insurance
coverage therefor, in the Business or any of the assets, results of operations,
Liabilities, prospects or condition, financial or otherwise, of the Sellers.
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(d) CLOSING CERTIFICATE. The Sellers shall have delivered a certificate,
dated the Closing Date, in the form of "Exhibit I" hereto, certifying to the
fulfillment of the conditions set forth in subparagraphs (a), (b) and (c) of
this Section. Such certificate shall constitute a representation and warranty of
the Sellers with regard to the matters therein for purposes of this Agreement.
(e) CLOSING DOCUMENTS. Purchasers shall have received the documents
referred to in Section 6.3(a). All agreements, certificates, opinions and other
documents delivered by Sellers to Purchasers hereunder shall be in form and
substance satisfactory to Purchasers.
(f) DOCUMENTS CONCERNING LEASEHOLD INTERESTS. Purchasers shall have
received from each lessor of each leasehold estate included in the Purchased
Assets consents to assignment of leasehold interest, consents to leasehold
mortgage, and estoppel certificates, and from each existing mortgagee with
respect to Real Property all consents, nondisturbance agreements, and other
documents as the Sellers may be entitled to under the terms of the Parsippany
Lease and the Succasunna Lease.
(g) CONSENTS. The Sellers shall have received the consents, approvals and
actions of the Persons referred to in Schedule 3.3, including the Landlords'
Consents.
(h) CONCESSIONAIRE AGREEMENTS. Each Seller shall have terminated, on or
prior to the Closing Date, any and all concessionaire or other agreements
between such Sellers and Theaters Confections, Inc. ("TCI"), and shall have
delivered to Purchasers a release granted by TCI to each of the respective
Sellers from any liability under such concessionaire or other agreements.
6.2. CONDITIONS PRECEDENT TO OBLIGATION OF SELLERS. The obligation of
Sellers to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions, any one or more
of which may be waived in whole or in part by Sellers at Sellers' sole option:
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
representations and warranties of Purchasers contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date, with
the same force and effect as though such representations and warranties had been
made on, as of and with reference to the Closing Date. Each Purchaser shall have
performed all of the covenants and complied in all respects with all of the
provisions required by this Agreement to be performed or complied with by it at
or before the Closing.
(b) LITIGATION. No statute, regulation or order of any Governmental Body
shall be in effect that restrains or prohibits the transactions contemplated
hereby, and there shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any Governmental Body challenging the
lawfulness of or seeking to prevent or delay any of the transactions
contemplated by this Agreement or the Other Agreements or seeking monetary or
other relief by reason of the consummation of such transactions.
(c) CLOSING CERTIFICATE. Each Purchaser shall have delivered a
certificate, dated the Closing Date, in the form of "Exhibit J", certifying to
the fulfillment of the conditions set forth in subparagraphs (a) and (b) of this
Section. Such certificate shall constitute a representation and warranty of such
Purchasers with regard to the matters therein for purposes of this Agreement.
(d) CLOSING DOCUMENTS. Sellers shall have received the documents referred
to in Section 6.3(b). All agreements, certificates, opinions and other documents
delivered by
20
Purchasers to Sellers hereunder shall be in form and substance satisfactory to
Sellers.
6.3. DELIVERIES AND PROCEEDINGS AT CLOSING.
(a) DELIVERIES BY SELLERS. Sellers shall deliver or cause to be delivered
to Purchasers at the Closing:
i) For each Seller, a general warranty bill of sale and instrument
of assignment to the Purchased Assets in the form of Exhibit K annexed hereto,
duly executed by such Sellers.
ii) The Assignment and Assumption of the Leases in the form of
Exhibit L.
iii) Assignments of all transferable or assignable licenses,
Permits and warranties relating to the Purchased Assets and of any trademarks,
trade names, patents and other Intellectual Property, duly executed and in form
reasonably acceptable to Purchasers.
iv) Certificates of the appropriate public officials to the effect
that each Seller was a validly existing corporation in good standing in its
state of incorporation as of a date not more than 30 days prior to the Closing
Date.
v) Incumbency and specimen signature certificates dated the Closing
Date, signed by the officers of each Seller and certified by their respective
Secretaries.
vi) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Seller as of a date not more than 30 days prior to the
Closing Date, certified by the Secretaries of State of their respective states
of incorporation and (B) the bylaws of each Seller as of the Closing Date,
certified by their respective Secretaries.
vii) Certificates of the respective Secretaries of Sellers (A)
setting forth resolutions of the Board of Directors of each Seller and, if
required by applicable law, the stockholders of each Seller authorizing the
execution and delivery of this Agreement and the performance by such Sellers of
the transactions contemplated hereby, and (B) to the effect that the Governing
Documents of Sellers delivered pursuant to Section 6.3(a)(v) were in effect at
the date of adoption of such resolutions, the date of execution of this
Agreement and the Closing Date.
viii) The Voting Trust Agreement executed by each Seller.
ix) The opinion of Alter Bartfeld & Mantel LLP, legal counsel to
Sellers, in substantially the form of "Exhibit M".
x) For each Seller, a completed New Theater Transition Form, in
the form attached hereto as "Exhibit N".
xi) Such other agreements and documents as Purchasers may
reasonably request.
(b) DELIVERIES BY PURCHASERS. Purchasers shall deliver or cause to be
delivered to Sellers at the Closing:
i) Delivery by the Escrow Agent of the CCG Shares and a wire
transfer of federal funds in accordance with Section 2.5 pursuant to complete
wire transfer instructions delivered by Sellers to Purchasers in writing at
least five days prior to Closing.
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ii) Certificates of the appropriate public official to the effect
that each Purchaser was a validly existing corporation in its state of
incorporation as of a date not more than 30 days prior to the Closing Date.
iii) Incumbency and specimen signature certificates dated the
Closing Date signed by the officers of each Purchaser and certified by their
respective Secretaries.
iv) True and correct copies of (A) the Governing Documents (other
than the bylaws) of each Purchaser as of a date not more than 30 days prior to
the Closing Date, certified by the Secretary of State of their respective states
of incorporation and (B) the bylaws of each Purchaser as of the Closing Date,
certified by their respective Secretaries.
v) Certificate of the respective Secretaries of the Purchasers (A)
setting forth resolutions of the Board of Directors of each Purchaser
authorizing the execution and delivery of this Agreement and the performance by
such Purchasers of the transactions contemplated hereby, certified by the
Secretary of such Purchasers and (B) to the effect that the Governing Documents
of Purchasers delivered pursuant to Section 6.3(b)(iv) were in effect at the
date of adoption of such resolutions, the date of execution of this Agreement
and the Closing Date.
vi) The opinion of Kirkpatrick & Lockhart LLP, Purchasers' legal
counsel, in substantially the form of "Exhibit O".
vii) A Registration Rights Agreement in substantially the form of
Exhibit P.
viii) Such other agreements and documents as Sellers may
reasonably request.
6.4. TERMINATION.
(a) MUTUAL CONSENT; FAILURE OF CONDITIONS. Except as provided in Section
6.4(b), this Agreement may be terminated at any time prior to Closing by: (i)
mutual consent of Purchasers and Sellers; (ii) Purchasers, if any of the
conditions specified in Section 6.1 hereof shall not have been fulfilled by
December 15, 1997 and shall not have been waived by Purchasers; or (iii)
Sellers, if any of the conditions specified in Section 6.2 hereof shall not have
been fulfilled by December 15, 1997 and shall not have been waived by Sellers.
(b) LIQUIDATED DAMAGES. In the event of termination of this Agreement by
either party hereto as a consequence of a material breach hereof by the other
party hereto, then such party shall be entitled to payment in lieu of damages in
an amount equal to $50,000, the nature of this transaction being such as will
not permit any exact determination of the damage that may be suffered by Sellers
under such circumstances. The failure of any party hereto to satisfy any
condition to Close hereunder not within the control of such party (such as the
Landlord Consents) shall not be deemed a material breach by such party.
ARTICLE VII.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
7.1. SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing, but all claims for damages made by virtue of such representations,
warranties and agreements shall be made under, and subject to the limitations
set forth in, this Article VII, except that the representation and warranty
contained in Section 4.7 shall not survive Closing.
7.2. INDEMNIFICATION BY SELLERS AND STOCKHOLDERS. Sellers and
Stockholders, jointly
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and severally, shall indemnify, defend, save and hold Purchasers and their
officers, directors, employees, agents and Affiliates (collectively, "PURCHASERS
INDEMNITEES") harmless from and against all demands, claims, allegations,
assertions, actions or causes of action, assessments, losses, damages,
deficiencies, Liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing) and whether or not any such demands,
claims, allegations, etc., of third parties are meritorious (collectively,
"PURCHASERS DAMAGES") asserted against, imposed upon, resulting to, required to
be paid by, or incurred by any Purchasers Indemnitees, directly or indirectly,
in connection with, arising out of, that could result in, or which would not
have occurred but for i) a breach of any representation or warranty made by any
Seller in this Agreement, in any certificate or document furnished pursuant
hereto by Sellers or any Other Agreement to which any Seller is or is to become
a party, ii) a breach or nonfulfillment of any covenant or agreement made by any
Seller in or pursuant to this Agreement and in any Other Agreement to which any
Seller is or is to become a party, iii) any Retained Liability and (iv) any
matter disclosed on Schedule 3.9.
7.3. INDEMNIFICATION BY PURCHASERS. Purchasers and CCG shall indemnify,
defend, save and hold Sellers and Stockholders and their officers, directors,
employees, Affiliates and agents (collectively, "SELLERS INDEMNITEES") harmless
from and against any and all demands, claims, actions or causes of action,
assessments, losses, damages, deficiencies, Liabilities, costs and expenses
(including reasonable legal fees, interest, penalties, and all reasonable
amounts paid in investigation, defense or settlement of any of the foregoing)
and whether or not any such demands, claims, allegations, etc., of third parties
are meritorious (collectively, "SELLERS DAMAGES") asserted against, imposed
upon, resulting to, required to be paid by, or incurred by any Sellers
Indemnitees, directly or indirectly, in connection with, arising out of, that
could result in, or which would not have occurred but for i) a breach of any
representation or warranty made by any Purchasers in this Agreement or in any
certificate or document furnished pursuant hereto by any Purchasers or any Other
Agreement to which any Purchasers is a party, ii) a breach or nonfulfillment of
any covenant or agreement made by any Purchasers in or pursuant to this
Agreement and in any Other Agreement to which any Purchasers is a party, and
iii) any Assumed Liability.
7.4. LIMITATIONS.
(a) TIME PERIOD. Sellers shall be obligated to indemnify Purchasers
Indemnitees and Purchasers shall be obligated to indemnify Sellers Indemnitees
only for those Purchasers Damages or Sellers Damages (as the case may be) as to
which any Purchasers or Sellers have given the other written notice thereof
within one year after the Closing Date. Notwithstanding the foregoing limitation
shall be inapplicable to Purchasers obligation to indemnify Sellers Indemnitees
as a result of the Purchasers' failure to perform its obligations under the
Assignment and Assumption of Leases which obligations shall remain in full force
and effect until the sooner of the delivery of a release of Seller's Indemnities
from any further liability under the Leases or the expiration of the Leases.
(b) CAP. Notwithstanding anything else herein to the contrary, Sellers'
obligation to indemnify Purchasers Indemnitees for any Purchasers Damages shall
not exceed $750,000.
(c) BASKET. Except with regard to any Purchasers Damages in connection
with, arising out of, that could result in, or which would not have occurred but
for a breach of the representations and warranties set forth in Section 3.8
hereof which Purchasers Damages shall not be subject to the limitation set forth
in this Section 7.4(c), Sellers shall not be obligated to indemnify any
Purchasers Indemnitee against any Purchasers Damages until the aggregate amount
of the Purchasers Damages thereunder exceeds $12,500 and then only to the extent
of such excess.
23
(d) OTHER. The limitations set forth in this Section 7.4 shall not apply
to Sellers Damages or Purchasers Damages arising out of fraud, Retained
Liabilities, Assumed Liabilities, any breach of a representation and warranty
relating to taxes or title, any matter addressed in Section 5.6 or the matters
involving the Indemnification Escrow Fund.
7.5. NOTICE OF CLAIMS. If any Purchasers Indemnitee or Sellers Indemnitee
(an "INDEMNIFIED PARTY") believes that it has suffered or incurred or will
suffer or incur any Purchasers Damages or Sellers Damages, as the case may be
("DAMAGES") for which it is entitled to indemnification under this Article VII,
such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "INDEMNIFYING PARTY") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this Section shall not affect any of such party's rights under this
Article VII or otherwise except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnified Party.
7.6. THIRD PARTY CLAIMS. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expenses of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to undertake, conduct
and control the conduct and settlement of such action or suit, i) the
Indemnifying Party shall not thereby permit to exist any Encumbrance upon any
asset of the Indemnified Party; ii) the Indemnifying Party shall not consent to
any settlement that does not include as an unconditional term thereof the giving
of a complete release from liability with respect to such action or suit to the
Indemnified Party; iii) the Indemnifying Party shall permit the Indemnified
Party to participate in such conduct or settlement through counsel chosen by the
Indemnified Party; and iv) the Indemnifying Party shall agree promptly to
reimburse the Indemnified Party for the full amount of any Damages including
fees and expenses of counsel for the Indemnified Party incurred after giving the
foregoing notice to the Indemnifying Party and prior to the assumption of the
conduct and control of such action or suit by the Indemnifying Party.
ARTICLE VIII.
MISCELLANEOUS
8.1. COSTS AND EXPENSES. Purchasers, on the one hand, and Sellers and
Stockholders, on the other hand, shall each pay its respective expenses,
brokers' fees and commissions, and Sellers shall pay all of the pre-Closing
expenses of Sellers incurred in connection with this Agreement and the
transactions contemplated hereby, including all accounting, legal and appraisal
fees and settlement charges. All transfer taxes incurred as a result of the
transfer of the Purchased Assets shall be paid by Sellers.
8.2. FURTHER ASSURANCES. Sellers shall, at any time and from time to time
on and after the Closing Date, upon request by Purchasers and without further
consideration, take or cause to be taken such actions and execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
instruments, documents, transfers, conveyances and assurances as may be required
or desirable for the better conveying, transferring, assigning, delivering,
assuring and confirming the Purchased Assets to Purchasers.
24
8.3. NOTICES. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made i) the second business day after the date of mailing, if delivered
by registered or certified mail, postage prepaid, ii) upon delivery, if sent by
hand delivery, iii) upon delivery, if sent by prepaid courier, with a record of
receipt, or iv) the next day after the date of dispatch, if sent by cable,
telegram, facsimile or telecopy (with a copy simultaneously sent by registered
or certified mail, postage prepaid, return receipt requested), to the parties at
the following addresses:
(a) if to Purchasers, to:
Clearview Cinema Group, Inc.
7 Waverly Place
Madison, NJ 07940
Telecopy: (201) 377-4303
Attention: A. Dale Mayo, President
with a required copy to:
David L. Forney, Esq.
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Telecopy: (412) 355-6501
(b) if to Sellers, to:
John Nelson
93 Hope Road
Blairstown, New Jersey 07825
with a required copy to:
Arthur S. Mantel, Esq.
Alter Bartfeld & Mantel LLP
90 Park Avenue
New York, NY 10016
Telecopy: (212) 953-5061
Any party hereto may change the address to which notice to it, or copies
thereof, shall be addressed, by giving notice thereof to the other parties
hereto in conformity with the foregoing.
8.4. OFFSET; ASSIGNMENT; GOVERNING LAW. Purchasers shall be entitled to
offset or recoup from any amounts due to Sellers from Purchasers hereunder or
under any Other Agreement (including in respect of the Promissory Notes) against
any obligation of Sellers to Purchasers hereunder or under any Other Agreement.
This Agreement and all the rights and powers granted hereby shall bind and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns. This Agreement and the rights, interests and obligations hereunder
may not be assigned by any party hereto without the prior written consent of the
other parties hereto, except that Purchasers may make such assignments to any
Affiliate of Purchasers provided that Purchasers remains liable hereunder. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey without regard to its conflict of law doctrines.
8.5. AMENDMENT AND WAIVER; CUMULATIVE EFFECT. To be effective, any
amendment
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or waiver under this Agreement must be in writing and be signed by the party
against whom enforcement of the same is sought. Neither the failure of any party
hereto to exercise any right, power or remedy provided under this Agreement or
to insist upon compliance by any other party with its obligations hereunder, nor
any custom or practice of the parties at variance with the terms hereof shall
constitute a waiver by such party of its right to exercise any such right, power
or remedy or to demand such compliance. Except as provided in Section 6.4, the
rights and remedies of the parties hereto are cumulative and not exclusive of
the rights and remedies that they otherwise might have now or hereafter, at law,
in equity, by statute or otherwise.
8.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except as set forth
in this Section 8.6, this Agreement and the Schedules and Exhibits set forth all
of the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersede all
prior or contemporaneous agreements and understandings, negotiations,
inducements or conditions, express or implied, oral or written. This Agreement
is not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder, except the provisions of Sections 7.2 and 7.3
relating to Purchasers Indemnitees and Sellers Indemnitees.
8.7. SEVERABILITY. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
8.8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PURCHASERS:
CLEARVIEW CINEMA GROUP, INC.
By:/s/ A. Dale Mayo
------------------------------------
A. Dale Mayo
Title: President
CCC SUCCASUNNA CINEMA CORP.
By:/s/ A. Dale Mayo
------------------------------------
A. Dale Mayo
Title: President
CCC PARSIPPANY CINEMA CORP.
By:/s/ A. Dale Mayo
------------------------------------
A. Dale Mayo
Title: President
SELLERS:
F&N CINEMA, INC.
By: /s/ John Nelson
------------------------------------
Title: President
ROXBURY CINEMA, INC.
By:/s/ John Nelson
------------------------------------
Title: President
/s/ Pamela Ferman
--------------------------------------
Pamela Ferman
/s/ Seth Ferman
--------------------------------------
Seth Ferman
STOCKHOLDERS:
/s/ John Nelson
--------------------------------------
John Nelson
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/s/ Pamela Ferman
--------------------------------------
Pamela Ferman
STOCKHOLDERS:
/s/ John Nelson
--------------------------------------
John Nelson
28
SCHEDULES
SCHEDULE 2.1(a) - Succasunna Purchased Assets
SCHEDULE 2.2(a) - Parsippany Purchased Assets
SCHEDULE 3.3 - Consents
SCHEDULE 3.5 - Undisclosed Liabilities
SCHEDULE 3.6 - No Changes
SCHEDULE 3.7 - Taxes
SCHEDULE 3.9 - Litigation
SCHEDULE 3.10 - Description of Contracts
SCHEDULE 3.11 - Permits
SCHEDULE 3.12 - Description of Real Property
SCHEDULE 3.13 - Environmental Matters
SCHEDULE 3.14 - Regulated Material
SCHEDULE 3.18 - Intellectual Property Rights
SCHEDULE 3.19 - Benefit Plans; Seller Plan
SCHEDULE 4.3 - Consents
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EXHIBITS
EXHIBIT A - Indemnification Escrow Agreement
EXHIBIT B - Parsippany Balance Sheet
EXHIBIT C - Parsippany Lease
EXHIBIT D - Form of Promissory Note A
EXHIBIT E - Form of Promissory Note B
EXHIBIT F - Succasunna Balance Sheet
EXHIBIT G - Succasunna Lease
EXHIBIT H - Form of Voting Trust Agreement
EXHIBIT I - Form of Sellers Closing Certificate
EXHIBIT J - Form of Purchaser Closing Certificate
EXHIBIT K- Form of Bill of Sale
EXHIBIT L - Form of Assignment and Assumption of Leases
EXHIBIT M - Form of Opinion of Alter Bartfeld & Mantel LLP
EXHIBIT N - Form of New Theater Transition Form
EXHIBIT O - Form of Opinion of Kirkpatrick & Lockhart LLP
EXHIBIT P - Form of Registration Rights Agreement
[Schedules and Exhibits will be provided upon request.]
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