EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BETWEEN
CINEMARK, INC.
AND
POPCORN MERGER CORP.
DATED AS OF MARCH 12, 2004
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS............................................................................................1
Section 1.1 Specific Definitions...................................................................1
Section 1.2 Other Terms...........................................................................10
Section 1.3 Other Definitional Provisions.........................................................10
ARTICLE II. THE MERGER...........................................................................................10
Section 2.1 The Merger............................................................................10
Section 2.2 The Closing...........................................................................10
Section 2.3 Effective Time........................................................................10
Section 2.4 Effect of the Merger..................................................................11
Section 2.5 Certificate of Incorporation; Bylaws..................................................11
Section 2.6 Directors and Officers................................................................11
ARTICLE III. PRECURSOR TRANSACTIONS; CONVERSION AND EXCHANGE OF SHARES...........................................11
Section 3.1 Precursor Transactions................................................................11
Section 3.2 Conversion of Shares; Stock Options...................................................12
Section 3.3 Dissenting Shares.....................................................................13
Section 3.4 Payment for Shares and Stock Options; Stock Transfer Books............................14
Section 3.5 Withholding...........................................................................15
Section 3.6 Calculation of Merger Consideration...................................................16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF CINEMARK...........................................................16
Section 4.1 Organization and Authority............................................................16
Section 4.2 Capitalization of Cinemark............................................................17
Section 4.3 Subsidiaries..........................................................................18
Section 4.4 Financial Statements; Company Reports; Undisclosed Liabilities........................19
Section 4.5 Absence of Certain Changes or Events..................................................20
Section 4.6 Licenses..............................................................................21
Section 4.7 Litigation............................................................................21
Section 4.8 Compliance with Law...................................................................22
Section 4.9 Contracts.............................................................................22
Section 4.10 Consents and Approvals................................................................23
Section 4.11 Tax Matters...........................................................................24
Section 4.12 Employee Benefits.....................................................................25
Section 4.13 Brokers and Finders...................................................................26
Section 4.14 Intellectual Property.................................................................26
Section 4.15 Real Property.........................................................................27
Section 4.16 Labor Matters.........................................................................28
Section 4.17 Environmental Matters.................................................................28
Section 4.18 Insurance.............................................................................28
Section 4.19 Compliance with Foreign Corrupt Practices Act.........................................29
Section 4.20 Suppliers.............................................................................29
Section 4.21 Affiliated Transactions...............................................................29
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Section 4.22 Expenses..............................................................................30
Section 4.23 Change of Control Payments............................................................30
Section 4.24 Indebtedness..........................................................................30
Section 4.25 Board Recommendation..................................................................30
Section 4.26 No Other Representations or Warranties................................................30
Section 4.27 Expiration of Representations and Warranties..........................................30
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................30
Section 5.1 Organization and Authority............................................................31
Section 5.2 Consents and Approvals................................................................31
Section 5.3 Brokers and Finders...................................................................31
Section 5.4 Litigation............................................................................31
Section 5.5 Investigation by Buyer................................................................31
Section 5.6 No Prior Activities...................................................................32
Section 5.7 No Industry Activity..................................................................32
Section 5.8 No Other Representations or Warranties................................................32
Section 5.9 Expiration of Representations and Warranties..........................................32
ARTICLE VI. CERTAIN COVENANTS AND AGREEMENTS OF CINEMARK and BUYER...............................................32
Section 6.1 Access to Premises and Information....................................................32
Section 6.2 Conduct of Business...................................................................33
Section 6.3 Registrations, Filings and Consents; Commercially Reasonable Efforts..................35
Section 6.4 [INTENTIONALLY OMITTED]...............................................................36
Section 6.5 [INTENTIONALLY OMITTED]...............................................................36
Section 6.6 Resignations/Directors................................................................37
Section 6.7 Actions with Respect to Financing.....................................................37
Section 6.8 Brazil Option Agreement...............................................................39
Section 6.9 Public Announcements..................................................................39
Section 6.10 Exclusivity...........................................................................39
Section 6.11 Notice of Developments................................................................40
Section 6.12 Information Statement.................................................................40
ARTICLE VII. CONDITIONS TO CLOSING...............................................................................40
Section 7.1 Conditions to Each Party's Obligation to Effect the Transaction.......................40
Section 7.2 Conditions to Obligations of Buyer....................................................41
Section 7.3 Conditions to Obligations of Cinemark.................................................43
ARTICLE VIII. TERMINATION........................................................................................44
Section 8.1 Termination...........................................................................44
Section 8.2 Effect of Termination.................................................................44
ARTICLE IX. MISCELLANEOUS........................................................................................45
Section 9.1 Amendment and Waiver..................................................................45
Section 9.2 Expenses..............................................................................45
Section 9.3 Assignment............................................................................45
Section 9.4 Entire Agreement......................................................................46
Section 9.5 Parties in Interest; No Third Party Beneficiaries.....................................46
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Section 9.6 Schedules.............................................................................46
Section 9.7 Counterparts..........................................................................46
Section 9.8 Section Headings; Table of Contents...................................................46
Section 9.9 Notices...............................................................................46
Section 9.10 GOVERNING LAW.........................................................................47
Section 9.11 WAIVER OF JURY TRIAL..................................................................47
Section 9.12 Severability..........................................................................47
Section 9.13 Construction..........................................................................48
Section 9.14 Specific Performance..................................................................48
Section 9.15 Survival of Representations, Warranties and Covenants.................................48
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is dated as of March 12, 2004 and is
by and between Cinemark, Inc., a Delaware corporation ("CINEMARK"), and Popcorn
Merger Corp., a Delaware corporation ("BUYER").
RECITALS
WHEREAS, the Boards of Directors of Cinemark and Buyer and the holders
possessing a majority of the voting power of all of the outstanding Cinemark
Common Stock (as defined below) have approved the merger of Buyer with and into
Cinemark (the "MERGER") upon the terms and subject to the conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the above premises, the mutual
promises and covenants herein contained, and for other good and valuable
consideration, the full receipt and sufficiency of which are hereby expressly
acknowledged by the parties hereto, it is hereby agreed as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Specific Definitions. As used in this Agreement, the
following terms shall have the meanings set forth or referenced below:
"8.5% INDENTURE" means that certain Indenture dated January 14, 1998 by
and between Cinemark USA, Inc. and The Bank of New York Trust Company of
Florida, N.A., as amended to the date hereof.
"8.5% SENIOR SUBORDINATED NOTES" means the 8.5% Senior Subordinated due
2008 issued by Cinemark USA, Inc. in the aggregate original principal amount of
$105,000,000 pursuant to the 8.5% Indenture.
"ADA" shall mean the Americans with Disabilities Act of 1990 and the
regulations promulgated thereunder, as amended from time to time.
"AFFILIATE" shall have the meaning given to such term in Rule 12b-2 of
Regulation 12B under the Exchange Act.
"AFFILIATED PERSON" shall have the meaning set forth in Section 4.21.
"AGGREGATE CASH ON HAND" means the aggregate amount of Cash on Hand
held by Cinemark and its Subsidiaries.
"AGREEMENT" means this Agreement and all Schedules and Exhibits hereto,
as amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"ALTERNATIVE TRANSACTION" means (other than the potential sale of
Cinemark Theatres U.K., Ltd.) any (i) reorganization, dissolution, liquidation,
refinancing or recapitalization of or
involving Cinemark or any of its Subsidiaries (other than the dissolution of
certain of the non-active Subsidiaries currently pending), (ii) merger,
consolidation, share exchange or acquisition of or involving Cinemark or any of
its Subsidiaries, (iii) sale of any material amount of assets of Cinemark or any
of its Subsidiaries, (iv) sale or issuance of capital stock or other equity
interests of Cinemark or any of its Subsidiaries, (v) similar transaction or
business combination involving Cinemark or any of its Subsidiaries or their
respective businesses or capital stock (or other equity interests) or assets or
(vi) other transaction the consummation of which would prevent, impede or delay
the consummation of the Transaction.
"AMENDED AND RESTATED BYLAWS" shall have the meaning set forth in
Section 2.5(b).
"AMENDED AND RESTATED CHARTER" shall have the meaning set forth in
Section 2.5(a).
"ANNUAL FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.4(a).
"AVAILABLE CASH ON HAND" means, as of the opening of business on the
Closing Date, Aggregate Cash on Hand, less (i) the aggregate amount of checks,
drafts and cash held by the individual theatres of Cinemark and its
Subsidiaries, less (ii) checks, drafts and cash delivered to and held by armored
cars or similar security services for the account of Cinemark or any of its
Subsidiaries, less (iii) the aggregate amount of Cash on Hand held by: (A)
Cinemark Partners II, Ltd., Laredo Theatre, Ltd. and Greeley, Ltd.; and (B) all
of Cinemark's Subsidiaries organized outside of the United States.
"BALANCE SHEET DATE" means December 31, 2003.
"BENEFIT PLANS" shall have the meaning set forth in Section 4.12(a).
"BRAZILIAN PUT AGREEMENTS" means, collectively, (i) the Amended and
Restated Shareholders' Agreement dated November 13, 2001 between Cinemark
Empreendimentos e Participacoes Ltda., NN Participacoes Ltda., Venture II Equity
Holdings Corporation, Inc. and Xxxxxxx Holdings Limited and (ii) the Option
Agreement.
"BUSINESS DAY" means any day other than Saturday, Sunday or a day on
which banks in the City of New York, New York are authorized or required by Law
to close.
"BUYER MATERIAL ADVERSE EFFECT" means any change or effect that would
materially adversely delay, impair or impact Buyer's ability to perform its
obligations hereunder and to consummate the Transaction.
"BUYER REPRESENTATIVES" shall have the meaning set forth in Section
6.1(a).
"CASH ON HAND" means all cash and cash equivalents, as of the opening
of business on the Closing Date, determined in accordance with GAAP. Cash on
Hand shall (A) be calculated net of issued but uncleared checks and drafts, (B)
include checks and drafts deposited for the account of Cinemark and its
Subsidiaries and (C) include checks, drafts and cash delivered to and held by
armored cars or similar security services for the account of Cinemark or any of
its Subsidiaries.
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"CERTIFICATES" shall have the meaning set forth in Section 3.4(b).
"CERTIFICATE OF MERGER" shall have the meaning set forth in Section
2.3.
"CINEMARK COMMON STOCK" means, collectively, Class A Common and Class B
Common.
"CINEMARK MATERIAL ADVERSE EFFECT" means any change or effect that,
individually or together with any other change or effect, is, or is reasonably
likely to be, materially adverse to the business, condition (financial or
otherwise), assets, liabilities, properties or results of operations of Cinemark
and its Subsidiaries, taken as a whole, but shall exclude any change or effect
resulting primarily from, after the date hereof, (i) a general deterioration in
the United States or Latin American economy, (ii) changes in the motion picture
exhibition industry, unless such changes relate specifically to Cinemark and its
Subsidiaries, taken as a whole, (iii) changes in GAAP, which Cinemark would be
required to adopt under applicable authoritative accounting pronouncements or
(iv) any action taken upon the written request of Buyer.
"CINEMARK PAYABLE EXPENSES" means the aggregate amount of the
out-of-pocket expenses of Cinemark and its Subsidiaries incurred by them or on
their behalf in connection with or related to the authorization, preparation,
negotiation, execution or performance of this Agreement and the Transaction,
which expenses have been paid or are payable to (i) their investment bankers,
including Xxxxxxx Sachs & Co. and Xxxxxx Brothers, Inc. and their respective
Affiliates, (ii) their accountants, including Deloitte & Touche LLP, and (iii)
their legal counsel, including Akin Gump Xxxxxxx Xxxxx & Xxxx LLP; provided that
"Cinemark Payable Expenses" shall not include (A) the expenses of such
investment bankers to the extent that such expenses are incurred in connection
with the Financing or the Tender Offer and (B) the fees of special Delaware
counsel engaged to deliver the opinion referenced in Section 7.2(f).
"CINEMARK USA" shall have the meaning set forth in Section 4.4(a).
"CLASS A COMMON" shall have the meaning set forth in Section 3.1(a).
"CLASS B COMMON" shall have the meaning set forth in Section 3.1(a).
"CLOSING" means the closing of the Transaction.
"CLOSING DATE" shall have the meaning set forth in Section 2.2.
"COBRA" shall have the meaning set forth in Section 4.12(e).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY INTELLECTUAL PROPERTY RIGHTS" shall have the meaning set forth
in Section 4.14(d).
"COMPANY LICENSES" shall have the meaning set forth in Section 4.6.
"COMPANY REPORTS" shall have the meaning set forth in Section 4.4(b).
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"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated
December 18, 2003, between Cinemark and Madison Dearborn Partners, LLC.
"CONSENTS" means consents, approvals, authorizations, permits,
clearances, exemptions, filings and notices.
"CONTINUING AMOUNT" means:
(i) with respect to Xxx Xxx Xxxxxxxx, Fifty-One Million Dollars
($51,000,000);
(ii) with respect to The Xxxxxxxx Special Trust, Forty-Nine Million
Dollars ($49,000,000);
(iii) with respect to Xxxx Xxxxx, One Million Eight Hundred
Eighty-Six Thousand Three Hundred Twenty Dollars ($1,886,320);
(iv) with respect to Xxxxxx Xxxxxx, One Million Six Hundred
Seventy-Seven Thousand Three Hundred Thirty-Seven Dollars ($1,677,337);
(v) with respect to Xxxxxxx Xxxxxx, One Million Eight Hundred
Seventy-One Thousand Nine Hundred Ninety-Seven Dollars ($1,871,997); and
(vi) with respect to Xxxxxxx Xxxxxxxx, One Million Three Hundred
Nineteen Thousand Three Hundred Thirty-Three Dollars ($1,319,333).
"CONTINUING SHARES" means, with respect to each Continuing Stockholder,
a number of shares of Class A Common equal to the quotient of (i) such
Continuing Stockholder's Continuing Amount, divided by (ii) the Merger
Consideration.
"CONTINUING STOCKHOLDERS" means, collectively, Xxx Xxx Xxxxxxxx, The
Xxxxxxxx Special Trust, Xxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxx Xxxxxx and Xxxxxxx
Xxxxxxxx.
"CONTRACT" means, other than a Lease, any agreement, contract, license,
note, mortgage, indenture, arrangement, promise, undertaking or other obligation
(whether written or oral, and whether express or implied) that is intended to be
legally binding.
"DGCL" means the Delaware General Corporation Law, as amended.
"DISSENTING SHARES" shall have the meaning set forth in Section 3.2.
"DISSENTING STOCKHOLDERS" shall have the meaning set forth in Section
3.2.
"EFFECTIVE TIME" means the time and date when the Merger shall become
effective.
"EMPLOYEES" mean all active employees of Cinemark and its Subsidiaries
as of the Closing Date.
"ENCUMBRANCES" mean a pledge, security interest, encumbrance, option,
charge, claim, lien (statutory or otherwise), right of usufruct, mortgage, right
of first refusal or any other
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restriction or third party right, including restrictions on use, the right to
vote or transfer equity interests, and the right to transfer, receive income or
exercise any other attribute of ownership.
"ENVIRONMENTAL LAWS" means all foreign, provincial, federal, state and
local laws, regulations, and requirements and all common law in effect on or
prior to the Closing Date relating to pollution or protection of the
environment, including laws relating to the release, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials all laws and regulations
with regard to record keeping, notification, disclosure and reporting
requirements respecting Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means each Person that together with Cinemark would
be deemed a "single employer" employer within the meaning of Code Section 414.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules
and regulations promulgated thereunder, in each case as amended from time to
time.
"EXERCISED INCENTIVE STOCK OPTIONS" shall have the meaning set forth in
Section 3.1(d).
"EXPENSE ACKNOWLEDGEMENTS" shall have the meaning set forth on Section
7.2(l).
"EXPENSES" means all out-of-pocket expenses (including all filing fees,
fees and expenses of counsel, accountants, investment bankers, financial
advisors, lenders, experts, actuaries, consultants and other service providers
to the party and its Affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution or performance of this Agreement and the Transaction.
"FINANCING" shall have the meaning set forth in Section 7.2(i).
"FOREIGN BENEFIT PLAN" shall have the meaning set forth in Section
4.12(f).
"GAAP" means United States generally accepted accounting principles
consistently applied.
"GOVERNMENT REGULATORY ENTITY" means any Governmental Entity with
regulatory jurisdiction over any Consent required for the consummation of the
Transaction, under the HSR Act or under Other Competition Laws.
"GOVERNMENTAL CONSENTS" shall have the meaning set forth in Section
7.1(a).
"GOVERNMENTAL ENTITY" means any supranational, national, federal,
state, regional, provincial, local, municipal, administrative, judicial,
legislative, executive, regulatory, police or taxing authority, or governmental
or quasi-governmental authority of any nature, including any court, regulatory
or administrative agency, commission, branch, bureau, department or body, or
other governmental authority or instrumentality, whether domestic or foreign.
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"HAZARDOUS MATERIALS" means all substances defined as Hazardous
Substances under the National Oil and Hazardous Substances Pollution Contingency
Plan, 40 C.F.R.Section 300.5, or defined as such by, or regulated as such under,
any Environmental Law.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INCENTIVE STOCK OPTIONS" shall have the meaning set forth in Section
3.1(b).
"INCOME TAX" means any Tax based upon, measured by, or calculated with
respect to income, profits or capital (including any capital gains Tax,
franchise Tax, capital Tax, minimum Tax and any Tax or items of Tax preference,
but not including sales, use, real or personal property, gross receipts,
employer, withholding, transfer or similar Taxes).
"INCOME TAX RETURN" means a Tax Return in respect of Income Taxes.
"INDEBTEDNESS" means with respect to any Person: (i) indebtedness for
borrowed money; (ii) indebtedness evidenced by notes, bonds, debentures or
similar instruments; (iii) all obligations of such Person as lessee under leases
that have been recorded as capital leases in accordance with GAAP; (iv) the
deferred purchase price of property or services incurred outside the Ordinary
Course of Business; (v) conditional sale or other title retention agreements
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (vi) reimbursement
obligations, whether contingent or matured, with respect to letters of credit,
bankers' acceptances, surety bonds, other financial guarantees and interest rate
protection agreements (without duplication of other indebtedness supported or
guaranteed thereby); (vii) all Indebtedness of others referred to in clauses (i)
through (vi) above guaranteed, without duplication, directly or indirectly in
any manner by such Person. For purposes of clarification, "Indebtedness" shall
not include accounts payable or accrued operating expenses of Cinemark or any of
its Subsidiaries.
"INTELLECTUAL PROPERTY" means all of the rights arising from or in
respect of the following: (i) patents; (ii) trademarks, service marks, trade
names, corporate names, brand names, and Internet domain names; (iii)
copyrights; (iv) trade secrets; (v) all technology, know-how, computer software
programs and applications, tangible and intangible proprietary information or
materials; and (vi) all applications and registrations relating to any of the
foregoing clauses (i)-(v) above.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE", with respect to Cinemark, means the actual knowledge,
following reasonable inquiry, of the Persons whose names are set forth on
Schedule 1.1(a) hereto. The foregoing standard of reasonable inquiry, to the
extent that it applies to making reasonable inquiry of other Persons, shall be
limited to making reasonable inquiry of: (i) those Persons who report directly
to any of the Persons identified on Schedule 1.1(a) (and in the case of Xxxxxxx
Xxxxxx, including each of Cinemark's country managers and chief financial
officers (or equivalents thereof) of each of Cinemark's Subsidiaries organized
outside of the United States); and (ii) with respect to the representations and
warranties contained in Sections 4.1, 4.4, 4.8,
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4.9(c), 4.14(f), 4.15(b) and 4.17, in addition to the Persons described in
clause (i) above, all third party service providers who possess material
knowledge of the subject of inquiry.
"LAW" means any federal, state, local, domestic, supranational,
national, regional, provincial, municipal constitution, treaty, statute or law,
including rule of common law, ordinance, rule, regulation, code, enactment,
proclamation, requirement, decree, directive or other statutory or legislative
provision, of any Governmental Entity, as amended as of the relevant date,
whether in the United States or a foreign jurisdiction.
"LEASE" means any lease, sublease, license, concession or other
agreement (written or oral) pursuant to which Cinemark or any of its
Subsidiaries holds any Leased Real Property.
"LEASED REAL PROPERTY" means all leasehold or subleasehold estates and
other rights to use or occupy any land, buildings, structures, improvements,
fixtures or other interest in real property.
"LETTER OF TRANSMITTAL" shall have the meaning set forth in Section
3.4(b).
"MATERIAL CONTRACT" shall have the meaning set forth in Section 4.9(a).
"MERGER" shall have the meaning set forth in the Recitals above.
"MERGER CONSIDERATION" shall have the meaning set forth in Section
3.6(a).
"OPTION AGREEMENT" means that certain Voting and Option Agreement dated
November 13, 2001, by and among (i) Cinemark USA, Inc., (ii) Xxx Xxx Xxxxxxxx,
(iii) NN Participacoes Ltda., (iv) Venture II Equity Holdings Corporation, Inc.,
and (v) Xxxxxxx Holdings Limited.
"OPTION CONSIDERATION" shall have the meaning set forth in Section
3.2(c).
"ORDER" means any judicial or administrative judgment, decision,
decree, order, settlement, injunction, writ, stipulation, determination, or
award, in each case to the extent legally binding.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
Cinemark and its Subsidiaries, taken as a whole, consistent with past practice.
"OTHER COMPETITION LAWS" means all (i) non-U.S. Laws intended to
prohibit, restrict or regulate actions having an anti-competitive effect or
purposes, including competition, restraint of trade, anti-monopolization, merger
control or anti-trust Laws together with (ii) any related Laws, including
non-U.S. anti-takeover laws and laws regulating foreign investment in
jurisdictions outside the United States.
"OWNED REAL PROPERTY" means all land, together with all buildings,
structures, improvements and fixtures located thereon, and all easements and
appurtenances thereto or any interest therein, owned by Cinemark or any of its
Subsidiaries.
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"PAYING AGENT" means The Bank of New York Trust Company, N.A. located
in Dallas, Texas or such other bank or trust company located in Dallas, Texas
designated by Cinemark and Buyer.
"PAYMENT FUND" shall have the meaning set forth in Section 3.4(a).
"PERMITTED ENCUMBRANCES" means (i) Encumbrances for Taxes (and
assessments and other governmental charges) not yet due and payable or due but
not delinquent or being contested in good faith by appropriate proceedings and
for which appropriate reserves or accruals have been established in accordance
with GAAP to the extent required by GAAP; (ii) mechanics', workmen's,
repairmen's, warehousemen's, landlord's, carriers' or other like Encumbrances
(including Encumbrances created by operation of Law) incurred in the Ordinary
Course of Business for sums not yet delinquent or being contested in good faith
and which has not and would not, individually or in the aggregate, have a
Cinemark Material Adverse Effect; (iii) Encumbrances in respect of easements,
permits, licenses, rights-of-way, restrictive covenants, reservations or
encroachments or irregularities in, and other similar exceptions to title and
any conditions with respect to real property that would be disclosed by a
current survey or title report or other public record and that do not materially
detract from the value of and has not, and would not, have a material adverse
effect on the use of the underlying asset; (iv) Encumbrances in respect of
pledges or deposits under workers' compensation laws or similar legislation,
unemployment insurance or other types of social security or to secure the
performance of statutory obligations, surety and appeal bonds, bids, leases,
government Contracts and similar obligations incurred in the Ordinary Course of
Business; (v) municipal bylaws, development restrictions or regulations,
facility cost sharing and servicing Contracts and zoning, building or planning
restrictions or regulations; (vi) Encumbrances in respect of mortgages (fee and
leasehold), deeds of trust, financing statements and other similar instruments
or documents relating to real property leased or leasehold improvements, which
Encumbrances are disclosed on Schedule 4.15; (vii) Encumbrances on the property
of Cinemark or its Subsidiaries securing the performance of bids, trade
contracts (other than for borrowed money), contingent obligations on surety and
appeal bonds and other obligations of like nature incurred in the Ordinary
Course of Business, provided that all Encumbrances securing delinquent
performance or obligations have not and would not (even if enforced) reasonably
be expected to have a Cinemark Material Adverse Effect; (viii) Encumbrances
arising solely by virtue of any statutory or common law provision relating to
banker's liens, rights of set-off or similar rights and remedies as to deposit
accounts or other funds maintained with a creditor depository institution; (ix)
any existing Encumbrances on the Real Property of Cinemark and its Subsidiaries
on the date hereof as set forth on Schedule 4.15; (x) any Encumbrances now
existing or hereafter arising under the Indentures governing the Senior
Subordinated Indebtedness; (xi) any Encumbrances arising under the Senior Credit
Facility, which Encumbrances are set forth on Schedule 4.15; (xii) any renewal
of or substitution for any Encumbrance permitted by the foregoing; (xiii)
Encumbrances arising in connection with this Agreement; and (xiv) solely with
respect to the Leases, restrictions on transfer or assignment.
"PERSON" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act), including any Governmental Entity.
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"PURCHASE PRICE" shall have the meaning set forth in Section
3.6(a)(ii).
"REAL PROPERTY" means, collectively, all Leased Real Property and Owned
Real Property.
"SECURITIES ACT" means the Securities Act of 1933, and the rules and
regulations promulgated thereunder, in each case as amended from time to time.
"SENIOR CREDIT FACILITY" means the Credit Agreement, dated as of
February 14, 2003, by and among Cinemark USA, Inc., certain Subsidiaries that
are guarantors thereto, Xxxxxx Brothers Inc., as Administrative Agent and the
other lenders party thereto, as amended to the date hereof.
"SENIOR SUBORDINATED NOTES" means, collectively, (i) the 8.5% Senior
Subordinated Notes and (ii) the 9% Senior Subordinated Notes due 2013 issued by
Cinemark USA, Inc. in the aggregate original principal amount of $360,000,000
pursuant to that certain Indenture dated February 11, 2003 by and between
Cinemark USA, Inc. and The Bank of New York Trust Company of Florida, N.A., as
amended to the date hereof.
"STOCK OPTIONS" means, collectively, all options to acquire shares of
Class A Common set forth on Schedule 4.2 attached hereto.
"STOCKHOLDERS" shall have the meaning set forth in Section 3.1.
"SUBSIDIARY" or "SUBSIDIARIES" means, as to any Person, any other
Person (i) of which such Person or any other Subsidiary of such Person is a
general partner, (ii) of which such Person, any one or more of its other
Subsidiaries of such Person, or such Person and any one or more of its other
Subsidiaries, directly or indirectly owns or controls securities or other equity
interests representing more than fifty percent (50%) of the aggregate voting
power, or (iii) of which such Person, any one or more of its other Subsidiaries
of such Person, or such Person and any one or more its other Subsidiaries,
possesses the right to elect more than fifty percent (50%) of the board of
directors or Persons holding similar positions.
"SURVIVING CORPORATION" shall have the meaning set forth in Section
2.1.
"TAXES" means all federal, state, local or foreign Income Tax, gross
receipts, windfall or excess profits, severance, property, production, sales,
use, license, excise, franchise, employment, withholding, environmental, customs
duty, capital stock, stamp, payroll, unemployment, disability, excise,
production, estimated, value added, occupancy or other taxes, duties or
assessments of any kind whatsoever, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties.
"TAX RETURNS" means all federal, state, local or foreign tax returns,
tax reports, information statements, and declarations of estimated tax,
including consolidated federal income tax returns of Cinemark and the Persons
consolidated with Cinemark and any schedules attached to any amendments thereof
and such returns, reports or declarations.
"TENDER OFFER" shall have the meaning set forth in Section 6.7(b).
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"THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS" shall have the meaning set
forth in Section 4.14(c).
"TRANSACTION" means the transactions contemplated by this Agreement.
Section 1.2 Other Terms. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
indicated throughout this Agreement.
Section 1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and
words of similar import, when used in this Agreement, shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement.
(b) The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(c) The term "including" shall mean "including, without
limitation".
(d) The terms "dollars" and "$" shall mean United States
Dollars.
ARTICLE II.
THE MERGER
Section 2.1 The Merger. At the Effective Time (as defined in Section
2.3 hereof), and subject to and upon the terms and conditions of this Agreement
and the applicable provisions of the DGCL, Buyer shall be merged with and into
Cinemark, the separate corporate existence of Buyer shall cease, and Cinemark
shall be the surviving corporation (sometimes called the "SURVIVING
CORPORATION") and shall continue its corporate existence under the laws of the
State of Delaware. The name of the Surviving Corporation shall continue to be
"Cinemark, Inc."
Section 2.2 The Closing. Unless this Agreement shall have been
terminated and the Transaction shall have been abandoned pursuant to Article
VIII hereof, the Closing shall take place at the offices of Akin Gump Xxxxxxx
Xxxxx & Xxxx LLP, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, at 10:00
a.m., Central Standard Time, as soon as practicable (and in any event within
three (3) Business Days) after all of the conditions to the Closing set forth in
Article VII hereof are satisfied or waived (other than those that by their terms
cannot be satisfied prior to the Closing, but subject to the fulfillment or
waiver of such conditions at the Closing), or such other date, time and place as
shall be agreed upon by Cinemark and Buyer (the actual date referred to herein
as the "CLOSING DATE").
Section 2.3 Effective Time. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the parties hereto shall deliver
to the Secretary of State of the State of Delaware a certificate of merger in
the form attached hereto as Exhibit 2.3 (the "CERTIFICATE OF MERGER"), and shall
make all other filings or recordings as may be required under the DGCL and any
other applicable Law in order to effect the Merger. The Merger shall be effected
by the filing
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of the Certificate of Merger with the Secretary of State of the State of
Delaware or at such later time as the parties hereto may agree and as is
provided in the Certificate of Merger.
Section 2.4 Effect of the Merger. At the Effective Time, the
Surviving Corporation shall possess all of the rights, privileges, immunities,
powers and franchises of each of Buyer and Cinemark; all of the property, real,
personal and mixed, including subscription of shares, choses in action and every
other asset of each of Buyer and Cinemark shall vest in the Surviving
Corporation without further act or deed; and all other effects presumed in a
merger including those set forth in Section 259 of the DGCL, shall result from
the Merger.
Section 2.5 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Amended and Restated
Certificate of Incorporation of Cinemark, as in effect immediately
prior to the Effective Time, shall be amended and restated
automatically in the form attached to the Certificate of Merger (the
"AMENDED AND RESTATED CHARTER"), and the Amended and Restated Charter
shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended in accordance with the applicable provisions
of the DGCL and the Amended and Restated Charter.
(b) At the Effective Time, the bylaws of Cinemark, as in
effect immediately prior to the Effective Time, shall be amended and
restated automatically in the form of Exhibit 2.5 attached hereto (the
"AMENDED AND RESTATED BYLAWS"), and the Amended and Restated Bylaws
shall be the bylaws of the Surviving Corporation until thereafter
amended in accordance with the applicable provisions of the DGCL, the
Amended and Restated Charter and the Amended and Restated Bylaws.
Section 2.6 Directors and Officers. The directors of Buyer
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed and qualified.
The officers of Cinemark immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly elected or appointed and
qualified.
ARTICLE III.
PRECURSOR TRANSACTIONS; CONVERSION AND EXCHANGE OF SHARES
Section 3.1 Precursor Transactions. On the basis of the representations,
warranties, covenants and other agreements, and subject to the satisfaction or
waiver of the conditions, set forth herein, each of Cinemark and the
stockholders of Cinemark (the "STOCKHOLDERS") and the holders of Stock Options
named below shall consummate the following transactions immediately prior to the
Effective Time:
(a) Each of the Stockholders holding shares of Cinemark's
Class B common stock, par value $.001 per share (the "CLASS B COMMON"),
shall convert all of its, his or her shares of Class B Common into the
same number of shares of Cinemark's Class A common stock, par value
$.001 per share (the "CLASS A COMMON"), pursuant to the terms
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of Cinemark's Certificate of Incorporation in effect immediately prior
to the Effective Time.
(b) Cinemark shall accelerate the vesting of all Stock
Options held by Xxxxxx Xxxxxx and Xxxxxxx Xxxxxxxx, which options were
granted to them by Cinemark on December 31, 2001 (the "INCENTIVE STOCK
OPTIONS") and which have not by their terms vested.
(c) Xxxxxx Xxxxxx shall exercise, by payment to Cinemark
of cash equal to the exercise price of, his Incentive Stock Options in
an amount necessary to acquire, and Cinemark shall issue upon such
exercise, a number of shares of Class A Common equal to the quotient of
(i) his Continuing Amount, divided by (ii) the Merger Consideration.
(d) Xxxxxxx Xxxxxxxx shall exercise, by payment to
Cinemark of cash equal to the exercise price of, his Incentive Stock
Options in an amount necessary to acquire, and Cinemark shall issue
upon such exercise, a number of shares of Class A Common equal to the
quotient of (i) his Continuing Amount, divided by (ii) the Merger
Consideration. The Incentive Stock Options exercised pursuant to
Section 3.1(c) and this Section 3.1(d) shall be referred to herein as
the "EXERCISED INCENTIVE STOCK OPTIONS."
Section 3.2 Conversion of Shares; Stock Options. At the Effective
Time, by virtue of the Merger and without any action on the part of Buyer,
Cinemark or the holders of any of the following securities or the holders of any
Stock Options:
(a) Each share of Class A Common issued and outstanding
immediately prior to the Effective Time (other than shares owned,
directly or indirectly, by Cinemark, the Continuing Shares and the
Dissenting Shares with respect to which appraisal rights have been
properly exercised under the DGCL) shall be converted into the right to
receive the Merger Consideration, without any interest thereon, payable
to the holder thereof upon surrender of the Certificate representing
such share in accordance with Section 3.4.
(b) Each share of common stock, par value $.01 per share,
of Buyer issued and outstanding immediately prior to the Effective Time
shall be canceled and retired and shall cease to exist.
(c) Each of the Stock Options outstanding immediately
prior to the Effective Time (which, for purposes of clarification,
shall not include the Exercised Incentive Stock Options) which is
surrendered in accordance with Section 3.4 by delivery of a duly
executed Letter of Transmittal prior to the Effective Time shall become
fully vested (to the extent not previously vested) and converted into
and become the right to receive cash in an amount (the "OPTION
CONSIDERATION") equal to the difference between (i) the number of
shares then issuable upon exercise of such Stock Option multiplied by
the Merger Consideration and (ii) the aggregate exercise price payable
upon exercise of such Stock Option. Upon surrender by a holder of a
Stock Option, and the receipt by such holder of the Option
Consideration payable in respect of such Stock Option, such Stock
Option shall be canceled. The surrender of a Stock Option to the Paying
Agent under Section 3.4 in exchange for the Option Consideration shall
be deemed a release of any
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and all rights the holder thereof had or may have had in respect of
such Stock Option. Each of the Stock Options which is not surrendered
in accordance with Section 3.4 and which is not exercised prior to the
fifth day prior to the Closing Date shall be cancelled immediately
prior to the Effective Time pursuant to the exercise by Cinemark of its
right to so cancel such Stock Options under the Cinemark, Inc. Long
Term Incentive Plan. The Cinemark, Inc. Long Term Incentive Plan shall
terminate as of the Effective Time, and the provisions in any other
plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of Cinemark (other than
the Option Agreement) shall be canceled as of the Effective Time.
(d) Each Continuing Share shall continue to remain issued
and outstanding as one validly issued, fully paid and non-assessable
share of Class A common stock, par value $.001 per share, of the
Surviving Corporation. From and after the Effective Time, each
outstanding certificate which represented Continuing Shares shall
evidence ownership of and represent the same number of shares of the
Surviving Corporation's Class A common stock, par value $.001 per
share.
(e) Each share of Cinemark Common Stock and all other
shares of capital stock of Cinemark that are owned by Cinemark (if any)
shall be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
Section 3.3 Dissenting Shares. To the extent required by applicable
provisions of the DGCL, shares of Class A Common that are issued and outstanding
immediately prior to the Effective Time and are held by holders of Class A
Common who (a) shall not have voted in favor of the Merger or consented thereto
in writing, (b) shall have complied with all the provisions of the DGCL
concerning the right of the holders of Class A Common to dissent from the Merger
and (c) shall have demanded properly appraisal and payment of the fair value of
their shares of Class A Common ("DISSENTING STOCKHOLDERS") shall not be
converted into the right to receive the Merger Consideration but shall instead
be converted into the right to receive such consideration as may be determined
to be due such Dissenting Shareholders pursuant to the laws of the State of
Delaware (such shares being the "DISSENTING SHARES"); provided, however, if any
Dissenting Stockholder fails to establish and perfect his dissenter's rights as
provided by applicable law, then such Dissenting Stockholder shall forfeit all
dissenter's rights including the right to obtain payment of the fair value of
the shares held by him, and such Dissenting Stockholder shall be entitled to
receive, as of the Effective Time, only the Merger Consideration (without any
interest thereon) for each share of Class A Common held by him, payable upon
surrender of the certificate representing such share in accordance with Section
3.4, and such shares shall no longer be Dissenting Shares. The Surviving
Corporation shall comply with all of the obligations pursuant to the DGCL of a
surviving corporation after the effectiveness of a merger with respect to
Dissenting Stockholders, and the Surviving Corporation shall direct all
negotiations and proceedings with respect to demands for payment of fair value
under Delaware law. Cinemark shall provide to Buyer: (i) prompt notice of any
demands for appraisal received by Cinemark, withdrawals of such demands, and any
other instruments served pursuant to the DGCL and received by Cinemark and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL. Cinemark shall not, except with the prior
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written consent of Buyer, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
Section 3.4 Payment for Shares and Stock Options; Stock Transfer
Books.
(a) At the Closing, Cinemark and Buyer shall enter
into a Payment Agent Agreement with the Paying Agent, in form and
substance reasonably acceptable to Cinemark and Buyer. Immediately
prior to the Effective Time, the Surviving Corporation shall deposit
in trust with the Paying Agent an amount in cash equal to the sum of
(i) the aggregate amount required for the conversion of the shares of
Class A Common at the Effective Time under Section 3.2(a), plus (ii)
the aggregate amount required for the cancellation of Stock Options
at the Effective Time under Section 3.2(c), less (iii) any
withholding required under the Code and the rules and regulations
promulgated thereunder, or any provision of state, local or foreign
tax law as contemplated by Section 3.5 (such amount being the
"PAYMENT FUND"). The Paying Agent shall, pursuant to irrevocable
instructions, make the payments provided for in Sections 3.2(a) and
3.2(c) out of the Payment Fund, reduced by the amount of any
withholding made pursuant to Section 3.5 as directed by the
Surviving Corporation. Pending such payments, the Paying Agent
shall, as directed by the Surviving Corporation, invest the Payment
Fund in short term obligations of, or obligations fully guaranteed
by, the United States of America, or any agency of the United
States, in commercial paper obligations receiving the highest
investment grade rating from both Xxxxx'x Investors Services, Inc.
and Standard & Poor's Corporation, or in certificates of deposit,
bank repurchase agreements or banker's acceptances of commercial
banks with capital exceeding $1,000,000,000. Any earnings on the
investment of the Payment Fund shall be paid to the Surviving
Corporation as and when requested by the Surviving Corporation. If,
at any time after the Effective Time a Dissenting Stockholder
ceases to be a Dissenting Stockholder by virtue of failing to
perfect dissenter's rights, upon such occurrence, the Surviving
Corporation shall promptly deposit to the Payment Fund an amount
equal to the product of (x) the number of shares held by such
stockholder and (y) the Merger Consideration (without any interest
thereon), reduced by the amount of any withholding made pursuant to
Section 3.5.
(b) Prior to the Effective Time, the Paying Agent shall
mail and otherwise make available to each record holder who held at the
Effective Time an outstanding certificate or certificates that
represented shares of Class A Common (other than Continuing Shares)
(the "CERTIFICATES") or Stock Options (other than Exercised Incentive
Stock Options) and who has not theretofore surrendered his, her or its
Certificates or Stock Options for payment at the Closing in accordance
with this Section 3.4 a letter of transmittal in the form of Exhibit
3.4(b) attached hereto (a "LETTER OF TRANSMITTAL") and instructions for
his, her or its use in effecting the surrender of the Certificates and
Stock Options for payment. Upon surrender to the Paying Agent of a
Certificate or a Stock Option, together with a duly executed Letter of
Transmittal and such other documents as the Paying Agent may reasonably
require, the holder of such Certificate (other than a Certificate with
respect to Continuing Shares) or Stock Option (other than Exercised
Incentive Stock Options), as the case may be, shall be entitled to
receive in exchange therefor cash in an amount equal to the product of
the number of shares of Class A Common represented by such Certificate
multiplied by the Merger Consideration or the
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Option Consideration payable in respect of such Stock Option, as the
case may be, reduced by the amount of any withholding made pursuant to
Section 3.5, and such Certificate or Stock Option shall thereafter be
cancelled. No interest will be paid or accrue on either the Merger
Consideration or the Option Consideration payable upon the surrender of
the Certificates or Stock Options, respectively. If payment is to be
made to a Person other than the Person in whose name the surrendered
Certificate is registered, or the Person in whose name the surrendered
Stock Option was granted, the Certificate or the Stock Option, as the
case may be, must be properly endorsed or otherwise in proper form for
transfer and the Person requesting such payment must agree to pay any
applicable transfer or other taxes or establish to the satisfaction of
the Paying Agent and the Surviving Corporation that such tax has been
paid or is not applicable. The Paying Agent must pay the cash
attributable to a Certificate or Stock Option which has been lost or
destroyed upon receipt of satisfactory evidence of ownership of the
shares of Class A Common or Stock Option, respectively, and of
appropriate indemnification, in each case on terms satisfactory to
Buyer. After the Effective Time, until surrendered in accordance with
these provisions, each Certificate (other than Certificates
representing Dissenting Shares) shall represent only the right to
receive the Merger Consideration as set forth in this Agreement.
(c) After the Effective Time, there shall be no transfers
on the stock transfer books of the Surviving Corporation of the shares
of Cinemark Common Stock which were outstanding immediately prior to
the Effective Time (other than the Continuing Shares). Certificates
(other than Certificates with respect to the Continuing Shares)
presented to the Surviving Corporation after the Effective Time shall
be cancelled.
(d) Any portion of the Payment Fund that remains
unclaimed by the stockholders of Cinemark for 90 days after the
Effective Time shall be repaid to the Surviving Corporation upon
demand, and any holder of Class A Common who has not complied with
these provisions shall look as a general creditor only to the Surviving
Corporation for payment of such holder's claims for the Merger
Consideration. Notwithstanding the foregoing, neither the Surviving
Corporation nor Buyer shall be liable to a holder of shares of Cinemark
Common Stock for any amounts delivered to a public official pursuant to
any applicable abandoned property, escheat or similar laws in
accordance with applicable Law. All interest accrued in respect of the
Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.
Section 3.5 Withholding. Notwithstanding anything herein to the
contrary, each of Buyer and the Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Cinemark Common Stock and Stock Options such amounts
as it reasonably believes it is required to deduct and withhold with respect to
the making of such payment under the Code and the rules and regulations
promulgated thereunder, or any provision of state, local or foreign Tax law;
provided that with respect to any such holder who does not submit a duly
executed Certificate of Non-foreign Status (which will be an attachment to the
Letter of Transmittal) together with a Letter of Transmittal, each of Buyer and
the Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable to such holder an amount determined in
accordance with Section 1445 of the Code (based upon the assumption that
Cinemark is a United
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States real property holding company (as defined in Section 897 of the Code)).
To the extent that amounts are so withheld by Buyer or the Surviving
Corporation, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holders of the Cinemark
Common Stock and Stock Options in respect of which such deduction and
withholding was made by Buyer or the Surviving Corporation, as the case may be.
Section 3.6 Calculation of Merger Consideration.
(a) For purposes hereof, the following terms shall have
the meanings set forth below:
(i) "MERGER CONSIDERATION" means, with respect
to each share of Cinemark Common Stock, an amount equal to the
quotient of: (A) the Purchase Price, divided by (B) the
aggregate number of shares of Cinemark Common Stock as of
immediately prior to the Effective Time, on a fully diluted
basis (including the Continuing Shares and the number of
shares of Cinemark Common Stock issuable upon exercise of all
outstanding Stock Options as of the Effective Time (for
purposes of clarification, excluding the Exercised Incentive
Stock Options)), without any interest thereon.
(ii) "PURCHASE PRICE" means an amount equal to
Nine Hundred Fifty-Seven Million Dollars ($957,000,000), less
the Cinemark Payable Expenses.
(b) On the basis of the good faith estimate of Cinemark
of the Cinemark Payable Expenses as of the Closing, the Merger
Consideration is estimated to be an amount equal to $22.54 as of the
date hereof. Exhibit 3.6 attached hereto shall set forth the following:
Cinemark's good faith estimate of the amount of Cinemark Payable
Expenses as of the Closing Date, together with a description, the
identity of the payee, and the estimated amount, of each such Cinemark
Payable Expense.
(c) As soon as practicable prior to the Closing Date, but
in no event later than three (3) Business Days prior thereto, Cinemark
and Buyer shall update the calculation set forth on Exhibit 3.6 based
upon the Expense Acknowledgements in a manner consistent with the
method set forth on Exhibit 3.6 on the date hereof and agree upon the
Merger Consideration. The amount of the Merger Consideration as so
agreed shall be deemed to be final and binding upon Buyer and Cinemark.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF CINEMARK
Except as otherwise set forth in the Schedules attached to this
Agreement (subject to Section 9.6), Cinemark represents and warrants to Buyer
that the statements set forth in this Article 4 are correct and complete.
Section 4.1 Organization and Authority. Cinemark is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full
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corporate power and authority to own or lease its assets and to carry on the
business in which it is engaged, and is duly qualified and licensed to do
business and is in good standing, in each jurisdiction where the ownership or
operation of its property and assets or the conduct of its business requires
such qualification, except where the failure to be so qualified or in good
standing has not had or would not reasonably be expected to have a Cinemark
Material Adverse Effect or to prevent or materially delay or materially impair
the Transaction. Cinemark has made available to Buyer correct and complete
copies of the certificate of incorporation and bylaws of Cinemark. Cinemark has
the legal capacity, power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. All actions or proceedings to be taken by or on the part of Cinemark
to authorize and permit the execution and delivery by Cinemark of this Agreement
and the instruments required to be executed and delivered by it pursuant hereto,
the performance by Cinemark of its obligations hereunder and the consummation by
Cinemark of the Transaction, including the approval of the foregoing by
Cinemark's board of directors and its stockholders, have been duly and properly
taken. This Agreement has been duly executed and delivered by Cinemark and
constitutes the legal, valid and binding obligation of Cinemark, enforceable
against Cinemark in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The execution, delivery and performance of this Agreement by
Cinemark do not and shall not, and the consummation by Cinemark of the
Transaction will not, constitute or result in (A) a breach or violation of, or a
default under, the certificate of incorporation or bylaws or other
organizational documents of Cinemark or any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of any Encumbrance on the assets of Cinemark or any of its Subsidiaries
(with or without notice, lapse of time or both) pursuant to, any Material
Contract or Lease to which Cinemark or any of its Subsidiaries is a party, or
give any party with rights thereunder the right to terminate, modify,
accelerate, cancel or require any notice or otherwise change the existing rights
or obligations of Cinemark or its Subsidiaries thereunder or (C) assuming
compliance with the matters referred to in Section 4.10 (Consents and Approvals)
and Section 5.2 (Consents and Approvals), to Cinemark's Knowledge, a violation
by Cinemark or any of its Subsidiaries of any Law or Order, except, in the case
of clause (B) or (C) above, for any breach, violation, default, acceleration or
creation set forth on Schedule 4.1.
Section 4.2 Capitalization of Cinemark. The authorized, issued and
outstanding capital stock of Cinemark, the name of the holders of record of such
capital stock, and the number of shares of such capital stock held by such
holders are set forth on Schedule 4.2. All of the issued and outstanding shares
of capital stock of Cinemark have been duly authorized and validly issued, and
are fully paid and nonassessable, were not issued in violation of any law or of
any statutory or contractual preemptive rights of any stockholder and are held
of record by the holders as set forth on Schedule 4.2. Except as set forth on
Schedule 4.2, there are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, redemption rights,
agreements, arrangements or commitments to issue or sell any shares of capital
stock or other securities of Cinemark or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of Cinemark (now, in the
future or upon the occurrence of any contingency), and no securities or
obligations evidencing such rights are authorized, issued or outstanding.
Schedule 4.2 sets forth the name of the holders of all of the outstanding Stock
Options, the number of
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shares of Cinemark Common Stock into which such Stock Options are exercisable
for each such holder, and the exercise price of such Stock Options. Except as
set forth on Schedule 4.2, there are no voting trusts, proxies or other
agreements or understandings with respect to the voting of the capital stock of
Cinemark. Cinemark does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
stockholders of Cinemark on any matter. Except as set forth on Schedule 4.2,
there are no agreements to register any securities or sales or resales thereof
under the federal or state securities laws.
Section 4.3 Subsidiaries.
(a) Schedule 4.3 sets forth for each Subsidiary of
Cinemark (i) its name and jurisdiction of formation and (ii) the amount
and type of issued and outstanding shares or other equity interests
(together with the names of the holders thereof, and the amount held by
each such holder). Except as set forth on Schedule 4.3, there are no
preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, put rights,
agreements, arrangements or commitments to issue or sell any shares of
capital stock or other equity interests of any Subsidiary of Cinemark
or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of any Subsidiary of Cinemark (now, in the
future or upon the occurrence of any contingency), and no securities or
obligations evidencing such rights are authorized, issued or
outstanding. Except as set forth on Schedule 4.3, there are no
agreements to register any securities of any Subsidiary of Cinemark or
sales or resales thereof under the federal or state securities laws.
(b) Each Subsidiary of Cinemark is a corporation, limited
liability company or limited partnership duly organized, validly
existing and in good standing (to the extent such concept is used in
the relevant jurisdiction) under the Laws of the jurisdiction of its
organization and has full corporate power and authority to own or lease
its assets and to carry on the business in which it is engaged, and is
duly qualified and licensed to do business and is in good standing (to
the extent such concept is used in the relevant jurisdiction), in each
jurisdiction where the ownership or operation of its property and
assets or the conduct of its business requires such qualification or
licensing, except where the failure to be so qualified or licensed and
in good standing has not had or would not reasonably be expected to
have a Cinemark Material Adverse Effect or to prevent or materially
delay or materially impair the Transaction. Cinemark has made available
to Buyer correct and complete copies of the respective organizational
documents of its Subsidiaries.
(c) All of the issued and outstanding shares of capital
stock or other equity interests of each Subsidiary of Cinemark have
been duly authorized and validly issued, and, in the case of shares of
capital stock, are fully paid and nonassessable, were not issued in
violation of any law or of any statutory or contractual preemptive
rights of any stockholder and are held of record by Cinemark or its
Subsidiaries, and all such shares or other equity interests represented
as being owned, directly or indirectly, by any Subsidiary or Cinemark
are owned by it free and clear of any and all Encumbrances, except as
set forth on Schedule 4.3.
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(d) Except as set forth on Schedule 4.3, neither Cinemark
nor any of its Subsidiaries controls directly or indirectly, or has any
direct or indirect equity participation or ownership interest in, any
corporation, partnership, trust or entity that is not a Subsidiary of
Cinemark.
Section 4.4 Financial Statements; Company Reports; Undisclosed
Liabilities.
(a) Audited Financial Statements. Cinemark has previously
delivered to Buyer true and complete copies of the audited consolidated
balance sheet of Cinemark USA, Inc., a Texas corporation ("CINEMARK
USA"), and its Subsidiaries as of December 31, 2003 and December 31,
2002 and 2001 and the related statements of income and cash flows for
each of the three fiscal years then ended, certified by Deloitte &
Touche, L.L.P. (such financial statements being collectively called the
"ANNUAL FINANCIAL STATEMENTS") and an audit report containing an
unqualified opinion of Deloitte & Touche, L.L.P. The Annual Financial
Statements were prepared in accordance with GAAP, applied on a
consistent basis throughout the periods covered thereby. The Annual
Financial Statements fairly present the financial position of Cinemark
USA and its Subsidiaries as of the applicable period and the results of
operations for the respective year then ended.
(b) Company Reports. All forms, reports and documents
filed by Cinemark USA, with any applicable federal or state securities
authorities, including the Securities and Exchange Commission, are
collectively referred to herein as the "COMPANY REPORTS." The Company
Reports, as amended through the date hereof, and all Company Reports
filed after the date of this Agreement, (i) were or will be prepared in
all material respects in accordance with the requirements of the
Securities Act or the Exchange Act and (ii) did not at the time they
were filed, or will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the financial statements (including, in each case,
any related notes thereto) contained in the Company Reports, as amended
through the date hereof, any Company Reports filed since the date of
this Agreement and prior to or on the Closing Date, complied in all
material respects with the published rules and regulations of the
Securities and Exchange Commission with respect thereto.
(c) No Undisclosed Liabilities. To the Knowledge of
Cinemark, there are no material liabilities or material obligations of
Cinemark or any of its Subsidiaries, whether accrued, absolute,
unmatured, contingent or otherwise required by GAAP to be set forth on
a balance sheet of Cinemark and its Subsidiaries or in the notes
thereto except (i) those arising in the Ordinary Course of Business
since the Balance Sheet Date, none of which relates to a breach of
Contract or Lease, tort, infringement, violation of Law, any action,
suit or proceeding, any writ, injunction, decree, order, judgment or
litigation affecting the ownership, lease, occupancy or operation of
any real property and (ii) liabilities which would not be required to
be reflected on a balance sheet or the footnotes thereto prepared in
accordance with GAAP.
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(d) Assets and Liabilities of Cinemark and CNMK Holdings,
Inc. Except as set forth on Schedule 4.4, since the date of its
incorporation, neither Cinemark (for purposes of clarification,
excluding any of its Subsidiaries) nor CNMK Holdings, Inc., a Delaware
corporation, has (i) carried on any business or conducted any
operations, (ii) any assets other than all of the outstanding capital
stock of CNMK Holdings, Inc. and Cinemark USA, respectively, nor (iii)
any liabilities or obligations of any kind, other than, in the case of
Cinemark, the performance of its obligations hereunder.
(e) Past and Future Performance. EXCEPT AS SPECIFICALLY
SET FORTH IN THIS AGREEMENT, CINEMARK MAKES NO REPRESENTATIONS OR
WARRANTIES REGARDING PAST FINANCIAL PERFORMANCE OF CINEMARK, ITS
SUBSIDIARIES OR THE ASSETS OWNED OR USED BY CINEMARK OR AS TO ANY
FINANCIAL INFORMATION OR FINANCIAL OR BUSINESS PROJECTIONS MADE
AVAILABLE TO BUYER REGARDING CINEMARK, ITS SUBSIDIARIES OR THE ASSETS
OWNED OR USED BY CINEMARK OR ITS SUBSIDIARIES (OTHER THAN THAT SUCH
FINANCIAL INFORMATION OR FINANCIAL OR BUSINESS PROJECTIONS WERE
PREPARED IN GOOD FAITH AND WERE BASED UPON ASSUMPTIONS BELIEVED TO BE
REASONABLE AT THE TIME OF THEIR PREPARATION), AND CINEMARK MAKES NO
REPRESENTATIONS OR WARRANTIES REGARDING FUTURE FINANCIAL PERFORMANCE OF
CINEMARK, ITS SUBSIDIARIES OR THE ASSETS OWNED OR USED BY CINEMARK AND
ITS SUBSIDIARIES OR AS TO THE FINANCIAL INFORMATION OR FINANCIAL OR
BUSINESS PROJECTIONS MADE AVAILABLE TO BUYER REGARDING CINEMARK AND ITS
SUBSIDIARIES OR THE ASSETS USED OR OWNED BY CINEMARK OR ITS
SUBSIDIARIES (OTHER THAN THAT SUCH FINANCIAL INFORMATION OR FINANCIAL
OR BUSINESS PROJECTIONS WERE PREPARED IN GOOD FAITH AND WERE BASED UPON
ASSUMPTIONS BELIEVED TO BE REASONABLE AT THE TIME OF THEIR
PREPARATION).
Section 4.5 Absence of Certain Changes or Events>>.
(a) Since the Balance Sheet Date, (i) Cinemark and its
Subsidiaries have not suffered any damage, destruction or loss (whether
or not covered by insurance), other than such damages, destruction and
loss as do not have or would not individually or in the aggregate be
reasonably expected to have a Cinemark Material Adverse Effect; and
(ii) there has been no change in the condition, assets or business of
Cinemark or its Subsidiaries other than in the Ordinary Course of
Business, except such changes as do not have or would not individually
or in the aggregate be reasonably expected to have a Cinemark Material
Adverse Effect.
(b) Except as set forth on Schedule 4.5, since the
Balance Sheet Date, Cinemark and its Subsidiaries have not: (i) other
than in the Ordinary Course of Business, increased the compensation
(including bonuses) payable on or after the date hereof, or to become
payable on or after the date hereof, to any director or executive
officer of Cinemark or any of its Subsidiaries; (ii) other than to or
among Cinemark and its wholly-owned Subsidiaries, declared or paid any
dividends, issued, purchased or
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redeemed any shares of its capital stock or any convertible securities
into or exchangeable for any of its respective capital stock, or made
any other distributions to its shareholders; (iii) granted any options
or other rights to purchase or obtain (including upon conversion,
exchange or exercise) any of its respective capital stock; (iv) other
than to or among Cinemark and its wholly-owned Subsidiaries, incurred
assumed, or guaranteed any liabilities or Indebtedness of any kind
other than Indebtedness that is incurred in the Ordinary Course of
Business; (v) amended or authorized any amendment to the certificate of
incorporation or bylaws of Cinemark or to any organizational documents
of any of Cinemark's Subsidiaries; (vi) made any acquisitions of real
property or other material personal property; (vii) other than to or
among Cinemark and its wholly-owned Subsidiaries, made any capital
investment in, any loan to, or any acquisition of the securities or
assets, of any other Person either involving more than $500,000 or
outside the Ordinary Course of Business; (viii) cancelled, waived,
compromised or released any right or claim (or series of rights or
claims) either involving more than $500,000 or outside the Ordinary
Course of Business; (ix) granted or received any material license or
sublicense under or with respect to any Intellectual Property; (x) made
any change in employment terms for the directors, officers, and
employees outside the Ordinary Course of Business; (xi) entered into
any collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement other than in the
Ordinary Course of Business; (xii) managed Cinemark's working capital
outside the Ordinary Course of Business; (xiii) made any capital
expenditures (or series of related capital expenditures) in excess of
$500,000 or outside the Ordinary Course of Business; (xiv) disposed of
any of their material assets; (xv) made any loan to, or entered into
any other transaction with any of their directors, officers or
employees outside the Ordinary Course of Business; (xvi) made or
pledged to make any charitable or other capital contribution outside
the Ordinary Course of Business; or (xvii) committed to do any of the
foregoing.
Section 4.6 Licenses. Cinemark and its Subsidiaries hold all material
permits, licenses, waivers, orders, approvals, concessions, registrations and
other authorizations issued or provided by Governmental Entities under all Laws
currently in effect, which are necessary for Cinemark and its Subsidiaries to
own their assets or to operate their businesses as currently, and as currently
proposed to be, conducted (the "COMPANY LICENSES"). All Company Licenses are in
full force and effect and shall remain in full force and effect immediately
following the Closing. There is not pending, nor to the Knowledge of Cinemark,
threatened against Cinemark or any of its Subsidiaries, any application, action,
petition, objection or other pleading, or any proceeding, with any Governmental
Entity which questions or contests the validity of, or any rights of the holder
under, or non-renewal or suspension of any Company License.
Section 4.7 Litigation. Neither Cinemark nor any of its Subsidiaries is
subject to any outstanding material Order of any Governmental Entity. Except as
disclosed on Schedule 4.7, there are no civil, criminal or administrative
claims, actions, suits, demands, proceedings, hearings or investigations pending
or, to the Knowledge of Cinemark, threatened against Cinemark or any of its
Subsidiaries, at Law, in equity or otherwise, in, before, or by, any court or
Governmental Entity, authority or arbitrator, in each case, involving an amount
in excess of $100,000.
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Section 4.8 Compliance with Law. To the Knowledge of Cinemark,
except as disclosed on Schedule 4.8, during the last five years, each of
Cinemark and its Subsidiaries has conducted its business in substantial
compliance with all applicable Laws, and neither Cinemark nor any of its
Subsidiaries has been subject during the last five years to any inspection,
investigation, penalty, assessment, or audit by any Governmental Entity to any
allegation that Cinemark or any of its Subsidiaries violated in any respect any
regulations of any Governmental Entity or made a material false statement or
omission to any such Governmental Entity, which inspection, investigation,
penalty, assessment or audit resulted in any fine or penalty (or related fines
or penalties) in excess of $100,000; provided, however, Cinemark makes no
representation herein regarding compliance with the ADA regarding the design and
construction of its theatres, other than that Cinemark and its Subsidiaries have
made good faith efforts to comply with the ADA.
Section 4.9 Contracts.
(a) Schedule 4.9 contains a list of all written Contracts
(referred to herein as a "MATERIAL CONTRACT") of the types described
below that are currently in effect:
(1) all employment and consulting Contracts
(other than those pursuant to which the base compensation to
be paid by Cinemark and its Subsidiaries collectively to the
offeree is less than $200,000 per year);
(2) all Contracts (or group of related
Contracts) or options to sell, license (as licensor) or lease
(as lessor) any property or asset of Cinemark or any of its
Subsidiaries in excess of $100,000 per year;
(3) all Contracts (or group of related
Contracts) pursuant to which Cinemark or any of its
Subsidiaries (i) possesses or uses, or has agreed to acquire,
license (as licensee) or lease (as lessee), any property or
asset, and (ii) is required to make payments, accrue expenses
or incur charges in excess of $500,000 per year;
(4) all Contracts (or group of related
Contracts), plans or programs pursuant to which payments, or
an acceleration of or increase in benefits, may be required
upon or after a change of control of Cinemark or any of its
Subsidiaries;
(5) all Contracts (or group of related
Contracts) requiring capital expenditures by Cinemark or any
of its Subsidiaries in excess of $500,000 per year;
(6) all Contracts which create a partnership or
joint venture to which Cinemark or any of its Subsidiaries is
a party;
(7) all Contracts (or group of related
Contracts) of indemnification or similar commitment entered
into in the five (5) year period prior to the date of this
Agreement with respect to which the potential aggregate
obligation is in excess of $500,000, including those that
relate to Cinemark's or any of its Subsidiaries'
indemnification obligations to its directors and officers;
-22-
(8) all Contracts that prohibit or restrict
Cinemark or any of its Subsidiaries from competing anywhere in
the world;
(9) all Contracts pursuant to which Cinemark or
any of its Subsidiaries provides management services or
consulting services to Persons not affiliated with Cinemark or
any of its Subsidiaries with respect to theatres or other real
property projects;
(10) all Contracts (other than Contracts between
Cinemark and its Subsidiaries or between a Subsidiary of
Cinemark and another Subsidiary of Cinemark) relating to
borrowed money or other Indebtedness or the mortgaging or
pledging or otherwise placing an Encumbrance on any asset
which will continue to be an obligation of the Surviving
Corporation or any of its Subsidiaries following the Closing;
(11) all on-screen advertising agreements to
which Cinemark or any of its Subsidiaries is a party;
(12) any other Contracts to which Cinemark or any
of its Subsidiaries is a party under which the consequences of
a default or termination could have a Cinemark Material
Adverse Effect; and
(13) any other Contracts required to be filed as
"material contracts" by Cinemark USA with the Securities and
Exchange Commission in connection with the Annual Report on
Form 10-K of Cinemark USA of the year ended December 31, 2003.
(b) To the Knowledge of Cinemark, neither Cinemark nor
any of its Subsidiaries is a party to any material oral Contracts.
(c) Cinemark has delivered or heretofore made available
to Buyer a true, complete and correct copy of each of the written
Material Contracts, and all amendments and supplements thereto and all
waivers thereunder. Neither Cinemark, any of its Subsidiaries nor any
other party is in default under, or in breach or violation of, nor has
an event occurred that (with or without notice, lapse of time or both)
would constitute a material default by Cinemark or any of its
Subsidiaries under any Material Contract. Cinemark has no Knowledge of
any anticipated material breach by any party to any of the Contracts
required to be included on Schedule 4.9. Each of the Contracts required
to be included in Schedule 4.9 is a legal, valid, and binding
obligation of Cinemark or its Subsidiaries, and to the Knowledge of
Cinemark, of the other parties thereto, enforceable against Cinemark or
its Subsidiaries, and to the Knowledge of Cinemark, the other parties
thereto in accordance with its terms, and is in full force and effect
and will remain such immediately following the Closing.
Section 4.10 Consents and Approvals. Except for the Governmental
Consents, no Consents are required to be made or obtained by Cinemark, its
Subsidiaries or the stockholders of Cinemark with or from, as the case may be,
any Governmental Entity, in connection with the execution and delivery of this
Agreement by Cinemark and the consummation by Cinemark of
-23-
the Transaction. Neither Cinemark nor any of its Subsidiaries is subject to any
Order which has had or would reasonably be expected to cause a Cinemark Material
Adverse Effect or prevent or materially delay the consummation of the
Transaction. No claim, legal action, suit, arbitration, governmental
investigation, action, or other legal, judicial or administrative proceeding is
pending, or to the Knowledge of Cinemark, threatened against Cinemark or any of
its Subsidiaries which has had or would cause a Cinemark Material Adverse Effect
or prevent or materially delay the Transaction.
Section 4.11 Tax Matters.
(a) Except as set forth on Schedule 4.11, (i) all Tax
Returns that are required to be filed by or with respect to Cinemark
and its Subsidiaries have been duly and timely filed or, where not so
timely filed, are covered under an extension that has been obtained
therefor, (ii) all Taxes, due and payable by Cinemark and its
Subsidiaries (whether or not shown on, or required to be shown on, any
Tax Return), have been paid in full or are being contested in good
faith by appropriate proceedings, provided that appropriate reserves or
accruals have been established in accordance with GAAP for all such
Taxes being so contested, (iii) all deficiencies asserted or
assessments with respect to all Taxes have been paid in full and (iv)
there are no Encumbrances with respect to Taxes upon any of the assets
of Cinemark or its Subsidiaries other than Permitted Encumbrances.
(b) Except as set forth on Schedule 4.11, there is no
material dispute or claim concerning any Tax liability of Cinemark or
any of its Subsidiaries (i) claimed or raised by any authority in
writing or (ii) to the Knowledge of Cinemark, based upon personal
contact with any agent of such authority. Neither Cinemark nor any of
its Subsidiaries has any outstanding waivers of any statute of
limitations in respect of material Taxes or agreed to any extension of
time with respect to a material Tax assessment or deficiency.
(c) Except as set forth on Schedule 4.11, neither
Cinemark nor any of its Subsidiaries is a party to any agreement,
contract, arrangement, or plan that has resulted or could result,
separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of Code Section 280G (or any corresponding
provision of state, local, or foreign Tax law), including with respect
to the Transaction.
(d) [INTENTIONALLY OMITTED]
(e) Except as set forth on Schedule 4.11(e), neither
Cinemark nor any of its Subsidiaries is a party to or bound by any tax
allocation or sharing agreement.
(f) Neither Cinemark nor any of its Subsidiaries (i) has
been a member of an affiliated group filing a consolidated federal
Income Tax Return (other than a group the common parent of which was
Cinemark) or (ii) has any liability for the Taxes of any Person (other
than Cinemark or any of its Subsidiaries) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor or by contract.
(g) Except as set forth on Schedule 4.11, neither
Cinemark nor any of its Subsidiaries will be required to include any
item of
-24-
income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date
as a result of any: (i) change in method of accounting for a taxable
period ending on or prior to the Closing Date; (ii) "closing agreement"
as described in Code Section 7121 (or any corresponding or similar
provision of state, local, or foreign income Tax law) executed on or
prior to the Closing Date; (iii) intercompany transactions described in
treasury regulations under Code Section 1502 (or any corresponding or
similar provisions of state, local or foreign income Tax law); (iv)
installment sale or open transaction disposition made on or prior to
the Closing Date; or (v) prepaid amount received on or prior to the
Closing Date in excess of $250,000.
(h) In the two (2) years prior to the date hereof,
neither Cinemark nor any of its Subsidiaries has distributed stock of
another Person, or has had its stock distributed by another Person, in
a transaction that was purported or intended to be governed in whole or
in part by Code Section 355 or Code Section 361.
(i) Neither Cinemark nor any of its Subsidiaries has
engaged in a "listed transaction" as defined in Treas. Reg. Section
1.6011-4(b)(2).
Section 4.12 Employee Benefits.
(a) Schedule 4.12 sets forth a complete and correct list
of (i) all material "employee benefit plans," as defined in Section
3(3) of ERISA, (ii) all severance pay, vacation pay, awards, salary
continuation, sick leave, deferred compensation, bonus or other
incentive compensation, stock or other equity related award, restricted
stock, stock purchase, stock option, phantom stock or similar
arrangements, and (iii) all material employment, consulting,
retirement, pension, superannuation, profit sharing, termination,
severance, redundancy pay, thirteenth month or individual compensation
agreements or arrangements, covering any employee, former employee, or
the beneficiaries or dependents of any employee or former employee, in
each case, as to which Cinemark or any Subsidiary has any continuing
obligation or liability (contingent or otherwise) regardless of whether
it is maintained under local law, voluntary, private, funded, unfunded,
financed by the purchase of insurance, contributory or non-contributory
(collectively, the "BENEFIT PLANS"). Each Benefit Plan that is
maintained, sponsored or contributed to by Cinemark or any ERISA
Affiliate for the benefit of their U.S. employees shall be referred to
herein as a "U.S. Benefit Plan."
(b) Each U.S. Benefit Plan (and each related trust,
insurance contract or fund) has been in all material respects
maintained, funded and administered in accordance with the terms of
such U.S. Benefit Plan and any applicable collective bargaining
agreement and complies in form and in operation in all material
respects with the applicable requirements of the Code, ERISA and other
applicable Laws. Each U.S. Benefit Plan and its related trust intended
to qualify under Sections 401 and 501(a) of the Code, respectively, so
qualify and nothing has occurred with respect to the operation of any
such plan which would cause the loss of such qualification or exemption
or the imposition of any material liability, penalty or tax under ERISA
or the Code. None of the U.S. Benefit Plans has any material unfunded
liabilities not reflected on the Balance Sheet.
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(c) With respect to each U.S. Benefit Plan, true, correct
and complete copies of the following documents (as applicable), have
been made available to Buyer: (i) the most recent document constituting
the U.S. Benefit Plan and all amendments thereto, and any related trust
documents, (ii) the most recent summary plan description, and all
related summaries of material modifications, (iii) the most recent
annual report (Form 5500 series)) and (iii) the most recent IRS
determination letter.
(d) Neither Cinemark nor any ERISA Affiliate maintains,
sponsors, contributes to or has any liability or potential liability
with respect to any "defined benefit plan" (as defined in Section 3(35)
of ERISA) or, except as set forth on Schedule 4.12, any "multiemployer
plan" (as defined in Section 3(37) of ERISA).
(e) Neither Cinemark nor any ERISA Affiliate has any
liability or potential liability under any U.S. Benefit plan to provide
life insurance or medical or health benefits after termination of
employment to any Employee or former employee (or any dependents or
beneficiaries thereof) other than as required by Part 6 of Subtitle I
of ERISA or Section 4980B of the Code or any similar state law
("COBRA"). Cinemark and each ERISA Affiliate have complied in all
material respects with the requirements of COBRA.
(f) Each Benefit Plan that is governed by Laws of any
jurisdiction other than the United States (each a "FOREIGN BENEFIT
PLAN") has been maintained, funded and administered in accordance with,
and is in material compliance with, applicable Laws and the
requirements of such Foreign Benefit Plan's governing documents and any
applicable collective bargaining agreements. No Foreign Benefit Plan
has any unfunded or under funded liabilities, taking into account all
current, projected and contingent benefits payable under such plan to
any Employee, former employee, dependent, or beneficiary, regardless of
whether an amount less than such aggregate liability is reflected on
the employer's financial statements. No condition exists that would
prevent Cinemark or its Subsidiaries from terminating or amending any
Foreign Benefit Plan, except as required by applicable Law.
Section 4.13 Brokers and Finders. Except as set forth on Schedule 4.13,
neither Cinemark nor any of its Subsidiaries has employed any broker, finder,
consultant or intermediary in connection with the Transaction who would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof that would be payable by Cinemark or
any of its Subsidiaries.
Section 4.14 Intellectual Property.
(a) Cinemark or its Subsidiaries own, are licensed under,
or otherwise possess, in all material respects, the valid and
enforceable right to use all Intellectual Property that is used in the
business of Cinemark and its Subsidiaries as currently conducted and as
currently proposed to be conducted.
(b) Schedule 4.14 sets forth all of Cinemark and its
Subsidiaries' patents, patent applications, Internet domain names,
registered servicemarks, trademarks, trade
-26-
names, corporate names (other than those set forth on Schedule 4.3),
brand names and copyrights and applications for registration of
servicemarks, trademarks, trade names, corporate names, brand names and
copyrights.
(c) Neither Cinemark nor any of its Subsidiaries is, nor
will they be as a result of the execution and delivery of this
Agreement or the performance of its obligations hereunder, in material
violation of any licenses, sublicenses and other agreements as to which
Cinemark or any of its Subsidiaries is a party and pursuant to which
Cinemark or any of its Subsidiaries is authorized to use any
third-party Intellectual Property ("THIRD-PARTY INTELLECTUAL PROPERTY
RIGHTS").
(d) No material claims with respect to (A) the
Intellectual Property owned or exclusively licensed by Cinemark or its
Subsidiaries ("COMPANY INTELLECTUAL PROPERTY RIGHTS"); or (B)
Third-Party Intellectual Property Rights are currently pending or, to
the Knowledge of Cinemark, threatened by any Person against Cinemark or
its Subsidiaries.
(e) Schedule 4.14 sets forth a list of all agreements
under which Cinemark or any of its Subsidiaries has granted any rights
of whatever nature to third parties of, to or under the Company
Intellectual Property Rights. True, correct and complete copies of all
such agreements have been delivered to Buyer.
(f) To the Knowledge of Cinemark, Cinemark or its
applicable Subsidiary has the right to bring actions against any Person
that is infringing, misappropriating or using without authorization any
Company Intellectual Property Rights; and, as of the date hereof, no
claim of infringement, misappropriation or any other unauthorized use
of any of the Company Intellectual Property Rights by any third party,
employee, consultant or former employee or consultant of Cinemark or
any Subsidiary has been asserted.
Section 4.15 Real Property.
(a) Owned Real Property. Schedule 4.15 sets forth all of
the Owned Real Property owned by Cinemark or any of its Subsidiaries.
As to each parcel of Owned Real Property, and except as set forth in
Schedule 4.15: (i) Cinemark or its Subsidiary has good, marketable and
indefeasible title to the Owned Real Property free and clear of all
Encumbrances, except Permitted Encumbrances, (ii) except as set forth
on Schedule 4.15, neither Cinemark nor any of its Subsidiaries have
leased or otherwise granted to any Person the right to use or occupy
such Owned Real Property, (iii) there are no outstanding options,
rights of first offer or refusal to purchase any of the Owned Real
Property, and (iv) neither Cinemark nor any of its Subsidiaries are
party to any agreement or option to purchase any real property intended
to be used in their business.
(b) Leased Real Property. Schedule 4.15 sets forth all of
the Leased Real Property leased by Cinemark or any of its Subsidiaries.
As to each Lease, and except as set forth in Schedule 4.15: (i) such
Lease is legal, valid, binding and enforceable against Cinemark or its
applicable Subsidiary, and to the Knowledge of Cinemark, enforceable
against third parties, in full force and effect, and duly registered
where necessary under applicable Laws for the purposes of
enforceability against third parties (including
-27-
purchasers of the underlying property and mortgagees); (ii) the
consummation of the Merger does not require the consent of any other
party to such Lease and will not result in a breach of or default under
such Lease; (iii) neither Cinemark nor any Subsidiary nor any other
party to the Lease is in breach or default under such Lease; (iv) no
security deposit or portion thereof deposited with respect to such
Lease has been applied in respect of a breach or default under such
Lease which has not been redeposited in full; (v) neither Cinemark nor
any Subsidiary has subleased, licensed or otherwise granted any Person
the right to occupy such Leased Real Property or any portion thereof;
(vi) there are no Encumbrances on the estate or interest created by
such Lease, except for liens for any existing financing that will be
released at Closing or Permitted Encumbrances.
Section 4.16 Labor Matters. Schedule 4.16 contains a complete and
accurate list of (a) each collective bargaining agreement or other labor union
contract to which Cinemark or any Subsidiary is a party to or has any obligation
or liability, and (b) each works council, labor authority, employee group, or
other third party that must be notified or consulted with under applicable Law
with respect to the subject matter of this Agreement. Except as described on
Schedule 4.16 and except as would not reasonably be expected to have a Cinemark
Material Adverse Effect, (i) Cinemark and each of its Subsidiaries is in
compliance in all material respects with all applicable Laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, (ii) there is no unfair labor practice complaint pending or, to
Cinemark's Knowledge, threatened against Cinemark or any of its Subsidiaries,
and (iii) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against Cinemark. Each of Cinemark and its Subsidiaries
has, or will have as of the Closing, provided such notices and made such
consultation and disclosures as are required by applicable Laws with respect to
the subject matter of this Agreement.
Section 4.17 Environmental Matters. To Cinemark's Knowledge, Cinemark
and its Subsidiaries are in material compliance with all applicable
Environmental Laws. Neither Cinemark nor any of its Subsidiaries is subject to
any existing, pending or, to Cinemark's Knowledge, threatened material
proceedings under any Environmental Law. To Cinemark's Knowledge, Cinemark and
its Subsidiaries have obtained all permits required under Environmental Laws and
such permits are currently in full force and effect. To Cinemark's Knowledge,
there have been no unauthorized or other releases of any Hazardous Materials at
or from any property or facility owned or operated by Cinemark, any of its
Subsidiaries or any of their respective predecessors that have or would give
rise to a material liability or material obligation of Cinemark or its
Subsidiaries. Neither Cinemark, any of its Subsidiaries nor any of their
predecessors has treated, stored, disposed, arranged for or permitted the
disposal of, transported or released any Hazardous Materials so as to give rise
to a material liability or material obligation under Environmental Laws.
Section 4.18 Insurance. Schedule 4.18 contains a list and summary
description of all material insurance policies maintained as of the date hereof
by or on behalf of Cinemark or any of its Subsidiaries. Cinemark has delivered
or made available to Buyer copies of all such policies, together with all riders
and amendments thereto. Except as set forth on Schedule 4.18, neither Cinemark
nor any of its Subsidiaries has received any reservation of rights letters from
any of its insurers with respect to any insurance claims made during the last
three (3) years. All such policies are in full force and effect and will remain
in full force and effect after the
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consummation of the Transaction. All premiums with respect to such policies are
currently paid. Neither Cinemark nor any of its Subsidiaries (a) is currently in
material breach or material default (including with respect to the payment of
premiums or the giving of notices) with respect to its obligations under any
such insurance policies, (b) has repudiated any provision of any such insurance
policies in the last three (3) years or (c) has been denied insurance coverage
in the last three (3) years. Except as set forth on Schedule 4.18, neither
Cinemark nor any of its Subsidiaries has any self-insurance, deductible
retention or co-insurance programs, and the reserves set forth on the balance
sheet as of the date of the Balance Sheet Date are adequate to cover all
anticipated liabilities with respect to any such self-insurance, deductible
retention or co-insurance programs.
Section 4.19 Compliance with Foreign Corrupt Practices Act. Neither
Cinemark, nor any of its Subsidiaries, nor, to the Knowledge of Cinemark, any of
their respective directors, officers, agents or employees, has directly or
indirectly paid, offered, given or promised to pay or authorized the payment of,
any monies or other things of value to an officer or employee of any
Governmental Entity; an officer or employee of a public international
organization; any Person acting in an official capacity for or on behalf of any
Governmental Entity or public international organization; any political party or
official thereof; any candidate for political office; an employee, officer,
director or shareholder of any commercial purchaser of Cinemark's or any
Subsidiary's services; or any other Person, at the suggestion, request or
direction or for the benefit of any of the above-described Persons, or engaged
in acts or transactions otherwise in violation of the domestic anti-bribery
legislation of any Governmental Entity, the Foreign Corrupt Practices Act of the
United States, as amended from time to time and Cinemark's or any of its
Subsidiaries' written policy on questionable or improper payments. Each of
Cinemark and its Subsidiaries maintains a system of internal accounting controls
adequate to ensure that it maintains no off-the books accounts and that such
Selling Party 's assets are used only in accordance with its management
directives.
Section 4.20 Suppliers. Neither Cinemark nor any of its Subsidiaries
has received any written notice from any material supplier (including Coca-Cola,
Inc. or any of its Affiliates) to the effect that, and Cinemark has no Knowledge
that, such supplier will stop, materially decrease the rate of, or materially
change the terms (whether related to payment, price or otherwise) with respect
to, supplying materials, products or services to Cinemark or any of its
Subsidiaries (whether as a result of the consummation of the Transaction or
otherwise).
Section 4.21 Affiliated Transactions. Except as set forth on Schedule
4.21, no Affiliated Person is party to any Material Contract or any Leases with
Cinemark or any of its Subsidiaries or has any interest in any material
property, asset or right used by Cinemark or any of its Subsidiaries or
necessary for their business or, since the Balance Sheet Date, has received any
funds in excess of $50,000 from or on behalf of Cinemark or any of its
Subsidiaries (other than compensation paid by Cinemark or any of its
Subsidiaries to officers and other employees of Cinemark and its Subsidiaries in
the Ordinary Course of Business). Schedule 4.21 describes all such services
provided to or for the benefit of Cinemark or any of its Subsidiaries and the
costs and expenses charged to Cinemark and its Subsidiaries in respect thereof.
For purposes hereof, an "AFFILIATED PERSON" means: (a) any officer, director,
stockholder or Affiliate (other than any of Cinemark's Subsidiaries) of Cinemark
or any of its Subsidiaries, (b) any immediate
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family member of any such officer, director or stockholder and (c) any Person in
which any such officer, director, stockholder or Affiliate owns any beneficial
interest.
Section 4.22 Expenses. Schedule 4.22 sets forth Cinemark's good faith
estimate of the amount of all Expenses of Cinemark and its Subsidiaries,
together with a description, and the identity of the payee, of each such Expense
(which, for purposes of clarification, shall not include any Expenses payable by
the Surviving Corporation on behalf of Buyer and its Affiliates pursuant to
Section 9.2).
Section 4.23 Change of Control Payments. Schedule 4.23 sets forth the
amount of each payment due or to become due (whether or not automatically upon
the occurrence of the Closing) under the Contracts to which Cinemark or any of
its Subsidiaries is a party, other than under the Brazilian Put Agreements or as
a result of any accelerated vesting of stock options under the Cinemark, Inc.
Long Term Incentive Plan, upon the consummation of the Transaction, identifying
each such Contract, the amount of such payments payable under such Contract, and
the Person to whom such payments would be payable.
Section 4.24 Indebtedness. Except as set forth on Schedule 4.24,
neither Cinemark nor any of its Subsidiaries has any outstanding Indebtedness
(other than Indebtedness payable to Cinemark or any of its Subsidiaries), or is
a party to any Contract providing for the creation, incurrence or assumption
thereof. Schedule 4.24 sets forth the amount of the outstanding balance as of
the date hereof of all such Indebtedness of Cinemark and its Subsidiaries,
together with a description, and the amount, of each line item included in the
calculation thereof.
Section 4.25 Board Recommendation. The Board of Directors of
Cinemark, at a meeting duly called and held, has by the affirmative vote of all
those directors present (who constituted 100% of the directors then in office)
determined that this Agreement and the Transaction, including the Merger, are
fair to and in the best interest of the stockholders of Cinemark and has
approved the same.
Section 4.26 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither Cinemark
nor any other Person makes any other express or implied representation or
warranty on behalf of Cinemark with respect to the Transaction, including as to
the probable success or profitability of the ownership of Cinemark and its
Subsidiaries.
Section 4.27 Expiration of Representations and Warranties. Except in
the case of fraud, the representations and warranties of Cinemark contained
herein shall expire and be terminated and extinguished immediately after the
Closing, and thereafter neither Cinemark nor any other Person shall have any
liability whatsoever with respect to any of such expired representation or
warranty.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the schedules attached to this Agreement, Buyer
represents and warrants to Cinemark as of the date hereof as follows:
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Section 5.1 Organization and Authority. Buyer is duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
organization. Buyer has all requisite corporate power and authority, and has
taken all requisite corporate, shareholder or other action necessary in order to
execute, deliver and perform its obligations under this Agreement. This
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general applicability relating to or affecting creditors' rights
and to general equity principles. The execution, delivery and performance of
this Agreement by Buyer do not, and the consummation by Buyer of the Transaction
will not, constitute or result in (A) a breach or violation of, or a default
under, the constituent documents of Buyer, (B) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of any
Encumbrance (other than in connection with Financing) on the assets of Buyer
(with or without notice, lapse of time or both) pursuant to, any Contracts
binding upon Buyer or (C) assuming compliance with the matters referred to in
Section 4.10 (Consents and Approvals) and Section 5.2 (Consents and Approvals),
a violation of any Law, except, in the case of clause (B) or (C) above, for any
breach, violation, default, acceleration or creation that would not reasonably
be likely to have a Buyer Material Adverse Effect.
Section 5.2 Consents and Approvals. Except for the Governmental
Consents, no Consents are required to be made or obtained by Buyer with or from,
as the case may be, any Governmental Entity, in connection with the execution
and delivery of this Agreement by Buyer and the consummation by Buyer of the
Transaction, except those filings, permits, authorizations, consents, approvals
and/or notices for which the failure to make or obtain would not reasonably be
likely to prevent, materially delay or materially impair the ability of Buyer to
consummate the Transaction. Buyer not is subject to any Order which would
prevent the consummation of the Transaction. No claim, legal action, suit,
arbitration, governmental investigation, action, or other legal, judicial or
administrative proceeding is pending, or to the knowledge of Buyer, threatened
against Buyer which would prevent or delay the Transaction.
Section 5.3 Brokers and Finders. Other than Xxxxx & Company LLC,
Buyer has not employed any broker, finder, consultant or intermediary in
connection with the Transaction who would be entitled to a broker's, finder's or
similar fee or commission in connection therewith or upon the consummation
thereof.
Section 5.4 Litigation. There are no civil, criminal or
administrative claims, actions, suits, demands, proceedings or investigations
pending or, to the knowledge of Buyer, threatened against Buyer, at law, in
equity or otherwise, in, before, or by, any court, Governmental Entity,
authority or arbitrator which would reasonably be expected to have a material
adverse effect on the business or financial condition of Buyer or would
reasonably be likely to have a Buyer Material Adverse Effect.
Section 5.5 Investigation by Buyer. Buyer (a) is represented by
competent legal counsel, (b) has knowledge and experience in financial and
business matters and (c) has the capability of evaluating the merits and risks
of investing in Cinemark. Buyer acknowledges that neither Cinemark nor any other
Person has made any representation or warranty, expressed or implied, as to the
accuracy or completeness of any information regarding Cinemark that has been
furnished or made available to Buyer and its representatives, except as
expressly set forth in this
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Agreement or the Schedules, and neither Cinemark, its stockholders nor their
representatives nor any other Person shall have or be subject to any liability
(other than for fraud) to Buyer resulting from the distribution to Buyer, or
Buyer's use, of any such information with respect to Cinemark and its
Subsidiaries and any information, documents or material made available to Buyer
in management presentations or in any other form in expectation of the
Transaction. Buyer acknowledges that it is a sophisticated purchaser of
businesses and has been given sufficient access to all information with respect
to Cinemark requested by Buyer and, in entering into this Agreement, has not
relied upon any representations other than the representations and warranties of
Cinemark set forth in Article IV. Buyer acknowledges that no other
representations and warranties of Cinemark other than as are set forth in
Article IV are required by Buyer to enter into this Agreement.
Section 5.6 No Prior Activities. Buyer has not incurred, nor prior
to the Closing, will it incur any liabilities or obligations, except those
incurred in connection with its organization and with the negotiation of this
Agreement and the performance hereof, and the consummation of the Transaction,
including the Merger and the Financing. Except as contemplated by this
Agreement, including the Financing, Buyer has not engaged in any business
activities of any type or kind whatsoever, or entered into any agreements or
arrangements with any Person, or become subject to or bound by any obligation or
undertaking. As of the date hereof, all of the issued and outstanding capital
stock of Buyer are owned beneficially and of record by Buyer, free and clear of
all Encumbrances (other than those created by this Agreement and the
Transaction).
Section 5.7 No Industry Activity. Neither Buyer nor any Affiliate
of Buyer is directly or indirectly engaged in the ownership or operation of
movie theatres.
Section 5.8 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article V, neither Buyer nor
any other Person makes any other express or implied representation or warranty
on behalf of Buyer.
Section 5.9 Expiration of Representations and Warranties. Except in
the case of fraud, the representations and warranties of Buyer contained herein
shall expire and be terminated and extinguished immediately after the Closing,
and thereafter Buyer shall have no liability whatsoever with respect to any such
expired representation or warranty.
ARTICLE VI.
CERTAIN COVENANTS AND AGREEMENTS OF CINEMARK AND BUYER
Section 6.1 Access to Premises and Information.
(a) During the period commencing on the date hereof and
ending on the earlier to occur of the termination of this Agreement and
the Closing, subject to applicable Law, Cinemark shall, and shall cause
its Subsidiaries and Cinemark's and its Subsidiaries' officers,
directors, employees, agents representatives, accountants and counsel
to: (i) permit Buyer and its counsel, accountants, consultants,
financial advisors, agents and other representatives (including its
financing sources and their counsel, accountants, and other
representatives) (including Buyer, collectively, "BUYER
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REPRESENTATIVES") to have reasonable access, upon reasonable advance
notice, to (A) the premises of Cinemark and its Subsidiaries; (B) the
books, Contracts, Leases and records of Cinemark and its Subsidiaries;
and (C) the officers and directors of Cinemark and its Subsidiaries and
other employees, agents, business relations, accountants and counsel of
Cinemark or any of its Subsidiaries who have knowledge relating to
Cinemark or any of its Subsidiaries or their businesses; and (ii)
furnish to Buyer Representatives such information regarding the
business of Cinemark and its Subsidiaries as Buyer may reasonably
request, in each case to the extent that such access does not
unreasonably interfere with the business or operations of Cinemark or
any of its Subsidiaries; provided that Buyer Representatives comply
with the confidentiality obligations contained herein and in the
Confidentiality Agreement, and provided further that the foregoing
shall not (I) require Cinemark to permit any inspection, or to disclose
any information, that in its reasonable judgment would violate any of
Cinemark's obligations with respect to confidentiality, provided that
at the reasonable request of Buyer, Cinemark shall use commercially
reasonable efforts to have any such obligations waived or (II) require
any disclosure by Cinemark that would, as a result of such disclosure,
have the effect of causing the waiver of any legal privilege.
(b) In addition to the confidentiality arrangements
contained herein, all information provided or obtained in connection
with the Transaction (including pursuant to clause (a) above) shall be
held by Buyer in accordance with and subject to the terms of the
Confidentiality Agreement. In the event of a conflict or inconsistency
between the terms of this Agreement and the Confidentiality Agreement,
the terms of this Agreement shall govern. If the Closing occurs, the
parties hereto agree that the Confidentiality Agreement shall terminate
and forthwith become null and void in all respects and cease to have
any further force or effect.
Section 6.2 Conduct of Business. Except as otherwise expressly
contemplated by this Agreement, or as required by Law or Governmental Entity,
Cinemark covenants that until the earlier of the termination of this Agreement
and the Closing, it shall, and shall cause each of its Subsidiaries to, (i)
operate its business in the Ordinary Course of Business, (ii) continue, in a
manner consistent with the past practices, to maintain and preserve intact and
to keep available the services of its present officers and significant
employees, (iii) maintain its ordinary and customary relationships with its
suppliers, customers and others having business relationships with it with a
view toward preserving for Buyer the businesses of Cinemark and its
Subsidiaries, the assets used therein and the goodwill associated therewith,
(iv) operate its cash management in accordance with past practices, including
the payment of Indebtedness (subject to Section 6.2(b)), purchase of inventory,
provision of services, payment of payables and incurrence of and payment or
financing of capital expenditure, (v) maintain the material assets of Cinemark
and its Subsidiaries in good repair, order and condition (normal wear and tear
excepted) consistent with current needs, and (vi) pay all material Taxes as such
Taxes become due and payable in the Ordinary Course of Business, except Taxes
being contested in good faith by appropriate proceedings, provided that
appropriate reserves or accruals have been established in accordance with GAAP
for all such Taxes being so contested. Until the earlier of the termination of
this Agreement and the Closing, Cinemark shall not, and shall cause its
Subsidiaries not to, without the prior written approval of Buyer (which approval
will not be unreasonably withheld and with respect to which Buyer will use its
commercially reasonable efforts to respond to any request by
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Cinemark for such approval within three Business Days of receiving such request)
or as otherwise expressly contemplated by this Agreement, take any of the
following actions with respect to Cinemark or any of its Subsidiaries:
(a) amend the certificate of incorporation or bylaws or
other constituent or organizational document of Cinemark or of its
Subsidiaries, or issue, sell, encumber, agree to issue, sell or
encumber, redeem, purchase or, other than to or among Cinemark and its
wholly-owned Subsidiaries, declare or pay dividends upon, any equity
interests in Cinemark or any of its Subsidiaries except, in the case of
dividends payable by Cinemark Brasil S.A., as required by existing
organizational documents of such Subsidiaries or applicable Law;
(b) incur, assume, or guaranty any liabilities or
Indebtedness of any kind;
(c) cancel any Indebtedness owed to Cinemark or its
Subsidiaries or waive any material claims or rights pertaining to the
business of Cinemark or any of its Subsidiaries;
(d) change in any material respect any tax elections or
settle or compromise any material Tax liability;
(e) amend or terminate any Material Contract or any Lease
or waive or assign any material right thereunder;
(f) dispose of any assets with a fair market value in
excess of $500,000, other than the equity interests in, or assets of,
Cinemark Theatres U.K., Ltd.;
(g) make any capital expenditure in excess of 120% of the
amounts set forth on Schedule 6.2(h);
(h) except for changes as may be required under GAAP,
which Cinemark would be required to adopt under authoritative
accounting pronouncements applicable to Cinemark or its Subsidiaries,
change in any material respect any accounting, financial reporting,
inventory or credit allowance principle, practice, method or policy
used by Cinemark or any of its Subsidiaries;
(i) compromise or settle any lawsuit or claim (including
any lawsuit or claim involving as a party any Governmental Entity) if
such settlement (i) involves aggregate payments by Cinemark or any of
its Subsidiaries in respect of all such lawsuits or claims after the
Closing (or forgiveness of amounts payable to Cinemark to or any of its
Subsidiaries) in excess of $500,000 and which is not paid or covered by
insurance or (ii) would reasonably be expected to have a Cinemark
Material Adverse Effect;
(j) merge or consolidate with, or agree to merge or
consolidate with, or purchase substantially all of the assets of, or
otherwise acquire, any business, business organization or division
thereof, or any other Person;
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(k) fail to maintain in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by
it;
(l) except as required by any collective bargaining
agreement or other labor union contract or Law, announce or institute
any increase in the salary, commission or other compensation (including
bonuses) rates payable or to become payable by Cinemark or any of its
Subsidiaries to any employee of Cinemark or any of its Subsidiaries, or
approve, adopt, amend or modify any Employee Plan or similar plan,
agreement or arrangement, except pursuant to the terms of any contract
or agreement to which Cinemark or any of its Subsidiaries is a party
and which is listed on Schedule 4.12(a) attached hereto, or pursuant to
existing policies and practices of Cinemark and its Subsidiaries;
(m) enter into any employment agreement with any of
Cinemark's or its Subsidiaries' employees providing for annual
remuneration in excess of $100,000;
(n) effect any recapitalization, reclassification, stock
split or like change in the capitalization of Cinemark or any of its
Subsidiaries; or
(o) commit to any of the foregoing.
Section 6.3 Registrations, Filings and Consents; Commercially
Reasonable Efforts.
(a) Cinemark shall, and shall cause its Subsidiaries to,
cooperate with Buyer, and Buyer shall cooperate with Cinemark and its
Subsidiaries, and each such Person shall use all commercially
reasonable efforts to take or cause to be taken all actions, and do or
cause to be done all things necessary, proper or advisable on such
Person's part to consummate and make effective the Transaction as soon
as reasonably practicable. In furtherance of the foregoing,
(i) Cinemark and Buyer shall, and Cinemark shall
cause its Subsidiaries to, use commercially reasonable efforts
to prepare and file as promptly as practicable all
documentation to effect all necessary applications, notices,
petitions, filings and other documents and to obtain as
promptly as reasonably practicable all Governmental Consents,
including requesting early termination with respect to the
filings made under the HSR Act. Cinemark and Buyer shall, and
Cinemark shall cause its Subsidiaries, to file, or cause to be
filed, as soon as practicable, and in any event within five
(5) days following the date hereof with respect to the HSR Act
filing, and within five (5) days prior to the required filing
date, with respect to all other documentation, filings and
other documents necessary to make or obtain, as the case may
be, the Governmental Consents. Subject to applicable Laws
relating to the exchange of information, Cinemark and Buyer
shall have the right to review in advance, and to the extent
practicable each will consult the other on, all the
information relating to Cinemark or its Subsidiaries or Buyer,
as the case may be, that appear in any filing made with, or
written materials submitted to, any Governmental Entity in
connection with the Transaction. In exercising the foregoing
right, each of Buyer and
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Cinemark shall, and Cinemark shall cause its Subsidiaries to,
act reasonably and as promptly as reasonably practicable.
(ii) Cinemark shall, and shall cause its
Subsidiaries to, use all commercially reasonable efforts to
obtain as promptly as reasonably practicable all Consents
required to be obtained from any third party (other than any
Governmental Entity) to consummate the Transaction (including
all requisite Consents under the Leases). Cinemark shall, and
shall cause its Subsidiaries to, promptly provide all
necessary notices to such third parties (with the Buyer first
approving such notices before they are distributed), and Buyer
shall cooperate and use all commercially reasonable efforts to
assist Cinemark and its Subsidiaries in giving such notices
and obtaining such Consents.
(iii) Cinemark and Buyer shall, and Cinemark shall
cause its Subsidiaries to, use commercially reasonable efforts
to prevent the entry, enactment or promulgation of any
threatened or pending injunction or order that would adversely
affect the ability of the parties hereto to consummate the
Transaction, and to lift or rescind any injunction or order
adversely affecting the ability of the parties hereto to
consummate the transactions contemplated hereby.
(b) To the extent permissible under applicable Law and
consistent with the instructions of any Governmental Regulatory Entity,
Buyer and Cinemark each shall keep the other informed of the status of
matters relating to completion of the Transaction, including promptly
furnishing the other with copies of notices or other communications
received by Buyer and Cinemark, as the case may be, from any third
party and/or any Governmental Entity with respect to the Transaction.
(c) Each of Cinemark and Buyer agrees, and Cinemark shall
cause its Subsidiaries, to provide promptly to any Government
Regulatory Entity information and documents requested by any Government
Regulatory Entity or necessary, proper or advisable to permit
consummation of the Transaction, provided that information regarding
any Affiliate of Buyer deemed to be confidential by such Affiliate
shall be disclosed in the reasonable discretion of such Affiliate.
(d) The filing or process fees due or imposed under the
HSR Act or any Other Competition Laws, as well as the fees and
disbursements of any legal counsel or other advisor jointly retained by
the parties in connection with any such filings, shall be borne by
Buyer.
(e) Cinemark shall, and shall cause its Subsidiaries to,
use all commercially reasonable efforts to cause the fulfillment of the
conditions precedent contained in Section 7.2 and to consummate the
Transaction on, and subject to, the terms and conditions set forth in
this Agreement.
SECTION 6.4 [INTENTIONALLY OMITTED].
SECTION 6.5 [INTENTIONALLY OMITTED].
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Section 6.6 Resignations/Directors.
(a) Cinemark shall deliver to Buyer the resignations of
such persons as Buyer shall request from their position as directors or
officers of each of Cinemark and its Subsidiaries effective as of the
Effective Time.
(b) For a period of six years after the Closing Date,
either Buyer or the Surviving Corporation shall maintain in effect
Cinemark's current directors' and officers' liability insurance
covering acts or omissions occurring prior to the Closing Date with
respect to those Persons who are currently covered by Cinemark's
directors' and officers' liability insurance policy on substantially
the terms with respect to such coverage and amount as those of such
policy in effect on the date of this Agreement, provided, however, that
in no event will Buyer or the Surviving Corporation be required to
expend, on an annual basis, as the cost of maintaining such coverage
more than 200% of the amount currently expended by Cinemark to procure
its existing insurance coverage. The amount currently expended by
Cinemark to procure such insurance coverage is $127,500.
Notwithstanding the foregoing, Buyer, if it so elects, may satisfy its
obligations under this Section 6.6(b) at any time by procuring one or
more so-called "tail" or "runoff" policies of directors' and officers'
liability insurance that insure against the risks that would be insured
against by the current insurance policy.
(c) To the extent permitted under applicable Law, Buyer
shall cause the Surviving Corporation to, and the Surviving Corporation
shall, include and maintain in effect in its certificate of
incorporation and bylaws for a period of at least six years, the same
provisions regarding elimination of liability, indemnification and
advancement of expenses of officers, directors, employees and other
persons contained in Cinemark's certificate of incorporation and
by-laws as in effect on the date hereof.
Section 6.7 Actions with Respect to Financing.
(a) Senior Credit Facility and Senior Subordinated Notes.
On the Closing Date, Cinemark shall cause Cinemark USA and its other
Subsidiaries, as applicable, to amend and restate the terms of the
Senior Credit Facility in such manner and form as requested by Buyer in
its reasonable discretion. Buyer shall cause the Surviving Corporation
to make the change of control purchase offer to the holders of the
Senior Subordinated Notes to the extent required under the terms of the
indentures governing the Senior Subordinated Notes.
(b) Tender Offer.
(i) As soon as reasonably practicable after the
execution and delivery of this Agreement, Cinemark shall cause
Cinemark USA to commence a tender offer (the "TENDER OFFER")
pursuant to Rule 14e-1 of the Exchange Act for the 8.5% Senior
Subordinated Notes. Cinemark shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to assist
Buyer and the dealer manager in connection with the
preparation of all filings, mailings or other submissions to
be made in connection with the Tender Offer. Cinemark and
Buyer shall mutually
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agree upon the terms, conditions and structure of the Tender
Offer, including the elimination of substantially all negative
covenants in the 8.5% Indenture; provided that each party
agrees not to unreasonably withhold its consent to such terms
(including price), conditions and structures that are advised
by the investment banking firm managing such tender to be
customary for tenders of this type (as market conditions exist
as of the date of this Agreement). Notwithstanding the
foregoing, consent to terms, conditions and structures which
are no less favorable to the holders of the 8.5% Senior
Subordinated Notes than those recommended by such investment
banking firm, shall not be withheld by a party, if the other
party agrees to otherwise bear the cost of such term,
condition or structure. The Tender Offer shall be consummated,
and amounts payable to the holders of the 8.5% Senior
Subordinated Notes shall be paid, only in the event that the
Closing occurs. Buyer shall have the right to designate the
investment banking firm that will manage the Tender Offer.
Cinemark shall cause Cinemark USA to execute any supplemental
indenture (and all documents related thereto) to give effect
to the amendments approved pursuant to the Tender Offer.
(ii) If at any time prior to the Closing, any
information relating to Cinemark or any of its Subsidiaries,
or any of its Affiliates, officers, directors or employees is
discovered by Buyer, Cinemark or any of its Subsidiaries and
is of a type which should be set forth in an amendment or
supplement to the documents filed or mailed in respect of the
Tender Offer so that such documents would not include any
misstatement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading,
the party which discovers such information shall promptly
notify the other parties hereto and, to the extent required by
law, rules or regulations, an appropriate amendment or
supplement describing such information shall promptly be
prepared by Cinemark USA, and, if required, filed with the
Securities and Exchange Commission and/or disseminated to the
holders of the 8.5% Senior Subordinated Notes.
(c) From the date hereof until the Closing Date, Cinemark shall,
and shall cause each of its Subsidiaries and its and their respective employees
and representatives to use commercially reasonable efforts to, assist Buyer in
obtaining the Financing and in connection therewith, shall, and shall cause each
of its Subsidiaries to, use commercially reasonable efforts to: (i) promptly
prepare and provide all financial and other information as Buyer or the lenders
may reasonably request with respect to Cinemark, its Subsidiaries and the
transactions contemplated hereby, including financial projections relating to
the foregoing; (ii) assist in the preparation of an offering memorandum and
"road show" and other marketing materials for use in connection with the
offering of any securities constituting a portion of the Financing; (iii) make
available to prospective lenders such senior management and advisors of Cinemark
and its Subsidiaries as the lenders may reasonably request; (iv) make senior
management of Cinemark and its Subsidiaries reasonably available to participate
in "road show" meetings with prospective investors in connection with the
offering of any securities constituting a portion of the Financing; (v) assist
Buyer and the lenders in the preparation of one or more confidential information
memoranda and other marketing materials to be used in connection with the
syndication of each of such facilities; and (vi) assist Buyer in procuring any
title insurance (including
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owner's policies containing non-imputation endorsements),
surveys, environmental assessments, landlord lien waivers and
access agreements, Consents and estoppel certificates, and
such other documents as may be required in connection with the
Financing.
Section 6.8 Brazil Option Agreement. Following the Closing Date,
Buyer shall cause the Surviving Corporation to comply with the applicable terms
and provisions of the Option Agreement and shall cause one of its Subsidiaries
to purchase the Liquidity Stock (as such term is defined in the Option
Agreement) tendered pursuant to the terms of the Option Agreement. The Surviving
Corporation shall indemnify and hold Xxx Xxx Xxxxxxxx harmless from and against
all claims, losses, damages and liabilities, including reasonable legal and
other expenses arising from any breach by the Surviving Corporation of the
Option Agreement or this Section 6.8.
Section 6.9 Public Announcements. Prior to the Closing, Cinemark and
Buyer agree that they shall not, and Cinemark shall cause its Subsidiaries not
to, make any statement to the press, press release or other public announcement
regarding this Agreement or the Transaction unless the text and time of the
release of any such statement have been approved by the other party, except
where such disclosure is required pursuant to applicable Law, including
disclosures to the Securities and Exchange Commission regarding this Agreement
(in which case such party will provide reasonable opportunity to the other party
to review and consult with the other party regarding, any such public statements
prior to disclosure). The parties shall issue a joint press release, mutually
acceptable to Cinemark and Buyer, promptly upon execution of this Agreement.
Thereafter, neither party to this Agreement will issue any press release or make
any other public disclosures concerning the Transaction or the contents of this
Agreement without the prior written consent of the other party. Notwithstanding
the above, nothing in this Section 6.9 will preclude any party from making any
disclosures required by Law or necessary and proper in conjunction with the
filing of any tax return or other document required to be filed in connection
with making or obtaining (as the case may) the Governmental Consents; provided,
that the party required to make the release or statement shall allow the other
party reasonable time to review and comment on such release or statement in
advance of such issuance.
Section 6.10 Exclusivity. Until the earlier to occur of the
termination of this Agreement and the consummation of the Closing, Cinemark
shall not, and shall cause its Subsidiaries and its and its Subsidiaries'
representatives (including their respective officers, directors, employees,
agents, attorneys, accountants and financial advisors) not to: (a) solicit or
initiate any proposal or offer from any Person relating to, or enter into or
consummate any Alternative Transaction; or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner, any effort or attempt by any
Person to do or seek any of the foregoing. In addition, Cinemark shall, and
shall cause its Subsidiaries and its and its Subsidiaries' representatives to
(including their respective officers, directors, employees, agents, attorneys,
accountants and financial advisors), cease all discussions with any Persons
other than Buyer with respect to any Alternative Transaction, and Cinemark shall
promptly notify Buyer if any Person makes any proposal, offer, inquiry, or
contact with respect to a possible Alternative Transaction with Cinemark and
will provide to Buyer the terms of any such proposal.
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Section 6.11 Notice of Developments. Each of Cinemark and Buyer shall
promptly, and in any event within 48 hours, notify the other party in writing
(a) if any representation or warranty of Cinemark or Buyer, as the case may be,
set forth in this Agreement was untrue when made, (b) of any breach of any
covenant or obligation of Cinemark or Buyer, as the case may be, set forth in
this Agreement and (c) of any development occurring after the date of this
Agreement that would cause or constitute a breach of any of the representations
and warranties of Cinemark or Buyer, as the case may be, if such representation
or warranty had been made at the time of such development.
Section 6.12 Information Statement. Promptly after the date hereof,
Cinemark shall commence the preparation of all disclosure documents required
under all applicable Law to be sent to its stockholders related to the Merger,
this Agreement or any of the agreements contemplated hereby and the Transaction
(collectively, the "INFORMATION STATEMENT"). Cinemark covenants that at least
one (1) of the disclosure documents comprising the Information Statement will
contain all material information which is required to be included therein in
accordance with applicable Law (including Treas. Reg. Section 1.280G-1, Q/A 7)
and will conform in all material respects with the requirements of applicable
Law and Cinemark's certificate of incorporation and bylaws. Cinemark covenants
that the Information Statement (and all amendments and supplements thereto) will
not, at the time published, sent or given to its stockholders, contain any
untrue statement of a material fact or omit to state any fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Closing, any event with respect to Cinemark or any of its
Subsidiaries shall occur which is required to be described in an amendment of or
a supplement to the Information Statement, Cinemark shall so make the
appropriate disclosure to its stockholders. Cinemark shall consult with Buyer,
and obtain the prior written approval of the Buyer (which shall not be
unreasonably withheld), with respect to the disclosures made in the Information
Statement with respect to this Agreement or the Transaction, and the Information
Statement which is to be sent to Cinemark's stockholders shall be in the form
approved by Buyer (which approval shall not be unreasonably withheld). As soon
as practicable following the date hereof (but in no event later than 10 days
thereafter), Cinemark shall finalize the Information Statement for mailing to
its stockholders pursuant to this Section 6.12.
ARTICLE VII.
CONDITIONS TO CLOSING
Section 7.1 Conditions to Each Party's Obligation to Effect the
Transaction. The respective obligations of the parties to consummate the
Transaction are subject to the satisfaction or waiver as of the Closing of each
of the following conditions:
(a) The waiting period applicable to the consummation of the
Merger contemplated hereby under the HSR Act shall have expired or been
earlier terminated, and all filings to be made prior to the Effective
Time with, and all consents, approvals, permits and authorizations to
be obtained prior to the Effective Time from, Governmental Entities in
connection with the execution and delivery of this Agreement and the
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consummation of the Transaction, including Other Competition Laws,
shall have been made or obtained (as the case may be). All of the
foregoing filings, consents, approvals, permits and authorizations
(collectively, the "GOVERNMENTAL CONSENTS") are set forth on Schedule
7.1(a) attached hereto.
(b) No court or Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Order
that is in effect which enjoins or otherwise prohibits consummation of
the Transaction.
(c) Each of Buyer and Cinemark shall have executed and
delivered, or caused to have been executed and delivered, at the
Closing all of the documents required to be executed and delivered
pursuant to this Agreement.
Section 7.2 Conditions to Obligations of Buyer. The obligation of
Buyer to consummate the Transaction is subject to the satisfaction (or waiver in
writing by Buyer) in writing as of the Closing of each of the following
conditions:
(a) All of Cinemark's representations and warranties made in
this Agreement (including the Schedules attached hereto, and without
giving effect to any disclosures made by Cinemark after the date
hereof) shall have been true and correct as of the date hereof and
shall be true and correct in all respects (determined without regard to
any materiality or Cinemark Material Adverse Effect qualifier therein)
as of the Closing Date as though made as of such date, except for such
breaches of representations and warranties (determined as aforesaid)
(other than the representations and warranties contained in Section
4.2) that, either individually or in the aggregate, have not or would
not reasonably be expected to have a Cinemark Material Adverse Effect.
(b) The covenants and agreements of Cinemark to be performed
on or prior to the Effective Time shall have been duly performed in all
material respects (except for any covenants and agreements that are
qualified by a standard of materiality, which covenants and agreements
shall have been duly performed in all respects).
(c) No event which has had or would reasonably be expected to
have a Cinemark Material Adverse Effect shall have occurred since the
date of this Agreement.
(d) No court or Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Order,
and no action or proceeding shall have been instituted or threatened
prior to or on the Closing Date before any Governmental Entity
pertaining to the Transaction, in each case, the result of which could
prevent or make illegal the consummation of the Transaction.
(e) Cinemark shall have procured and delivered to Buyer all
Consents by third parties required to be disclosed by Section 4.1,
including written Consents of each of the Leases for which Consent is
required under its terms, on terms and conditions reasonably
satisfactory to Buyer.
(f) Cinemark shall have furnished Buyer with an opinion of
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP, counsel to Cinemark (which opinion
shall state that the agent
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and the lenders (including any initial purchasers) with respect to the
Financing may rely on such opinion for purposes of providing or
arranging for such debt financing), opining on the matters set forth on
Exhibit 7.2(f) attached hereto, in form and substance reasonably
acceptable to Buyer's counsel. Buyer shall have received an opinion of
special Delaware counsel, in form and substance reasonably acceptable
to Buyer's counsel, opining on the following matters: (i) all Delaware
consents, approvals and filings have been made or obtained; and (ii)
upon filing of the Certificate of Merger with the State of Delaware,
the Merger will be effective.
(g) Each of the agreements set forth on Exhibit 7.2(g)
attached hereto shall have been terminated after giving effect to the
Closing, and evidence of such shall have been delivered to Buyer, in
form and substance reasonably satisfactory to Buyer.
(h) The Stockholders Agreement, dated the date hereof, by and
among Cinemark, the Continuing Stockholders and the other signatories
thereto shall be in full force and effect as of the Closing.
(i) Cinemark shall have obtained on terms and conditions
reasonably satisfactory to Buyer sufficient funds to consummate the
Transaction (the "FINANCING").
(j) There shall have been no payments (including accelerated
vesting of stock or options) that Cinemark or any of its Subsidiaries,
Buyer or any of their Affiliates has made or is or may be required to
make as a result of the Transaction that was, is, or will be an "excess
parachute payment" within the meaning of Code Section 280G.
(k) Each of the Employment Agreements, dated the date hereof,
between Cinemark and each of Xxx Xxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxx
Xxxxx, Xxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxxxx
and Xxxx Xxxxxx shall be in full force and effect as of the Closing.
(l) Buyer shall have received copies of written
acknowledgements, in form and substance reasonably satisfactory to
Buyer (collectively, the "EXPENSE ACKNOWLEDGEMENTS"), from each of the
payees of the Expenses of Cinemark and its Subsidiaries (other than (i)
the fees and expenses of their investment bankers or lenders to the
extent that such fees or expenses are incurred in connection with the
Financing or the Tender Offer and (ii) the fees of the special Delaware
counsel engaged to deliver the opinion referenced in Section 7.2(f))
that such payee has been paid in full for all services rendered for, or
on behalf of, Cinemark and its Subsidiaries related to the Transaction,
and each of such acknowledgements shall be in full force and effect as
of the Closing.
(m) Cinemark shall have delivered to Buyer a certificate of an
authorized officer of Cinemark in the form set forth on Exhibit 7.2(m),
dated the Closing Date, stating that each of the conditions specified
above in Sections 7.2(a) - (d), inclusive, Section 7.2(j), and Sections
7.2(p) - (r), inclusive, is satisfied in all respects.
(n) Each of the Non-competition, Non-solicitation and
Non-disclosure Agreements, dated the date hereof, between Cinemark and
each of Xxx Xxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
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Xxxxxxx and Xxxx Xxxxxx shall be in full force and effect as of the
Closing. The Non-competition, Non-solicitation and Non-disclosure
Agreement, dated the date hereof, among Cinemark, CGI Equities Ltd.,
The Xxxxxxxx Special Trust, Xxxxxxxx Grandchildren's Trust for Xxxxxxx
Xxx Xxxxxxx, Xxxxxxxx Grandchildren's Trust for Cassie Xxx Xxxxxxx,
Xxxxxxxx Grandchildren's Trust for Xxxxx Xxxxx Xxx, Xxxxxxxx
Grandchildren's Trust for Xxxxxx Xxx Xxx, Xxxxxxxx Grandchildren's
Trust for Skyler Xxxx Xxxxxxxx and The Xxxxxxxx Foundation shall be in
full force and effect as of the Closing. The Non-solicitation and
Non-disclosure Agreement, dated the date hereof, among Cinemark,
Cypress Merchant Banking Partners L.P. and Cypress Pictures Ltd. shall
be in full force and effect.
(o) Cinemark shall have delivered to Buyer a copy of the
irrevocable written consent duly approving the Merger in accordance
with the DGCL and Cinemark's certificate of incorporation and bylaws
from the holders of not less than 91% of all of the outstanding shares
of Cinemark Common Stock as of the date hereof.
(p) Aggregate Cash on Hand shall be an amount equal to not
less than Seventy Million Dollars ($70,000,000), and Available Cash on
Hand shall be an amount equal to not less than Twenty-Six Million Three
Hundred Thousand Dollars ($26,300,000); provided that if the sale of
Cinemark Theatres U.K., Ltd. has not occurred as of the Closing,
Aggregate Cash on Hand shall be an amount equal to not less than
Sixty-Six Million Five Hundred Thousand Dollars ($66,500,000). Cinemark
shall have delivered to Buyer evidence reasonably satisfactory to Buyer
of the foregoing.
(q) Neither Cinemark nor any of its Subsidiaries shall have
incurred, assumed or guaranteed any Indebtedness of any kind after the
date hereof. Cinemark shall have delivered to Buyer evidence reasonably
satisfactory to Buyer of the foregoing.
(r) Each of the holders of the Stock Options that were granted
after May 17, 2002 shall have surrendered his or her Stock Options for
cancellation upon payment of the Option Consideration payable in
respect thereof, and Cinemark shall have delivered to Buyer evidence
reasonably satisfactory to Buyer of the foregoing.
(s) The execution and delivery of this Agreement and any other
documents and instruments required to be executed and delivered by
Cinemark pursuant to this Agreement, and the performance of its
obligations hereunder and thereunder, shall have been duly authorized
by all necessary corporate and shareholder action on the part of
Cinemark, and Buyer shall have received copies of all resolutions
pertaining to those authorizations, certified by the Secretary of
Cinemark.
Section 7.3 Conditions to Obligations of Cinemark. The obligation of
Cinemark to consummate the Transaction is subject to the satisfaction (or waiver
in writing by Cinemark) as of the Closing of each of the following conditions:
(a) Buyer's representations and warranties made in this
Agreement shall be true and correct in all respects (determined without
regard to any materiality or Buyer Material Adverse Effect qualifier
therein) as of the Closing Date as though made as of
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such date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations
and warranties shall be true and correct on and as of such earlier
date), and except for such breaches of representations and warranties
(determined as aforesaid) that, in the aggregate, would not reasonably
be expected to have a Buyer Material Adverse Effect, and Cinemark shall
have received a certificate from an authorized officer of Buyer to such
effect.
(b) The covenants and agreements of Buyer to be performed on
or prior to the Closing shall have been duly performed in all material
respects, and Cinemark shall have received a certificate to such effect
dated the Closing Date and executed by a duly authorized officer of
Buyer.
ARTICLE VIII.
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Closing as follows:
(a) by mutual written agreement of the parties hereto; or
(b) by either Cinemark or Buyer if the Effective Time shall
not have occurred on or prior to sixty (60) days after the date of this
Agreement, unless extended by written agreement of the parties hereto;
provided, however, that the right to terminate under this Section
8.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date; or
(c) by either Buyer or Cinemark, by giving written notice of
such termination to the other party, if any Order permanently enjoining
or otherwise prohibiting consummation of the Transaction shall become
final and non-appealable; or
(d) by Cinemark if any of the conditions set forth in Sections
7.1 or 7.3 shall have become incapable of fulfillment and shall not
have been waived by Cinemark; provided, however, that the right to
terminate this Agreement shall not be available to Cinemark if its
breach of its obligations under this Agreement has been the cause of
the impossibility of fulfillment of such condition; or
(e) by Buyer if any of the conditions set forth in Section 7.1
or 7.2 shall have become incapable of fulfillment and shall not have
waived by Buyer; provided, however, that the right to terminate this
Agreement shall not be available to Buyer if its breach of its
obligations under this Agreement has been the cause of the
impossibility of fulfillment of such condition.
Section 8.2 Effect of Termination. In the event of the termination of
this Agreement in accordance with Section 8.1 hereof, this Agreement shall
thereafter become void and have no effect, and no party hereto or its respective
Affiliates or their directors, officers, employees, shareholders or agents shall
have any liability to the other parties hereto or their respective Affiliates,
directors, officers, employees, shareholders or agents except for the
obligations of the
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parties hereto contained in Section 6.9 (Public Announcements), this Section
8.2, Section 9.2 (Expenses), Section 9.9 (Notices), Section 9.10 (Governing Law)
and Section 9.11 (Waiver of Jury Trial), and except that nothing herein will
relieve any party from liability for a breach of this Agreement prior to such
termination.
ARTICLE IX.
MISCELLANEOUS
Section 9.1 Amendment and Waiver. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument executed by each
of the parties hereto. No waiver by any party of any of the provisions hereof
shall be effective unless explicitly set forth in writing and executed by the
party so waiving. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, and in any documents delivered or to be delivered pursuant to
this Agreement and in connection with the Closing hereunder. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
Section 9.2 Expenses. Except as otherwise expressly provided in this
Agreement, (i) if the Closing occurs, the Surviving Corporation shall pay all of
the Expenses of Cinemark and its Subsidiaries and Buyer, other than the Cinemark
Payable Expenses (which shall be borne by the Stockholders as a reduction to the
Purchase Price pursuant to Section 3.6(a)(ii)); and (ii) if the Closing does not
occur, the parties hereto shall bear their own respective Expenses incurred in
connection with this Agreement and the Transaction; provided, that all
out-of-pocket expenses incurred by or on behalf of Madison Dearborn Capital
Partners IV, L.P. or any of its Affiliates or Cinemark or any of its
Subsidiaries in connection with (A) the delivery by special Delaware counsel of
the opinion referenced in Section 7.2(f) and (B) the Financing (including the
preparation and negotiation of any amendment and restatement of the Senior
Credit Facility) and the Tender Offer payable to the investment banks and the
lenders engaged by Cinemark or any of its Subsidiaries in connection with the
Financing and the Tender Offer and their respective legal counsel shall be borne
50% by each of Buyer and Cinemark.
Section 9.3 Assignment. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other parties hereto, which consent will not unreasonably be withheld,
and any attempted assignment, without such consent, shall be null and void;
provided that Buyer shall have the right to assign all or any portion of their
rights and obligations under this Agreement to (i) one or more wholly-owned
subsidiaries of Buyer (including any subsidiary which may be organized
subsequent to the date hereof), or (ii) to any lender providing financing to
Buyer or the Surviving Corporation or any of their Affiliates, for collateral
security purposes, and any such lender may exercise all of the rights and
remedies of Buyer hereunder, provided that no such assignment shall in any
manner limit or impair Buyer's obligations hereunder.
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Section 9.4 Entire Agreement. This Agreement (including all Exhibits
and Schedules hereto) and the Confidentiality Agreement referred to herein
contain the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters.
Section 9.5 Parties in Interest; No Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Except for the rights of
officers and directors under Section 6.6 and the rights of Xxx Xxx Xxxxxxxx
under Section 6.8, nothing in this Agreement, express or implied, is intended to
confer upon any Person other than Buyer, Cinemark or their respective
successors, any rights or remedies under or by reason of this Agreement.
Section 9.6 Schedules. The Schedules to this Agreement shall be
arranged in sections corresponding to the numbered and lettered sections
contained in Article 4, and any disclosure made with respect to any particular
numbered or lettered section shall not be deemed disclosed with respect to any
other numbered or lettered section unless the relevance of such disclosure to
such other numbered or lettered section is reasonably identified in such
disclosure. Nothing in the Schedules shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Schedules
identify the exception with reasonable particularity and describes the relevant
facts in reasonable detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself).
Section 9.7 Counterparts. This Agreement and any amendments hereto may
be executed in multiple counterparts, each of which shall be deemed to be an
original by the parties executing such counterpart, but all of which shall be
considered one and the same instrument.
Section 9.8 Section Headings; Table of Contents. The section headings
and table of contents contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
Section 9.9 Notices. All notices or other communications hereunder
shall be deemed to have been duly given and made if in writing and if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by a national courier
service, or if sent by facsimile (with confirmation thereof), to the person at
the address set forth below, or such other address as may be designated in
writing hereafter, in the same manner, by such person:
(a) if to Cinemark, to: Cinemark, Inc.
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
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With copies to: Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxx Xxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, P.C.
(b) if to Buyer to: Popcorn Merger Corp.
c/o Madison Dearborn Capital Partners
Three First Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxx
With a copy to: Xxxxxxxx & Xxxxx LLP
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxx, P.C.
Any notice given by mail shall be effective when received.
Section 9.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS.
Section 9.11 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THE AGREEMENT OR THE TRANSACTION, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH
WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR
AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY
ACTION OR PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR THIS
TRANSACTION SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE SITTING WITHOUT A JURY.
Section 9.12 Severability. The provisions of this Agreement shall be
deemed severable, and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof unless
such invalidity or unenforceability, after taking into account the mitigation
contemplated by the next sentence, deprives a party of a material benefit
contemplated by this Agreement. If any provision of this Agreement, or the
application thereof to any Person or any circumstance, is invalid or
unenforceable: (a) a suitable
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and equitable provision shall be substituted therefor in order to carry out, as
far as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
Section 9.13 Construction. This Agreement has been negotiated by the
parties and their respective counsel in good faith and will be fairly
interpreted in accordance with its terms and without any strict construction in
favor of or against any party.
Section 9.14 Specific Performance. The parties agree that irreparable
damage would occur in the event that the provisions of this Agreement were not
performed in accordance with their specific terms. Accordingly, it is agreed
that the parties shall be entitled to an injunction or injunctions to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 9.15 Survival of Representations, Warranties and Covenants.
Except in the case of fraud, the representations and warranties made in this
Agreement shall expire and be terminated and extinguished immediately after the
Closing, and thereafter none of Cinemark, Buyer, the Surviving Corporation nor
any other Person shall have any liability whatsoever with respect to any of such
expired representation or warranty. The covenants and agreements of the parties
to this Agreement will survive in accordance with their terms.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement and Plan of Merger has been signed
on behalf of each of the parties hereto as of the date first written above.
CINEMARK, INC.
By: /s/ Xxx Xxx Xxxxxxxx
---------------------------------
Name: Xxx Xxx Xxxxxxxx
Title: Chief Executive Officer
POPCORN MERGER CORP.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: President
SOLELY WITH RESPECT TO ARTICLE III:
/s/ Xxx Xxx Xxxxxxxx
---------------------------------------
Xxx Xxx Xxxxxxxx
THE XXXXXXXX SPECIAL TRUST
By /s/ Xxx Xxx Xxxxxxxx
------------------------------------
Xxx Xxx Xxxxxxxx, Trustee
By /s/ Xxxx Xxxxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxxxx, Trustee
/s/ Xxxxxxx Xxxxxx
---------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxx Xxxxx
---------------------------------------
Xxxx Xxxxx
