Exhibit 10.56
EXCHANGE AND TERMINATION AGREEMENT
Exchange and Termination Agreement, dated as of May 23, 1997 (the
"Agreement"), by and among Clearview Cinema Group, Inc., a Delaware corporation
(the "Company"), CMNY Capital II, L.P., a Delaware limited partnership ("CMNY"),
CMCO, Inc., a New York corporation ("CMCO"), Xxxxxx X. Xxxxxxxx ("Davidoff" and,
together with CMNY and CMCO, the "Warrantholders"), A. Xxxx Xxxx, Xxxxx X. Xxxxx
and Xxxxxxx X. Xxxx.
WHEREAS, the Warrantholders are holders of warrants (the
"Warrants") to purchase from the Company, in the aggregate, 200 shares of its
Common Stock, $.01 par value (the "Common Stock"), as set forth in more detail
in Annex A attached hereto; and
WHEREAS, the Company, CMNY, A. Xxxx Xxxx, Xxxxx X. Xxxxx and
Xxxxxxx X. Xxxx are parties to an Investment and Stockholders Agreement, dated
December 21, 1994, as amended (the "Investment Agreement"); and
WHEREAS, pursuant to the Investment Agreement, CMNY has the right
to sell, under certain conditions, 250 shares of Common Stock to the Company,
and the Company has the right to purchase, under certain conditions, those same
shares (the "Put/Call Rights"); and
WHEREAS, the Company is contemplating an initial public offering
(the "Offering") of shares of Common Stock, pursuant to a registration statement
on Form SB-2 (the "Registration Statement") to be filed with the Securities and
Exchange Commission on May 27, 1997; and
WHEREAS, the proposed managing underwriter for the Offering has
requested that, in connection with the Offering, the Investment Agreement be
terminated and the parties thereto are willing to terminate the Investment
Agreement in connection with the Offering; and
WHEREAS, the Company and the Stockholders have discussed
exchanging Warrants to purchase 162.50 shares of Common Stock for 110 shares of
Common Stock in connection with the Offering.
NOW, THEREFORE, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, agree as follows:
1. Exchange. In accordance with the table set forth in Annex B
attached hereto, immediately prior to the consummation of the Offering, CMNY,
CMCO and Davidoff shall exchange (the "Exchange") Warrants to purchase 162.50
shares of Common Stock, in the aggregate, for 110 shares of Common Stock, in the
aggregate. At such time, (a) each Warrantholder shall deliver his or its
Warrants to the Company, duly endorsed and otherwise in proper form for transfer
to the Company, and (b) the Company shall deliver to such Warrantholder stock
certificates for the shares of Common Stock to which such Warrantholder is
entitled as set forth in Annex B attached hereto.
2. Termination of the Investment Agreement. Effective as of
immediately prior to the consummation of the Offering, all rights and
obligations of the parties hereto under
the Investment Agreement, including without limitation the Put/Call Rights,
shall terminate and the Investment Agreement shall have no further force and
effect.
3. Stock Split. If, prior to the occurrence of the Exchange, the
Company splits its Common Stock by means of a dividend of shares of Common Stock
on its outstanding shares of Common Stock as described in the Registration
Statement, then the number of shares of Common Stock to be issued in the
Exchange shall be proportionately adjusted.
4. Representations and Warranties.
4.1 Each of the Warrantholders represents and warrants to the
Company as follows:
a. Such Warrantholder is an "accredited investor" as
defined under Regulation D promulgated under the Securities Act of 1933, as
amended (the "Act"), and is acquiring the shares of Common Stock to be received
in the Exchange by him or it for such Warrantholder's own account, for
investment and not with a view to, or for sale in connection with, any
distribution thereof. Such Warrantholder has no present intention of
distributing or reselling any of the shares of Common Stock that such
Warrantholder receives in the Exchange.
b. Such Warrantholder, in making the decision to exchange
Warrants for shares of Common Stock pursuant to this Agreement, has not relied
upon any representations or warranties, express or implied, except for the
representations and warranties expressly set forth in this Agreement; and such
Warrantholder has been provided by the Company with such access to the books and
records and personnel and other representatives of the Company and to such other
information as such Warrantholder has requested in order to make an informed
decision as to the advisability of participating in the Exchange.
4.2 The Company represents and warrants to each of the
Warrantholders as follows:
a. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has the corporate power and adequate authority, rights and franchises to
own its property and carry on its business as now being conducted and is now
duly qualified and in good standing in each state or other jurisdiction in which
the character of the properties owned by it therein or the conduct of its
present business would make such qualification necessary and where failure to so
qualify would have a materially adverse impact on the business or financial
condition of the Company and its subsidiaries taken as a whole (a "Material
Adverse Affect"). The Company has the corporate power and adequate authority to
enter into and perform this Agreement and to issue shares of Common Stock in the
Exchange.
b. The shares of Common Stock to be issued in the
Exchange, when so issued, will be validly issued, fully paid and non-assessable.
c. The execution and delivery of this Agreement and the
performance of the provisions hereof have been duly authorized by the Company
and do not require the consent or approval of any governmental body or other
regulatory authority or any third party not yet obtained. All corporate action
for the due execution and delivery of this Agreement and the performance of the
Exchange and all other transactions contemplated hereby has been duly and
validly taken. No right of any of the Company's stockholders or creditors is
impaired or infringed upon by this Agreement. This Agreement constitutes a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms except as limited by bankruptcy, insolvency or other
similar laws affecting the enforceability of creditors' rights generally and by
general principles of equity.
d. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not:
(i) Constitute a violation of the Certificate of
Incorporation or the By-laws of the Company, as of the date
hereof or as amended as described in the Registration Statement;
(ii) Conflict with, result in a breach of, constitute a
default (with or without notice and/or the lapse of time) under,
result in being declared void or voidable any provision of, or
result in any right to terminate or cancel, any contract, lease,
agreement, license, commitment or purchase order to which the
Company or any of its properties is bound;
(iii) Constitute a violation of any statute, judgment,
order, decree, regulation or rule of any court, governmental
authority or arbitrator applicable or relating to the Company or
the business of the Company that could constitute a Material
Adverse Effect; or
(iv) Result in (A) the acceleration of any debt or other
obligation of the Company, (B) the creation of any lien, charge
or other encumbrance upon any of the assets of the Company, or
(C) the termination or cancellation or right to terminate or
cancel any obligation owed to the Company.
5. Registration Rights Agreement. CMCO and Davidoff shall
execute, upon receipt of the stock certificates representing the shares of
Common Stock received in the Exchange, an agreement, in the form attached hereto
in Annex C, that provides that they shall be entitled to the benefits of and
shall be subject to the obligations under the Registration Rights Agreement,
dated as of May 23, 1997, by and among the Company and certain of its
stockholders upon execution thereof.
6. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof.
Any changes in or additions to this Agreement may be made only upon the written
consent of all parties hereto.
7. Successors. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
8. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the state of Delaware without regard to any of
its principles of conflicts of laws.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Exchange and Termination Agreement as of the date first set forth above.
CLEARVIEW CINEMA GROUP, INC.
By:
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A. Xxxx Xxxx Xxxxxx X. Xxxxxxxx
President
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CMNY CAPITAL II, L.P. A. Xxxx Xxxx
By:
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Xxxxxx X. Xxxxxxxx Xxxxx X. Xxxxx
General Partner
CMCO, INC. ----------------------------
Xxxxxxx X. Xxxx
By:
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Xxxxxx X. Xxxxxxxx
Managing Director
[Exhibits will be provided by the Company upon request.]
