SUBORDINATED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD,
PLEDGED, ASSIGNED OR TRANSFERRED UNLESS REGISTERED THEREUNDER OR
UNLESS AN EXEMPTION FROM SUCH REGISTRATION SHALL BE AVAILABLE.
THE PAYMENT OF THIS INSTRUMENT, BOTH PRINCIPAL AND INTEREST AND ALL
OTHER INDEBTEDNESS EVIDENCED HEREBY IS SUBORDINATE, SUBJECT TO, AND
MADE JUNIOR IN RIGHT OF PAYMENT TO THE PRIOR RIGHTS OF THE PROVIDENT
BANK, AGENT, ITS SUCCESSORS AND ASSIGNS, FOR THE RATABLE BENEFIT OF
THE PROVIDENT BANK AND OTHER LENDERS, IN THE MANNER AND TO THE
EXTENT SET FORTH IN A CERTAIN SUBORDINATION AGREEMENT DATED AS OF
NOVEMBER 21, 1997, WHICH AGREEMENT IS INCORPORATED HEREIN BY
REFERENCE.
SUBORDINATED PROMISSORY NOTE
$4,000,000.00 Madison, New Jersey
November 21, 1997
FOR VALUE RECEIVED, CLEARVIEW CINEMA GROUP, INC., a Delaware
corporation with its offices at 0 Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), hereby promises to pay to F&N Cinema, Inc., a New Jersey
corporation, and Roxbury Cinema, Inc., a New Jersey corporation (collectively,
the "Holder"), the principal amount of FOUR MILLION ($4,000,000) DOLLARS,
together with interest calculated from the date hereof in accordance with the
provisions of this Subordinated Promissory Note (this "Note"). Payments on this
Note are to be made at 00 Xxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, or such other
address as duly designated by the Holder, in lawful money of the United States
of America.
1. PAYMENT OF INTEREST; RATE. This Note shall bear interest on the
outstanding principal amount hereof at an annual rate of ten and one-half
percent (10 1/2%). Interest hereunder shall be based upon a 360-day year and
shall be payable monthly in arrears on the 15th day of each month of each year
(each of such monthly interest payment dates being referred to herein as an
"Interest Payment Date") commencing January 15, 1998. In the event that an
Interest Payment Date is not a business day, the Company shall pay to the Holder
the interest payment on the first business day following the applicable Interest
Payment Date.
2. PAYMENT OF PRINCIPAL. All outstanding principal and all accrued
but unpaid interest shall be paid in full on the earliest to occur of (i) the
fifth anniversary of the date hereof, (ii) the date of closing of the issuance
by the Company of debt securities under Rule 144A issued by the Securities
Exchange Commission under the Securities Act of 1933, and (iii) the issuance by
the Company in an underwritten public offering of additional equity securities
or the issuance by the Company of debt to institutional debt holders (other than
banks) in either case having an aggregate offering price of at least
$10,000,000.
3. MANDATORY PREPAYMENT OF PRINCIPAL. If the Company obtains at any
time or from time to time bank financing pursuant to which the Company borrows
in excess of $60 million in principal amount ("Bank Financing"), then, at the
time of such borrowing or borrowings, the Company shall repay an amount of
principal under this Note equal to 15% of the excess of (i) the principal amount
of the Bank Financing over (ii) $60 million; PROVIDED, HOWEVER, that repayments
and subsequent additional borrowings up to the amount of such repayments will
not give rise to additional repayment obligations hereunder. [By way of example
and not limitation, if the Company borrows in the aggregate $64 million from a
bank or banks, then the Company must repay $600,000 in principal amount
hereunder ((64-60)*15%). If the Company thereafter repays $6 million of Bank
Financing (reducing the then outstanding amount of Bank Financing to $58
million) and then subsequently obtains an additional $12 million of Bank
Financing (increasing the then outstanding amount of Bank Financing to $70
million), then, at the time of the $12 million borrowing, the Company shall
repay an additional $900,000 hereunder ((70-64)*15%). If the Company thereafter
repays $4 million of Bank Financing (reducing the then outstanding amount of
Bank Financing to $66 million) and then subsequently obtains an additional $3
million of Bank Financing (increasing the then outstanding amount of Bank
Financing to $69 million), then no amount is due under this Note as a result of
such $3 million borrowing.]
4. PREPAYMENT OF NOTE. The Company may prepay, without penalty or
premium, the outstanding principal amount of this Note in whole or in part at
any time and from time to time.
5. SUBORDINATION. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Holder covenants and agrees, that the
indebtedness evidenced by this Note shall be subordinate and subject in right of
payment, to the prior payment in full of all Senior Indebtedness of the Company
to the extent provided in a subordination agreement by and among the Company,
the Holder and the holder of the Senior Indebtedness.
(b) For purposes of this Section 5, "Senior Indebtedness"
shall mean the principal of, premium, if any, and interest (including any
interest accruing after the filing of a petition in bankruptcy) on and other
amounts due on or in connection with any indebtedness of the Company as defined
in and arising under any loan, credit, security or similar agreement with any
bank, insurance company, or other commercial financial institution, in any case
whether arising prior to, on or after the date of issuance of this Note, and all
renewals, extensions, and refundings thereof.
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(c) Xxxxxx acknowledges that the holder of Senior Indebtedness
as of the date of this Note is The Provident Bank. In the event that the Company
from time to time refinances, substitutes or replaces the Senior Indebtedness
with any other bank, insurance company or commercial lending institution such
that such other person then replaces The Provident Bank as the holder of Senior
Indebtedness, then Holder shall enter into a subordination agreement with such
holder of Senior Indebtedness in form and substance substantially similar to the
Subordination Agreement (other than the identity of the Senior Indebtedness and
the holder thereof) and Holder shall make a notation to such effect on the
legend of this Note.
(d) The Company may at any time and from time to time issue
any indebtedness that is pari passu with this Note.
6. DEFAULT. Each of the following events shall constitute an "Event
of Default" under this Note:
(a) the failure of the Company to pay when due any interest,
principal or any other sum under this Note, and such default shall remain
uncured for a five (5) business day period;
(b) the Company shall (i) file, or consent by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy or insolvency law of any
jurisdiction, (ii) make an assignment for the benefit of its creditors, (iii)
consent to the appointment of a custodian, receiver, trustee or other officer
with similar powers of itself or of any substantial part of its property, (iv)
be adjudicated insolvent or be liquidated, or (v) take corporate action for the
purpose of any of the foregoing;
(c) a court or governmental authority of competent
jurisdiction shall enter an order appointing, without consent by the Company, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or if an order
for relief shall be entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or liquidations
of the Company, or if any petition for any such relief shall be filed against
the Company and such petition shall not be dismissed within 60 days;
(d) any material default by the Company or its affiliates
under the Merger Agreement or the Purchase Agreement (defined below) or under
any Other Agreement other than the Promissory Notes (as such terms are defined
under the Merger Agreement and the Purchase Agreement), which default results in
a material out-of-pocket liability to the Holder or its affiliates and which
default is not waived or substantially cured within 30 days after the Company
has notice of such default;
(e) any material default by the Company under the Senior
Indebtedness as a result of which the holder of the Senior Indebtedness has
exercised its rights of acceleration or foreclosure and which default is not
waived or substantially cured within 10 business days after the exercise of such
rights by such holder.
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Upon the occurrence of any Event of Default, Xxxxxx may declare the unpaid
principal amount of and the accrued interest on this Note immediately due and
payable.
7. ASSET PURCHASE AGREEMENT. This Note has been issued pursuant to
that certain Asset Purchase Agreement (the "Purchase Agreement") dated as of the
date hereof among the Company, the Holder and the Company's wholly owned
Delaware subsidiaries, CCC Succusanna Cinema Corp., CCC Parsippany Cinema Corp.,
and others, and is subject to its terms, including, without limitation, the
Company's rights of setoff and recoupment thereunder.
8. REPORTING. So long as this Note is outstanding, the Company shall
deliver to Holder on a timely basis all material public documents that the
Company files with the Securities Exchange Commission (such a Forms 10K and
10Q).
9. MISCELLANEOUS. (a) This Note shall be construed in accordance
with and governed by the laws of the State of New Jersey (without regard to its
conflict of laws principles).
(b) The Company agrees to remain and continue bound hereby
notwithstanding any extension or extensions of time of payment, and
notwithstanding any failure or omission to make presentment or demand for
payment of this Note or to protest it for non-payment, and hereby expressly
waives any and all presentment or demand for its payment and protest for time of
payment of it, or any part of it, or its non-payment or dishonor.
(c) Payments made on this Note shall be applied first to
collection costs and expenses hereof (including reasonable attorneys fees), next
to accrued interest, then to other amounts which may be due (other than
principal), and then to principal.
(d) Notwithstanding anything to the contrary contained in this
Note, no interest shall accrue or be payable hereunder that is in excess of the
maximum amount permitted under the applicable law relating to usury. Any
interest that is in excess of the maximum amount permitted under the applicable
law relating to usury shall be applied to reduce the outstanding principal
balance hereof and shall be deemed to represent a prepayment of principal
hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
by its President as of the date first above written.
CLEARVIEW CINEMA GROUP, INC.
By:/s/ X. Xxxx Xxxx
-----------------------------
Name: X. Xxxx Xxxx
Title: President
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