Exhibit 10.37
AGREEMENT
This Agreement is dated as of ____________, 1995, by and among Cinema
Herricks, Inc., a New York corporation (the "GG Group"), Clearview Cinema Group,
Inc., a Delaware corporation ("CCG") and CCC Herricks Cinema Corp., a Delaware
corporation ("HCC" together with CCG the "Clearview Group").
The GG Group desires to grant and the Clearview Group desires to
receive an option to purchase certain of the GG Group's assets, upon the terms
and subject to the conditions set forth below.
The GG Group and the Clearview Group further desire that the Clearview
Group shall manage the Theater on behalf of the GG Group (as defined in Section
4.7) upon the terms and subject to the conditions set forth below.
In consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the GG Group, and the Clearview Group,
each intending to be legally bound hereby, agree as set forth below.
ARTICLE I.
MANAGEMENT OF THEATER
1.01 Term. From and after the Effective Date of this Agreement until the
earlier of the Closing or Termination of this Agreement in accordance with
Article X, HCC shall manage the Herricks Theater upon the terms and subject to
the conditions set forth in this Agreement. The Effective Date of this Agreement
shall be September 8, 1995.
1.02 Retention Fee.
(a) Retention Fees. Until the earlier of the Closing or Termination
of this Agreement the GG Group for each Contract Year shall receive an amount
(each a "Retention Fee" and collectively the "Retention Fees"), equal to the sum
of (i) $30,000 and (ii) ten percent of the Average Excess Revenue, if any, as of
the end of that Contract Year.
(b) Time of Payment; Adjustments. The Retention
Fee for each Contract Year shall be made in thirteen installments
comprising (i) twelve equal monthly installments based on the Estimated
Retention Fee for that Contract Year, payable on the last day of each month
during the Contract Year, and (ii) a final installment consisting of the amount,
if any, by which the Retention Fee exceeded the Estimated Retention Fee for that
Contract Year, payable within thirty days after the close of the Contract Year.
If the Estimated Retention Fee paid on account of a particular Contract Year
exceeds the actual Retention Fee for that Contract Year, the Clearview Group (i)
shall be entitled to deduct such excess (the "Refundable Amount") from (A) the
Retention Fee for the succeeding Contract Year, deducting the full Refundable
Amount from the initial installment and continuing to deduct the remaining
portion of the Refundable Amount from each successive installment until the
Refundable Amount has been satisfied in full or (B) if the Clearview Group shall
have exercised the Option, as a set-off against the Purchase Price, or (ii) in
the case of the Fifth Contract Year if the Clearview Group shall not have
exercised the Option, shall be entitled to a cash refund of such excess within
thirty days following the end of the Fifth Contract Year.
(c) Definitions.
(i) The "Average Excess Revenue" at the end of a particular
Contract Year shall be equal to two hundred percent of (i) the amount by which
the Gross Revenue for all Contract Years preceding such Closing Date exceeds (A)
$460,000 multiplied by (B) the number of such Contract Years divided by (ii) the
number of such Contract Years; provided, however, that in the event that
additional screens are added to the Theater in accordance with Section 1.7, for
any Contract Year in which the obligation to repay Borrowed Funds (as defined in
Section 1.7) remains outstanding, only 75% of the Gross Revenue for the Theater
shall be included in the revenue used in calculating the Average Excess Revenue
for such time as the Borrowed Funds shall remain outstanding. By way of example
and not limitation, if in a particular Contract Year the obligation remained
outstanding for five months of the Contract Year to repay Borrowed Funds in
connection with the addition of screens at the Herricks Theaters the Gross
Revenue for that Contract Year shall equal the sum of (A) 75% of the Gross
Revenues for the Herricks Theater for the five months during which the Borrowed
Funds remained outstanding plus (B) 100% of the Gross Revenue for the Herricks
Theater for the seven months during which the Borrowed Funds were not
outstanding.
(ii) The "Estimated Retention Fee" shall be (i) $30,000 for the
First Contract Year, (ii) for the Second Contract Year, an amount equal to the
Retention Fee for the First Contract Year, (iii) for the Third Contract Year, an
amount equal to the
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Retention Fee for the Second Contract Year, (iv) for the Fourth Contract Year,
an amount equal to the Retention Fee for the Third Contract Year, and (v) for
the Fifth Contract Year, an amount equal to the Retention Fee for the Fourth
Contract Year.
(iii) The "Gross Revenue" for a particular Contract Year for
the Theater shall be the sum of all income of any kind derived from the
operation of the Theater, including without limitation from rentals, ticket
sales, concessions and all other sources minus any sales taxes paid thereon;
provided, however, that should any Theater be closed for renovation or
additions, the Gross Revenue for that Theater shall include on account of the
period during which the Theater was closed (the "Closed Period") an amount equal
to the average daily Gross Revenue for that Theater calculated over the twelve
months prior to the Closed Period multiplied by the number of days in the Closed
Period.
(d) Nature of Retention Fees. The Retention Fees shall be
non-refundable. If the Clearview Group exercises the Option, Option Payment
shall be credited toward the Purchase Price as defined in Section 2.5.
1.03 Duties. With respect to the HCC Theater, HCC shall and CCG shall cause
HCC to:
(a) operate and manage all aspects of the business of the Theater,
including but not limited to personnel, programming, finance, accounting,
maintenance, sales, administration, both with respect to day-to-day operations
and with respect to strategic planning, in its complete and sole discretion,
subject only to the following limitations:
(i) HCC shall maintain the present film release policy of
current premium first-run releases in the Long Island, New York Market;
(ii) all employment and termination decisions as to theater
managers, relief managers, and supervisors shall be made by a two-person
committee that shall include Xxxxx Xxxxx; and
(iii) HCC shall maintain the present admission price of $7.50
general admission and $4.50 for children under twelve and senior citizens, and
shall not change that admission price unless the admission price charged by the
major theater circuits in Long Island, New York, shall change, in which case HCC
shall have the right, but not the obligation, to change the admission price
charged by it in accordance with such change;
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(b) be liable for all operating costs and expenses of the Theater
incurred on or after the date of the Effective Date of this Agreement, including
theater rents, additional rents, real-estate and other taxes (excluding income
taxes), and insurance premiums, and will cause such costs and expenses to be
paid directly to the GG Group, who shall pay same directly, no later than seven
days after the date such cost or expense is due (due dates for obligations which
are not evidenced by invoices shall be determined by industry standards); any
obligations which become due and owing after the date of this Agreement but
which comprise costs and expenses incurred and attributable before the date of
this Agreement, such as rent, electricity, gas, water, sewer, telephone,
property taxes, employee salary and benefits and similar items, shall be
prorated between the Clearview Group and the GG Group as of the date of this
Agreement;
(c) fulfill all obligations of the GG Group under the Leases;
(d) make or cause to be made all necessary ordinary repairs,
renewals, and replacements of equipment and furnishings, and shall contract for
any labor and materials that may be required in connection therewith, and
purchase all supplies that are necessary for the proper operation of the
Theater;
(e) cause to be placed and carried insurance in the types and
amounts (i) currently placed and carried by the GG Group, (ii) required by the
Lease, or (iii) required by applicable law which shall name the GG Group as well
as anyone else required or be named;
(f) use its best efforts to maintain the current market share of the
Theater, which efforts shall include but not be limited to taking such steps as
are reasonable, in the Clearview Group's sole discretion, to seek legal
correction of any prejudicial or discriminatory action on the part of
exhibitors, film companies, film distributors, or film buyers; and
(g) return the Theater with all Assets (or suitable replacements
(the "Replacements")) in operating condition upon termination or expiration of
this Agreement; provided, however, that all personal property other than the
Replacements, if any, brought into the Theater by the Clearview Group shall
remain property of the Clearview Group.
1.04. Labor Negotiations. The GG Group shall participate jointly with the
Clearview Group in the negotiation of any labor contract with IATSE, local
number 640 representing the employees of the Clearview Group employed at the
Theater.
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1.05. Employees. The Clearview Group shall be permitted but not obligated
to hire the current or former employees of the GG Group, subject to Section
1.3(a)(ii).
1.06. Financial Statements/Inspection.
(a) On or prior to the fifteenth day of each month, the Clearview
Group shall provide the GG Group with statements, for the Theater, certified by
CCG's President, setting forth for the previous month, the Gross Revenue for the
Theater; the twelfth monthly statement shall provide cumulative information for
the year then ended.
(b) The Clearview Group shall allow the GG Group or its designated
agent access to financial records concerning the Gross Revenues of the Theater
during regular business hours upon reasonable notice.
(c) The Clearview Group shall instruct the theater manager to
transmit by facsimile to the GG Group the same revenue information that is
transmitted by facsimile to the main office of the Clearview Group each night.
1.07. Improvements. The Clearview Group may with the written consent of the
GG Group renovate the Theater to increase the number of screens at the Theater
from two to four and may, in connection with such renovation, borrow funds (the
"Borrowed Funds") from a third party lender.
1.08. Name of Theaters. Until the expiration or termination of this
Agreement, the Clearview Group shall manage the Theater under the name
"Clearview Cinemas" or variation of that name as requested by the Clearview
Group on behalf of the GG Group. The GG Group acknowledges that it shall have no
right to operate the Theaters under the name "Clearview Cinemas" or any
variation of that name if this Agreement expires or is terminated.
1.09. Remit Funds. After the Effective Date of this Agreement, the GG Group
shall promptly transfer and deliver to the Clearview Group any cash or other
property, if any, that the GG Group may receive relating to the operation of the
Theaters subsequent to the Effective Date and the Clearview Group shall promptly
transfer and deliver to the GG Group any cash or other property, if any, that
the Clearview Group may receive relating to the operation of the Theaters prior
to the Effective Date of this Agreement.
1.10. Nature of Business. The GG Group acknowledges that the Clearview
Group shall manage the Theater on behalf of the GG
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Group according to Clearview Group's business judgments, in its sole and
absolute discretion and except as expressly limited in Section 1.3 shall have no
duty to the GG Group in connection with the Clearview Group's management of
Theaters except as specifically and expressly required in this Agreement.
Neither the GG Group (except as specifically set forth in Article IV) nor the
Clearview Group makes any representations, warranties or guarantees as to the
level of revenues or profit to be generated by the Theaters under the Clearview
Group's management.
1.11. No Termination. The GG Group acknowledges that it
shall have no right to terminate all or any part of this
Agreement except on the terms set forth in Article X.
1.12. Miscellaneous.
(a) the Clearview Group shall provide the GG Group with the
following passes entitling the holder to free admission to the Theater at any
time: three season passes for four people each, three season passes for two
people each, and such courtesy passes as shall be requested by the GG Group, not
to exceed seven per week; and
(b) the Clearview Group shall honor currently outstanding season
passes.
ARTICLE II.
THE OPTION
2.01. Grant of Option. The GG Group hereby grants to the Clearview Group an
exclusive option (the "Option") to purchase the Assets (as defined in Section
3.1) on the terms and subject to the conditions set forth in this Agreement to
the extent owned by the GG Group only.
2.02. Exercise of Option. The Clearview Group may exercise the Option by
delivering to the GG Group a written notice (the "Option Notice") either (a)
within the thirty-day period immediately following the end of each of the Second
Contract Year, the Third Contract Year, the Fourth Contract Year, or the Fifth
Contract Year or (b) within any Exercise Period (as defined in Section 9.2(b)).
The "First Contract Year" shall be the period beginning on September 8, 1995 and
ending on September 7, 1996; the "Second Contract Year" shall be the period
beginning on September 8, 1996 and ending on September 7, 1997; the "Third
Contract Year" shall be the period beginning on September 8, 1997 and ending on
September 7, 1998; the "Fourth Contract Year" shall be the period beginning on
September 8, 1998 and ending on September 7, 1999; the "Fifth Contract Year"
shall be the period beginning on September 8, 1999 and ending on September 7,
2000;
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each such period may be referred to in this Agreement as a "Contract Year."
2.03. Option Payment. In consideration of the Option granted by this
Agreement, the Clearview Group shall pay to the GG Group the amounts and on the
dates set forth on Schedule 2.3(a), the aggregate amount of $40,000.00 (the
"Option Payment"), plus an additional aggregate amount of $1,600 (the "Interest
Reimbursement") as reimbursement for interest.
ARTICLE III.
THE ACQUISITION
The Provisions of this Article III shall be applicable only if the
Clearview Group shall have exercised the Option as set forth in Article II.
3.01. Sale and Purchase of Assets. At the Closing (as defined below), the
GG Group shall sell and transfer to the Clearview Group, and the Clearview Group
shall purchase from the GG Group the assets (collectively, the "Assets") set
forth on Schedule 3.1.
3.02. Assumption of Liabilities. At the Closing, HCC shall assume the Lease
for the Herricks Theater; provided, however, that such assumption shall not
release HI from any prior or subsequent liability under its Lease. Except as
expressly provided in this Agreement, the Clearview Group does not and shall not
assume or in any way undertake to pay, perform, satisfy or discharge any other
liabilities or obligations of the GG Group (the "Retained Liabilities") and the
GG Group will pay and satisfy when due all Retained Liabilities.
3.03. Closing Date. The consummation of the purchase and sale of the Assets
(the "Closing) shall take place at the New York offices of Xxxxxxxxxxx &
Xxxxxxxx LLP, 1251 Avenue of the Americas, New York, New York (or at such other
location in New York City as the Clearview Group shall designate) on a date (the
"Closing Date") not fewer than fifteen nor more than forty-five days after the
date of delivery of the Option Notice.
3.04. Purchase Price. The aggregate purchase price (the "Purchase Price")
for the Assets shall be equal to the sum of (i) $300,000 plus Average Excess
Revenue as of the Closing Date. By way of example and not limitation, Schedule
3.4 sets forth an illustration of the Purchase Price.
3.05. Closing. At Closing, the Clearview Group shall pay to the GG Group
the Purchase Price (i) by wire transfer of immediately available federal funds
or (ii) only if the stock of
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CCG shall be then listed for trading on a national securities exchange or
NASDAQ, at the option of the GG Group by a convertible promissory note of CCG,
in the form attached as Exhibit A to this Agreement, in an amount equal to or
less than $50,000, and the remainder by wire transfer of immediately available
federal funds. At the Closing, the Clearview Group shall receive a credit on
account of the Purchase Price for the Initial Option Payment. The GG Group
acknowledges that CCG shall have no obligation to file any registration
statement with the Securities and Exchange Commission or any similar state or
federal agency or to cause its stock to be listed for trading on any national
securities exchange or NASDAQ.
3.06. Taxes. All sales and transfer taxes relating to the transactions
contemplated by this Agreement will be borne by the Clearview Group; provided
however, that any Real Property Transfer Gains Tax (pursuant to Article 31-B of
the New York Tax Code) (the "Real Property Gains Tax") will be paid and borne by
the GG Group. The Purchase Price shall be allocated as set forth on Schedule
3.6.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE GG GROUP
As an inducement to the Clearview Group to enter into this Agreement and
consummate the transactions contemplated hereby, the GG Group represents and
warrants to the Clearview Group as follows:
4.01. Organization. The GG Group is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to own or lease its
properties, carry on its business as now conducted, enter into and perform its
obligations under this Agreement.
4.02. Authorization; Enforceability. This Agreement has been duly executed
and delivered by and constitutes the legal, valid and binding obligations of the
GG Group, enforceable against it in accordance with its terms. All actions
contemplated by this Section have been duly and validly authorized by all
necessary proceedings by the GG Group.
4.03. No Violation of Laws or Agreements; Consents. Neither the execution
and delivery of this Agreement, the consummation of the transactions
contemplated in this Agreement nor the compliance with or fulfillment of its
terms, conditions or provisions by the GG Group will: (i) contravene any
provision of the governing documents of the GG Group, (ii) conflict with,
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result in a breach of, constitute a default or an event of default (or an event
that might, with the passage of time or the giving of notice or both, constitute
a default or event of default) under any of the terms of, result in the
termination of, result in the loss of any right under, or give to any other
person the right to cause such a termination of or loss under, any Asset or any
other contract, agreement or instrument to which the GG Group is a party or by
which any of its assets may be bound or affected, (iii) result in the maturation
or acceleration of any liability or obligation of the GG Group (or give to any
other person the right to cause such a creation, maturation or acceleration),
(iv) violate any judgment or order of any governmental body to which the GG
Group is subject or by which any of the Assets or any of its other assets may be
bound or affected, or (v) result in the creation or imposition of any
encumbrance upon any of the Assets or give to any other Person any interest or
right therein. Except for the consents of the Landlords under the Leases, no
consent, approval or authorization of, or registration or filing with, any
person is required in connection with the execution and delivery by the GG Group
of this Agreement or the consummation by the GG Group of the transactions
contemplated by this Agreement.
4.04. Financial Information. The books of account and related records of
the GG Group reflect accurately the assets and liabilities of the GG Group. The
representations and warranties contained in the previous sentence shall survive
only until the end of the First Contract Year.
4.05. Undisclosed Liabilities. The GG Group, to its knowledge, has no debt,
obligation or liability, absolute, fixed, contingent or otherwise, of any nature
whatsoever, whether due or to become due, including any unasserted claim,
whether incurred directly or by any predecessor thereto, and whether arising out
of any act, omission, transaction, circumstance, sale of goods or services,
state of facts or other condition that would have a material effect on
Clearview's operation of the Theaters, except those which have been disclosed in
writing to the Clearview Group. The representations and warranties contained in
this Section shall survive only until the end of the First Contract Year.
4.06. Taxes. Except as set forth on Schedule 4.6, the GG Group has filed or
caused to be filed on a timely basis, or will file or cause to be filed on a
timely basis, all Tax Returns that are required to be filed by it prior to or on
the Closing Date, pursuant to the Law of each governmental authority with taxing
power over it. All such Tax Returns were or will be, as the case may be, correct
and complete. The GG Group has paid all Taxes that have become due as shown on
such Tax Returns or pursuant to
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any assessment received as an adjustment to such Tax Returns. The GG Group has
withheld and paid all Taxes required to have been withheld in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party. There is no pending, or, to the knowledge of
the GG Group, threatened or anticipated, assessment of any additional Tax
against any member of the affiliated group of corporations which the GG Group is
or was a part for any taxable period during which the GG Group or any
predecessor company was a member of such group. "Tax" means any domestic or
foreign, federal, state, county, local or foreign tax, levy, impost or other
charge of any kind whatsoever, including any interest or penalty thereon or
addition thereto, whether disputed or not. "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to any Tax, including any schedule or attachment thereto, and including
any amendment thereof.
4.07. Condition of Assets; Business. The GG Group is engaged in the
business (the "Business") of the operation of a movie theater (the "Theater") at
the location set forth in the Lease and no other business. As of the date of
this Agreement, the Assets are in operating condition and repair and are
suitable for the purposes for which they are used in the Business. The
representations and warranties contained in the previous sentence shall survive
only for the ninety day period immediately following the date of this Agreement.
4.08. Title to Assets; No Liens. Subject to any liens or encumbrances
placed or caused to be placed upon the Assets by the lessors or rights of the
lessor under the Herricks Lease, the GG Group has good and marketable title to
all of the Assets, and none of the Assets is subject to any lien, encumbrance or
impairment, except as has been disclosed in writing to the Clearview Group.
4.09. No Pending Litigation or Proceedings. Except as set forth in Schedule
4.9, no action, suit, investigation, claim or proceeding of any nature or kind
whatsoever, whether civil, criminal or administrative, by or before any
governmental body or arbitrator ("Litigation") is pending or, to the knowledge
of the GG Group, threatened against or affecting the GG Group, the Business, any
of the Assets, or any of the transactions contemplated by this Agreement, and to
the knowledge of the GG Group there is no basis for any Litigation. The GG Group
does not have pending any Litigation against any third party.
4.10. Contracts; Compliance. The GG Group has provided the Clearview Group
with a copy of (i) the Lease (as defined below), (ii) the agreement between the
GG Group and IATSE, local number 640 (each of the foregoing documents referred
to herein as a
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"Contract" and together, the "Contracts"). The GG Group is not a party to any
other contract, loan agreement, lease, indenture, mortgage, instrument,
commitment or other agreement, arrangement or understanding, whether written or
oral that would have a material adverse effect on the operation of the Theaters.
To the knowledge of the GG Group, each Contract is a legal, valid and binding
obligation of the GG Group and is in full force and effect. The GG Group and
each other party to each Contract has performed all obligations required to be
performed by it thereunder and is not in breach or default, and is not alleged
to be in breach or default, in any respect thereunder, and no event has occurred
and no condition or state of facts exists (or would exist upon the giving of
notice or the lapse of time or both) that would become or cause a breach,
default or event of default thereunder, would give to any Person the right to
cause such a termination or would cause an acceleration of any obligation
thereunder. The GG Group is not currently renegotiating any Contract nor has it
received any notice of non-renewal or price increase or sales or production
allocation with respect to any Contract. The representations and warranties
contained in this Section shall survive only until the end of the First Contract
Year.
4.11. Permits; Compliance With Law. Schedule 4.11 sets forth each permit,
certificate, license, franchise, privilege, approval, registration and
authorization held by the GG Group (each, a "Permit" and collectively,
"Permits"). To its knowledge, each Permit is valid, subsisting and in full force
and effect. To its knowledge, the GG Group is in compliance with and has
fulfilled and performed its obligations under each Permit, and no event or
condition or state of facts exists (or would exist upon the giving of notice or
lapse of time or both) that could constitute a breach or default under any
Permit. To its knowledge, the GG Group has not been nor is currently in
violation of any Law and has received no notice of any violation of Law, and no
event has occurred or condition or state of facts exists that could give rise to
any such violation. The GG Group has not received any notice of non-renewal of
any Permit. The representations and warranties contained in this Section shall
survive only until the end of the First Contract Year.
4.12. Real Property. The GG Group does not own any real property. The GG
Group holds a leasehold interest in the real property upon which the Theater is
located (the "Real Property") pursuant to that certain lease (the "Lease")
between Purmil Company and Cinema Herricks, Inc., dated January 1, 1994. The GG
Group has the right to quiet enjoyment of the Real Property for the full term of
the Leases in accordance with the terms of the Lease. To its knowledge, the use
and operation of the Real Property conforms to all applicable building, zoning,
safety and
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subdivision Laws, environmental Laws and other Laws, and all restrictive
covenants and restrictions and conditions affecting title. The GG Group has not
received any written or oral notice of assessments for public improvements or
condemnation against the Real Property. The representations and warranties
contained in this Section shall survive only until the end of the First Contract
Year.
4.13. Bank Debt. As of the date of this Agreement, Xxxxx Xxxxx, or an
affiliate which is not the GG Group, is indebted in the principal amount of not
less than $150,000 to commercial lending institutions, representing funds
borrowed and used in connection with the operation of the Theater.
4.14. Customer Relations. To the GG Group's knowledge, there exists no
condition or state of facts or circumstances involving the GG Group's customers,
suppliers, distributors or representatives that the GG Group can reasonably
foresee could adversely affect the Business now or in the future. The
representations and warranties contained in this Section shall survive only
until the end of the First Contract Year.
4.15. Finders' Fees. Neither the GG Group nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE Clearview GROUP
As an inducement to the GG Group to enter into this Agreement and
consummate the transactions contemplated hereby, the Clearview Group represents
and warrants to the GG Group as follows:
5.01. Organization. Each of the Clearview Group is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the corporate power and authority to own
or lease its properties, carry on its business, enter into this Agreement and to
perform its obligations under this Agreement.
5.02. Authorization; Enforceability. This Agreement has been duly executed
and delivered by and constitutes the legal, valid and binding obligations of the
Clearview Group, enforceable against it in accordance with its terms. All
actions contemplated by this Agreement have been duly and validly authorized by
all necessary proceedings by the Clearview Group.
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5.03. No Violation of Laws; Consents. Neither the execution and delivery of
this Agreement, the consummation of the transactions contemplated in this
Agreement nor the compliance with or fulfillment of its terms, conditions or
provisions by the Clearview Group will: (i) contravene any provision of the
governing documents of the Clearview Group, (ii) conflict with, result in a
breach of, constitute a default or an event of default (or an event that might,
with the passage of time or the giving of notice or both, constitute a default
or event of default) under any of the terms of, result in the termination of,
result in the loss of any right under, or give to any other person the right to
cause such a termination of or loss under, any Asset or any other contract,
agreement or instrument to which the Clearview Group is a party or by which any
of its assets may be bound or affected, (iii) result in the maturation or
acceleration of any liability or obligation of the Clearview Group (or give to
any other person the right to cause such a creation, maturation or
acceleration), (iv) violate any judgment or order of any governmental body to
which the Clearview Group is subject or by which any of the Assets or any of its
other assets may be bound or affected, or (v) prior to the Closing, result in
the creation or imposition of any encumbrance upon any of the Assets or give to
any other Person any interest or right therein. No consent, approval or
authorization of, or registration or filing with, any person is required in
connection with the execution and delivery by the Clearview Group of this
Agreement or the consummation by the Clearview Group of the transactions
contemplated by this Agreement.
5.04. No Pending Litigation or Proceedings. Except as set forth in Schedule
5.4, no action, suit, investigation, claim or proceeding of any nature or kind
whatsoever, whether civil, criminal or administrative, by or before any
governmental body or arbitrator ("Litigation") is pending or, to the knowledge
of the Clearview Group, threatened against or affecting the Clearview Group, the
Business, any of the Assets, or any of the transactions contemplated by this
Agreement, and to the knowledge of the Clearview Group there is no basis for any
Litigation. The Clearview Group does not have pending any Litigation against any
third party.
5.05. Finders' Fees. Neither the Clearview Group nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finders' fee in connection with
any of the transactions contemplated hereby. Any claim for any brokerage fee,
commission or finders' fee claimed by Xxxxx Xxxxx shall be paid by the Clearview
Group.
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5.06. Financial Statement. The Clearview Group has previously provided to
the GG Group the audited consolidated and consolidating balance sheets, income
statements, and statements of cash flows for CCG at December 31, 1994 and for
the year then ended (the "Financial Statements"). The Financial Statements (i)
are accurate, correct and complete in accordance with the books of account and
records of CCG, (ii) have been prepared in accordance with GAAP on a consistent
basis throughout the indicated period, (iii) fairly present the consolidated
financial condition, assets, and liabilities and results of operation of CCG at
the dates and for the period indicated in accordance with Accounting Principles.
As of the date of this Agreement, there has been no material adverse change in
the financial condition, business or prospects of CCG.
5.07. Undisclosed Liabilities. The Clearview Group, to its knowledge, has
no debt, obligation or liability, absolute, fixed, contingent or otherwise, of
any nature whatsoever, whether due or to become due, including any unasserted
claim, whether incurred directly or by any predecessor thereto, and whether
arising out of any act, omission, transaction, circumstance, sale of goods or
services, state of facts or other condition that would have a material effect on
GG Group's operation of the Theaters, except those which have been disclosed in
writing to the GG Group. the representations and warranties contained in this
Section shall survive only until the end of the First Contract Year.
5.08. Taxes. The Clearview Group has filed or caused to be filed on a
timely basis, or will file or cause to be filed on a timely basis, all Tax
Returns that are required to be filed by it prior to or on the Closing Date,
pursuant to the Law of each governmental authority with taxing power over it.
All such Tax Returns were or will be, as the case may be, correct and complete.
The Clearview Group has paid all Taxes that have become due as shown on such Tax
Returns or pursuant to any assessment received as an adjustment to such Tax
Returns. The Clearview Group has withheld and paid all Taxes required to have
been withheld in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party. There is no
pending, or, to the knowledge of the Clearview Group, threatened or anticipated,
assessment of any additional Tax against any member of the affiliated group of
corporations which the Clearview Group is or was a part for any taxable period
during which the Clearview Group or any predecessor company was a member of such
group. "Tax" means any domestic or foreign, federal, state, county, local or
foreign tax, levy, impost or other charge of any kind whatsoever, including any
interest or penalty thereon or addition thereto, whether disputed or not. "Tax
Return" means any return, declaration, report, claim for refund, or information
return or
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statement relating to any Tax, including any schedule or attachment thereto, and
including any amendment thereof.
ARTICLE VI.
CERTAIN COVENANTS
6.01. Exclusivity. The GG Group shall not sell or transfer the Assets or
the Business or engage in any negotiations regarding the sale of the Assets or
the Business to or with any person other than the Clearview Group. Any issuance
by the GG Group of or sale or transfer by any person of shares of capital stock
of any or all of the GG Group shall be caused or permitted by the GG Group only
(A) (i) upon written notice to the Clearview Group not fewer than ten business
days prior to such issuance, sale or transfer setting forth the name of the
recipient of such shares (the "Recipient") or (ii) pursuant to transfer upon the
demise of Xxxxx Xxxxx and (B) upon written agreement by the Recipient that each
of the GG Group is bound by the terms of this Agreement.
6.02. Conduct of Business Pending Closing. The GG Group shall permit the
Clearview Group to manage the Theater in accordance with the provisions of
Article I. The GG Group shall not, without the prior written consent of the
Clearview Group, (a) engage in any business or enter into any contract or
commitment; (b) cause or permit any Contract to be amended, supplemented or
modified in any way; (c) take any action that is reasonably likely to result in
the occurrence of a breach of this Agreement; or (d) take any action or omit to
take any action that will cause a breach or termination of any Contract.
6.03. Liens, Encumbrances. Prior to the Closing, neither the Clearview
Group nor the GG Group shall pledge or encumber any of the Assets.
6.04. Mechanics Liens. The Clearview Group shall use its best efforts to
defend any mechanics liens filed against the Theaters or the Assets. In the
event that mechanics liens remain filed against the Theaters or any of the
Assets at the expiration or termination for any reason of this Agreement, the
Clearview Group shall retain liability for the payment of the claims supporting
such liens; provided however, that in connection with such liability, the
Clearview Group shall retain all rights to litigate such claims and shall have
no obligation to pay any such claim until the entry by a court of competent
jurisdiction of a final non-appealable order in favor of claimant and against
the Clearview Group, provided however, that to the extent that the exercise of
any right of Clearview under this Section shall be a violation of the Lease,
Clearview shall first obtain permission
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of the landlord under the Lease before exercising its rights under this Section.
6.05. Indemnification. The GG Group shall indemnify, defend, save and hold
harmless the Clearview Group from and against any and all Damages incurred by
any or all of the Clearview Group in connection with or in any way related to
(a) the tax liabilities of the GG Group set forth in Schedule 4.6 and (b) any
contractual obligation of the GG Group to any third party. For the purpose of
this section "Damages" shall include all demands, claims, causes of action,
losses, costs, damages, expenses and other liabilities (including court costs,
interest, penalties and reasonable attorneys' fees) incurred by any or all of
the Clearview Group. In addition to and not in lieu of other remedies, the
Clearview Group shall be entitled to enforce this Section by setting-off any
amounts owed to that party against amounts owed by that party to the other
party.
6.06. Publicity. The GG Group and the Clearview Group shall not issue any
press release or otherwise make any announcements to the public or the employees
of the GG Group with respect to this Agreement without the prior written consent
of the other, except as required by Law.
6.07. Fulfillment of Agreements. each party hereto shall use its best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement.
6.08. The GG Group Assistance. The GG Group shall cooperate with and assist
the Clearview Group and its authorized representatives in order to provide, to
the extent reasonably requested by the Clearview Group, an efficient transfer of
control of the Assets and to avoid any undue interruption in the activities and
operations of the Business following the Effective Date of this Agreement,
including but not limited to providing the Clearview Group with all information
requested in Schedule 6.8 within seven business days after the execution of this
Agreement.
6.09. Non-Competition. For a period of ten years after the Closing under
this Agreement, neither Xxxxx Xxxxx nor any of the GG Group shall on his or its
own behalf or as a partner, officer, executive, a manager, employee, director,
consultant, shareholder (other than as owner of less than five (5%) percent of
the issued and outstanding stock of a publicly owned corporation whose
securities are traded on a nationally recognized stock exchange or quoted on
NASDAQ), directly or indirectly, engage in any business which is, or be employed
by any person or entity whose
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business is substantially the same as, or materially competitive with the
business of the theater within a five mile radius of the Theater.
ARTICLE VII.
DELIVERIES AND PROCEEDINGS
7.01. Deliveries and Proceedings Simultaneous with Execution of this
Agreement.
(a) Deliveries by the GG Group to the Clearview Group. The GG Group
shall deliver or cause to be delivered to the Clearview Group simultaneously
with the execution of this Agreement:
(i) Incumbency and specimen signature certificates dated the Closing
Date, signed by the officers of the GG Group and certified by the Secretary of
the GG Group;
(ii) Certificates of the Secretary of the GG Group setting forth all
resolutions of the Boards of Directors of the GG Group and the stockholders of
the GG Group authorizing the execution and delivery of this Agreement and the
performance by the GG Group of the transactions contemplated hereby; and
(iii) A certificate of an officer of each GG Group certifying that
Xxxxx Xxxxx is the sole stockholder of the GG Group and certifying to his
knowledge that all representations made in this Agreement (subject to any
limitations expressly set forth in each representation) are accurate as of the
date of this agreement.
(b) Deliveries by the Clearview Group to the GG Group. The Clearview
Group shall deliver or cause to be delivered to the GG Group simultaneously with
the execution of this Agreement:
(i) Incumbency and specimen signature certificates
signed by the officers of the Clearview Group and certified by
the Secretary of the Clearview Group;
(ii) A Certificate of the Secretary of the Clearview Group setting
forth all resolutions of the Board of Directors of the Clearview Group
authorizing the execution and delivery of this Agreement and the performance by
the Clearview Group of the transactions contemplated hereby, certified by the
respective Secretaries of the Clearview Group; and
(iii) A certificate of A. Xxxx Xxxx as an officer of each of the
Clearview Group certifying to his knowledge that
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all representations made in this Agreement are accurate as of the date of this
Agreement.
(c) Deliveries by the GG Group to the Escrow Agent. The GG Group
shall deliver or cause to be delivered to the Escrow Agent simultaneously with
the execution of this Agreement:
(i) An assignment of the Herricks Lease duly
executed by the GG Group in the form attached hereto as Exhibit
C; and
(ii) A General warranty xxxx of sale and instrument of assignment of
the Assets, duly executed by the GG Group, in the form attached hereto as
Exhibit D.
(d) Deliveries by the Clearview Group to the Escrow Agent. The
Clearview Group shall deliver or cause to be delivered to the Escrow Agent
simultaneously with the execution of this Agreement:
(i) The Escrowed Funds as provided in Article VIII
of this Agreement; and
(ii) an assignment of all rights of the Clearview Group to the
Assets, including the Leases, under this Agreement, duly executed in the form
attached hereto as Exhibit E.
7.02. Deliveries and Proceedings at Closing.
(a) Deliveries by the Escrow Agent. The Escrow Agent shall deliver
or cause to be delivered to the Clearview Group at the Closing those documents
previously delivered to the Escrow Agent by the GG Group in accordance with
Section 7.01 above.
(b) Deliveries by the GG Group. The GG Group shall deliver to the
Clearview Group at the Closing:
(i) Certificates of the Secretary of the GG Group certifying that
the resolutions delivered pursuant to Section 7.1(a)(iii) have not been amended
or superseded and remain in full force and effect;
(ii) A certificate of the President of the GG Group certifying that,
to his knowledge, all representation and warranties made by the GG Group in this
Agreement, except those that shall have expired pursuant to the explicit
provisions of this Agreement, are true and correct as of the Closing Date; and
(iii) evidence of the determination by the appropriate taxing
authority of the amounts of the Real Property
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Gains Tax required to be paid by the GG Group upon consummation of this
Agreement and a check or checks made payable to the appropriate taxing authority
in such amounts; provided, however, that if the GG Group shall not deliver any
or all of such evidence and checks, the Clearview Group shall deduct from the
Purchase Price an amount sufficient in the reasonable discretion of the
Clearview Group to pay such tax, which deduction may be used to pay such tax.
(c) Deliveries by the Clearview Group. The Clearview Group shall
deliver or cause to be delivered to the GG Group at the Closing:
(i) (a) A wire transfer of immediately available federal funds in
accordance with Section 2.05 pursuant to complete wire transfer instructions
delivered by the GG Group to the Clearview Group in writing at least two
business days prior to Closing and (b) only if the stock of CCG shall be then
listed for trading on a national securities exchange, including NASDAQ, and if
so elected by the GG Group, a promissory note in an amount requested by the GG
Group equal to or less than $50,000;
(ii) A certificate of the Secretary of the Clearview Group
certifying that the resolution delivered pursuant to Section 7.01(b)(ii) have
not been amended or superseded and remain in full force and effect; and
(iii) A check made payable to the appropriate taxing authority in
the amount of all sales tax required to be paid by the Clearview Group pursuant
to Section 2.06.
ARTICLE VIII.
ESCROWED FUNDS AND DOCUMENTS
8.01. Escrowed Funds. Simultaneously with the execution by the parties of
this Agreement, pursuant to an Escrow Agreement in the form of Exhibit F hereto,
the Clearview Group shall cause to be deposited with an escrow agent (the
"Escrow Agent") acceptable to the Clearview Group and the GG Group, $60,000 in
bank certificates of deposit (the "Escrowed Funds"). The Clearview Group shall
replenish within thirty days any reduction in the Escrow Funds below $60,000.
8.02. Escrow of Documents. Simultaneously with the execution by the
parties of this Agreement, the parties shall cause to be delivered to the Escrow
Agent those documents (the "Escrowed Documents") set forth in Section 8.01.
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8.03. Rights to Escrowed Funds. During the term of this Agreement, the
Escrowed Funds shall be held for the benefit of the GG Group pursuant to the
terms of this Agreement, and shall not be subject to the rights of any trustee,
creditor, or other person in any bankruptcy, reorganization, insolvency or
receivership proceeding.
8.04. Use of Escrow Funds. The Clearview Group has deposited with the
Escrow Agent the Escrowed Funds for the faithful performance and observance by
the Clearview Group of the terms, provisions, and conditions of this Agreement,
to be distributed to or for the benefit of the GG Group upon the terms and
subject to the conditions set forth in this Agreement. The Clearview Group
covenants that it will not assign or encumber or attempt to assign or encumber
the Escrowed Funds and that neither the Escrow Agent nor its successors or
assigns shall be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance.
ARTICLE IX.
DEFAULT
9.01. Events of Default. The following events shall constitute an Event of
Default:
(a) Failure by the Clearview Group to pay when due any Option
Payment;
(b) Failure by the Clearview Group or the GG Group to comply with
any term or condition of the agreement or breach of any representation or
warranty;
(c) Failure by the Clearview Group to pay any payment when due under
any Lease;
(d) If the landlord under the Lease shall deliver written notice
(the "Landlord Termination Notice") to the Clearview Group stating that the
Lease is in default and setting forth a date (the "Termination Date") by which
such default must be cured or the Lease shall be terminated, failure by the
Clearview Group to cure such default prior to five business days prior to the
Termination Date;
(e) Filing of any bankruptcy petition or other insolvency proceeding
by or against the Clearview Group under any federal or state law;
(f) Failure by the Clearview Group to vacate within sixty days of
the filing thereof any execution or attachment
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(excluding mechanics liens) filed against the Theater or any of the Assets on
account of any obligation or because of the taking or the omission of any action
by the Clearview Group;
(g) Failure by the GG Group to vacate within sixty days of the
filing thereof any execution or attachment filed against the Theater or any of
the Assets on account of any obligation or because of the taking or the omission
of any action by the GG Group;
(h) Failure by the Clearview Group to repair any damage or
destruction to the Theater in an amount in excess of $50,000 as soon as is
practicable in the reasonable discretion of the Clearview Group; or
(i) Failure by the Clearview Group to replenish the Escrow Account
within thirty days of a payment from such account pursuant to Section 9.2(a).
9.02. Rights and Remedies Upon Default.
(a) Use of Escrowed Funds. Upon the occurrence of an Event of
Default that can be cured by the payment of money in an amount equal to or less
than the current outstanding balance of the Escrowed Funds, the GG Group may
send a notice of default (the "Notice of DeFault") simultaneously to the Escrow
Agent and to Clearview, setting forth with particularity the nature of the
default and attaching to the Notice of Default the xxxx, invoice or other
evidence of the unpaid obligation (the "Obligation") giving rise to the default.
If the Clearview Group shall not (i) have paid the Obligation and provided proof
of such payment to the Escrow Agent or (ii) delivered to the Escrow Agent
written notice of dispute of the amount (the "Dispute Notice") of the Obligation
together with proof of payment of the undisputed amount, if any, of the
Obligation, within the ten business days immediately following the delivery to
the Clearview Group of the Notice of Default, the Escrow Agent shall pay from
the Escrowed Funds the Obligation directly to the obligee or to the GG Group if
the Obligation is owed directly to the GG Group. If the Clearview Group shall
have delivered the Dispute Notice to the Escrow Agent, and the dispute shall
concern an Option Payment, the Clearview Group and the GG Group shall resolve
the dispute pursuant to the provisions of Section 1.3(e). If the Clearview Group
shall not have delivered proof of payment of the amount of the Option Payment as
set forth in the Resolution Notice as defined in Section 1.3(e) within ten
business days following the delivery to the Clearview Group of the Resolution
Notice, the Escrow Agent shall pay such amount directly to the GG Group from the
Escrowed Funds.
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(b) Termination by the GG Group.
(i) Notice of Termination; Right to Cure or Exercise Option. Except
as provided in Section 9.2(b)(ii), upon the occurrence of an Event of Default by
the Clearview Group which cannot be cured by the payment of money in an amount
equal to or less than the current outstanding balance of the Escrowed Funds, the
GG Group may deliver to the Clearview Group a Notice of Default setting forth
the nature of the default with particularity. If (a) the Clearview Group shall
not have substantially cured such default within the thirty-day period following
the delivery of the Notice of Default (or such lesser period of time as provided
under notice the lessor under the Lease) or (b) the Clearview Group shall have
disputed the payment of any Obligation under Section 9.2(a), the GG Group may
deliver to the Clearview Group a Notice of Termination. Within the ten business
day period (the "Exercise Period") immediately following the delivery of the
Notice of Termination, the Clearview Group may either cure the default or
exercise the Option by delivering the Option Notice to the GG Group. If the
Default is not cured, the Escrow Agent shall retain so much of the Escrowed
Funds as would be necessary to cure the Default, which shall be released to the
GG Group if a judgment is entered against the GG Group in connection with such
Default.
(ii) Closing; Adjustment of Purchase Price. If the Clearview Group
shall have delivered the Option Notice in accordance with this Section 9.2, the
Closing shall take place within the sixty day period immediately following the
delivery of the Option Notice; provided, however, that if the Clearview Group
shall have received a Landlord Notice of Default from the lessor under the
Lease, the Closing shall take place on a date not fewer than five days prior to
the date by which the Landlord Notice of Default requires the default alleged
therein to be cured. Upon exercise of the Option pursuant to this Article, the
Purchase Price shall be adjusted to include, to the extent not already included
in the Purchase Price, the following amounts, discounted to present value as of
the Closing Date at a rate of ten percent per annum: (A) if the Option Notice is
delivered during the First Contract Year, the Option Payment and all Retention
Fees that would have been required through the end of the Second Contract Year
and (B) if the Option Notice is delivered in the Second, Third, Fourth, or Fifth
Contract Year, all Retention Fees that would have been required through the end
of the Contract Year during which the Option Notice was delivered. For the
purpose of calculating the adjustments under this Section, all Retention Fees
for each Contract Year shall be deemed to be the Estimated all Retention Fees
for that Contract Year; provided, however, that if the Option Notice is
delivered within the Second Contract Year, all Retention Fees for the Second
Contract Year
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shall be the greater of the Retention Fees for the First Contract Year or
$165,000. If the Clearview Group shall exercise the Option pursuant to this
Article, the Clearview Group shall pay to the GG Group, to the extent such
amount exceeds the amounts already paid to the GG Group pursuant to this
Section, an amount equal to the Retention Fees which would have been due to the
GG Group if the Option had not been so exercised, based upon the actual
performance of the Clearview Group from the date of the Closing until the first
time at which the Clearview Group was entitled to exercise its Option under
Article One of this Agreement (the "Cut-off Date"), such payment to be made
within the thirty-day period immediately following the Cut-off Date.
(iii) Failure to Cure or Exercise Option. If at the end of the
Exercise Period the Clearview Group shall remain in default and shall not have
delivered the Option Notice, the GG Group may terminate this Agreement in
accordance with Article X. If the Default is not cured, the Escrow Funds may be
utilized to the extent available and the Clearview Group shall be responsible
for any deficiency.
(c) Termination by the Clearview Group. Upon the occurrence of an
Event of Default by the GG Group, the Clearview Group may deliver to the GG
Group a Notice of Default setting forth the nature of the default with
particularity. If the GG Group shall not have substantially cured the default
within the thirty business day period following the delivery of the Notice of
Default, the Clearview Group may terminate this Agreement in accordance with
Article X.
ARTICLE X.
TERMINATION
10.01. Termination.
(a) Expiration. This Agreement shall terminate without further
action by any party unless the Clearview Group shall have delivered the Option
Notice to the GG Group on or before the thirtieth day following the end of the
Fifth Contract Year.
(b) Termination. Except as provided in Section 9.2(b), this
Agreement may be terminated by notice given by the following parties at the
following times, such termination to be effective on the fifth business day
following the delivery of such notice:
(i) at any time prior to Closing by mutual written consent of the
Clearview Group and the GG Group;
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(ii) by the Clearview Group (A) within the sixty day period
following the end of the Second Contract Year, if the amount (the "Minimum
Revenue") equal to fifty percent of the sum of (1) the Gross Revenue for the
Theater for the First Contract Year plus (2) the Gross Revenue for the Theater
for the Second Contract Year shall not have been equal to or in excess of
$510,000; by way of example and not limitation, if the Gross Revenue for the
First Contract Year shall have been $500,000 and the Gross Revenue for the
Second Contract Year shall have been $600,000, the Minimum Revenue shall be .5
(500,000 + 600,000) = 550,000; or (B) in accordance with the terms and
conditions set forth in Section 9.2(c).
(iii) by the GG Group (A) if the Minimum revenue shall not have been
equal to or in excess of $510,000, the GG Group, within the sixty day period
following the Second Contract Year, shall have delivered to the Clearview Group
written notice of the GG Group's intention to terminate this Agreement (the "GG
Group Notice"), and the Clearview Group shall not have delivered to the GG Group
the Option Notice within thirty days of the receipt of the GG Group Notice; or
(B) in accordance with the terms and conditions set forth in Section 9.2(b).
(c) Inability to Operate. Notwithstanding anything else herein to
the contrary, if prior to Closing, the Clearview Group is rendered substantially
unable to operate the Business for a period of time equal to or greater than 30
days by any reason beyond the Clearview Group's control and which it cannot
reasonably cure, including but not limited to destruction of a substantial
portion of the Assets or if the whole or any part of the Real Property shall be
acquired or condemned by Eminent Domain for any public or quasi-public use, the
Clearview Group at its option, which may be exercised by written notice given to
the GG Group within thirty (30) business days after the Clearview Group's
receipt of notice of such loss, may terminate this Agreement, effective
immediately.
10.02. Events Upon Termination.
(a) Release of Premises; Payment. Upon the expiration or termination
of this Agreement for any reason, the Clearview Group shall surrender possession
of the Theaters to the GG Group; provided, however, that until such surrender
the Clearview Group shall continue to pay to the GG Group for each month or
fraction thereof an amount equal to the monthly Option Payments (or fraction
thereof) last payable under this Agreement; provided, however, any obligations
which become due and owing after the possession shall be surrendered but which
comprise costs and expenses incurred and attributable before such date, such as
rent, electricity, gas, water, sewer, telephone, property
-24-
taxes, employee salary and benefits and similar items, shall be prorated between
the Clearview Group and the GG Group as of the date of surrender.
(b) Escrowed Funds. Upon the termination of this Agreement, the
Escrowed Funds and Escrowed Documents shall be pre-paid insurance premiums,
concession inventories, theater supplies from the Escrow Funds distributed as
follows:
(i) if the Agreement shall be terminated by GG pursuant to Section
10.1(b)(iii)(B), the Escrow Agent shall pay from the Escrow Funds (A) directly
to the landlord, under the Lease, all rent due and owing to the landlord (a
"Rental Payment Amount") on the date of the delivery of the Notice of
Termination and shall continue to pay such rent as subsequently becomes due for
the theater until the earlier of (1) the date on which the GG Group shall first
charge admission for entrance to the Theater or (2) the end of the six month
period immediately following the delivery of the Notice of Termination and (B)
directly to the GG Group all Retention Fees which would have been due and
payable to the GG Group through the end of the Contract Year during which the
Notice of Termination was delivered to the Clearview Group together with
interest at twelve percent per annum on such amount calculated from the date of
delivery of the Notice of Termination through the date on which such payment is
made by the Escrow Agent to the GG Group (the "Retention Fee Amount") and shall
release the Escrowed Documents to the GG Group. Not less than twenty-four hours
after the first date upon which the GG Group shall first charge admission for
entrance to the Theater, the GG Group shall notify the Escrow Agent in writing
of such occurrence (each an "Operation Notice"). If the GG Group shall fail to
so notify the Escrow Agent, the Clearview Group may deliver such notice to the
Escrow Agent.
(ii) if the Agreement shall expire or shall be terminated for any
reason other than the termination of the Agreement by the GG Group pursuant to
Section 10.1(b)(iii)(B), the Escrow Agent shall immediately release the Escrowed
Funds and the Escrowed Documents (other than Exhibit E) signed by the Clearview
Group to the Clearview Group; provided, however, that if the Agreement shall
expire or be terminated for a reason other than default by the GG Group, the
Escrow Agent shall release to the GG Group the amount of the Escrow Funds equal
to the amounts owed by the Clearview Group to the GG Group and to the lessors
under the Leases, including amounts due to the GG Group and to the lessors until
the Clearview Group shall have delivered possession of the Theaters to the GG
Group.
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ARTICLE XI.
DISPUTE RESOLUTION
11.01. Dispute Resolution. The calculation of Excess Revenue and Gross
Revenue shall be made by the Clearview Group, as reflected in the Financial
Statements periodically provided by the Clearview Group to the GG Group pursuant
to Section 1.6. Any disagreement concerning the calculation of the amount of the
Excess Revenue or of the Gross Revenue or the calculation of any Retention Fee
or the Purchase Price for a particular Contract Year shall be delivered to the
Clearview Group by the GG Group in writing (the "Dispute Notice") within sixty
days following the end of such Contract Year or, if the Option shall have been
exercised, within thirty days following the delivery of the Option Notice,
provided that the most recent financial statement pursuant to Section 1.6 shall
have been timely delivered. If the Clearview Group and the GG Group do not
resolve such dispute within thirty days after the delivery of such notice, the
Clearview Group and the GG Group shall engage to resolve such dispute at the New
York office of the accounting firm of KPMG Peat Marwick, if such firm shall not
have represented any of the Clearview Group or its affiliates within the
three-year period ending on the day the Dispute Notice is delivered to the
Clearview Group, and otherwise the New York office of the accounting firm of
Xxxxxx Xxxxxxxx, or if neither such firm accepts such engagement, an accounting
firm designated by the New York office of the American Arbitration Association.
The management agreement with such accounting firm shall require the accounting
firm to make their determination with respect to the items in dispute within
ninety days. The Clearview Group and the GG Group shall each pay one-half of the
costs of the fees and expenses of such accounting firm. The resolution by such
accounting firm of such dispute shall be final, binding and conclusive upon the
parties and shall be the parties' sole and exclusive remedy regarding any
dispute concerning the amount of the Excess Revenue or Gross Revenue. During the
period of dispute, the Clearview Group shall continue to pay to the GG Group all
amounts owed to the GG Group that are undisputed. Upon resolution of the
dispute, the accounting firm shall deliver to each of the GG Group and the
Clearview Group a written resolution of the dispute (the "Resolution Notice").
ARTICLE XII.
MISCELLANEOUS
12.01. Nature of Relationship. It is not the intention of the parties to
this Agreement and nothing provided in this Agreement shall be deemed to create
a joint venture or partnership between the Clearview Group and the GG Group. It
is
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further intended that this Agreement does not constitute an assignment or
sublease of the GG Group's rights under the Lease prior to exercise of the
Option and payment of the Purchase Price by the Clearview Group. Neither party
shall have the authority to enter into any contract or commitment in the name
and on behalf of the other party.
12.02. Costs and Expenses. The Clearview Group and the GG Group shall each
pay its respective expenses in connection with this Agreement and the
transactions contemplated in this Agreement.
12.03. Specific Performance. The GG Group acknowledges that damages at law
would be an inadequate remedy for (i) violation of any provision relating to the
exercise of the Option by the Clearview Group and (ii) breach by the GG Group of
Section 6.9. Accordingly, in the event of (i) the violation of any provision of
this Agreement relating to the exercise of the Option by the Clearview Group or
(ii) breach by the GG Group of Section 6.9, the Clearview Group, in addition to
and not in lieu of other remedies, shall be entitled to compel specific
performance by the GG Group of its obligations under this Agreement.
12.04. Further Assurances. The GG Group shall, at any time and from time to
time on and after the Closing Date, upon request by the Clearview Group and
without further consideration, take or cause to be taken such actions and
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, documents, transfers, conveyances and assurances as
may be required for the better conveying, transferring, assigning, delivering,
assuring and confirming the Assets to the Clearview Group.
12.05. Notices.
(a) Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made i. the second business day after the date of mailing, if
delivered by registered or certified mail, postage prepaid, ii. upon delivery,
if sent by hand delivery, iii. upon delivery, if sent by prepaid courier, with a
record of receipt, or iv. the next day after the date of dispatch, if sent by
cable, telegram, facsimile or telecopy: to the parties at the following
addresses:
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if to the Clearview Group, to:
Clearview Cinema Group, Inc.
0 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
with a required copy to:
Xxxxxx X. Xxxxxxxx, Esquire
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
if to the GG Group, to:
Xxxxx Xxxxx
00 Xxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
with a required copy to:
Hollenberg, Levin, Xxxxxxx, Xxxx
and Xxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Telecopy: (000) 000-0000
(b) Simultaneous Transmission; Change of Address. All notices or
other communications given or made pursuant to Section 12.5(a)(i) shall be
simultaneously sent by facsimile and all notices or other communications given
or made pursuant to Section 12.5(a)(iv) shall be simultaneously sent by
registered or certified mail, postage prepaid, return receipt request). Any
party hereto may change the address to which notice to it, or copies thereof,
shall be addressed by giving notice thereof to the other parties hereto in
conformity with the foregoing.
12.06. Assignment; Governing Law. This Agreement and all the rights and
powers granted hereby shall bind and inure to the benefit of the parties hereto
and their respective permitted successors and assigns. This Agreement and the
rights, interests and obligations hereunder may not be assigned by any party
hereto and the Leases may not be sublet by the Clearview Group without the prior
written consent of the other parties hereto, except that the Clearview Group may
make such assignments or sublet to any Affiliate of the Clearview Group provided
that the Clearview Group remains liable under this Agreement and the Clearview
Group
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obtains such consent, if any, that is required to be obtained by any CCGS under
the Lease and the GG Group may make such assignments to any affiliate of the GG
Group provided that the GG Group remains liable hereunder. This Agreement shall
be governed by and construed in accordance with the laws of New York without
regard to its conflict of law doctrines.
12.07. Amendment and Waiver. To be effective, any amendment or waiver under
this Agreement must be in writing and be signed by the party against whom
enforcement of the same is sought. Neither the failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or to insist
upon compliance by any other party with its obligations hereunder, nor any
custom or practice of the parties at variance with the terms hereof, shall
constitute a waiver by such party of its right to exercise any such right, power
or remedy or to demand such compliance.
12.08. Entire Agreement; No Third Party Beneficiaries. This Agreement and
the Schedules and Exhibits set forth all of the promises, covenants, agreements,
conditions and undertakings between the parties hereto with respect to the
subject matter hereof, and supersede all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express or implied,
oral or written. This Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
12.09. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of Law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
12.10. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an
original but all of which together shall be deemed to be one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Cinema Herricks, Inc.
By:_____________________________
Title:_______________________
CCC Herricks Cinema Corp.
By:_____________________________
Title:_______________________
Clearview Cinema Group
By:_____________________________
Title:_______________________
[Schedules and Exhibits are not included herewith, but will be
provided by the Company upon request.]
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