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Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
MARQUEE HOLDINGS INC.,
and
LCE HOLDINGS, INC.
DATED AS OF JUNE 20, 2005
TABLE OF CONTENTS
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Index of Defined Terms
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 20, 2005 (this “ Agreement ”), by and among Marquee Holdings Inc., a Delaware corporation (“ Parent ”), and LCE Holdings, Inc., a Delaware corporation (the “ Company ”).
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), Parent and the Company will enter into a business combination transaction pursuant to which the Company will merge with and into Parent with Parent as the surviving corporation (the “ Merger ”); and
WHEREAS, the respective Boards of Directors of Parent and the Company have determined that the Merger is advisable to, and in the best interests of, their respective companies and their respective stockholders and, accordingly, have each approved this Agreement, agreed to effect the Merger and resolved to recommend that their respective stockholders consent to and approve this Agreement, the Merger and the other transactions contemplated hereby; and
WHEREAS, as a condition to and as an inducement to Parent’s willingness to enter into this Agreement, the Company is concurrently with the execution and delivery of this Agreement, entering into a Consent and Support Agreement in the form of Exhibit A to this Agreement (the “ Company Consent and Support Agreement ”) with the holders of Company Capital Stock (as defined therein) listed on the signature pages thereto (together with all other holders of outstanding shares of Company Common Stock, the “ Company Stockholders ”) pursuant to which, among other things, each of such Company Stockholders is consenting to and approving this Agreement, the Merger and the other transactions contemplated hereby;
WHEREAS, as a condition to and as an inducement to the Company’s willingness to enter into this Agreement, Parent is concurrently with the execution and delivery of this Agreement, entering into a Consent and Support Agreement in the form of Exhibit B to this Agreement (the “ Parent Consent and Support Agreement ”) with the holders of Existing Parent Common Stock (as defined herein) listed on the signature pages thereto (together with all other holders of outstanding shares of Existing Parent Common Stock, the “ Parent Stockholders ”) pursuant to which, among other things, each of such Parent Stockholders is consenting to and approving this Agreement, the Merger and the other transactions contemplated hereby;
WHEREAS, for federal income tax purposes, it is intended that each of the Merger and the Operating Company Merger shall qualify as a “reorganization,” and this Agreement shall constitute a plan of reorganization, within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”) and the Treasury Regulations promulgated thereunder;
WHEREAS, for federal income tax purposes, it is intended that the LCE Intermediate Holdings Merger shall qualify as a complete liquidation of a subsidiary and a “reorganization” and this Agreement shall constitute both a plan of liquidation, within the meaning of Section 332 of the Code and the Treasury Regulations promulgated thereunder, and a plan of reorganization, within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder;
WHEREAS, for federal income tax purposes, it is intended that the LCE Holdco Merger shall qualify as a complete liquidation of a subsidiary and this Agreement shall constitute a plan of liquidation, within the meaning of Section 332 of the Code and the Treasury Regulations promulgated thereunder;
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, the parties hereto agree as follows:
Section 1.1 The Merger . Upon the terms and subject to the satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, the Company shall be merged with and into Parent. As a result of the Merger, the separate corporate existence of the Company shall cease and Parent shall continue as the surviving corporation of the Merger (the “ Surviving Corporation ”).
Section 1.2 Closing . The closing of the Merger (the “ Closing ”) shall take place on the third Business Day after the satisfaction or waiver (subject to applicable Law) of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Closing) set forth in Article VII, unless this Agreement has been theretofore terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties hereto (the actual date of the Closing being referred to herein as the “ Closing Date ”). The Closing shall be held at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022, unless another place is agreed to in writing by the parties hereto. On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger relating to the Merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with the relevant provisions of, the DGCL. The Certificate of Merger shall be effective on the date and time of such filing or such later date and time as Parent and the Company shall have agreed to and shall be specified in the Certificate of Merger (such date and time, being the “ Effective Time ”).
Section 1.3 Effect of the Merger . The Merger will have the effects provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, at the Effective Time, except as otherwise provided herein, all the property, rights, privileges, powers and franchises of the Company and Parent shall vest
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in the Surviving Corporation, and all debts, liabilities and duties of the Company and Parent shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Certificate of Incorporation and Bylaws of Surviving Corporation .
(a) Certificate of Incorporation. The Certificate of Incorporation of Parent, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation, until thereafter changed or amended as provided therein or by applicable Law.
(b) Parent Charter Amendments . Prior to the Effective Time, following the LCE Intermediate Holdings Merger, the Certificate of Incorporation of Parent shall be amended and restated as described in the Term Sheet (the “ Parent Charter Amendments ”). By virtue of the Parent Charter Amendments, and without any action on the part of Parent or its stockholders, (i) each existing share of common stock, par value $0.01 per share, of Parent (the “ Existing Parent Common Stock ”) issued and outstanding at the time of the Parent Charter Amendments shall be reclassified, changed and converted into one half of a share of Class A-1 Common Stock of Parent, par value $0.01 per share (the “ Parent Class A-1 Common Stock ”), and one half of a share of Class A-2 Common Stock of Parent, par value $0.01 per share (the “ Parent Class A-2 Common Stock ” and, together with the Parent Class A-1 Common Stock, the “ Parent Class A Common Stock ”), each having the rights, powers and privileges set forth in the Parent Charter Amendments, (ii) there shall be authorized a new class of common stock of Parent designated as Class L-1 Common Stock, par value $0.01 per share (the “ Parent Class L-1 Common Stock ”), and there shall be authorized a new series of common stock of Parent designated as Class L-2 Common Stock, par value $0.01 per share (the “ Parent Class L-2 Common Stock ” and, together with the Parent Class L-1 Common Stock, the “ Parent Class L Common Stock ”), each having the rights, powers and privileges set forth in the Parent Charter Amendments, (iii) there shall be authorized a new class of common stock of Parent designated as Class N Common Stock, par value $0.01 per share (the “ Parent Class N Common Stock ”), having the rights, powers and privileges set forth in the Parent Charter Amendments and (iv) the authorized and unissued Existing Parent Common Stock (together with the Parent Class A Common Stock, the Parent Class L Common Stock and the Parent Class N Common Stock, the “ Parent Capital Stock ”) shall remain authorized and shall be reclassified as residual common stock, par value $0.01, per share of Parent, with the rights, powers and privileges set forth in the Parent Charter Amendments.
(c) Bylaws. At the Effective Time, the Bylaws of Parent in effect immediately prior to the Effective Time, which shall contain the provisions necessary to effectuate the arrangements contemplated by the Term Sheet, shall become the Bylaws of the Surviving Corporation, until thereafter changed or amended as provided therein or by applicable Law.
Section 1.5 Directors and Officers of the Surviving Corporation . At the Effective Time, (i) the initial directors of the Surviving Corporation, each to hold office
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in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation, shall be those individuals appointed by the stockholders of the Surviving Corporation in accordance with the arrangements contemplated by the Term Sheet and (ii) the initial officers of the Surviving Corporation, each to hold the office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation, shall be those appointed by the initial directors of the Surviving Corporation in accordance with the arrangements contemplated by the Term Sheet.
ARTICLE II
Section 2.1 Conversion of Securities . At the Effective Time, by virtue of the Merger and without any action on the part of Parent, the Company or the holders of any of the following securities:
(a) Conversion Generally . Each share of Class A-1 Common Stock, par value $0.001 per share (“ Company Class A-1 Common Stock ”), Class A-2 Common Stock, par value $0.001 per share (“ Company Class A-2 Common Stock ”), Class A-3 Common Stock, par value $0.001 per share (“ Company Class A-3 Common Stock ”) and Class A-4 Common Stock, par value $0.001 per share, (the “ Company Class A-4 Common Stock ”) of the Company issued and outstanding immediately prior to the Effective Time shall be converted, at the election of the holder thereof in accordance with the procedures set forth herein, into either (i) a fraction of a newly and validly issued, fully paid and nonassessable share of Class L-1 Common Stock, par value $0.01 per share, of the Surviving Corporation (“ Surviving Class L-1 Common Stock ”) equal to one half of the Exchange Ratio and a fraction of a newly and validly issued, fully paid and nonassessable share of Class L-2 Common Stock, par value $0.01 per share, of the Surviving Corporation (“ Surviving Class L-2 Common Stock ”) equal to one half of the Exchange Ratio or (ii) a fraction of a newly and validly issued, fully paid and nonassessable share of Class N Common Stock, par value $0.01 per share, of the Surviving Corporation (“ Surviving Class N Common Stock ”) equal to the Exchange Ratio. Each share of Class L Common Stock, par value $0.001 per share (the “ Company Class L Common Stock ” and, together with the Company Class A-1 Common Stock, the Company Class A-2 Common Stock, the Company Class A-3 Common Stock and the Company Class A-4 Common Stock, the “ Company Capital Stock ”), of the Company, none of which will be issued and outstanding at or immediately prior to the Effective Time, shall automatically cease to exist without payment of any consideration therefor. The consideration described in this Section 2.1(a) and payable with respect to a particular share of Company Capital Stock is referred to herein as the “ Merger Consideration .” Except as provided in this Section 2.1, at the Effective Time, by virtue of the Merger, all shares of Company Capital Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each certificate previously representing any such shares shall thereafter represent the right to receive the Merger Consideration payable in respect of such shares of Company Capital Stock.
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(b) Cancellation of Company Treasury Shares. Each share of Company Capital Stock, if any, held by the Company as treasury stock immediately prior to the Effective Time shall be cancelled, and no payment (of Merger Consideration or otherwise) shall be made with respect thereto.
(c) Capital Stock of Parent. After giving effect to the Parent Charter Amendments, (i) no shares of Parent Class L Common Stock or Existing Parent Common Stock will be issued and outstanding prior to the Effective Time (ii) each share of Parent Class A-1 Common Stock issued and outstanding immediately prior to the Effective Time shall, at the election of the holder thereof in accordance with the procedures set forth herein, either (A) remain issued and outstanding and unchanged as a validly issued, fully paid and nonassessable share of Class A-1 Common Stock, par value $0.01 per share, of the Surviving Corporation (“ Surviving Class A-1 Common Stock ”) or (B) be converted into one validly issued, fully paid and nonassessable share of Surviving Class N Common Stock, (iii) each share of Parent Class A-2 Common Stock issued and outstanding immediately prior to the Effective Time shall, at the election of the holder thereof in accordance with the procedures set forth herein, either (A) remain issued and outstanding and unchanged as a validly issued, fully paid and nonassessable share of Class A-2 Common Stock, par value $0.01 per share, of the Surviving Corporation (“ Surviving Class A-2 Common Stock ”) or (B) be converted into one validly issued fully paid and nonassessable share of Surviving Class N Common Stock and (iv) each share of Parent Class N Common Stock issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and unchanged as a validly issued, fully paid and nonassessable share of Surviving Class N Common Stock.
(d) Change in Shares. If, between the date of this Agreement and the Effective Time, the outstanding shares of Parent Capital Stock or Company Capital Stock shall have been changed into, or exchanged for, a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Merger Consideration shall be correspondingly adjusted to provide the holders of Company Capital Stock the same economic effect as contemplated by this Agreement prior to such event. For the avoidance of doubt, the reclassification of the Existing Parent Common Stock pursuant to the Parent Charter Amendments shall not give rise to any adjustment to the Merger Consideration pursuant to this Section 2.1(d).
Section 2.2 Exchange of Certificates; Merger Consideration and Surviving Corporation Capital Stock . Each holder of record of Company Class A-1 Common Stock, Company Class A-2 Common Stock, Company Class A-3 Common Stock or Company Class A-4 Common Stock shall make an election on a form designated by Parent (an “ Election Form ”) as to the type of Merger Consideration such holder elects to receive as provided in Section 2.1(a). Any Company Capital Stock for which such holder of record has not, as of the Closing Date, properly submitted an Election Form shall be converted into Merger Consideration consisting of Class L Common Stock, par value $0.01 per share, of the Surviving Corporation in accordance with the exchange mechanism set forth in Section 2.1(a) (it being understood that the Company Stockholders who are employees of the Company shall elect to receive Class N
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Common Stock, par value $0.01 per share, of the Surviving Corporation). Each holder of record of Parent Class A-1 Common Stock or Parent Class A-2 Common Stock shall make an election on an Election Form as to the type of Capital Stock of the Surviving Corporation such holder elects to receive as provided in Section 2.1(c). Any Parent Class A-1 Common Stock or Parent Class A-2 Common Stock for which such holder of record has not, as of the Closing Date, properly submitted an Election Form shall remain outstanding as Surviving Class A-1 Common Stock or Surviving Class A-2 Common Stock, as applicable, in accordance with Section 2.1(c) (it being understood that the Parent Stockholders who are employees of Parent shall elect to receive Surviving Class N Common Stock). At the Closing (or as soon as practicable thereafter), upon surrender by the Company Stockholders to Parent of stock certificates representing all of the outstanding shares of Company Capital Stock (the “ Stockholders’ Shares ”), which certificates shall be accompanied by stock powers duly executed in blank, Parent shall deliver, or cause to be delivered, to each of the Company Stockholders, common stock certificates of the Surviving Corporation representing the portion of Merger Consideration such Company Stockholder is entitled based on the Stockholders’ Shares held by such Company Stockholder.
Section 2.3 Withholding . In the event that Parent would be required by the Code or by any provision of state, local or foreign tax Law to deduct and withhold any amount from the payment of Merger Consideration otherwise payable to a Company Stockholder pursuant to this Agreement, such holder shall, at the Closing, pay to Parent an amount of cash equal to the amount of such required deduction or withholding and Parent shall pay to such holder, without deduction or withholding, the full amount of the Merger Consideration payable to such holder pursuant to this Agreement, and such holder shall be treated, for all purposes of this Agreement, as having been paid the full amount of the Merger Consideration to which it is entitled pursuant to this Agreement.
Section 2.4 Stock Transfer Books . At the Effective Time, the stock transfer books of the Company shall be closed and thereafter, there shall be no further registration of transfers of shares of Company Capital Stock theretofore outstanding on the records of the Company. From and after the Effective Time, the holders of certificates representing shares of Company Capital Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares of Company Capital Stock except the right to receive the Merger Consideration.
Section 2.5 Company Stock Options .
(a) The Company and Parent shall use commercially reasonable efforts to take all actions reasonably necessary and appropriate to provide that, at the Effective Time, each unexpired and unexercised Company Stock Option that has vested prior to the Effective Time (each such Company Stock Option, a “ Vested Company Option ”) shall be cancelled and shall thereafter be of no force or effect, or shall be exchanged for an option to purchase Capital Stock of the Surviving Corporation (a “ Surviving Corporation Option ”) pursuant to terms reasonably agreed to by the Company and Parent, taking into account the terms of such Company Vested Option, including the exercise price and the value of the shares of Company Capital Stock to
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which such Company Vested Option relates relative to the value of shares of Capital Stock of the Surviving Corporation to which the Surviving Corporation Option shall relate. The Company shall use commercially reasonable efforts, including pursuant to the rights of the Company under any Company Stock Option Plans or other Contracts in respect of Company Stock Options to which the Company is party, to cause each of the holders of Vested Company Options to consent to the cancellation or exchange of such holder’s Vested Company Options in accordance with the preceding sentence.
(b) Prior to the Effective Time, the Company and LCE Holdco shall take all actions reasonably necessary or appropriate to provide that the Company Stock Option Plan shall terminate as of the Effective Time and each unexpired and unexercised Company Stock Option (other than Vested Company Options) outstanding immediately prior to the Effective Time shall be cancelled as of the Effective Time and the holder thereof shall not be entitled to receive any consideration or other payment (whether in cash, property or otherwise) therefor.
Section 2.6 Merger of LCE Holdco LLC .
(a) LCE Holdco Merger Generally . Immediately prior to the Effective Time, in accordance with the DGCL and the Delaware Limited Liability Company Act (the “ DLLCA ”), the Company shall cause LCE Holdco LLC., a Delaware limited liability company (“ LCE Holdco ”) that is a direct wholly owned Subsidiary of LCE Intermediate Holdings, Inc., a Delaware corporation and a direct wholly owned Subsidiary of the Company (“ LCE Intermediate Holdings ”), to be merged with and into LCE Intermediate Holdings (the “ LCE Holdco Merger ”). As a result of the LCE Holdco Merger, the separate limited liability company existence of LCE Holdco shall cease and LCE Intermediate Holdings shall continue as the surviving corporation of the LCE Holdco Merger.
(b) LCE Holdco Certificate of Merger . The Company shall cause the LCE Holdco Merger to be consummated by filing (or causing to be filed) a certificate of merger relating to the LCE Holdco Merger with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of, the DGCL and the DLLCA.
(c) Effects of the LCE Holdco Merger . The LCE Holdco Merger will have the effects provided in the applicable provisions of the DGCL and DLLCA. Without limiting the generality of the foregoing, upon consummation of the LCE Holdco Merger, all the property, rights, privileges, powers and franchises of LCE Holdco and LCE Intermediate Holdings shall vest in LCE Intermediate Holdings, and all debts, liabilities and duties of LCE Holdco and the LCE Intermediate Holdings shall become the debts, liabilities and duties of LCE Intermediate Holdings.
(d) Certificate of Incorporation; Bylaws; Directors and Officers. Upon consummation of the LCE Holdco Merger, the Certificate of Incorporation, Bylaws, directors and officers of LCE Intermediate Holdings, as the surviving corporation of the LCE Holdco Merger, shall be the Certificate of Incorporation, Bylaws,
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directors and officers of the Company in effect or in office, as applicable, immediately prior to the LCE Holdco Merger.
(e) Conversion of LCE Intermediate Holdings Securities . Upon consummation and by virtue of the LCE Holdco Merger, without any action on the part of LCE Holdco, LCE Intermediate Holdings, or the members of LCE Holdco or stockholders of LCE Intermediate Holdings, each membership interest in LCE Holdco, of which none have been issued and are outstanding that are not held by LCE Intermediate Holdings, shall automatically be cancelled, retired and cease to exist without payment of any consideration therefor and any and all other membership interests in LCE Holdco shall automatically be canceled and shall cease to exist without payment of any consideration therefor.
(f) Company Capital Stock . Each share of Capital Stock of LCE Intermediate Holdings issued and outstanding immediately prior to the consummation of the LCE Holdco Merger shall remain issued and outstanding and unchanged as a validly issued, fully paid and nonassessable share of Capital Stock of LCE Holdco as in existence prior to the consummation of the LCE Holdco Merger.
Section 2.7 Merger of LCE Intermediate Holdings .
(a) LCE Intermediate Holdings Merger Generally . Immediately prior to the Effective Time, following the consummation of the LCE Holdco Merger, in accordance with the DGCL, LCE Intermediate Holdings shall be merged with and into the Company (the “ LCE Intermediate Holdings Merger ”). As a result of the LCE Intermediate Holdings Merger, the separate corporate existence of LCE Intermediate Holdings shall cease and the Company shall continue as the surviving corporation of the LCE Intermediate Holdings Merger.
(b) LCE Intermediate Holdings Certificate of Merger . The Company shall cause the LCE Intermediate Holdings Merger to be consummated by filing a certificate of merger relating to the LCE Intermediate Holdings Merger with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of, the DGCL.
(c) Effects of the LCE Intermediate Holdings Merger . The LCE Intermediate Holdings Merger will have the effects provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, upon consummation of the LCE Intermediate Holdings Merger, all the property, rights, privileges, powers and franchises of LCE Intermediate Holdings and the Company shall vest in the Company, and all debts, liabilities and duties of LCE Intermediate Holdings and the Company shall become the debts, liabilities and duties of the Company.
(d) Certificate of Incorporation; Bylaws; Directors and Officers. Upon consummation of the LCE Intermediate Holdings Merger, the Certificate of Incorporation, Bylaws, directors and officers of the Company, as the surviving corporation of the LCE Intermediate Holdings Merger, shall be the Certificate of
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Incorporation, Bylaws, directors and officers of the Company in effect or in office, as applicable, immediately prior to the LCE Intermediate Holdings Merger.
(e) Conversion of LCE Intermediate Holdings Securities . Upon consummation and by virtue of the LCE Intermediate Holdings Merger, without any action on the part of LCE Intermediate Holdings, the Company or the holders of any of the following securities, (i) each share of 10% Cumulative Preferred Stock, par value $0.001 per share (the “ LCE Intermediate Holdings Preferred Stock ”), of LCE Intermediate Holdings issued and outstanding immediately prior to the consummation of the LCE Intermediate Holdings Merger shall be converted into a number of fully paid and nonassessable shares of Company Class A-4 Common Stock equal to the Preferred Exchange Ratio and (ii) each share of Common Stock, par value $0.01 per share (the “ LCE Intermediate Holdings Common Stock ” and, together with the LCE Intermediate Holdings Preferred Stock, the “ LCE Intermediate Holdings Capital Stock ”), of LCE Intermediate Holdings, of which no shares are outstanding that are not held by the Company, shall automatically be cancelled and cease to exist without payment of any consideration therefor, (iii) each share of LCE Intermediate Holdings Capital Stock, if any, held by LCE Intermediate Holdings as treasury stock immediately prior to the consummation of the LCE Intermediate Holdings Merger shall be cancelled, and no payment of consideration shall be made with respect thereto and (iv) except as provided in this Section 2.7(e), all shares of LCE Intermediate Holdings Capital Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each certificate previously representing any such shares shall thereafter represent the right to receive the LCE Intermediate Holdings Merger Consideration payable in respect of such shares of LCE Intermediate Holdings Capital Stock. The consideration described in this Section 2.7(e) and payable with respect to a particular share of LCE Intermediate Holdings Capital Stock is referred to herein as the “ LCE Intermediate Holdings Merger Consideration .”
(f) Company Capital Stock . Each share of Company Capital Stock issued and outstanding immediately prior to the consummation of the LCE Intermediate Holdings Merger shall remain issued and outstanding and unchanged as a validly issued, fully paid and nonassessable share of Company Capital Stock.
Section 2.8 Merger of Operating Companies
(a) Operating Company Merger Generally . Immediately following the Effective Time, in accordance with the DGCL, Loews Cineplex Entertainment Corporation, a Delaware corporation (“ Loews ”), shall be merged with and into AMCE (the “ Operating Company Merger ”). As a result of the Operating Company Merger, the separate corporate existence of Loews shall cease and AMCE shall continue as the surviving corporation of the Operating Company Merger.
(b) Operating Company Certificate of Merger . The Surviving Corporation shall cause AMCE to cause the Operating Company Merger to be consummated by filing a certificate of merger relating to the Operating Company Merger
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with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of, the DGCL.
(c) Effects of the Operating Company Merger . The Operating Company Merger will have the effects provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, upon consummation of the Operating Company Merger, all the property, rights, privileges, powers and franchises of Loews and AMCE shall vest in AMCE, and all debts, liabilities and duties of Loews and AMCE shall become the debts, liabilities and duties of AMCE.
(d) Certificate of Incorporation; Bylaws; Directors and Officers. Upon consummation of the Operating Company Merger, the Certificate of Incorporation, Bylaws, directors and officers of AMCE, as the surviving corporation of the Operating Company Merger, shall be the Certificate of Incorporation, Bylaws, directors and officers of AMCE in effect or in office, as applicable, immediately prior to the Operating Company Merger.
(e) Conversion of Loews Securities . Upon consummation and by virtue of the Operating Company Merger, without any action on the part of AMCE, Loews or the holders of the following securities, (i) each share of Preferred Stock, par value $0.01 per share, Class A Common Stock, par value $0.01 per share and Class B Common Stock, par value $0.01 per share (collectively, the “ Loews Capital Stock ”) of Loews issued and outstanding immediately prior to the consummation of the Operating Company Merger shall be cancelled and be converted into the right to receive one newly issued fully paid and nonassessable share of common stock, par value $0.01, of AMCE (“ AMCE Common Stock ”), (ii) each share of Loews Capital Stock, if any, held by Loews as treasury stock immediately prior to the consummation of the Operating Company Merger shall be cancelled, and no payment of consideration shall be made with respect thereto, (iii) except as provided in this Section 2.8(e), all shares of Loews Capital Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each certificate previously representing any such shares shall thereafter represent the right to receive the Operating Company Merger Consideration payable in respect of such shares of Loews Capital Stock. The consideration described in this Section 2.8(e) and payable with respect to a particular share of Loews Capital Stock is referred to herein as the “ Operating Company Merger Consideration .”
(f) AMCE Common Stock . Each share of AMCE Common Stock issued and outstanding immediately prior to the consummation of the Operating Company Merger shall remain issued and outstanding and unchanged as a validly issued, fully paid and nonassessable share of AMCE Common Stock.
Section 2.9 Transaction Order . For the avoidance of doubt, it is understood and agreed that the transactions contemplated by Article I and this Article II shall occur in the following order: (a) immediately prior to the Effective Time, (i) first, the LCE Holdco Merger shall be consummated, (ii) second, the LCE Intermediate Holdings Merger shall be consummated and (iii) third, the Parent Charter Amendments shall be effected, (b) at the Effective Time, the Merger shall be consummated and (c)
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immediately following the Effective Time, the Operating Company Merger shall be consummated.
Section 2.10 Tax Consequences The parties intend that each of the Merger, the Operating Company Merger and the LCE Intermediate Holdings Merger qualify as a “reorganization” under Section 368(a) of the Code. With respect to each of the Merger, the Operating Company Merger and the LCE Intermediate Holdings Merger, each of the parties hereto adopts this Agreement as a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) and agrees to cooperate in order to qualify the transactions as reorganizations, and to report each of the Merger, the Operating Company Merger and the LCE Intermediate Holdings Merger for federal and state income tax purposes in a manner consistent with such characterization.
(b) The parties intend that each of the LCE Intermediate Holdings Merger and the LCE Holdco Merger qualify as a complete liquidation of a subsidiary under Section 332 of the Code. Each of the parties hereto adopts this Agreement as a “plan of liquidation” with respect to each of the LCE Intermediate Holdings Merger and the LCE Holdco Merger within the meaning of Section 332(b) of the Code and Treasury Regulations Section 1.332-6 and agrees to cooperate in order to qualify the transactions as liquidations, and to report each of the LCE Intermediate Holdings Merger and the LCE Holdco Merger for federal and state income tax purposes in a manner consistent with such characterization.
ARTICLE III
The Company hereby represents and warrants to Parent that, except as set forth in the Company Disclosure Schedule (each schedule of which qualifies the correspondingly numbered section in this Agreement and any other section to which it is reasonably apparent on the face of such schedule that such schedule would qualify such other section):
Section 3.1 Corporate Existence and Power .
(a) The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Each Subsidiary of the Company (collectively, the “ Company Subsidiaries ”) is, and to the Knowledge of the Company each Company JV is, duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of the jurisdiction in which it is organized, except where the failure to be so organized, existing or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. Each of the Company, the Company Subsidiaries and, to the Knowledge of the Company each Company JV, has the requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to have such power and authority would not, individually or in the aggregate, reasonably be expected to have a Material
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Adverse Effect on the Company. Each of the Company, the Company Subsidiaries and, to the Knowledge of the Company each of the Company JVs, is duly qualified or licensed to do business, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. The Company has heretofore made available to Parent true, correct and complete copies of the Company’s Certificate of Incorporation (the “ Company Certificate of Incorporation ”), Bylaws (the “ Company Bylaws ”) and minute books and the similar organizational documents and minute books of each of the Company Subsidiaries, all as currently in effect. None of the Company, any of the Company Subsidiaries, or to the Knowledge of the Company any Company JV, is in violation of any of the terms or provisions of their respective Certificates of Incorporation, Bylaws or similar organizational documents, in each case as currently in effect, except, in the case of the Company Subsidiaries and Company JVs, such violations as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
(b) As of the date hereof, Schedule 3.1(b) sets forth a list of (i) all Company Subsidiaries and Company JVs and their respective jurisdictions of organization and (ii) all Persons in which the Company or a Company Subsidiary directly or indirectly owns 10% or more of the outstanding Capital Stock, including an indication of the percentage owned by the Company or such Company Subsidiary. As of the date hereof, except as set forth on Schedule 3.1(b), the Company directly or indirectly holds 100% of the issued and outstanding shares of Capital Stock of each of the Company Subsidiaries and Company JVs and there are no other outstanding Equity Interests in the Company Subsidiaries or, to the Knowledge of the Company, the Company JVs. All of the issued and outstanding shares or certificates representing Capital Stock of each of the Company Subsidiaries and Company JVs that are owned by the Company, a Company Subsidiary or a Company JV are owned free and clear of all Liens and are validly issued, fully paid and nonassessable.
Section 3.2 Capitalization . The authorized Capital Stock of the Company consists of 13,600,000 shares of Company Class A-1 Common Stock, 13,600,000 shares of Company Class A-2 Common Stock, 8,800,000 shares of Company Class A-3 Common Stock, 37,000,000 shares of Company Class A-4 Common Stock and 4,250,000 shares of Company Class L Common Stock. As of the date hereof, there are outstanding 13,285,332.70 shares of Company Class A-1 Common Stock, 13,285,332.70 shares of Company Class A-2 Common Stock, 8,596,391.81 shares of Company Class A-3 Common Stock, 91,530.77 shares of Company Class A-4 Common Stock and 3,917,620.91 shares of Company Class L Common Stock, and there are no other outstanding Equity Interests of the Company. All shares of Company Capital Stock have been duly authorized and validly issued and are fully paid and nonassessable and were not issued in violation of any preemptive rights. No bonds, debentures, notes or other indebtedness of the Company having the right to vote on any matters on which the holders of capital stock of the Company may vote are issued or outstanding. As of the date hereof, except as set forth on Schedule 3.2(a), there are no outstanding options,
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warrants or other rights to acquire Capital Stock from the Company, and no preemptive or similar rights, calls, agreements, commitments, arrangements, subscriptions or other rights, convertible or exchangeable securities, agreements, arrangements or commitments of any character, relating to the Capital Stock of the Company, obligating the Company to issue, deliver, transfer, issue or sell, any Equity Interests of the Company or obligating the Company to grant, extend or enter into any agreement, arrangement or commitment with respect to any such Equity Interests. Schedule 3.2(a) sets forth a true, correct and complete list of all outstanding options to purchase shares of Company Capital Stock and shares of Capital Stock of LCE Intermediate Holdings, Inc., as of the date hereof, which list sets forth the name of the holders thereof and, to the extent applicable, the exercise price or purchase price thereof, the number of shares of Company Capital Stock and shares of Capital Stock of LCE Intermediate Holdings, Inc., as applicable, subject thereto, the governing agreement or arrangement with respect thereto and the expiration date thereof. Except as set forth on Schedule 3.2(b), as required by the terms of any Company Stock Options, and/or as permitted by Section 5.1, there are no (i) outstanding agreements or other obligations of the Company, any Company Subsidiary or to the Knowledge of the Company any Company JV to repurchase, redeem or otherwise acquire (or cause to be repurchased, redeemed or otherwise acquired) any shares of Company Capital Stock or shares of Capital Stock of LCE Intermediate Holdings, Inc. or (ii) voting trusts or other agreements or understandings to which the Company or any Company Subsidiary or, to the Knowledge of the Company, any of the Company’s directors or executive officers is a party with respect to the voting of Capital Stock of the Company, any Company Subsidiary or to the Knowledge of the Company any Company JV.
Section 3.3 Corporate Authorization .
(a) The execution, delivery and performance by the Company of this Agreement and the Transaction Documents to which it is or will be party and the consummation by the Company of the transactions contemplated hereby and thereby are within the corporate powers of the Company, and have been duly authorized by all necessary corporate action, except with respect to the approval of the Company Stockholders that is being obtained immediately following the execution hereof. This Agreement and each Transaction Document to which the Company is or will be party constitutes or will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights, and to general equitable principles (the “ Bankruptcy Exception ”).
(b) The Company’s Board of Directors, at a meeting duly called and held or by unanimous written consent, and not subsequently rescinded or modified in any way, has duly (i) determined that this Agreement, the Transaction Documents to which the Company is or will be party and the transactions contemplated hereby and thereby (including the Merger) are fair to and in the best interests of the Company Stockholders, (ii) approved and adopted this Agreement, the Transaction Documents to which the Company is or will be party and the transactions contemplated hereby and thereby (including the Merger) and declared this Agreement advisable and (iii) recommended that
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the Company Stockholders vote in favor of the adoption of this Agreement and the Transaction Documents to which the Company is or will be party and in favor of all other actions necessary to consummate the transactions contemplated hereby and thereby.
Section 3.4 No Conflict; Required Filings and Consents .
(a) The execution and delivery of this Agreement and the Transaction Documents to which it is or will be party by the Company do not, and the performance by the Company of its obligations hereunder and thereunder will not, (i) conflict with or violate any provision of the Company Certificate of Incorporation or Company Bylaws or any similar organizational documents of any Company Subsidiary or to the Knowledge of the Company, any Company JV, (ii) assuming that all consents, approvals, authorizations and permits described in Section 3.4(b) have been obtained and all filings and notifications described in Section 3.4(b) have been made and any waiting periods thereunder have terminated or expired, conflict with or violate any Law applicable to the Company or any Company Subsidiary, or to the Knowledge of the Company any Company JV, or by which any property or asset of the Company, any Company Subsidiary or any Company JV is bound or affected or (iii) require any consent or approval under, result in any breach of or any loss of any benefit under, or constitute a change of control or default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, vesting, amendment, acceleration or cancellation of, or result in the creation of a Lien or other encumbrance on any property or asset of the Company, any Company Subsidiary, or the Knowledge of the Company any Company JV, pursuant to, any Contract, Company Permit or other instrument or obligation, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, reasonably be expected to (x) have a Material Adverse Effect (without giving effect to clause (iv) of the definition thereof) on the Company or (y) prevent or materially delay the performance by the Company of its obligations hereunder or under the Transaction Documents or the ability of the Company to take any action necessary to consummate the Merger.
(b) The execution and delivery of this Agreement and the Transaction Documents to which it is or will be party by the Company do not, and the performance by the Company of its obligations hereunder or thereunder will not, require any consent, approval, authorization or permit of, or filing with, or notification to, any domestic or foreign governmental, administrative, judicial or regulatory authority (a “ Governmental Entity ”) or any other Person (it being understood that the approval of the Company Stockholders is being obtained immediately following the execution hereof), except (i) under the Exchange Act, the Securities Act and any applicable Blue Sky Law, (ii) under the HSR Act and, if and to the extent necessary, foreign or supranational antitrust and competition Laws, (iii) the filing and recordation of the Certificate of Merger as required by the DGCL and (iv) for such other consents, approvals, authorizations, permits, filings or notifications, the failure of which to make or obtain, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
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Section 3.5 SEC Filings .
(a) Each of the Company and its Subsidiaries, including Loews, has timely filed all forms, reports and documents (including all Exhibits, Schedules and Annexes thereto) required to be filed by it under the Securities Act or the Exchange Act, as the case may be, with the SEC since July 27, 2004, including any amendments or supplements thereto and including the registration statement on Form S-4 of Loews and certain other Company Subsidiaries filed on April 15, 2005 (including the draft amendment to such Form S-4 dated June 9, 2005 that has been delivered to Parent, the “ Company S-4 ” and collectively, the “ Company SEC Documents ”). The Company SEC Documents, as of their respective filing dates, or in the case of the amendment to the S-4, as of the date hereof, (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) complied in all material respects with the Securities Act or the Exchange Act, each as in effect on the date so filed or delivered to Parent, as the case may be. As of the date hereof, no Company Subsidiary or Company JV is, and the Company is not, subject to the periodic reporting requirements of the Exchange Act. The Company has previously provided to Parent a true, correct and complete copy of the draft of the amendment dated June 9, 2005 included in the Company S-4 to be filed subsequent to the announcement of this Agreement and there are no other amendments or modifications which have not yet been filed with the SEC to any agreement, document or other instrument which previously has been filed by Loews with the SEC pursuant to the Securities Act or the Exchange Act, to the extent such amendment or modification is required to be filed thereunder.
(b) The management of each of the Company and Loews has (i) implemented disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to the Company and its Subsidiaries, including Loews, is made known to the management of the Company and Loews by others within those entities and (ii) disclosed, based on its most recent evaluation, to the Company’s and to Loews’ outside auditors and the audit committee of the Boards of Directors of the Company and Loews and to Parent (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that, in its good faith judgment, are reasonably likely to materially affect the Company’s or Loews’ ability to record, process, summarize and report financial data and (B) any fraud, whether or not material, known to management that involves management or other employees who, in each case, have a significant role in the Company’s or Loews’ internal control over financial reporting.
Section 3.6 Permits; Compliance With Law . The Company, each of the Company Subsidiaries, and to the Knowledge of the Company each Company JV, is in possession of all authorizations, licenses, permits (including Environmental Permits), certificates, approvals and clearances, and has submitted notices to, all Governmental Entities necessary for the Company or any Company Subsidiary or Company JV to develop, construct, own, lease and operate its properties or other assets and to carry on their respective businesses in the manner described in the Company SEC Documents filed or delivered to Parent prior to the date hereof and as it is being conducted as of the
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date hereof (other than authorizations, licenses, permits (including Environmental Permits), certificates, approvals and clearances required to be in the possession of, or notices required to be submitted by landlords of real properties leased by the Company, a Company Subsidiary or a Company JV pursuant to a lease or other agreement) (the “ Company Permits ”), and all such Company Permits are valid, and in full force and effect, except where the failure to have, or the suspension or cancellation of, or failure to be valid or in full force and effect of, any of the Company Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. None of the Company, any Company Subsidiary, or any Company JV, is in conflict with, or in default or violation of, (i) any Law applicable to the Company, any Company Subsidiary or, to the Knowledge of the Company, any Company JV or by which any property or asset of the Company, any Company Subsidiary or any Company JV is bound or affected or (ii) any Company Permits, except, with respect to clauses (i) and (ii), for any such conflicts, defaults or violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.7 Financial Statements .
(a) The audited and unaudited financial statements, including all related notes and schedules, contained in the Company SEC Documents (or incorporated therein by reference) (collectively, the “ Loews Financial Statments ”) (i) when filed, complied in all material respects with all applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto (ii) present fairly in all material respects the consolidated financial position of Loews and its consolidated Subsidiaries as of their respective dates and the consolidated results of operations, retained earnings and cash flows of Loews and its consolidated Subsidiaries for the respective periods indicated and (iii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except for changes in accounting principles disclosed in the notes thereto and subject, in the case of unaudited statements, to normal year end adjustments which were not and are not expected to be material in amount and the absence of related notes).
(b) Set forth on Schedule 3.7(b) are the unaudited consolidated balance sheet of the Company and the consolidated Company Subsidiaries as of March 31, 2005 and the related unaudited statements of income and cash flows for the three calendar months ended March 31, 2005 (the “ Company Financial Statements ”). The Company Financial Statements (i) present fairly in all material respects the consolidated financial position of the Company and the consolidated Company Subsidiaries as of their respective dates and the consolidated results of operations, retained earnings and cash flows of the Company and the consolidated Company Subsidiaries for the respective periods indicated and (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except for changes in accounting principles disclosed in the notes thereto and subject, in the case of unaudited statements, to normal year end adjustments which were not and are not expected to be material in amount and the absence of related notes).
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Section 3.8 Absence of Certain Changes .
(a) Since December 31, 2004, except as specifically required by, or as disclosed pursuant to, this Agreement, the Company, the Company Subsidiaries, the Domestic Company JVs and, to the Knowledge of the Company, the Foreign Company JVs, have conducted their respective businesses in all material respects in the ordinary course consistent with past practice, and there has not been any event, occurrence or development which individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company.
(b) Since December 31, 2004, except as specifically required or expressly permitted by, or as disclosed pursuant to, this Agreement, none of the Company, any Company Subsidiary, any Domestic Company JV or to the Knowledge of the Company any Foreign Company JV has taken any action that, if taken during the period from the date of this Agreement through the Effective Time, would violate Section 5.1.
Section 3.9 No Undisclosed Liabilities . There are no Liabilities of the Company, any Company Subsidiary or any Company JV of the kind required to be reflected in the Loews Financial Statements in accordance with GAAP, other than (i) Liabilities disclosed or provided for in the Loews Financial Statements, (ii) Liabilities incurred since December 31, 2004, in the ordinary course of business consistent with past practice which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company and (iii) Liabilities which would not, individually or in the aggregate, be material to the Company and the Company Subsidiaries, taken as a whole.
Section 3.10 Litigation . There is no action, suit, investigation or proceeding pending against, or to the Knowledge of the Company threatened against or affecting, the Company or any Company Subsidiary, or to the Knowledge of the Company any Company JV, or any of their respective properties or any of their respective officers or directors, or for which the Company, any Company Subsidiary or to the Knowledge of the Company any Company JV, is obligated to indemnify a Third Party, before any court or arbitrator or any governmental body, agency or official except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. There is no judgment, decree, injunction, rule, writ or order of any Governmental Entity or arbitrator outstanding against the Company, any Company Subsidiary or to the Knowledge of the Company any Company JV, which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.11 Taxes .
(a) Each of the Company, each Company Subsidiary, and to the Knowledge of the Company each Company JV, has timely filed or caused to be timely filed with the appropriate Tax authorities all material Tax Returns that are required to be filed by, or with respect to, the Company, the Company Subsidiaries and the Company
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JVs on or prior to the Closing Date. All such Tax Returns are true, correct and complete in all material respects. There are no material Liens for Taxes upon the assets of the Company, any Company Subsidiary or to the Knowledge of the Company any Company JV, except Liens for Taxes not yet due.
(b) All material Taxes and Tax liabilities of the Company, the Company Subsidiaries, and to the Knowledge of the Company the Company JVs, have been timely paid or fully provided for as a liability on the financial statements of the Company, the Company Subsidiaries and Company JVs in compliance with GAAP.
(c) None of the Company, any of the Company Subsidiaries, or to the Knowledge of the Company any of the Company JVs, has been a party to any distribution occurring during the two years preceding the date of this Agreement in which the parties to such distribution treated the distribution as subject to Section 355 of the Code.
(d) No deficiencies for material Taxes have been claimed, proposed or assessed in writing against the Company, any of the Company Subsidiaries, or to the Knowledge of the Company any Company JV, by any Tax authority that have not been finally resolved, and neither the Company nor any Company Subsidiary has Knowledge of any pending or threatened claim, proposal or assessment against the Company, any Company Subsidiary or Company JV for any such deficiency for material Taxes. The Company has not received written notice of any audits, investigations or other proceedings relating to any Liability of the Company, any Company Subsidiary or any Company JV in respect of any material Taxes which to the Company’s Knowledge is still open.
(e) None of the Company, any Company Subsidiary or to the Knowledge of the Company any Company JV has granted any waivers or extensions of the time to assess any material Taxes.
(f) The Company, each Company Subsidiary, and to the Knowledge of the Company each Company JV, have withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.
(g) None of the Company, any Company Subsidiary, or to the Knowledge of the Company any Company JV, is liable for a material amount of Taxes of any other Person (other than the Company or any Company Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.
(h) None of the Company, any Company Subsidiary, or to the Knowledge of the Company any Company JV, is party to any Tax allocation, indemnification or sharing agreement relating to allocating, indemnifying, or sharing Taxes among members of a consolidated, combined or unitary group.
(i) None of the Company, any Company Subsidiary, or to the Knowledge of the Company any Company JV, has entered into any transaction which
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constitutes a “listed transaction” (as defined in Treasury Regulation Section 301.6111-2(b)(2)).
Section 3.12 Contracts and Commitments .
(a) Except as filed as exhibits to the Company SEC Documents filed or delivered to Parent prior to the date of this Agreement, none of the Company, any Company Subsidiary, or to the Knowledge of the Company any Domestic Company JV, is a party to or bound by any Contract other than any Company Lease which (i) as of the date hereof, is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC), (ii) involves aggregate expenditures in excess of $8,000,000, (iii) involves annual expenditures in excess of $5,000,000 and is not cancelable within one year, (iv) which would prohibit or materially delay the consummation of the Merger, (v) contains any non-compete or exclusivity provisions with respect to any line of business or geographic area with respect to the Company, any Company Subsidiary or any of the Company’s current or future Affiliates, or which restricts the conduct of any line of business by the Company, any Company Subsidiary or any of the Company’s current or future Affiliates or any geographic area in which the Company, any Company Subsidiary or any of the Company’s current or future Affiliates may conduct business, in each case in any material respect, (vi) constitutes a partnership, joint venture, management services, stockholder or similar agreement or arrangement, (vii) provides for annual compensation of $150,000 or more to any director or officer of the Company, any Company Subsidiary or any Domestic Company JV (viii) evidences or governs material Indebtedness or (ix) amends, supplements or modifies in any respect any of the foregoing Contracts. Each Contract of the type described in Section 3.12, whether or not set forth in Schedule 3.12, and any Company Lease, is referred to herein as a “ Company Material Contract ”.
(b) Each Company Material Contract is valid and binding on the Company, each Company Subsidiary, and to the Knowledge of the Company each Domestic Company JV, party thereto and, to the Company’s and each such Company Subsidiary’s Knowledge each other party thereto, and is in full force and effect, and the Company, each of the Company Subsidiaries, and to the Knowledge of the Company each Domestic Company JV, have performed in all respects all obligations required to be performed by them to the date hereof under each Company Material Contract and, to the Company’ Knowledge, each other party to each Company Material Contract has performed in all respects all obligations required to be performed by it under such Company Material Contract to the date hereof, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.13 Employee Benefit Plans .
(a) Schedule 3.13(a) contains a true, correct and complete list of each Company Employee Plan. With respect to each Company Employee Plan, the Company has made available to Parent true, correct and complete copies of the Company Employee Plan and any amendments thereto (or if the Company Employee Plan is not a written
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plan, a written description thereof). Each Company Employee Plan has been established and maintained in material compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations (including but not limited to ERISA, the Sarbanes-Oxley Act of 2002, as amended, and the Code) which are applicable to such Company Employee Plan, except for such exceptions that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
(b) Neither the Company nor any Company ERISA Affiliate has incurred any liability under Title IV of ERISA that has not been satisfied in full, and no condition exists that presents a material risk to the Company or any Company ERISA Affiliate of incurring any such liability other than liability for premiums due the PBGC (which premiums have been paid when due).
(c) Each Company Employee Plan (which is not a multiemployer pension plan) which is intended to be qualified under Section 401(a) of the Code is so qualified, each trust forming a part thereof is exempt from federal income tax pursuant to Section 501(a) of the Code and, to the Knowledge of the Company, no circumstances exist which will adversely affect such qualification or exemption.
(d) The consummation of the transactions contemplated by this Agreement and the Transaction Documents will not, either alone or in combination with any other event, (i) entitle any current or former employee, officer, director or consultant of the Company, any Company Subsidiary, or to the Knowledge of the Company any Company JV, or any Company ERISA Affiliate to severance pay, unemployment compensation or any other similar termination payment, or (ii) accelerate the time of payment or vesting, or increase the amount of, or otherwise enhance, any benefit due to any such employee, officer, director or consultant. No amounts payable under Company Employee Plans will fail to be deductible for federal income tax purposes under Section 280G of the Code by reason of the consummation of the transactions contemplated by this Agreement.
(e) No Company Employee Plan is a “multiemployer pension plan,” as defined in Section 3(37) of ERISA, nor is any Company Employee Plan a plan described in Section 4063(a) of ERISA. As of the date of this Agreement, the Company has no unpaid withdrawal liability with respect to any “multiemployer pension plan” to which the Company or any Company ERISA Affiliate has contributed or been obligated to contribute. In the event the Company or any Company ERISA Affiliate withdrew in a “complete withdrawal” from all “multiemployer pension plans” to which the Company or any Company ERISA Affiliate has contributed, or been obligated to contribute, as of the Effective Time, the aggregate withdrawal liability incurred by the Company or such Company ERISA Affiliate would not have a Material Adverse Effect on the Company.
(f) No Company Employee Plan provides benefits, including, without limitation, death or medical benefits (whether or not insured), with respect to any current or former employees of the Company, any Company Subsidiary, or to the Knowledge of the Company any Company JV, for periods extending beyond their retirement or other
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termination of service (other than (i) coverage mandated by applicable law, (ii) death benefits or retirement benefits under any “employee pension plan,” as that term is defined in Section 3(2) of ERISA, or (iii) benefits the full cost of which is borne by the current or former employee (or his or her beneficiary)).
(g) There are no pending or, to the Knowledge of the Company, threatened or anticipated claims by or on behalf of any Company Employee Plan (which is not a multiemployer pension plan), by any employee or beneficiary under any such plan or otherwise involving any such plan (other than routine claims for benefits or claims that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company). No Company Employee Plan is under audit or investigation by, nor has the Company been contacted with respect to any Company Employee Plan by, the IRS, the PBGC or the Department of Labor. No such audit, investigation or contact is pending or, to the Knowledge of the Company, threatened as of the date of this Agreement.
(h) As of December 31, 2004, with respect to each Company Employee Plan (which is not a multiemployer pension plan) that is a defined benefit plan, the projected benefit obligations under all such plans, whether or not qualified, utilizing actuarial methods and assumptions set forth in the Loews Financial Statements, did not exceed the fair market value of the assets of such plans as of such date by more than $20,000,000. As of the date hereof and as of the Effective Time, the aggregate increase in any such underfunding since December 31, 2004 (taking into account only such plans for which there is any increase) would not, if all such plans were then terminated, have a Material Adverse Effect on the Company.
(i) There is no Contract, plan or arrangement with any current or former employee, officer or director of the Company to which the Company, any Company Subsidiary, or to the Knowledge of the Company any Company JV, is a party as of the date of this Agreement that, individually or in the aggregate and as a result of the Merger (whether alone or upon the occurrence of additional or subsequent events) or otherwise, is reasonably likely to give rise to the payment of any amount that would not be deductible pursuant to Section 162(m) of the Code or any corresponding or similar provision of state, local or foreign income Tax law.
Section 3.14 Labor and Employment Matters .
(a) (i) There are no collective bargaining agreements with any union covering employees of the Company, any of the Company Subsidiaries or to the Knowledge of the Company any Domestic Company JV, (ii) there is no labor strike, dispute, slowdown, stoppage or lockout actually pending or, to the Knowledge of the Company or any of the Company Subsidiaries, threatened against the Company, any of the Company Subsidiaries or to the Knowledge of the Company any of the Company JVs, (iii) to the Knowledge of the Company or any of the Company Subsidiaries, no union organizing campaign with respect to the employees of the Company, any of the Company Subsidiaries or Domestic Company JVs is threatened or underway, (iv) there is no unfair labor practice charge or complaint against the Company, any of the Company
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Subsidiaries, or to the Knowledge of the Company any Domestic Company JV, pending or, to the Knowledge of the Company or any of the Company Subsidiaries, threatened before the National Labor Relations Board or any similar state or foreign agency, (v) there is no written grievance pending relating to any collective bargaining agreement or other grievance procedure and (vi) to the Knowledge of the Company or any of the Company Subsidiaries, no charges with respect to or relating to the Company, any of the Company Subsidiaries or any of the Domestic Company JVs are pending before the Equal Employment Opportunity Commission or any other agency responsible for the prevention of unlawful employment practices, except for such exceptions to the foregoing clauses (iv), (v) and (vi) which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
(b) The Company has made available to Parent true, correct and complete copies of each of the Company’s material written personnel policies or rules applicable to employees of the Company or of the Company Subsidiaries in effect as of the date hereof. The Company and the Company Subsidiaries, and to the Knowledge of the Companies the Domestic Company JVs, and to the Knowledge of the Company and the Company Subsidiaries, all of the suppliers, manufacturers, contractors and subcontractors (“ Contractors ”) engaged in the operation of the respective businesses of the Company, the Company Subsidiaries and to the Knowledge of the Companies the Domestic Company JVs, are and have at all times been, in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages, hours of work and occupational safety and health, except for such failures to be in compliance as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
(c) As of the date hereof, within the last three years, none of the Company, the Company Subsidiaries or to the Knowledge of the Company any of the Company JVs have effectuated (i) a “plant closing” (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company, any of the Company Subsidiaries or any of the Company JVs, or (ii) a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility of the Company, any of the Company Subsidiaries or any of the Company JVs; nor has the Company, any of the Company Subsidiaries or to the Knowledge of the Company any of the Company JVs, been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state or local Law.
Section 3.15 Real Property; Leases .
(a) Schedule 3.15(a) contains a true, correct and complete list, by location, of all real property owned by the Company, any Company Subsidiary or any Domestic Company JV (the “ Company Owned Real Properties ”). Except for (x) such exceptions which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, (y) any matters of public record affecting the use of such properties and disclosed in writing in the most recently obtained title insurance policies or reports with respect to the Company Owned Real Properties
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made available to Parent prior to the date hereof and (z) Permitted Encumbrances, (i) the Company and the Company Subsidiaries have good and marketable title to the Company Owned Real Properties and (ii) the Company Owned Real Properties will be at Closing free and clear of all mortgages, Liens, leases, tenancies, security interests, options to purchase or lease or rights of first refusal except for those items securing debt assumed or allowed by the Surviving Corporation and its Subsidiaries. Schedule 3.15(a) contains a true, correct and complete list of the most recent title insurance policies or reports relating to the Company Owned Real Properties.
(b) Schedule 3.15(b) contains a true, correct and complete list, by address, of all material real property leased by the Company, any Company Subsidiary or any Domestic Company JV (the “ Company Leased Real Properties ”, and, together with the Company Owned Real Properties, the “ Company Real Properties ”). The Company has made available to Parent true, correct and complete copies of all Contracts providing for the lease of the Company Leased Real Properties (the “ Company Leases ”), each of which, in the aggregate are fairly presented in accordance with GAAP, consistently applied, in the Loews Financial Statements. With respect to (i) the Company Leased Real Properties other than Significant Company Theatre Properties, except for such exceptions which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company and (ii) the Significant Company Theatre Properties:
(A) each Company Lease is valid and binding upon the Company, a Company Subsidiary or a Domestic Company JV and upon the landlord thereunder and in full force and effect and grants the lessee under such Company Lease, once the premises under such Company Lease have been delivered by the landlord, the exclusive right to use and occupy the premises, subject to Permitted Encumbrances, and the Company, a Company Subsidiary or a Domestic Company JV enjoys peaceful and undisturbed possession of the premises, subject to Permitted Encumbrances;(B) the Company, a Company Subsidiary or a Domestic Company JV has good and valid title to the leasehold estate or other interest created under its respective Company Leases, subject to Permitted Encumbrances;(C) there is no, nor has the Company, any Company Subsidiary or to the Knowledge of the Company any Domestic Company JV received notice of any, default (or condition or event which, after notice or lapse of time or both, would constitute a default) thereunder by the lessee or (to the Knowledge of the Company) by the landlord thereunder which if it resulted in a termination of a Company Lease would be material to the Company and the Company Subsidiaries, taken as a whole;(D) with respect to any Company Leases that were assigned to the Company, any Company Subsidiary or any Domestic Company JV by a Third Party, to the Knowledge of the Company, all consents to such assignments or sublease have been obtained which may have been required with respect to such
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assignments or sublease, except such the failure of which to obtain has been cured by a course of dealing with the applicable landlord or which would not be material to the Company and the Company Subsidiaries, taken as a whole; and (E) none of the rights of the Company, any Company Subsidiary or to the Knowledge of the Company any Domestic Company JV under any of the Company Leases will be subject to termination or modification as the result of the consummation of the transactions contemplated by this Agreement and the Transaction Documents, and upon the consummation of the Merger, Parent will have succeeded to all of the rights, title and interest of the Company or such Company Subsidiary or Company JV either directly or indirectly by ownership of the Company Subsidiaries or Company JVs under each of such Company Leases.(c) Except as would not reasonably be expected to have a Material Adverse Effect on the Company, (i) each lease, sublease, license or other agreement granting to any Third Party any right to the use, occupancy or enjoyment of any Company Real Properties or any portion thereof that has an annual base rent equal to or greater than $500,000 (collectively, the “ Company Space Leases ”) is valid, binding and in full force and effect, (ii) all rent and other sums and charges payable by the tenant or occupant thereunder (the “ Company Space Tenant ”) are current, (iii) no termination event or condition or uncured default on the part of the Company, or to the Knowledge of the Company, the Company Space Tenant, exists under any Company Space Lease and (iv) no event or condition has occurred or exists that, with or without notice or lapse of time or both, would constitute such a default or termination event or condition.
(d) The Company is not obligated under, or a party to any Contract providing for (i) the purchase of any Company Leased Real Property for a purchase price in excess of $4 million or (ii) any option, right of first refusal or other right to sell, assign or dispose of any Company Owned Real Property.
(e) All components of all improvements included within the Company Real Properties, including, without limitation, the roofs and structural elements thereof and the heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer, waste water, storm water, paving and parking equipment, systems and facilities included therein, are in good working order and repair, except for such failures to be in good working order or repair that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. All of the Company Real Properties are used and open as an operating theatre. The purposes for those locations that are not so used are listed on Schedule 3.15(e). All of the Company Real Properties that are operating theatres have adequate means of ingress and egress to and from a public way and adequate parking available for the operation of the theatre located at such location. All Company Real Properties that are operating theatres may be used as motion picture theatres under applicable zoning provisions.
(f) The Company has not received any notice, nor has any Knowledge, of any pending, threatened or contemplated condemnation proceeding affecting any Significant Company Theatre Property or any part thereof, or any sale or
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other disposition of any Significant Company Theatre Property or any part thereof in lieu of condemnation, except in each case for those which would not materially interfere with the operations of the relevant Significant Company Theatre Property. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, the Company has not received any notice, nor has any Knowledge, of any pending, threatened or contemplated condemnation proceeding affecting any Company Real Properties (other than the Significant Company Theatre Properties) or any part thereof, or of any sale or other disposition of any Company Real Properties (other than the Significant Company Theatre Properties) or any part thereof in lieu of condemnation.
Section 3.16 Environmental Matters . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company:
(a) No Hazardous Material has been Released upon any Company Real Property or any other real property (whether or not owned, leased or otherwise used or occupied by the Company or its Subsidiaries) as a result of which any of the Company or its Subsidiaries, or to the Knowledge of the Company the Domestic Company JVs, has or may become liable to any Person pursuant to Environmental Law.
(b) There are no writs, injunctions, decrees, orders or judgments outstanding, or Environmental Claims pending or, to the Knowledge of the Company, threatened, or any known basis therefor, relating to the Company’s compliance with or liability under any Environmental Law.
(c) None of the Company, any of its Subsidiaries or any Domestic Company JV has received any request for information, or been notified that it is a potentially responsible party, under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“ CERCLA ”), or any similar Environmental Law.
Section 3.17 Insurance . The Company and its Subsidiaries maintain, and to the Knowledge of the Company the Company JVs maintain, insurance coverage with reputable insurers, or maintain self-insurance practices, in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of the Company, its Subsidiaries and the Company JVs (taking into account the cost and availability of such insurance). All such insurance policies are in full force and effect, and none of the Company, any of its Subsidiaries or to the Knowledge of the Company any of the Company JVs, is in default in any material respect with respect to its obligations under any material insurance policy maintained by it.
Section 3.18 Affiliate Transactions . Except (i) as set forth in the Company SEC Documents filed or delivered to Parent before the date of this Agreement or (ii) pursuant to any employment agreement with any officer of the Company, there are no items of the type that would be required to be disclosed under Item 404 of Regulation
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S-K promulgated by the SEC that would be required to be disclosed thereunder between the Company and any (a) present or former officer or director of the Company or any Company Subsidiary or, to the Knowledge of the Company, any Company JV or any of their immediate family members (including their spouses), (b) record or beneficial owner of more than 5% of any class of Company Capital Stock, or (c) Person known by the Company’s executive officers to be an Affiliate of any such officer, director or beneficial owner.
Section 3.19 Intellectual Property .
(a) Schedule 3.19(a) sets forth a true, correct and complete list of all (i) issued Patents and pending applications therefor, (ii) Trademarks, (iii) registrations for Copyrights and applications therefor and (iv) Internet domain name registrations and applications therefor, in each case (of the foregoing clauses (i) through (iv)), that are owned by the Company or any of the Company Subsidiaries or any of the Domestic Company JVs (the “ Company Owned Intellectual Property ”). Each item of Company Owned Intellectual Property has been duly registered in, filed in or issued by, as applicable, the official government registrars and/or issuers of patents, trademarks or copyrights, in the various jurisdictions indicated on Schedule 3.19(a).
(b) With respect to each item of Company Owned Intellectual Property (i) the Company or a Company Subsidiary or a Domestic Company JV is the exclusive owner of all right, title and interest in and to such Company Owned Intellectual Property, free and clear of any Liens (other than Permitted Encumbrances) or claims of others and (ii) the Company has taken all necessary actions, including the making of all requisite filings, renewals and payments, to maintain and protect such Company Owned Intellectual Property rights, except, with respect to clauses (i) and (ii), for such failures to so own or to take such actions which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
(c) The Company and each of the Company Subsidiaries owns, or has the right, free and clear of all Liens (other than Permitted Encumbrances), to use pursuant to a valid License Agreement, all material Intellectual Property necessary for, or used by the Company, each Company Subsidiary in the operation of its business in all material respects as it is presently conducted and presently proposed to be conducted.
(d) Except as would not be material to the Company and the Company Subsidiaries, taken as a whole:
(i) There are no claims, allegations or suits pending or, to the Knowledge of the Company, threatened, and the Company has not received any notice, claim, charge, complaint or demand alleging that the conduct of the Company, any of the Company Subsidiaries or, to the Knowledge of the Company, any Company JV infringes, misappropriates or otherwise violates any Intellectual Property of any Third Party or challenging the ownership, use, registration, validity or enforceability of the Intellectual Property owned by the Company, any Company Subsidiary or any Domestic Company JV or, to the
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Knowledge of the Company, licensed to the Company, any Company Subsidiary or any Domestic Company JV.
(ii) To the Knowledge of the Company, the conduct of the Company’s, the Company Subsidiaries’ and the Company JVs’ respective businesses has not and does not infringe, misappropriate or otherwise violate any Intellectual Property of any Third Party.
(iii) To the Knowledge of the Company, the Intellectual Property owned by or licensed to Company or any of the Company Subsidiaries or any of the Domestic Company JVs has not been infringed, misappropriated or otherwise violated by any Third Party.
(e) The collection, use, maintenance and disclosure of information and data relating to users of any web sites owned or operated by or on behalf of the Company, any of the Company Subsidiaries or, to the Knowledge of the Company, any Domestic Company JV is in compliance with all applicable privacy policies, terms of use, laws and regulations. The consummation of the transactions contemplated by this Agreement and the Transaction Documents will not result in a violation of any such privacy policies, terms of use, laws or regulations relating to any such web sites.
Section 3.20 Title and Sufficiency of Assets .
(a) The Company and each Company Subsidiary, and to the Knowledge of the Company each Company JV, have good and valid title to all of their personal properties and assets reflected on the Company’s audited balance sheet (including in any related notes thereto) as of December 31, 2004 included in the Yankee Financial Statements (the “ Company 2004 Balance Sheet ”) or acquired after December 31, 2004 (other than assets disposed of since December 31, 2004 in the ordinary course of business consistent with past practice or, following the date hereof, as permitted pursuant to Section 5.1), in each case free and clear of all Liens, except for (a) Liens that secure Indebtedness that is properly reflected in the Company 2004 Balance Sheet; (b) Liens for Taxes not yet due or being contested in good faith (provided adequate reserves (in the good faith judgment of management) have been set aside for payment thereof); and (c) Liens arising in the ordinary course of business consistent with past practice and securing Indebtedness not yet due and payable.
(b) The Company and each Company Subsidiary, and to the Knowledge of the Company each Company JV, either owns, or has valid leasehold interest in, all material assets and properties necessary for the operation of its business as presently conducted. Without limiting the foregoing, except as set forth on Schedule 3.20(b), each theater located on Company Real Property, together with the related items of personal property located therein, constitutes a fully-operable motion picture theatre and each such motion picture theater and related personal property is fit for the use for which it is intended and to which it is presently devoted and complies with the Americans with Disabilities Act and Section 504 of the Rehabilitation Act of 1973 and all other applicable Laws.
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Section 3.21 Brokers . There is no investment banker, broker, finder, financial advisor or other intermediary which has been retained by or is authorized to act on behalf of the Company or any of the Company Subsidiaries who would be entitled to any fee in connection with the transactions contemplated by this Agreement and the Transaction Documents.
Section 3.22 Tax Treatment .
(a) None of the Company, any Company Subsidiary or, to the Knowledge of the Company, any of the Company’s Affiliates has taken or agreed to take, or will take or will agree to take, any action that would prevent the Merger, the Operating Merger or the LCE Intermediate Holdings Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code. The Company is not aware of any agreement, plan or other circumstance that would prevent the Merger, the Operating Merger or the LCE Intermediate Holdings Merger from qualifying as a “reorganization” within the meaning of Section 368(a).
(b) None of the Company, any Company Subsidiary or, to the Knowledge of the Company, any of the Company’s Affiliates has taken or agreed to take, or will take or will agree to take, any action that would prevent the LCE Intermediate Holdings Merger or the LCE Holdco Merger from qualifying as a complete liquidation of a subsidiary within the meaning of Section 332 of the Code. The Company is not aware of any agreement, plan or other circumstance that would prevent the LCE Intermediate Holdings Merger or the LCE Holdco Merger from qualifying as a complete liquidation of a subsidiary within the meaning of Section 332 of the Code.
Section 3.23 State Takeover Statutes . No “fair price,” “moratorium,” “control share acquisition” or other anti-takeover Law, including the interested stockholder provisions codified in Section 203 of the DGCL (each, a “ Takeover Statute ”) or any other similar statutory or organizational document anti-takeover provision is applicable to this Agreement, the Merger or the transactions contemplated by this Agreement and the Transaction Documents.
ARTICLE IV
Parent hereby represents and warrants to the Company that except as set forth in the Parent Disclosure Schedule (each schedule of which qualifies the correspondingly numbered section in this Agreement and any other section to which it is reasonably apparent on the face of such schedule that such schedule would qualify such other section):
Section 4.1 Corporate Existence and Power .
(a) Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Each Subsidiary of Parent
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(collectively, the “ Parent Subsidiaries ”) is duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of the jurisdiction in which it is organized, except where the failure to be so organized, existing or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent. Each of Parent and the Parent Subsidiaries has the requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to have such power and authority would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent. Each of Parent and the Parent Subsidiaries is duly qualified or licensed to do business, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent. Parent has heretofore made available to the Company true, correct and complete copies of Parent’s Certificate of Incorporation (the “ Parent Certificate of Incorporation ”), Bylaws (the “ Parent Bylaws ”) and minute books and the similar organizational documents and minute books of each of Parent Subsidiaries, all as currently in effect. None of Parent or any of the Parent Subsidiaries is in violation of any of the terms or provisions of their respective Certificates of Incorporation, Bylaws or similar organizational documents, in each case as currently in effect, except, in the case of the Parent Subsidiaries, such violations as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
(b) As of the date hereof, Schedule 4.1(b) sets forth a list of (i) all Parent Subsidiaries and their respective jurisdictions of organization and (ii) all Persons in which Parent or a Parent Subsidiary directly or indirectly owns 10% or more of the outstanding Equity Interests, including an indication of the percentage owned by Parent or such Parent Subsidiary. As of the date hereof, except as set forth on Schedule 4.1(b), Parent directly or indirectly holds 100% of the outstanding share of Capital Stock of each of the Parent Subsidiaries and there are no other Equity Interests in the Parent Subsidiaries outstanding. All of the issued and outstanding shares or certificates representing Capital Stock of each of the Parent Subsidiaries that are owned by Parent or a Parent Subsidiary are owned free and clear of all Liens and are validly issued, fully paid and nonassessable.
Section 4.2 Capitalization .
Prior to the effectiveness of the Parent Charter Amendments, the authorized Capital Stock of Parent consists of 2,000,000 shares of Existing Parent Common Stock. All shares of Existing Parent Common Stock have been duly authorized and validly issued and are fully paid and nonassessable and were not issued in violation of any preemptive rights. As of the date hereof, there are outstanding 769,350 shares of Existing Parent Common Stock, and there are no other outstanding Equity Interests of Parent. All shares of Existing Parent Common Stock have been duly authorized and validly issued and are fully paid and nonassessable and were not issued in violation of any preemptive rights. No bonds, debentures, notes or other indebtedness of Parent having the right to vote on any matters on which the holders of capital stock of Parent
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may vote are issued or outstanding. As of the date hereof, except as set forth on Schedule 4.2(a), there are no outstanding options, warrants or other rights to acquire Capital Stock from Parent, and no preemptive or similar rights, calls, agreements, commitments, arrangements, subscriptions or other rights, convertible or exchangeable securities, agreements, arrangements or commitments of any character, relating to the Capital Stock of Parent, obligating Parent to issue, deliver, transfer issue or sell, any Equity Interests of Parent or obligating Parent to grant, extend or enter into any agreement, arrangement or commitment with respect to any such Equity Interests. Schedule 4.2(a) sets forth a true, correct and complete list of all outstanding options to purchase shares of Existing Parent Common Stock, as of the date hereof, which list sets forth the name of the holders thereof and, to the extent applicable, the exercise price or purchase price thereof, the number of shares of Existing Parent Common Stock subject thereto, the governing agreement or arrangement with respect thereto and the expiration date thereof. Except as set forth on Schedule 4.2(b), as required by the terms of any Parent Stock Options, and/or as permitted by Section 5.2, there are no (i) outstanding agreements or other obligations of Parent or any Parent Subsidiary to repurchase, redeem or otherwise acquire (or cause to be repurchased, redeemed or otherwise acquired) any shares of Existing Parent Common Stock or (ii) voting trusts or other agreements or understandings to which Parent or any Parent Subsidiary or, to the Knowledge of Parent, any of Parent’s directors or executive officers is a party with respect to the voting of Capital Stock of Parent or any Parent Subsidiary.
Section 4.3 Corporate Authorization .
(a) The execution, delivery and performance by Parent of this Agreement and the Transaction Documents to which it is or will be party and the consummation by Parent of the transactions contemplated hereby and thereby are within the corporate powers of Parent, and have been duly authorized by all necessary corporate action, except with respect to the approval of the Parent Stockholders that is being obtained immediately following the execution hereof. This Agreement and each Transaction Document to which Parent is or will be party constitutes or will constitute a valid and binding agreement of Parent, enforceable against Parent in accordance with its terms, except as such enforceability may be limited by the Bankruptcy Exception.
(b) Parent’s Board of Directors, acting by unanimous written consent not subsequently rescinded or modified in any way, has duly (i) determined that this Agreement, the Transaction Documents to which Parent is or will be party and the transactions contemplated hereby and thereby (including the Merger) are fair to and in the best interests of Parent Stockholders, (ii) approved and adopted this Agreement, the Transaction Documents to which Parent is or will be party and the transactions contemplated hereby and thereby (including the Merger) and declared this Agreement advisable and (iii) recommended that Parent Stockholders vote in favor of the adoption of this Agreement and the Transaction Documents to which Parent is or will be party and in favor of all other actions necessary to consummate the transactions contemplated hereby and thereby.
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Section 4.4 No Conflict; Required Filings and Consents .
(a) The execution and delivery of this Agreement and the Transaction Documents to which it is or will be a party by Parent do not, and the performance by Parent of its obligations hereunder and thereunder will not, (i) conflict with or violate any provision of Parent Certificate of Incorporation or Parent Bylaws or any similar organizational documents of any Parent Subsidiary, (ii) assuming that all consents, approvals, authorizations and permits described in Section 4.4(b) have been obtained and all filings and notifications described in Section 4.4(b) have been made and any waiting periods thereunder have terminated or expired, conflict with or violate any Law applicable to Parent or any Parent Subsidiary or by which any property or asset of Parent or any Parent Subsidiary is bound or affected or (iii) require any consent or approval under, result in any breach of or any loss of any benefit under, or constitute a change of control or default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, vesting, amendment, acceleration or cancellation of, or result in the creation of a Lien or other encumbrance on any property or asset of Parent or any Parent Subsidiary pursuant to, any Contract, Parent Permit or other instrument or obligation, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, reasonably be expected to (x) have a Material Adverse Effect (without giving effect to clause (iv) of the definition thereof) on Parent or (y) prevent or materially delay the performance by Parent of its obligations hereunder or under the Transaction Documents or the ability of Parent to take any action necessary to consummate the Merger.
(b) The execution and delivery of this Agreement and the Transaction Documents to which it is or will be party by Parent do not, and the performance by Parent of its obligations hereunder and thereunder will not, require any consent, approval, authorization or permit of, or filing with, or notification to, any Governmental Entity or any other Person (it being understood that the approval of the Parent Stockholders is being obtained immediately following the execution hereof), except (i) under the Exchange Act, the Securities Act and any applicable Blue Sky Law, (ii) under the HSR Act and, if and to the extent necessary, foreign or supranational antitrust and competition Laws, (iii) the filing and recordation of the Certificate of Merger as required by the DGCL and (iv) for such other consents, approvals, authorizations, permits, filings or notifications, the failure of which to make or obtain, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
Section 4.5 SEC Filings .
(a) Each of Parent and its Subsidiaries, including AMCE, has timely filed all forms, reports and documents (including all Exhibits, Schedules and Annexes thereto) required to be filed by it under the Securities Act or the Exchange Act, as the case may be, with the SEC since December 23, 2004, including any amendments or supplements thereto (together with the AMCE annual report on Form 10-K for the year ended March 31, 2005 that has been delivered to the Company, collectively, the “ AMCE SEC Documents ”). The AMCE SEC Documents, as of their respective filing dates, or in the case of the Form 10-K delivered to the Company, as of the date hereof, (i) did not contain any untrue statement of a material fact or omit to state a material fact required to
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be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) complied in all material respects with the Securities Act or the Exchange Act, each as in effect on the date so filed or delivered to the Company, as the case may be. Other than AMCE, no Parent Subsidiary is subject to the periodic reporting requirements of the Exchange Act. Parent has previously provided to the Company a true, correct and complete copy of any amendment or modification which has not yet been filed with the SEC to any agreement, document or other instrument which previously had been filed by Parent or AMCE with the SEC pursuant to the Securities Act or the Exchange Act, to the extent such amendment or modification is required to be filed thereunder.
(b) The management of each of Parent and AMCE has (i) implemented disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to Parent and its Subsidiaries, including AMCE, is made known to the management of Parent and AMCE by others within those entities and (ii) disclosed, based on its most recent evaluation, to Parent’s and to AMCE’s outside auditors and the audit committee of the Boards of Directors of Parent and AMCE and to the Company (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that, in its good faith judgment, are reasonably likely to materially affect Parent’s or AMCE’s ability to record, process, summarize and report financial data and (B) any fraud, whether or not material, known to management that involves management or other employees who, in each case, have a significant role in Parent’s or AMCE’s internal control over financial reporting.
Section 4.6 Permits; Compliance With Law . Parent and each of Parent Subsidiaries is in possession of all authorizations, licenses, permits (including Environmental Permits), certificates, approvals and clearances, and has submitted notices to, all Governmental Entities necessary for Parent or any Parent Subsidiary to develop, construct, own, lease and operate its properties or other assets and to carry on their respective businesses in the manner described in the Company SEC Documents filed or delivered to the Company prior to the date hereof and as it is being conducted as of the date hereof (other than authorizations, licenses, permits (including Environmental Permits), certificates, approvals and clearances required to be in the possession of, or notices required to be submitted by landlords of real properties leased by Parent or a Parent Subsidiary pursuant to a lease or other agreement) (the “ Parent Permits ”), and all such Parent Permits are valid, and in full force and effect, except where the failure to have, or the suspension or cancellation of, or failure to be valid or in full force and effect of, any of Parent Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent. Neither Parent nor any Parent Subsidiary is in conflict with, or in default or violation of, (i) any Law applicable to Parent or any Parent Subsidiary or by which any property or asset of Parent or any Parent Subsidiary is bound or affected or (ii) any Parent Permits, except, with respect to clauses (i) and (ii), for any such conflicts, defaults or violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
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Section 4.7 Financial Statements .
(a) The audited and unaudited financial statements, including all related notes and schedules, contained in the AMCE SEC Documents (or incorporated therein by reference) (collectively, the “ AMCE Financial Statements ”) (i) when filed, complied in all material respects with all applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (ii) present fairly in all material respects the consolidated financial position of Parent or AMCE, as the case may be, and its consolidated Subsidiaries as of their respective dates and the consolidated results of operations, retained earnings and cash flows of Parent or AMCE, as the case may be, and its consolidated Subsidiaries for the respective periods indicated and (iii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except for changes in accounting principles disclosed in the notes thereto and subject, in the case of unaudited statements, to normal year end adjustments which were not and are not expected to be material in amount and the absence of related notes).
(b) Set forth on Schedule 4.7(b) are the audited consolidated balance sheet of Parent and the consolidated Parent Subsidiaries as of March 31, 2005 and the related audited statements of income and cash flows for the fifty-two weeks ended March 31, 2005 (the “ Parent Financial Statements ”). The Parent Financial Statements (i) present fairly in all material respects the consolidated financial position of Parent and the consolidated Parent Subsidiaries as of their respective dates and the consolidated results of operations, retained earnings and cash flows of Parent and the consolidated Parent Subsidiaries for the respective periods indicated; and (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except for changes in accounting principles disclosed in the notes thereto and subject, in the case of unaudited statements, to normal year end adjustments which were not and are not expected to be material in amount and the absence of related notes).
Section 4.8 Absence of Certain Changes .
(a) Since March 31, 2005, except as specifically required by, or as disclosed pursuant to, this Agreement, Parent and the Parent Subsidiaries have conducted their respective businesses in all material respects in the ordinary course consistent with past practice, and there has not been any event, occurrence or development which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on Parent.
(b) Since March 31, 2005, except as specifically required or expressly permitted by, or as disclosed pursuant to, this Agreement, neither Parent nor any Parent Subsidiary has taken any action that, if taken during the period from the date of this Agreement through the Effective Time, would violate Section 5.2.
Section 4.9 No Undisclosed Liabilities . There are no Liabilities of Parent or any Parent Subsidiary of the kind required to be reflected in the AMCE Financial Statements or Parent Financial Statements in accordance with GAAP, other than (i) Liabilities disclosed or provided for in the AMCE Financial Statements or Parent Financial Statements, (ii) Liabilities incurred since March 31, 2005, in the ordinary
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course of business consistent with past practice which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent and (iii) Liabilities which would not, individually or in the aggregate, be material to Parent and the Parent Subsidiaries, taken as a whole.
Section 4.10 Litigation . There is no action, suit, investigation or proceeding pending against, or to the Knowledge of Parent threatened against or affecting, Parent or any Parent Subsidiary or any of their respective properties or any of their respective officers or directors, or for which Parent or any Parent Subsidiary is obligated to indemnify a Third Party, before any court or arbitrator or any governmental body, agency or official except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent. There is no judgment, decree, injunction, rule, writ or order of any Governmental Entity or arbitrator outstanding against Parent or any Parent Subsidiary which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
Section 4.11 Taxes .
(a) Each of Parent and each Parent Subsidiary has timely filed or caused to be timely filed with the appropriate Tax authorities all material Tax Returns that are required to be filed by, or with respect to, Parent and the Parent Subsidiaries on or prior to the Closing Date. All such Tax Returns are true, correct and complete in all material respects. There are no material Liens for Taxes upon the assets of Parent or any Parent Subsidiary, except Liens for Taxes not yet due.
(b) All material Taxes and Tax liabilities of Parent and the Parent Subsidiaries have been timely paid or fully provided for as a liability on the financial statements of Parent and Parent Subsidiaries in compliance with GAAP.
(c) Neither Parent nor any of the Parent Subsidiaries has been a party to any distribution occurring during the two years preceding the date of this Agreement in which the parties to such distribution treated the distribution as subject to Section 355 of the Code.
(d) No deficiencies for material Taxes have been claimed, proposed or assessed in writing against Parent or any of the Parent Subsidiaries by any Tax authority that have not been finally resolved, and neither Parent nor any Parent Subsidiary has Knowledge of any pending or threatened claim, proposal or assessment against Parent or any Parent Subsidiary for any such deficiency for material Taxes. Parent has not received written notice of any pending audits, investigations or other proceedings relating to any Liability of Parent or any Parent Subsidiary in respect of any material Taxes which to Parent’s Knowledge is still open.
(e) Neither Parent nor any Parent Subsidiary has granted any waivers or extensions of the time to assess any material Taxes.
(f) Parent and each Parent Subsidiary have withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid
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or owing to any employee, independent contractor, creditor, stockholder, or other third party.
(g) Neither Parent nor any Parent Subsidiary is liable for a material amount of Taxes of any other Person (other than Parent or any Parent Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.
(h) Neither Parent nor any Parent Subsidiary is party to any Tax allocation, indemnification or sharing agreement relating to allocating, indemnifying, or sharing Taxes among members of a consolidated, combined or unitary group.
(i) Neither Parent nor any Parent Subsidiary has entered into any transaction which constitutes a “listed transaction” (as defined in Treasury Regulation Section 301.6111-2(b)(2)).
Section 4.12 Contracts and Commitments .
(a) Except as filed as exhibits to the AMCE SEC Documents filed or delivered to the Company prior to the date of this Agreement, none of Parent or any Parent Subsidiary is a party to or bound by any Contract other than any Parent Lease which (i) as of the date hereof, is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC), (ii) involves aggregate expenditures in excess of $8,000,000, (iii) involves annual expenditures in excess of $5,000,000 and is not cancelable within one year, (iv) would prohibit or materially delay the consummation of the Merger, (v) contains any non-compete or exclusivity provisions with respect to any line of business or geographic area with respect to Parent, any Parent Subsidiary or any of Parent’s current or future Affiliates, or which restricts the conduct of any line of business by Parent, any Parent Subsidiary or any of Parent’s current or future Affiliates or any geographic area in which Parent, any Parent Subsidiary or any of Parent’s current or future Affiliates may conduct business, in each case in any material respect, (vi) constitutes a partnership, joint venture, management services, stockholder or similar agreement or arrangement, (vii) provides for annual compensation of $150,000 or more to any director or officer of Parent or any Parent Subsidiary, (viii) evidences or governs material Indebtedness or (ix) amends, supplements or modifies in any respect any of the foregoing Contracts. Each Contract of the type described in Section 4.12, whether or not set forth in Schedule 4.12, and any Parent Lease, is referred to herein as a “ Parent Material Contract ”.
(b) Each Parent Material Contract is valid and binding on Parent and each Parent Subsidiary party thereto and, to Parent’s and each such Parent Subsidiary’s Knowledge each other party thereto, and is in full force and effect, and Parent and each of Parent Subsidiaries have performed in all respects all obligations required to be performed by them to the date hereof under each Parent Material Contract and, to Parent’s Knowledge, each other party to each Parent Material Contract has performed in all respects all obligations required to be performed by it under such Parent Material
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Contract to the date hereof, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
Section 4.13 Employee Benefit Plans .
(a) Schedule 4.13(a) contains a true, correct and complete list of each Parent Employee Plan. With respect to each Parent Employee Plan, Parent has made available to the Company true, correct and complete copies of Parent Employee Plan and any amendments thereto (or if Parent Employee Plan is not a written plan, a written description thereof). Each Parent Employee Plan has been established and maintained in material compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations (including but not limited to ERISA, the Sarbanes-Oxley Act of 2002, as amended, and the Code) which are applicable to such Parent Employee Plan, except for such exceptions that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
(b) Neither Parent nor any Parent ERISA Affiliate has incurred any liability under Title IV of ERISA that has not been satisfied in full, and no condition exists that presents a material risk to Parent or any Parent ERISA Affiliate of incurring any such liability other than liability for premiums due the PBGC (which premiums have been paid when due).
(c) Each Parent Employee Plan (which is not a multiemployer pension plan) which is intended to be qualified under Section 401(a) of the Code is so qualified, each trust forming a part thereof is exempt from federal income tax pursuant to Section 501(a) of the Code and, to the Knowledge of Parent, no circumstances exist which will adversely affect such qualification or exemption.
(d) The consummation of the transactions contemplated by this Agreement and the Transaction Documents will not, either alone or in combination with any other event, (i) entitle any current or former employee, officer, director or consultant of Parent, any Parent Subsidiary or any Parent ERISA Affiliate to severance pay, unemployment compensation or any other similar termination payment, or (ii) accelerate the time of payment or vesting, or increase the amount of, or otherwise enhance, any benefit due to any such employee, officer, director or consultant. No amounts payable under Parent Employee Plans will fail to be deductible for federal income tax purposes under Section 280G of the Code by reason of the consummation of the transactions contemplated by this Agreement.
(e) No Parent Employee Plan is a “multiemployer pension plan,” as defined in Section 3(37) of ERISA, nor is any Parent Employee Plan a plan described in Section 4063(a) of ERISA. As of the date of this Agreement, Parent has no unpaid withdrawal liability with respect to any “multiemployer pension plan” to which Parent or any Parent ERISA Affiliate has contributed or been obligated to contribute. In the event Parent or any Parent ERISA Affiliate withdrew in a “complete withdrawal” from all “multiemployer pension plans” to which Parent or any Parent ERISA Affiliate has contributed, or been obligated to contribute, as of the Effective Time, the aggregate
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withdrawal liability incurred by Parent or such Parent ERISA Affiliate would not have a Material Adverse Effect on Parent.
(f) No Parent Employee Plan provides benefits, including, without limitation, death or medical benefits (whether or not insured), with respect to any current or former employees of Parent or any Parent Subsidiary for periods extending beyond their retirement or other termination of service (other than (i) coverage mandated by applicable law, (ii) death benefits or retirement benefits under any “employee pension plan,” as that term is defined in Section 3(2) of ERISA, or (iii) benefits the full cost of which is borne by the current or former employee (or his or her beneficiary)).
(g) There are no pending or, to the Knowledge of Parent, threatened or anticipated claims by or on behalf of any Parent Employee Plan (which is not a multiemployer pension plan), by any employee or beneficiary under any such plan or otherwise involving any such plan (other than routine claims for benefits or claims that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent). No Parent Employee Plan is under audit or investigation by, nor has Parent been contacted with respect to any Parent Employee Plan by, the IRS, the PBGC or the Department of Labor. No such audit, investigation or contact is pending or, to the Knowledge of Parent, threatened as of the date of this Agreement.
(h) As of March 31, 2005, with respect to each Parent Employee Plan (which is not a multiemployer pension plan) that is a defined benefit plan, the projected benefit obligations under all such plans, whether or not qualified, utilizing actuarial methods and assumptions set forth in the AMCE Financial Statements and Parent Financial Statements, did not exceed the fair market value of the assets of such plans as of such date by more than $40,000,000. As of the date hereof and as of the Effective Time, the aggregate increase in any such underfunding since March 31, 2005 (taking into account only such plans for which there is any increase) would not, if all such plans were then terminated, have a Material Adverse Effect on Parent.
(i) There is no Contract, plan or arrangement with any current or former employee, officer or director of Parent to which Parent or any Parent Subsidiary is a party as of the date of this Agreement that, individually or in the aggregate and as a result of the Merger (whether alone or upon the occurrence of additional or subsequent events) or otherwise, is reasonably likely to give rise to the payment of any amount that would not be deductible pursuant to Section 162(m) of the Code or any corresponding or similar provision of state, local or foreign income Tax law.
Section 4.14 Labor and Employment Matters .
(a) (i) There are no collective bargaining agreements with any union covering employees of Parent or any of Parent Subsidiaries, (ii) there is no labor strike, dispute, slowdown, stoppage or lockout actually pending or, to the Knowledge of Parent or any of Parent Subsidiaries, threatened against Parent or any of Parent Subsidiaries; (iii) to the Knowledge of Parent or any of Parent Subsidiaries, no union organizing campaign with respect to the employees of Parent or any of Parent Subsidiaries is threatened or
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underway; (iv) there is no unfair labor practice charge or complaint against Parent or any of Parent Subsidiaries pending or, to the Knowledge of Parent or any of Parent Subsidiaries, threatened before the National Labor Relations Board or any similar state or foreign agency; (v) there is no written grievance pending relating to any collective bargaining agreement or other grievance procedure; and (vi) to the Knowledge of Parent or any of Parent Subsidiaries, no charges with respect to or relating to Parent or any of Parent Subsidiaries are pending before the Equal Employment Opportunity Commission or any other agency responsible for the prevention of unlawful employment practices, except for such exceptions to the foregoing clauses (iv), (v) and (vi) which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
(b) Parent has made available to the Company true, correct and complete copies of each of Parent’s material written personnel policies or rules applicable to employees of Parent or of Parent Subsidiaries in effect as of the date hereof. Parent and Parent Subsidiaries, and to the Knowledge of Parent and the Parent Subsidiaries all of the Contractors engaged in the operation of the respective businesses of Parent and the Parent Subsidiaries, are and have at all times been, in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages, hours of work and occupational safety and health, except for such failures to be in compliance as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
(c) As of the date hereof, within the last three years, Parent and Parent Subsidiaries have not effectuated (i) a “plant closing” (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of Parent or any of Parent Subsidiaries, or (ii) a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility of Parent or any of the Parent Subsidiaries; nor has Parent or any of the Parent Subsidiaries been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state or local Law.
Section 4.15 Real Property; Leases .
(a) Schedule 4.15(a) contains a true, correct and complete list, by location, of all real property owned by Parent or any Parent Subsidiary (the “ Parent Owned Real Properties ”). Except for (x) such exceptions which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent, (y) any matters of public record affecting the use of such properties and disclosed in writing in the most recently obtained title insurance policies with respect to Parent Owned Real Properties made available to Parent prior to the date hereof and (z) Permitted Encumbrances, (i) Parent and the Parent Subsidiaries have good and marketable title to Parent Owned Real Properties and (ii) the Parent Owned Real Properties will be at Closing free and clear of all mortgages, Liens, leases, tenancies, security interests, options to purchase or lease or rights of first refusal except for those items securing debt assumed or allowed by the Surviving Corporation and its Subsidiaries. Schedule 4.15(a)
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contains a true, correct and complete list of all title insurance policies relating to Parent Owned Real Properties.
(b) Schedule 4.15(b) contains a true, correct and complete list, by address, of all material real property leased by Parent or any Parent Subsidiary (the “ Parent Leased Real Properties ”, and, together with Parent Owned Real Properties, the “ Parent Real Properties ”). Parent has made available to the Company true, correct and complete copies of all Contracts providing for the lease of Parent Leased Real Properties (the “ Parent Leases ”), which, in the aggregate are fairly presented in accordance with GAAP, consistently applied, in the Parent Financial Statements. With respect to (i) the Parent Leased Real Properties other than Significant Parent Theatre Properties, except for such exceptions which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent and (ii) the Significant Parent Theatre Properties:
(A) each Parent Lease is valid and binding upon Parent or a Parent Subsidiary and upon the landlord thereunder and in full force and effect and grants the lessee under such Parent Lease, once the premises under such Parent Lease have been delivered by the landlord, the exclusive right to use and occupy the premises, subject to Permitted Encumbrances, and Parent or a Parent Subsidiary enjoys peaceful and undisturbed possession of the premises, subject to Permitted Encumbrances;(B) Parent or a Parent Subsidiary has good and valid title to the leasehold estate or other interest created under its respective Parent Leases, subject to Permitted Encumbrances;(C) there is no, nor has Parent or any Parent Subsidiary received notice of any, default (or condition or event which, after notice or lapse of time or both, would constitute a default) thereunder by the lessee or (to the Knowledge of Parent) by the landlord thereunder which if it resulted in a termination of a Parent Lease would be material to Parent and the Parent Subsidiaries, taken as a whole;(D) with respect to any Parent Leases that were assigned to Parent or any Parent Subsidiary by a Third Party, to the Knowledge of Parent, all consents to such assignments or sublease have been obtained which may have been required with respect to such assignments or sublease, except such the failure of which to obtain has been cured by a course of dealing with the applicable landlord or which would not be material to Parent and the Parent Subsidiaries, taken as a whole; and(E) none of the rights of Parent or any Parent Subsidiary under any of the Parent Leases will be subject to termination or modification as the result of the consummation of the transactions contemplated by this Agreement and the Transaction Documents, and upon the consummation of the Merger, Parent will have succeeded to all of the rights, title and interest of Parent or such Parent Subsidiary either directly or indirectly by ownership of the Parent Subsidiaries under each of such Parent Leases.
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(c) Except as would not reasonably be expected to have a Material Adverse Effect on Parent, (i) each lease, sublease, license or other agreement granting to any Third Party any right to the use, occupancy or enjoyment of any Parent Real Properties or any portion thereof that has an annual base rent equal to or greater than $500,000 (collectively, the “ Parent Space Leases ”) is valid, binding and in full force and effect, (ii) all rent and other sums and charges payable by the tenant or occupant thereunder (the “ Parent Space Tenant ”) are current, (iii) no termination event or condition or uncured default on the part of Parent, or to the Knowledge of Parent, the Parent Space Tenant, exists under any Parent Space Lease and (iv) no event or condition has occurred or exists that, with or without notice or lapse of time or both, would constitute such a default or termination event or condition.
(d) Parent is not obligated under, or a party to any Contract providing for (i) the purchase of any Parent Leased Real Property for a purchase price in excess of $4 million or (ii) any option, right of first refusal or other right to sell, assign or dispose of any Parent Owned Real Property.
(e) All components of all improvements included within Parent Real Properties, including, without limitation, the roofs and structural elements thereof and the heating, ventilation, air conditioning, plumbing, electrical, mechanical, sewer, waste water, storm water, paving and parking equipment, systems and facilities included therein, are in good working order and repair, except for such failures to be in good working order or repair that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent. All of the Parent Real Properties are used and open as an operating theatre. The purposes for those locations that are not so used are listed on Schedule 4.15(e). All of the Parent Real Properties that are operating theatres have adequate means of ingress and egress to and from a public way and adequate parking available for the operation of the theatre located at such location. All Parent Real Properties that are operating theatres may be used as motion picture theatres under applicable zoning provisions.
(f) Parent has not received any notice, nor has any Knowledge, of any pending, threatened or contemplated condemnation proceeding affecting any Significant Parent Theatre Property or any part thereof, or any sale or other disposition of any Significant Parent Theatre Property or any part thereof in lieu of condemnation, except in each case for those which would not materially interfere with the operations of the relevant Significant Parent Theatre Property. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent, Parent has not received any notice, nor has any Knowledge, of any pending, threatened or contemplated condemnation proceeding affecting any Parent Real Properties (other than the Significant Parent Theatre Properties) or any part thereof, or of any sale or other disposition of any Parent Real Properties (other than the Significant Parent Theatre Properties) or any part thereof in lieu of condemnation.
Section 4.16 Environmental Matters . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent:
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(a) No Hazardous Material has been Released upon any Parent Real Property or any other real property (whether or not owned, leased or otherwise used or occupied by Parent or its Subsidiaries) as a result of which Parent or its Subsidiaries has or may become liable to any Person pursuant to Environmental Law.
(b) There are no writs, injunctions, decrees, orders or judgments outstanding, or Environmental Claims pending or, to the Knowledge of Parent, threatened, or any known basis therefor, relating to Parent’s compliance with or liability under any Environmental Law.
(c) Neither Parent nor any of its Subsidiaries has received any request for information, or been notified that it is a potentially responsible party, under CERCLA or any similar Environmental Law.
Section 4.17 Insurance . Parent and its Subsidiaries maintain insurance coverage with reputable insurers, or maintain self-insurance practices, in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of Parent and its Subsidiaries (taking into account the cost and availability of such insurance). All such insurance policies are in full force and effect, and none of Parent or any of its Subsidiaries is in default in any material respect with respect to its obligations under any material insurance policy maintained by it.
Section 4.18 Affiliate Transactions . Except (i) as set forth in the AMCE SEC Documents filed or delivered to the Company before the date of this Agreement or (ii) pursuant to any employment agreement with any officer of Parent, there are no items of the type that would be required to be disclosed under Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed thereunder between Parent and any (a) present or former officer or director of Parent or any Parent Subsidiary or any of their immediate family members (including their spouses), (b) record or beneficial owner of more than 5% of any class of Existing Parent Common Stock, or (c) Person known by Parent’s executive officers to be an Affiliate of any such officer, director or beneficial owner.
Section 4.19 Intellectual Property .
(a) Schedule 4.19(a) sets forth a true, correct and complete list of all (i) issued Patents and pending applications therefor, (ii) Trademarks, (iii) registrations for Copyrights and applications therefor and (iv) Internet domain name registrations and applications therefor, in each case (of the foregoing clauses (i) through (iv)) that are owned by Parent or any of Parent Subsidiaries (the “ Parent Owned Intellectual Property ”). Each item of Parent Owned Intellectual Property has been duly registered in, filed in or issued by, as applicable, the official government registrars and/or issuers of patents, trademarks or copyrights, in the various jurisdictions indicated on Schedule 4.19(a).
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(b) With respect to each item of Parent Owned Intellectual Property (i) Parent or a Parent Subsidiary is the exclusive owner of all right, title and interest in and to such Parent Owned Intellectual Property, free and clear of any Liens (other than Permitted Encumbrances) or claims of others and (ii) Parent has taken all necessary actions, including the making of all requisite filings, renewals and payments, to maintain and protect such Parent Owned Intellectual Property rights, except, with respect to clauses (i) and (ii), for such failures to so own or to take such actions which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
(c) Parent and each of Parent Subsidiaries owns, or has the right, free and clear of all Liens (other than Permitted Encumbrances), to use pursuant to a valid License Agreement, all material Intellectual Property necessary for, or used by Parent each Parent Subsidiary in, the operation of its business in all material respects as it is presently conducted and presently proposed to be conducted.
(d) Except as would not be material to Parent and the Parent Subsidiaries, taken as a whole:
(i) There are no claims, allegations or suits pending or, to the Knowledge of Parent, threatened, and Parent has not received any notice, claim, charge, complaint or demand alleging that the conduct of Parent or any of Parent Subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property of any Third Party or challenging the ownership, use, registration, validity or enforceability of the Intellectual Property owned by Parent or any Parent Subsidiary, or to the Knowledge of Parent, licensed to Parent or any Parent Subsidiary.
(ii) To the Knowledge of Parent, the conduct of Parent’s and Parent Subsidiaries’ business has not and does not infringe, misappropriate or otherwise violate any Intellectual Property of any Third Party.
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