February 12, 2020

National CineMedia/Screenvision (DOJ 2014-2015)

Deal SummaryCooperation | Conditions Precedent |Defense Strategy | Litigation Commitments | Remedy Commitments | Reverse Break Fees | Termination Provisions

(a)               Deal Summary. National Cinemedia, Inc. announced on May 5, 2014 that it had entered a definitive merger agreement with Screenvision for $375 million. The parties agreed to use “reasonable best efforts” to obtain all clearances and to defend against all lawsuits or other proceedings challenging the merger. The agreement required divestitures only if the divestiture would not result in a material adverse effect. National Cinemedia agreed to a reverse termination fee of $28.84 million. Each party retained the right to terminate if the HSR waiting period and any extension of the period had not expired by May 5, 2015. The termination date was subject to an additional 90 day extension (August 3, 2015) upon written notice by National Cinemedia. The DOJ challenged the transaction on November 3, 2014. The parties announced they had abandoned the deal on March 16, 2015.

(b)               Cooperation. § 5.09(a)-(e): (a) Each party hereto shall, as promptly as possible (i) make, or cause or be made, all filings and submissions (including those under the HSR Act) required under any Law applicable to such party or any of its Affiliates; (ii) use reasonable best efforts to obtain, or cause to be obtained, promptly all consents, authorizations, orders and approvals from all Governmental Authorities (including under the HSR Act) that may be or become necessary for the consummation of the transactions contemplated by this Agreement. Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals.

                        (b) Company Member and Parent shall use reasonable best efforts to give all notices to, and obtain all consents from, all third parties that are described in Section 3.05 of the Disclosure Schedules.

                        (c) Without limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the parties hereto shall use all reasonable best efforts prior to Closing to: (i) respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any agreement or document contemplated hereby; . . .

                        (d) All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Company Member or the Surviving Entity with Governmental Authorities in the ordinary course of business, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each party shall give notice to the other party with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

                        (e) Each party hereto shall use its reasonable best efforts to defend against all lawsuits or other legal or regulatory proceedings challenging either of the Mergers or their respective consummation, unless the parties mutually consent to settlement of other resolution of the litigation or proceedings. None of the parties shall commit to or agree (or permit their respective Affiliates to commit to or agree) with any Governmental Entity to stay, toll or extend any applicable waiting period under the HSR Act, without the prior written consent of the other parties (such consent not to be unreasonably withheld or delayed).

(c)                Conditions Precedent. § 7.01(a)-(b); 702(d); 703(d): Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or mutual waiver, at or prior to the Closing, of each of the following conditions:

                        (a) The filings of Parent and Company Member pursuant to the HSR Act shall have been made and the applicable waiting period and any extensions thereof shall have expired or been terminated and any commitment to or agreement with a Government Entity to stay, toll or extend any applicable waiting period under the HSR Act made by a party pursuant to the terms of Section 5.09 shall have been satisfied, expired or withdrawn. Any commitment to, or agreement with, a Government Entity to stay, toll, or extend any applicable waiting period under the HSR Act made by any party pursuant to the terms of Section 5.09 shall have been satisfied, expired or withdrawn.

                        (b) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing the transactions contemplated hereunder to be rescinded following completion thereof.

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                        702 (d) No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which enjoins, restrains or otherwise prohibits the transactions contemplated hereby.

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                        703 (d) No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which enjoins, restrains or otherwise prohibits the transactions contemplated hereby.

(d)               Defense Strategy. § 5.09(c),(e): (c) Without limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the parties hereto shall use all reasonable best efforts prior to Closing to: . . . (ii) avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any agreement or document contemplated hereby; and (iii) in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any agreement or document contemplated hereby has been issued, to have such Governmental Order vacated or lifted.

                        (e) Each party hereto shall use its reasonable best efforts to defend against all lawsuits or other legal or regulatory proceedings challenging either of the Mergers or their respective consummation, unless the parties mutually consent to settlement of other resolution of the litigation or proceedings. None of the parties shall commit to or agree (or permit their respective Affiliates to commit to or agree) with any Governmental Entity to stay, toll or extend any applicable waiting period under the HSR Act, without the prior written consent of the other parties (such consent not to be unreasonably withheld or delayed).

(e)                Litigation Commitments. § 5.09(e): (e) Each party hereto shall use its reasonable best efforts to defend against all lawsuits or other legal or regulatory proceedings challenging either of the Mergers or their respective consummation, unless the parties mutually consent to settlement of other resolution of the litigation or proceedings. None of the parties shall commit to or agree (or permit their respective Affiliates to commit to or agree) with any Governmental Entity to stay, toll or extend any applicable waiting period under the HSR Act, without the prior written consent of the other parties (such consent not to be unreasonably withheld or delayed).

(f)                Remedy Commitments. § 5.09(f): Notwithstanding the foregoing, nothing in this Section 5.09 shall require, or be construed to require, either party or any of its Affiliates, before or after the Closing Date, to agree to (i) sell, hold, divest, license, discontinue or limit any of its or its Affiliates’ assets, businesses, contracts or interests; (ii) any conditions relating to, changes in, or restrictions on the operation of any of its or its Affiliates assets, businesses, contracts or interests; (iii) any material modification or waiver of the terms and conditions of this Agreement; or (iv) take any action (or fail to take any action) which could adversely affect the Tax treatment of the transactions contemplated by this Agreement as described in Section 2.02(f) and Section 6.05, except to the extent, in the case of preceding clauses (i) and (ii), that such agreement could not reasonably be expected to result in a Material Adverse Effect or Parent Material Adverse Effect.

(g)               Reverse Break Fees. § 8.03(a): Termination Fees. (a) If Company Member terminates this Agreement (or could have terminated this Agreement but for the prior termination of this Agreement by Parent pursuant to Section 8.01(b)(ii) or Section 8.01(d)) pursuant to (w) Section 8.01(c)(i), (x) Section 8.01(c)(ii), (y) Section 8.01(d) or (z) Section 8.01(c)(iii) and in the case of this clause (z), all of the conditions to Parent’s obligations to consummate the Closing under Section 7.02 (other than Section 7.02(d)) have been satisfied (other than any such conditions (x) which by their nature are to be satisfied by the Closing Date or (y) that have not been satisfied as a result of Parent’s failure to fulfill any of its obligations under this Agreement or perform or comply with any of the covenants, agreements, or conditions hereof to be performed or complied with by Parent prior to the Closing), the parties agree that Company Member shall have suffered a loss and value to the Company of an incalculable nature and amount, unrecoverable in Law, and Parent shall pay to Company Member a fee of $28.84 million (the “Reverse Termination Fee”), it being understood that in no event shall Parent be required to pay the Reverse Termination Fee on more than one occasion. The Reverse Termination Fee shall be payable in immediately available funds by wire transfer no later than ten Business Days after such termination.

(h)               Time Period and Other Conditions Under Which the Parties May Walk Away from the Agreement. § 8.01(a)-(d): Termination. This Agreement may be terminated at any time prior to the Closing:

                        (a) by the mutual written consent of Company Member and Parent;

                        (b) by Parent by written notice to Company Member if: . . . (ii) the conditions set forth in Section 7.01(a) shall not have been fulfilled by May 5, 2015 or 90 days thereafter if extended pursuant to written notice provided by the Company Member to Parent or Parent to the Company Member prior to May 5, 2015 (the “Termination Date”), unless such failure shall be due to the failure of Parent to provide all of the information required pursuant to the HSR Act in the initial filing or upon additional requests from the appropriate regulators or to fulfill any obligation of Parent under this Agreement; or (iii) any of the conditions set forth in Section 7.02 shall not have been fulfilled by the Termination Date, unless such failure shall be due to the failure of Parent to fulfill any of its obligations under this Agreement or otherwise perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;

                        (c) by Company Member by written notice to Parent if: . . . (ii) the conditions set forth in Section 7.01(a) shall not have been fulfilled by the Termination Date, unless such failure shall be due to the failure of Company Member to provide all of the information required pursuant to the HSR Act in the initial filing or upon additional requests from the appropriate regulators or to fulfill any obligation of Company Member under this Agreement; (iii) any of the conditions set forth in Section 7.03 shall not have been fulfilled by the Termination Date, unless such failure shall be due to the failure of Company Member to fulfill any of its obligations under this Agreement or perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or

                        (d) by Parent or Company Member in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable.