EXHIBIT 10.41
AMENDED AND RESTATED
CITADEL STANDBY CREDIT FACILITY
Dated as of January 29, 2002
between
SUTTON HILL CAPITAL, L.L.C.,
as Borrower
and
READING INTERNATIONAL, INC.,
as Lender
TABLE OF CONTENTS
Page
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ARTICLE I DEFINED TERMS.............................................................. 1
I.1 Definitions......................................................... 1
I.2 Accounting and Other Terms.......................................... 10
I.3 Certain Matters of Construction..................................... 10
ARTICLE II CREDIT FACILITY............................................................ 11
II.1 The Commitment...................................................... 11
II.2 Manner of Borrowing................................................. 11
II.3 Repayment of Principal.............................................. 12
II.4 Payment of Interest................................................. 12
II.5 Voluntary Prepayment................................................ 12
II.6 Mandatory Prepayment................................................ 13
II.7 Note................................................................ 14
II.8 Other Indebtedness.................................................. 14
ARTICLE III PAYMENTS; REDUCTION OF COMMITMENT; EXTENSION.............................. 14
III.1 Manner of Payments.................................................. 14
III.2 Extension of Payments............................................... 15
III.3 Computation of Interest............................................. 15
III.4 Reduction of Commitment............................................. 15
ARTICLE IV CONDITIONS OF LENDING............................................ 15
IV.1 Initial Conditions.................................................. 15
IV.2 Continuing Conditions............................................... 17
IV.3 No Waiver of Conditions............................................. 18
ARTICLE V REPRESENTATIONS AND WARRANTIES.............................................. 19
V.1 Status.............................................................. 19
V.2 Litigation.......................................................... 19
V.3 Compliance with Other Instruments................................... 20
V.4 Binding Agreement................................................... 20
V.5 Authorizations...................................................... 21
V.6 Regulation.......................................................... 21
V.7 Title to Property; Liens............................................ 21
V.8 Taxes............................................................... 21
V.9 Pension Plans....................................................... 21
V.10 Collateral.......................................................... 21
V.11 Location of Borrower................................................ 22
V.12 Investment Company Act.............................................. 22
V.13 Membership Interests; Management.................................... 22
V.14 Brokerage Fees, etc................................................. 22
V.15 Financial Statements................................................ 22
V.16 Name................................................................ 22
V.17 Indebtedness; Other Agreements...................................... 22
V.18 No Subsidiaries..................................................... 22
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ARTICLE VI AFFIRMATIVE COVENANTS...................................................... 23
VI.1 Payment of Taxes.................................................... 23
VI.2 Preservation of Existence........................................... 23
VI.3 Compliance with Laws................................................ 23
VI.4 Keeping of Books and Records; Inspection............................ 23
VI.5 Notice of Certain Events............................................ 23
VI.6 Financial Statements and Other Information.......................... 24
VI.7 Maintenance of Property............................................. 24
VI.8 Use of Proceeds..................................................... 25
VI.9 Separate Existence.................................................. 25
ARTICLE VII NEGATIVE COVENANTS........................................................ 25
VII.1 Change in Nature of Business........................................ 25
VII.2 Liens............................................................... 25
VII.3 Other Indebtedness.................................................. 26
VII.4 Consolidations, Mergers, etc........................................ 27
VII.5 Pension Plans....................................................... 27
VII.6 Location of Borrower................................................ 27
VII.7 Sale, Lease, etc.................................................... 27
VII.8 Fiscal Year......................................................... 27
VII.9 Liquidation, Dissolution, etc....................................... 27
VII.10 Loans............................................................... 27
VII.11 Change of Ownership or Management................................... 27
VII.12 Dividends........................................................... 28
VII.13 Prohibition of Amendments or Waivers................................ 28
VII.14 Subsidiaries........................................................ 28
ARTICLE VIII TERMS OF SUBORDINATION................................................... 28
VIII.1 Subordination of Indebtedness....................................... 28
ARTICLE IX EVENTS OF DEFAULT.......................................................... 28
IX.1 Events of Default................................................... 28
IX.2 Default Remedies.................................................... 32
IX.3 Setoff.............................................................. 33
IX.4 Default Interest.................................................... 33
IX.5 Restrictions on Remedies............................................ 34
ARTICLE X COLLATERAL.................................................................. 34
X.1 Borrower Collateral................................................. 34
X.2 Equity Collateral................................................... 34
ARTICLE XI GENERAL PROVISIONS......................................................... 34
XI.1 Modification of Agreement; No Sale of Interest...................... 34
XI.2 Indulgences Not Waivers............................................. 34
XI.3 Severability........................................................ 35
XI.4 Cumulative Rights; No Waiver........................................ 35
XI.5 Execution in Counterparts........................................... 35
XI.6 Notices............................................................. 35
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XI.7 Entire Agreement.................................................... 36
XI.8 Governing Law....................................................... 37
XI.9 Waiver of Jury Trial................................................ 37
XI.10 General Waivers..................................................... 37
XI.11 Limited Recourse.................................................... 37
XI.12 Headings............................................................ 37
XI.13 Termination by Borrower............................................. 37
XI.14 Accounting Terms.................................................... 38
XI.15 Incorporation....................................................... 38
XI.16 Tax Forms........................................................... 38
ARTICLE XII LENDER COOPERATION........................................................ 38
XII.1 Lender Cooperation.................................................. 38
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EXHIBIT
Exhibit A Form of Note
Exhibit B Form of Notice of Borrowing
Exhibit C Opinion of Counsel to the Borrower
Exhibit D Schedule of Equipment
Exhibit E Amended and Restated Pledge Agreement
Exhibit F Amended and Restated Security Agreement
Exhibit G Amended and Restated Intercreditor Agreement
Exhibit H Theatre Properties
Exhibit I Site Leases
SCHEDULES
Schedule 5.2 Litigation
Schedule 5.17 Indebtedness
Schedule 7.2 Liens
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AMENDED AND RESTATED
CITADEL STANDBY CREDIT FACILITY
THE CITADEL STANDBY CREDIT FACILITY, dated as of the 28th day of July,
2000 (as amended, modified and supplemented from time to time, this
"Agreement"), by and between CITADEL HOLDING CORPORATION now known as READING
INTERNATIONAL, INC. (together with its permitted successors and assigns, the
"Lender"), a Nevada corporation with an office at 550 South Hope Street, Suite
1825, Los Angeles, CA 90071, and SUTTON HILL CAPITAL, L.L.C. (together with its
permitted successors and assigns, the "Borrower"), a New York limited liability
company with its chief executive office and principal place of business at 120
North Robertson Boulevard, Los Angeles, California 90048, is hereby amended and
restated as of this 29th day of January 2002.
ARTICLE I
DEFINED TERMS
1.1 Definitions. When used in this Agreement, each of the following terms
defined in this Section 1.1 shall have the following meanings (terms defined in
the singular to have the same meaning when used in the plural and vice versa):
"Actual Knowledge" shall mean, with respect to the Borrower, the
information, material or other represented item is actually known by James
J. Cotter, Michael R. Forman or, with respect to representations and
warranties as of the date hereof, Robert Smerling or Michael Conroy.
"Affiliate" shall mean, as to any Person, any other Person controlling,
controlled by or under direct or indirect common control with such Person.
For the purposes of this definition, "control," when used with respect to
any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have the meanings correlative to the
foregoing. Notwithstanding the foregoing: (a) the Borrower and its
Affiliates (the "Borrower's Affiliates") shall not include Reading, the
Lender, and their respective direct and indirect Subsidiaries; (b)
Reading, the Lender, and their respective direct and indirect
Subsidiaries, on the one hand, and the Borrower and the Borrower's
Affiliates, on the other hand, shall not be considered Affiliates of each
other; and (c) none of Nationwide or any of its Affiliates shall be
considered an Affiliate of Reading, Lender or any of their respective
direct and indirect Subsidiaries or the Borrower or any of its Affiliates.
"Agreement" shall mean this Amended and Restated Citadel Standby Credit
Facility, as the same may be amended, restated, modified or supplemented
from time to time.
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"Applicable Law" shall mean all laws, rules and regulations applicable to
the Person, conduct, transaction or covenant in question, including (a)
all applicable common law and equitable principles; (b) all provisions of
all applicable state, federal and foreign constitutions, statutes, rules,
regulations and orders of governmental bodies; and (c) all orders,
judgments and decrees of all courts and arbitrators.
"Assets" shall mean any and all assets or property of any kind, real or
personal, tangible or intangible, now owned or hereafter acquired by the
Borrower.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as now
constituted or hereafter amended.
"Board of Governors" shall mean the Board of Governors of the Federal
Reserve Board.
"Borrower" shall have the meaning specified in the preamble to this
Agreement.
"Borrower Collateral" shall mean the Equipment and all other assets of the
Borrower except Real Property Interests.
"Business Day" shall mean a day other than (a) a Saturday or a Sunday or
(b) a day on which banks in New York City are permitted, required or
authorized by law or executive order to close.
"Capitalized Lease" shall mean, as applied to any Person, any lease of any
property which in accordance with GAAP would be capitalized on that
Person's balance sheet as lessee or for which the amount of the asset or
liability thereunder, if so capitalized, should be disclosed in a note to
such balance sheet.
"Citadel Cinemas" shall mean Citadel Cinemas, Inc., a Nevada corporation,
which is a subsidiary of Lender, and its successors and assigns (including
successors or assigns as tenant under the Lease Agreement).
"Closing Date" shall mean July 28, 2000.
"Collateral" shall mean the Equity Collateral and the Borrower Collateral.
"Commitment" shall mean, at any time, the obligation of the Lender to make
Loans pursuant to Section 2.1 hereof in an aggregate principal amount up
to eighteen million Dollars ($18,000,000) (as the same may be reduced
pursuant to Section 2.1, 2.6, 3.4 or 9.2 hereof).
"Commitment Period" shall have the meaning set forth in Section 2.1
hereof.
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"Consumer Price Index" shall mean the Consumer Price Index for Urban
Consumer Wage and Clerical Workers based upon the New York-Northern New
Jersey-Long Island area for All Items, published by the United States
Department of Labor, Bureau of Labor Statistics, or a successor substitute
index, and if in any year the 1982-84 average of one hundred (100) is no
longer used as the basis of calculation, then, for the purposes of this
Section, the Consumer Price Index for such year shall be recalculated as
though such 1982-84 average of one hundred (100) were still the basis of
calculation of the Consumer Price Index for such year. In the event such
Consumer Price Index (or a successor substitute index) is not available, a
reliable government or other non-partisan publication evaluating the
information theretofore used in determining the Consumer Price Index shall
be used to reflect the increase in the national cost of living.
"Contract" shall mean any contract, agreement, indenture, loan or credit
agreement, receivable sales or financing agreement, capital note,
mortgage, security agreement, bond or note (or any guarantee of any of the
foregoing).
"Dollars" or "$" shall mean the lawful currency of the United States of
America and, in relation to any amount to be advanced or paid hereunder,
funds having same day or immediate value.
"Equipment" shall mean all of the Borrower's right, title and interest in
and to all personal property used primarily in connection with the Theatre
Properties or otherwise located at the properties listed on Exhibit H
attached hereto, including, without limitation, all replacements and
subsequent replacements of the foregoing, excluding any supplies and
inventory.
"Equity Collateral" shall have the meaning given to that term in the
Pledge Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 and
all rules and regulations from time to time promulgated thereunder.
"Event of Default" shall mean each of the events set forth in Section 9.1
hereof.
"Fee Option Agreement" shall mean the Fee Option Agreement, dated as of
the Closing Date, between Fee Sub and the Borrower, as amended and
restated as of January 29, 2002 as the same may be amended, restated,
modified or supplemented from time to time.
"Fee Sub" shall mean Citadel Realty, Inc., a Nevada corporation.
"Final Date" shall mean December 1, 2010.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time (except for accounting
changes in response to releases of the Financial Accounting Standards
Board, or other authoritative releases).
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"Improvements" shall mean all buildings and other improvements (including,
without limiting the generality of the foregoing, any affixed property
which would constitute "fixtures" under Section 9-313(1)(A) of the UCC)
now or hereafter located on the Theatre Properties.
"Indebtedness" shall mean for any Person, without duplication, (a) all
indebtedness or other obligations of such Person for borrowed money and
all indebtedness of such Person with respect to any other items (other
than income taxes payable, deferred taxes, deferred credits and accounts
payable) which would, in accordance with GAAP, be classified as a
liability on the balance sheet of such Person, (b) all obligations of such
Person to pay the deferred purchase price of property or services,
including any such obligations created under or arising out of any
conditional sale or other title retention agreement, (c) all obligations
of such Person (contingent or otherwise) under reimbursement or similar
agreements with respect to the issuance of letters of credit, (d) all
indebtedness or other obligations of such Person under or in respect of
any swap, cap, collar or other financial hedging arrangement, (e) all
indebtedness or other obligations of any other Person of the type
specified in clause (a), (b), (c) or (d) above, the payment or collection
of which such Person has guaranteed (except by reason of endorsement for
collection in the ordinary course of business) or in respect of which such
Person is liable, contingently or otherwise, including, without
limitation, liable by way of agreement to purchase products or securities,
to provide funds for payment, to maintain working capital or other balance
sheet conditions or otherwise to assure a creditor against loss, and (f)
all indebtedness or other obligations of any other Person of the type
specified in clause (a), (b), (c), (d) or (e) above secured by (or for
which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including,
without limitation, accounts and contract rights) owned by such Person,
whether or not such Person has assumed or becomes liable for the payment
of such indebtedness or obligations.
"Indemnity Guarantee" shall mean the Guaranty, dated the Closing Date,
entered into among the Indemnity Guarantors, Citadel Cinemas and Fee Sub.
"Indemnity Guarantors" shall mean James J. Cotter and Michael R. Forman.
"Initial Drawdown Date" shall mean the date that is the seventh (7th)
anniversary of the Closing Date.
"Interest Rate" shall mean a rate per annum equal to (a) for the period
ending on the day prior to the second anniversary of the Closing Date,
8.25%, and (b) during each contract year (or part thereof) thereafter, the
multiplier (as hereinafter defined) for such contract year multiplied by
the Interest Rate as in effect during the prior contract year. For
purposes of the foregoing, (i) a "contract year" means each period
beginning on the Closing Date or an anniversary thereof and ending on the
day prior to the next anniversary thereof, and (ii) the
4
"multiplier" means one plus a fraction, the numerator of which is the
Consumer Price Index in effect for the month of March preceding the
anniversary date in question minus the Consumer Price Index in effect
for the month of March in the prior year and the denominator of which
is the Consumer Price Index in effect for the month of March in the
prior year, provided that (A) except as provided in the following
clause (B), the multiplier for any contract year shall not be greater
than 1.06 nor less than 1.03 and (B) the multiplier for the contract
year shall be such as would have been in effect had the multiplier for
the second contract year been applied to determining the Interest Rate
for the second contract year; and provided, further, that in no event
shall the Interest Rate exceed the maximum rate permitted by law.
"Insolvency or Liquidation Proceeding" shall mean (a) any insolvency or
bankruptcy case or proceeding (including any case under the Bankruptcy
Code), or any receivership, liquidation, reorganization or other similar
case or proceeding relative to the Borrower or all or substantially all of
its Assets, or (b) any liquidation, dissolution, reorganization or winding
up of the Borrower, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy (other than any voluntary liquidation,
dissolution, reorganization or winding up), or (c) any assignment of all
or substantially all of the Assets of the Borrower for the benefit of
creditors or any other marshaling of Assets and liabilities of the
Borrower.
"Intercreditor Agreement" shall mean the Intercreditor Agreement, dated as
of the Closing Date as amended and restated as of January 29, 2002, among
the Lender, Nationwide, and the Borrower, in the form of Exhibit G hereto,
as the same may be amended, restated, modified or supplemented from time
to time.
"Lease Agreement" shall mean the lease agreement between the Borrower and
Citadel Cinemas, dated as of the Closing Date, as amended, modified and
supplemented from time to time.
"Lender" shall mean Citadel Holding Corporation, a Nevada corporation, now
known as Reading International, Inc. and its successors.
"License of Intangibles" shall mean that certain License of Intangibles
dated as of the Closing Date between the Borrower and Citadel Cinemas, as
the same may be amended, restated, modified or supplemented from time to
time.
"Lien" shall mean any security interest, mortgage, pledge, hypothecation,
assignment as collateral, encumbrance, lien (statutory or other), or other
security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of
the foregoing, and the filing of any financing statement under the UCC or
comparable law of any jurisdiction in respect of any of the foregoing).
5
"Limited Liability Company Agreement" shall mean the Limited Liability
Company Agreement of the Borrower, effective as of April 8, 1999, as
amended, modified, supplemented or restated from time to time.
"Loan" shall mean each loan, if any, made by the Lender to the Borrower
pursuant to Section 2.1 hereof.
"Mandatory Borrowing or Reduction Notice" shall have the meaning set forth
in Section 2.8 hereof.
"Material Adverse Effect" shall mean the effect of any event or condition
which, alone or when taken together with other events or conditions
occurring or existing concurrently therewith, (a) has a material adverse
effect upon the business, operations or financial condition of the
Borrower or upon the Collateral (taken as a whole), or the Property (taken
as a whole); (b) materially impairs the ability of the Lender to enforce
or collect the Obligations in accordance with this Agreement or the other
Related Documents; (c) materially impairs the ability of the Lender to
realize, in accordance with this Agreement or the other Related Documents
or Applicable Law, upon the Equity Collateral or upon any material element
or portion of the Borrower Collateral (taken as a whole); or (d) has a
material adverse effect on the ability of the Lender to realize on the
Indemnity Guarantee, including on the business and financial condition and
prospects of Messrs Cotter and Forman.
"Member" shall mean Sutton Hill and its successors and assigns.
"Nationwide" shall mean Nationwide Theatres Corp., a California
corporation, and its successors and assigns.
"Nationwide Agreement" shall mean, collectively, the agreements, documents
and instruments evidencing or securing the Nationwide Indebtedness, as any
thereof may be amended, restated, modified or supplemented from time to
time.
"Nationwide Default" shall mean a "Default" by the Borrower under the
Nationwide Agreement, as such term is defined from time to time therein.
"Nationwide Event of Default" shall mean an "Event of Default" by the
Borrower under the Nationwide Agreement, as such term is defined from time
to time therein.
"Nationwide Indebtedness" shall mean any and all indebtedness, obligations
and liabilities of the Borrower from time to time outstanding under the
Nationwide Agreement, whether now existing or hereafter arising, fixed or
contingent, due or not due, liquidated or unliquidated, determined or
undetermined, and whether for principal, premium, interest (including
interest accruing before or after the commencement of any Insolvency or
Liquidation Proceeding or interest that would have accrued but for the
commencement of such Insolvency or
6
Liquidation Proceeding, to the date of payment, even if the claim for such
interest is not allowed pursuant to Applicable Law), fees, indemnities,
costs, expenses or otherwise.
"Nationwide Liens" shall mean the Liens on the Collateral which have been
or may from time to time be granted to Nationwide pursuant to the
Nationwide Agreement.
"Note" shall mean, collectively, the promissory note if and when issued by
the Borrower payable to the order of the Lender, evidencing the Loans, if
any, made by the Lender as provided herein, in the form of Exhibit A
hereto, and any promissory note or notes of the Borrower issued in
substitution thereof.
"Notice of Borrowing" shall mean an irrevocable notice, in the form of
Exhibit B hereto, given to the Lender by the Borrower pursuant to Section
2.2 hereof.
"Obligations" shall mean any and all indebtedness, debts, obligations, and
liabilities of the Borrower to the Lender from time to time outstanding
under the Related Documents to which the Borrower is a party, whether
fixed or contingent, due or not due, liquidated or unliquidated,
determined or undetermined, and whether for principal, interest, fees,
expenses or otherwise, including principal of and interest on and any
other amounts payable in respect of the Loans, if any, and including,
further, any rights of subrogation or contribution arising under the
Related Documents.
"Operating Manager" shall mean (a) during the four-year period commencing
on the Closing Date, James J. Cotter, so long as he remains active in the
business and affairs of the Member, and (b) at any time after such
four-year period (or any earlier time when Mr. Cotter is not so active),
any Person designated pursuant to the terms of the Limited Liability
Company Agreement as the operating manager of the Borrower; provided that
there may be more than one Operating Manager of the Borrower from time to
time.
"Operational Agreements" shall mean the License of Intangibles, the
Sub-Management Agreement and the Lease Agreement.
"Option Agreement" shall mean the Option to Purchase and Agreement of
Purchase and Sale and Escrow Instructions dated as of August 16, 1985
between Sutton Hill and Nationwide (as successor-in-interest to Sutcin
Holding Corp.), as such agreement has been extended by a First Addendum
dated as of January 1, 1992, a Second Addendum dated as of July 1, 1996,
and a Third Addendum, dated as of the Closing Date and a Fourth Addendum
dated January 29, 2002, in connection with the purchase of fee properties
underlying the Sutton Theatre, as the same may be amended, restated,
modified or supplemented from time to time.
"Outstanding" shall mean all Loans made by the Lender pursuant hereto and
not repaid by the Borrower.
7
"Payment Account" means account designated in writing by the Lender prior
to the making of the Initial Loan and from time to time thereafter as the
"Payment Account" for purposes of this Agreement.
"Payment Date" shall mean the 30th day of each March, June, September and
December, commencing on the first such date following the initial Loan
made hereunder.
"Permitted Liens" shall mean any Lien of a kind specified in Section 7.2
of this Agreement.
"Person" shall mean any individual, partnership, corporation, joint stock
company, trust (including a business trust), limited liability company,
joint venture, unincorporated organization or other form of business
entity, or a government or agency or political subdivision thereof.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of the
Closing Date, between Sutton Hill and the Lender as amended and restated
as of January 29, 2002, as the same may be amended, restated, modified or
supplemented from time to time.
"Properly Contested" shall mean (including grammatical alternatives
thereof), (a) in the case of any Indebtedness of the Borrower (including
any Taxes) that is not paid as and when due or payable by reason of the
Borrower's bona fide dispute concerning its liability to pay same or
concerning the amount thereof, (i) such Indebtedness is being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted; (ii) if the Indebtedness results from, or is determined by the
entry, rendition or issuance against the Borrower or any of its Assets of,
a judgment, writ, order or decree, execution on such judgment, writ, order
or decree is stayed pending a timely appeal or other judicial review; and
(iii) if such contest is abandoned, settled or determined adversely (in
whole or in part) to Borrower, Borrower forthwith pays such Indebtedness
and all penalties, interest and other amounts due in connection therewith
or otherwise causes such judgment, writ, order or decree to be satisfied;
and (b) in the case of any other obligation of Borrower, (i) compliance
with or performance of such obligation is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted; (ii)
the lack of performance or compliance therewith will not have a Material
Adverse Effect or compliance therewith or performance thereof has been
stayed or permissibly deferred; (iii) there is no material risk of
criminal liability against the Lender; and (iv) if such contest is
abandoned, settled or determined adversely to Borrower, Borrower
thereafter promptly and with reasonable diligence effects such required
compliance or performance.
"Property" shall mean the Borrower's interest in the Site Leases,
Improvements and Equipment.
"Reading" shall mean Reading Entertainment, Inc., a Nevada corporation.
8
"Real Property Interests" shall mean fee, leasehold and other estates in
real property, real property fixtures and improvements, the rents, income
and profits generated or arising from any such estate, fixtures or
improvements and any and all other real estate interests, claims and
rights a lien or encumbrance on which would be subject to mortgage taxes
pursuant to Article 11 of the Tax Law of the State of New York (as from
time to time in effect) or replacements thereto.
"Related Documents" shall mean this Agreement, the Note, the Security
Agreement and the Intercreditor Agreement. The term "Related Documents"
shall not include any of the foregoing documents to the extent that such
document has been terminated in accordance with its terms not due to the
occurrence of an event of default thereunder.
"Security Agreement" shall mean the Security Agreement, dated as of July
28, 2000, between the Lender and the Borrower, substantially in the form
of Exhibit F hereto as amended and restated as of January 29, 2002, as it
may be amended, restated, modified or supplemented from time to time.
"Site Leases" shall mean all the site leases listed on Exhibit I attached
hereto.
"Sub-Management Agreement" means the Sub-Management Agreement, dated as of
the date hereof, between the Borrower and Citadel Cinemas, as the same may
be amended, restated, modified and supplemented from time to time.
"Subsidiary" of any Person shall mean any corporation, partnership,
limited liability company, joint venture, trust or estate of which (or in
which) more than 50% of:
(a) the outstanding capital stock having voting power to elect
a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting
power upon the occurrence of any contingency),
(b) the interest in the capital or profits of such partnership
or joint venture, or
(c) the beneficial interest of such trust or estate
is at the time directly or indirectly owned by such Person, by such Person
and one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"Sutton Hill" shall mean Sutton Hill Associates, a California general
partnership, and its successors and assigns.
9
"Taxes" shall mean any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of whatever
nature, including income, receipts, excise, property, sales, use,
transfer, license, payroll, withholding, social security and franchise
taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and all
interest, penalties, additions to tax and similar liabilities with respect
thereto, but excluding, in the case of the Lender, franchise taxes or
taxes imposed on or measured by the net income or overall gross receipts
of the Lender.
"Tenant Event" shall mean an event arising from or attributable to an
action or inaction of, or a condition or event relating to, Citadel
Cinemas or any of its Affiliates (or the agents, officers, directors or
employees of Citadel Cinemas or any such Affiliate), or initiated by
Citadel Cinemas or any of its Affiliates (or any such Person), unless such
action, inaction, or event was or resulted from an action by Citadel
Cinemas or any of its Affiliates to enforce any rights or remedies under
the Lease Agreement or any other Contract or Applicable Law so long as
such action so to enforce was initiated in good faith.
"Termination Date" shall mean the date which is eighteen (18) months
following the Initial Drawdown Date.
"Theatre Properties" shall mean the Borrower's interest in the properties
listed on Exhibit H attached hereto.
"UCC" shall mean the Uniform Commercial Code (or any successor statute) as
adopted and in effect from time to time in the State of New York or, when
the laws of any other state govern the method or manner of the creation,
perfection or enforcement of any security interest in any of the
Collateral, the Uniform Commercial Code (or any successor statute) of such
state.
1.2 Accounting and Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP or, as appropriate,
the accounting principles used in preparation of the financial statements
referred to in Section 5.15, and all financial data pursuant to the Agreement
shall be prepared in accordance with such principles. All other terms contained
in this Agreement shall have, when the context so indicates, the meanings
provided for by the UCC to the extent the same are used or defined therein.
1.3 Certain Matters of Construction. All references in this Agreement to
any other agreement or instrument shall include such other agreement or
instrument as the same may be amended, modified or supplemented from time to
time. In the computation of interest and fees payable from a specified date to a
later specified date, unless otherwise indicated the word "from" means "from and
including" and the words "to" and "until" both mean "to but not including". The
terms "herein," "hereof" and "hereunder" and other words of similar import refer
to this Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be
10
deemed to cover all genders. The section titles, table of contents and list of
exhibits appear as a matter of convenience only and shall not affect the
interpretation of this Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations; all references to any instruments or agreements, including
references to this Agreement or any and all agreements, instruments and
documents heretofore, now or hereafter executed by the Borrower in favor of or
delivered to the Lender in respect to the transactions contemplated by this
Agreement, shall include any and all modifications or amendments thereto and any
and all extensions or renewals thereof. The words "including" and "include" mean
"including, without limitation".
ARTICLE II
CREDIT FACILITY
2.1 The Commitment. Subject to the terms and conditions of this Agreement
and in reliance on the representations and warranties contained herein, the
Lender shall make Loans to the Borrower, from time to time during the period
(the "Commitment Period") from the Initial Drawdown Date to and including the
date that is one hundred eighty (180) days following the Termination Date (or
such later date as is set forth in a written notice from the Lender to the
Borrower), in an aggregate principal amount at any one time Outstanding up to
but not exceeding the amount of the Commitment, which Loans shall be evidenced
by and be repayable in accordance with the terms of the Note and shall be
secured by the Collateral. The Lender, in its sole discretion or as provided in
Section 2.2(d), may at the request of the Borrower given at any time after the
sixth anniversary of the Closing Date make loans earlier than the Initial
Drawdown Date. Within the limits of the Commitment, the Borrower may borrow
under this Section 2.1 and prepay pursuant to Section 2.6 hereof. Any principal
amount repaid, by prepayment or otherwise, may not be reborrowed, and the
Commitment shall be reduced by the amount so borrowed and repaid. The sum of the
principal amount at any time of all Outstanding Loans made by the Lender
pursuant to this Agreement shall not exceed eighteen million Dollars
($18,000,000).
2.2 Manner of Borrowing.
(a) The Borrower shall give the Lender (i) for any Loan proposed to
be made on or before or within ninety (90) days following the Initial Drawdown
Date, a duly completed Notice of Borrowing in the form of Exhibit B attached
hereto not later than 3:00 P.M. (New York City time) not less than one hundred
twenty (120) days prior to the date designated by the Borrower as the date of
advance for such Loan, and (ii) for any Loan proposed to be made any time
thereafter, a duly completed Notice of Borrowing not later than 3:00 P.M. (New
York City time) not less than one hundred eighty (180) days prior to the date
designated by the Borrower as the date of advance for such Loan. Each Notice of
Borrowing shall be irrevocable and binding on the Borrower.
(b) Each such Notice of Borrowing shall specify: (i) the amount of
such Loan, which shall be in an aggregate principal amount of at least $25,000
(or, if the then unused
11
Commitment is less than $25,000, such lesser amount); and (ii) the date of such
borrowing, which shall be a Business Day during the Commitment Period (unless
the Lender agrees to make a Loan earlier than the Initial Drawdown Date).
(c) Subject to the terms and conditions of this Agreement, the
Lender shall make the amount of each Loan available to the Borrower by
transferring the amount thereof on the date of the advance specified by the
Borrower to an account designated by the Borrower in the Notice of Borrowing.
(d) At any time and from time to time after the Closing Date,
subject to the provisions of this Section 2.2(d), the Lender may give the
Borrower a notice (a "Mandatory Borrowing or Reduction Notice") requiring the
Borrower to either (i) give a Notice of Borrowing for a Loan in an amount equal
to the then unused amount of the Commitment, as provided in Section 2.2(a)(i),
or (ii) give a notice under Section 3.4 reducing the Commitment, as of the date
of such notice, to the amount of Loans then outstanding. If the Borrower does
not give either a Notice of Borrowing or a notice reducing the Commitment, as
required by this Section 2.2(d), within 30 days of the date of the Mandatory
Borrowing or Reduction Notice, the Borrower shall be deemed to have given on
such 30th day a notice as described in Section 2.2(d)(ii).
2.3 Repayment of Principal. The Borrower shall repay the Lender the
aggregate principal amount of the Outstanding Loans on the Final Date (or such
earlier date as is required pursuant to Section 2.6) in accordance with the
terms of the Note.
2.4 Payment of Interest.
(a) The Borrower shall pay interest on the unpaid principal amount
of each Loan, if any, owing to the Lender from the date of such Loan to the date
on which such principal amount shall be paid in full, at a rate equal to the
Interest Rate, payable quarterly in arrears on each Payment Date.
(b) Regardless of any provision contained in this Agreement or any
other Related Document, in no contingency or event whatsoever shall the
aggregate of all amounts deemed interest under this Agreement or the Note and
charged or collected pursuant to the terms hereof or thereof exceed the highest
rate permissible under Applicable Law. It is the intent of the parties hereof to
comply with all Applicable Laws relating to interest and usury and, if the
Lender shall inadvertently charge or receive interest hereunder in excess of the
highest applicable rate, the Lender shall promptly refund such excess interest
to the Borrower and such rate shall automatically be reduced to the maximum rate
permitted by Applicable Law.
2.5 Voluntary Prepayment. Subject in each case to the terms of the
Intercreditor Agreement, the Borrower may, on 10 day's prior written notice to
Lender, prepay all, but not less than all, of the outstanding Loans. The
Borrower may not otherwise prepay any Loan without the consent of the Lender,
except as required by this Agreement. Any prepayment must be accompanied
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by the payment of accrued interest on the amount prepaid to the date of
prepayment. Amounts so prepaid shall be applied to the remaining installments
due in respect of the Loans in inverse order of maturity.
2.6 Mandatory Prepayment. Subject in each case to the terms of the
Intercreditor Agreement:
(a) If Citadel Cinemas exercises the Purchase Option (as defined in
the Lease Agreement), the Borrower shall prepay all Obligations in full on
the Purchase Option Closing Date (as defined in the Lease Agreement);
provided that, if Citadel Cinemas shall fail or refuse to close, then the
Borrower shall have no obligation to prepay as herein set forth; and
(b) If the Borrower shall receive and, pursuant to the terms of the
Lease Agreement, be entitled to retain any insurance proceeds resulting
from damage to any of its Assets (including proceeds of insurance
maintained by Citadel Cinemas), or proceeds resulting from any Taking (as
defined in the Lease Agreement) or shall receive a payment pursuant to
clause (i) of paragraph (c) of Section 19 of the Lease Agreement, the
Borrower shall use the full amount of such sums, after payment of any
out-of-pocket expenses incurred by the Borrower in connection therewith,
to pay (i) first, any outstanding principal amount of the Nationwide
Indebtedness, and (ii) second, any outstanding principal amount of the
Indebtedness under this Agreement; provided, however, that, with the prior
written approval of Nationwide (which it may elect to grant or withheld in
its sole discretion), the Borrower may apply all of such sums to prepay
the principal Indebtedness outstanding hereunder until paid in full, in
which event all such excess shall be applied in reduction of the principal
balance of the Nationwide Indebtedness; provided, further, that, if at the
time of the Borrower's receipt of any of the aforesaid sums, there is no
amount then outstanding hereunder or less than the full amount has been
drawn hereunder, the Borrower shall utilize such sums to prepay other
Indebtedness (or distribute such sums to its sole Member for such use) or
the Nationwide Indebtedness and, to the extent that such sums are applied
in reduction of the principal of such other Indebtedness (or so used by
such Member), the Commitment hereunder shall be reduced dollar for dollar.
(c) If the Acquisition Cost (as defined in the Lease Agreement) is
reduced by the Acquisition Cost Adjustment (as defined in the Lease
Agreement) as a result of the termination of the Sub-Management Agreement,
then (i) the Commitment shall be reduced by an amount equal to the lesser
of the Acquisition Cost Adjustment and the unused Commitment and (ii) if
the amount of the reduction under Section 2.6(c)(i) is less than the
Acquisition Cost Adjustment, then (A) the Borrower, within 30 days after
the date the adjustment for the Acquisition Cost Adjustment is made under
the Lease Agreement, shall pay an amount equal to the excess of the
Acquisition Cost Adjustment over the amount of the reduction in the
Commitment under Section 2.6(c)(i) to be applied to (I) first, any
outstanding principal amount of the Nationwide Indebtedness, and (II)
second, any
13
outstanding principal amount of the Indebtedness under this Agreement;
provided, however, that, with the prior written approval of Nationwide
(which it may elect to grant or withheld in its sole discretion), the
Borrower may apply all of such sums to prepay the principal Indebtedness
outstanding hereunder until paid in full, in which event all such excess
shall be applied in reduction of the principal balance of the Nationwide
Indebtedness, and (B) the Commitment shall be reduced by the amount of
Loans as so prepaid.
2.7 Note. The Loans shall be evidenced by a single Note payable to the
order of the Lender. The amount of each Loan and repayment or prepayment of the
principal thereof shall be endorsed by the Lender on the schedule annexed to and
constituting a part of the Note, provided that the failure to make or any error
in making any such endorsement on such schedule shall not limit or extinguish
the obligation of the Borrower to repay such Loan. Such endorsements shall be
prima facie evidence of the aggregate unpaid principal amount of all Loans made
by the Lender.
2.8 Other Indebtedness. Any amount paid by the Lender or an Affiliate of
the Lender to Nationwide under the Intercreditor Agreement, or to any other
lender to Borrower under a similar agreement entered into pursuant to the last
sentence of Section 7.3, shall be deemed a borrowing by the Borrower and a part
of the Loans.
ARTICLE III
PAYMENTS; REDUCTION OF COMMITMENT; EXTENSION
3.1 Manner of Payments. Each payment required to be made by the Borrower
under this Agreement and the Note, if any, shall be made by transferring the
amount thereof in immediately available funds in Dollars to the Payment Account,
no later than 3:00 P.M. (New York City time) on the date on which such payment
shall become due. Each such payment shall be made without set-off or
counterclaim; provided that no payment by the Borrower to the Lender pursuant to
this Section 3.1 shall be deemed a waiver of any rights the Borrower may have
against the Lender. Subject to Section 11.16 hereof, each such payment shall
also be made free and clear of, and without deduction for, any taxes, duties,
levies, imposts or other charges of a similar nature except as required by law
and, in the event that any deduction for any taxes, duties, levies, imposts or
other charges shall be so required, the Borrower shall pay such additional
amounts as may be necessary so that the net amount of the payment hereunder,
after reduction by the amount of such taxes, duties, levies, imposts or other
charges, is equal to the amount that the Borrower was obligated to pay absent
the requirement to deduct such taxes, duties, levies, imposts or other charges.
Notwithstanding anything to the contrary contained in the foregoing sentence or
elsewhere in this Agreement, in no event shall the Borrower be obligated or
responsible for taxes on the overall net income or overall gross receipts of the
Lender or franchise taxes of the Lender. Any payment received after 3:00 P.M.
(New York City time) on any Business Day shall be deemed to have been received
on the next following Business Day. All payments received by the Lender shall be
applied first to outstanding Obligations other
14
than principal, interest and late charges, then to accrued but unpaid late
charges, then to accrued but unpaid interest, and then to unpaid principal.
3.2 Extension of Payments. If any payment by the Borrower under this
Agreement shall become due on a day which is not a Business Day, the due date
thereof shall be extended to the next following day which is a Business Day, and
such extension shall be taken into account in computing the amount of interest
then due and payable hereunder.
3.3 Computation of Interest. Interest on all Loans payable under this
Agreement and the Note shall be computed on the basis of a year of 360 days
consisting of 12 months of 30 days each.
3.4 Reduction of Commitment. The Borrower may, upon not less than three
Business Days' irrevocable notice (or such shorter period as is provided in
Section 2.2(d)), reduce all but not less than all of the unused Commitment to
zero. In addition, if the Borrower shall give a Notice of Borrowing but fails to
satisfy the conditions to the Loan requested thereby on the date for making of
such Loan, other than as provided in the proviso to Section 4.1(i), the
Commitment shall be reduced to an amount of the outstanding Loans, if any,
effective as of the date such Loan was to have been made. The Borrower may not
otherwise reduce the Commitment. At 5:00 P.M. (New York City time) on the one
hundred eightieth (180) day following the Termination Date, unless the
Commitment Period is extended pursuant to a written notice delivered to the
Borrower by the Lender, the Commitment shall be reduced to zero; provided,
however, that the foregoing shall not affect the Borrower's rights with respect
to any unfunded advance theretofore requested by the Borrower.
ARTICLE IV
CONDITIONS OF LENDING
4.1 Initial Conditions. Notwithstanding any other provision of this
Agreement, and without affecting in any manner the rights of the Lender under
the other Sections of this Agreement, it is understood and agreed that the
Lender will not be obligated to fund the initial Loan unless the Lender has
received the following items three (3) Business Days prior to the date of the
initial Loan (unless such conditions are waived by the Lender), except with
respect to the items described in paragraphs (a), (b), (d), and (g) which shall
be delivered on the date hereof:
(a) Standby Credit Facility and Note. A counterpart of this
Agreement and of the Note in the form attached hereto as Exhibit A, duly
executed and delivered on behalf of the Borrower (including by way of a
telecopied signature page, provided that, in the case of the Note, the original
thereof is delivered to the Lender on or before the date of the initial Loan);
(b) Borrower's Certificate. A certificate from the Borrower,
executed on its behalf by an Operating Manager of the Borrower, certifying that
attached thereto are true and complete copies of the certificate of formation
(certified by the Secretary of State of the State of New
15
York) and the Limited Liability Company Agreement and of partnership
authorizations of Sutton Hill, the sole member of the Borrower, authorizing the
transactions contemplated hereby and the borrowing of the Loans;
(c) Good Standing Certificates. A certificate from the Secretary of
State of the State of New York certifying that the Borrower is in existence and
in good standing in such state;
(d) Legal Opinion. A legal opinion addressed to the Lender from
Whitman Breed Abbott & Morgan LLP, New York counsel to the Borrower, as to the
matters set forth in Exhibit C hereto, which opinion the Borrower hereby
instructs its counsel to deliver to the Lender for its benefit;
(e) No Default Certificate. A certificate from the Borrower
certifying that to its Actual Knowledge (i) the representations and warranties
of the Borrower contained in Article V hereof, which are qualified with respect
to materiality, are true and correct, and all such representations or warranties
that are not so qualified are true and correct in all material respects with the
same force and effect as though made on and as of such date, except to the
extent that such representations and warranties expressly relate to an earlier
date, and (ii) no Event of Default has occurred and is continuing; provided,
however, that no such representation or warranty contained in Article V shall be
deemed untrue or incorrect nor shall any such Event of Default be deemed to
exist if resulting from a Tenant Event.
(f) Collateral. A counterpart of the Security Agreement, duly
executed and delivered (including, without limitation, by way of a telecopied
signature page) on behalf of the Borrower, a counterpart of the Pledge
Agreement, duly executed and delivered (including, without limitation, by way of
a telecopied signature page) by the Member, and evidence that (i) all filings or
other action necessary to perfect the Lender's security interest in the
Collateral have been made, and (ii) the Lien perfected by such filings has
priority over any other Liens except as otherwise permitted under Section 7.2
hereof;
(g) Authorized Signatures. A certificate of the Borrower as to the
names of the officers or similar officials of the Borrower authorized to sign
any documents contemplated by this Agreement and the other Related Documents,
together with the true signatures of such officers or similar officials who will
sign such documents. The Lender may conclusively rely on such certificates until
the Lender receives a further written certificate of the Borrower canceling or
amending the prior certificate and submitting the signature(s) of the officers
or similar officials named in such subsequent certificate;
(h) Use of Proceeds. A certificate from the Borrower confirming that
(i) (x) the proceeds of the initial Loan will be used to discharge all of the
Borrower's then-existing Indebtedness (other than under the Nationwide
Agreement), that all commitments thereunder have been or will be terminated, and
that all Liens relating thereto have been released; (y) such Indebtedness has
otherwise been satisfied, with all such commitments terminated and Liens
released;
16
or (z) the Borrower is no longer obligated, or its assets encumbered, with
respect thereto; and (ii) once the conditions of clause (i) are satisfied, Loan
proceeds will be used for distribution to Sutton Hill;
(i) UCC, etc., Searches. Reports listing the results of UCC filing
and tax and judgment Lien searches, prepared by one or more firms reasonably
satisfactory to the Lender, with respect to the Borrower and each of its
Affiliates which at any time in the past 6 years have been tenant under any of
the Site Leases and with respect to Sutton Hill, indicating that there are no
such filings or Liens affecting the Collateral except for Permitted Liens;
provided, however, that the Lender shall withhold from the pending Loan an
amount equal to the amount secured by any such filing or 125% of the amount of
any such Lien (unless such Lien is a Permitted Lien), which amount shall be
deemed made as and thereafter be an outstanding Loan, until such filing or Lien
is resolved (promptly after which time any amount of such withheld Loan not used
to satisfy the claim relating to such filing or Lien shall be delivered to
Borrower) and the balance of the pending Loan shall be advanced if the other
conditions thereto are then satisfied;
(j) Intercreditor Agreement. Counterparts of the Intercreditor
Agreement, duly executed and delivered (including, without limitation, by way of
a telecopied signature page) on behalf of the Borrower and Nationwide. The
Lender agrees to execute and deliver the Intercreditor Agreement, provided the
other conditions herein are satisfied; and
(k) Nationwide Agreement. The Nationwide Agreement shall not have
been amended or modified in any respect, other than amendments or modifications
which would not have required consent of the Lender under Section 2.10(c) of the
Intercreditor Agreement had the Intercreditor Agreement been entered into on the
date of this Agreement.
4.2 Continuing Conditions. The agreement of the Lender to make each Loan
requested to be made by it on any date (including the initial Loan) is subject
to the satisfaction of the following conditions precedent:
(a) Notice of Borrowing. The Lender shall have received a duly
completed and executed Notice of Borrowing, as required by Section 2.2
hereof;
(b) Certificate. The Lender shall have received a certificate of the
type described in clause (e) of Section 4.1 hereof, subject to the same
proviso as therein set forth;
(c) Use of Loan Proceeds. The Lender shall receive a certificate
from the Borrower as to Borrower's use of proceeds of the requested
advance of the Loan in accordance with clause (h) of Section 4.1 hereof;
and
(d) UCC, etc., Searches. The Lender shall have received an updated
search of the type described in clause (i) of Section 4.1 hereof (and the
amount of the Loan shall be
17
reduced, but the balance thereof made available to the Borrower, as
described in the proviso thereto).
(e) Cotter/Forman Guaranty. If such Loan is being made on or before
the second (2nd) anniversary of the Closing Date as a result of a
Mandatory Borrowing or Reduction Notice and, in such Mandatory Borrowing
Notice, the Lender states that (i) it will obtain all or a part of the
funds for such Loan by the Lender or an Affiliate, or any of them (such
party or party being the "Citadel Borrower"), borrowing funds from a
person or persons other than an Affiliate of the Lender (the "Third Party
Lender") and (ii) it requests delivery of the guaranty provided for in
this Section 4.2(e), the Third Party Lender shall have received a guaranty
by James J. Cotter and Michael R. Forman, jointly and severally, of the
obligations of the Citadel Borrower to the Third Party Lender, in such
form and containing such terms as such Third Party Lender may reasonably
request (and, without limiting the foregoing, the Lender may assign or
grant a security interest in the Note and the Pledge Agreement and
Security Agreement, or any of them, to any Third Party Lender); provided,
that (v) such guaranty shall be on customary terms for similar guaranties
and shall provide that it shall terminate on, and be of no effect with
respect to any claim made thereon after, the seventh (7th) anniversary of
the Closing Date, (w) Messrs. Cotter and Forman shall not be required to
provide such guaranty unless, simultaneously therewith, the Lender
provides to them an indemnity agreement, in form reasonably satisfactory
to them, pursuant to which the Lender agrees to indemnify such guarantors
against any liability (including reasonable attorneys fees and other
costs) they may incur by reason of such guaranty, (x) Messrs. Cotter and
Forman shall have no obligation to provide any security or collateral for
such guaranty, (y) Messrs. Cotter and Forman shall have no obligation to
provide such guaranty (A) unless the loan obtained by the Citadel Borrower
is obtained solely for the purpose of providing funds to make Loans under
this Agreement or (B) if any collateral is provided for such loan other
than any one or more of the Note, the Pledge Agreement, the Security
Agreement, the Lease Agreement, the License of Intangibles, those certain
management agreements assigned to the Lender or an Affiliate by the
Borrower or entered into between the Lender or an Affiliate, on the one
hand, and the Borrower or an Affiliate, on the other, the other assets and
contract rights obtained or entered into by the Lender and its Affiliates
in connection with the foregoing, and the other assets, contract rights,
and other intangibles obtained by the Lender and its Affiliates in
connection with the leasing or operation of the Theatre Properties and the
management of the theatres managed under the management agreements
referred to in this clause (B) and (z) the Lender shall pay or reimburse
Messrs. Cotter and Forman for all reasonable legal fees and other out of
pocket expenses incurred by them in connection with such guaranty.
On the date of each Loan, the Borrower shall be deemed to have represented that
all of the conditions to the making of such Loan have been satisfied.
4.3 No Waiver of Conditions. If any one or more of the foregoing
conditions set forth in Section 4.1 or 4.2 hereof are not satisfied at the time
when a Loan is to be advanced by the Lender
18
and the Lender nevertheless (whether with or without knowledge of the failure of
any such condition to be satisfied) funds the then pending Loan to the Borrower,
the making of such Loan shall not operate as a waiver of any such condition.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make the
Loans, if any, hereunder, the Borrower hereby represents and warrants to the
Lender that the following statements are true and correct as of the Closing Date
and that the statement set forth in Sections 5.1, 5.3, 5.4, 5.5, 5.6, 5.7, 5.8,
5.9, 5.10, 5.11, 5.12, 5.13, 5.14 are true as of the date hereof:
5.1 Status. The Borrower (a) is a duly organized and validly existing
limited liability company in good standing under the laws of the State of New
York, (b) is duly licensed or qualified to do business in each other
jurisdiction where the failure to be so licensed or qualified could have a
Material Adverse Effect, (c) has all requisite power and authority to own or
lease its properties and conduct its business as presently conducted and to
execute and deliver, and to perform its obligations under, this Agreement and
the other Related Documents to which it is (or may become) a party, except where
the failure to have such power or authority would not materially impair the
ability of the Borrower to perform its obligations under this Agreement and the
other Related Documents, and (d) has delivered to the Lender true and complete
copies of the Borrower's certificate of formation and Limited Liability Company
Agreement, as each is in effect on the Closing Date.
5.2 Litigation. Except as listed in Schedule 5.2, to the Actual Knowledge
of the Borrower, the Borrower has not received written notice of any:
(a) judgment at law or in equity issued by any court, governmental
body, agency, commission or other tribunal against the Borrower that (i)
questions the validity of this Agreement or any of the other Related
Documents to which it is (or may become) a party or the Liens purported to
be created thereby and (ii) is not related to any action or inaction of,
or any condition or event relating to, the Lender or any of its
Affiliates, or
(b) action, suit, proceeding or investigation at law or in equity by
or before any court, governmental body, agency, commission or other
tribunal pending against, nor, to the Borrower's Actual Knowledge,
threatened in writing against, the Borrower by Nationwide or any of its
Affiliates or, as of the date of this Agreement, any other Person (other
than Lender or any of its Affiliates) that, if adversely determined
against the Borrower, could be reasonably expected to question the
validity of this Agreement or any of the other Related Documents to which
it is (or may become) a party or the Liens purported to be created
thereby.
19
5.3 Compliance with Other Instruments. The execution, delivery and
performance by the Borrower of this Agreement and the other Related Documents to
which it is (or may become) a party will not (a) as of the date hereof or the
date such other Related Document is executed, conflict with, result in a breach
of, or constitute a default under, any terms or provisions of any material
Contract to which the Borrower is a party or to which it or any material portion
of its Assets is subject (including its interest in the Site Leases and the
Option Agreement) or any Applicable Law (provided compliance with such Contract
or Applicable Law is not the obligation of Citadel Cinemas or any of its
Affiliates under the Operational Agreements), or the Borrower's certificate of
formation or Limited Liability Company Agreement or (b) result in, or require
the creation or imposition of, any Lien upon or with respect to the Assets
except as may be contemplated hereby or by the Related Documents, which, in the
case of this clause (b) would have, in the aggregate, a Material Adverse Effect.
5.4 Binding Agreement. The execution, delivery and performance by the
Borrower of this Agreement and the other Related Documents to which the Borrower
is (or may become) a party have been duly authorized by all necessary action by
or on behalf of the Borrower. This Agreement constitutes, and such other Related
Documents, if and when executed and delivered by or on behalf of the Borrower,
will constitute, legal, valid and binding obligations of the Borrower,
enforceable according to their terms, subject, as to enforceability, to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law).
20
5.5 Authorizations. To the Borrower's Actual Knowledge, all
authorizations, consents, approvals, registrations, filings, exemptions and
licenses with or from any governmental or regulatory authorities which are
necessary for the borrowings hereunder, for the execution and delivery by the
Borrower of this Agreement or any other Related Document to which the Borrower
is (or may become) a party, or for the performance by the Borrower of its
obligations hereunder or thereunder, except for such authorizations, consents,
approvals, registrations, filings, exemptions and licenses which are required to
be effected or obtained by Citadel Cinemas or any of its Affiliates pursuant to
the terms of the Operational Agreements or Applicable Law or the absence of
which would not, in the aggregate, have a Material Adverse Effect, have been
effected and obtained and, so long as may be required for the Borrower to comply
with this Agreement or any other Related Document, are in full force and effect.
5.6 Regulation. The Borrower is not principally engaged in, nor does it
have as one of its important activities, the business of extending credit for
the purpose of purchasing or carrying any "margin stock" (as defined in
Regulation U of the Board of Governors of the Federal Reserve System).
5.7 Title to Property; Liens. The Borrower has good title to the Borrower
Collateral and is the sole legal owner thereof. The Borrower Collateral is free
and clear of any Liens, except as permitted pursuant to Section 7.2 hereof and
Liens arising as a result of any Tenant Event.
5.8 Taxes. The Borrower has filed, or caused to be filed, all required tax
returns with respect to Taxes, or has filed for extensions of time for the
filing thereof, and has paid all applicable Taxes other than Taxes not yet due
or which may be paid hereafter without penalty, except for (a) filings or
payments as to which the failure to file would not have a Material Adverse
Effect, (b) Taxes which are being Properly Contested by the Borrower, and (c)
Taxes which are required to be paid or discharged by Citadel Cinemas or any of
its Affiliates under the terms of the Operational Agreements. The Borrower has
no Actual Knowledge of any deficiency or additional assessment in connection
therewith not provided for in the financial statements heretofore furnished the
Lender except such deficiencies or assessments that would not have a Material
Adverse Effect.
5.9 Pension Plans. The Borrower has not established and does not maintain
or contribute to any employee benefit plan that is covered by Title IV of ERISA.
5.10 Collateral. Once executed and delivered, the terms of the Pledge
Agreement shall create a valid security interest in the Equity Collateral,
securing the payment of the Obligations. Once executed and delivered, the terms
of the Security Agreement shall create a valid security interest in all material
elements of the Borrower Collateral (taken as a whole), securing payment of the
Obligations. On or prior to the date of the initial Loan, all action necessary
to perfect such security interests will have been taken and such security
interests will have priority over any other Lien on such Collateral, except for
Liens permitted by Section 7.2 hereof.
21
5.11 Location of Borrower. On the date hereof, the Borrower is "located"
(as that term is defined in Section 9-103(3)(d) of the UCC) at 120 North
Robertson Boulevard, Los Angeles, California 90048.
5.12 Investment Company Act. The Borrower is not, nor will it be during
the term of this Agreement, (a) an "investment company," within the meaning of
the Investment Company Act of 1940, as amended or (b) subject to regulation
under any foreign, federal or local statute or any other Applicable Law of the
United States of America or any other jurisdiction, in each case limiting its
ability to incur indebtedness for money borrowed as contemplated hereby or by
any of the other Related Documents.
5.13 Membership Interests; Management. The only member of the Borrower is
Sutton Hill, its successors and assigns. As of the date hereof, James J. Cotter
is an Operating Manager of the Borrower.
5.14 Brokerage Fees, etc. There are no claims against the Borrower for
brokerage commissions, finder's fees or investment banking fees in connection
with the transactions contemplated by this Agreement.
5.15 Financial Statements. The financial statements of the Borrower
furnished to the Lender fairly present the financial position of the Borrower as
of the date of this Agreement and have been prepared in conformity with tax
accounting principles used by the Borrower for its federal tax reporting
purposes.
5.16 Name. The Borrower has not changed its name prior to the date hereof.
5.17 Indebtedness; Other Agreements. On or prior to the date hereof, the
Borrower has not (a) created, assumed or incurred any Indebtedness except the
existing Indebtedness listed on Schedule 5.17 hereto and the Nationwide
Indebtedness, (b) entered into any Contract other than (i) the Related Documents
to which it is a party, and (ii) Contracts incidental to the performance of its
obligations under the Operational Agreements, or (c) conducted any business
other than incidental to its formation, its acquisition of the Property and
related Assets from its Affiliates, and the transactions contemplated hereby and
by the Operational Agreements. The Borrower has no material obligations other
than under this Agreement and the documents and instruments referred to in
clauses (a) and (b) of this Section 5.17. The Borrower has delivered to the
Lender true and complete copies of all material documents and instruments
relating to all such Indebtedness (including the Nationwide Indebtedness) and
all material Contracts referred to in clause (b) (ii) of this Section 5.17
(other than the Operational Agreements).
5.18 No Subsidiaries. The Borrower has no Subsidiaries and owns no
interest in any other Person.
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ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that from the date hereof until
the Obligations have been paid and performed in full and this Agreement shall
have terminated, unless the Lender shall otherwise consent in writing:
6.1 Payment of Taxes. The Borrower will duly pay and discharge, or cause
to be paid and discharged, all Taxes, and governmental charges or levies imposed
upon it or upon its income or Assets, prior to the date on which penalties
attach thereto, except to the extent that (a) the nonpayment of such Tax, charge
or levy would not, either singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, (b) any such Tax, charge or levy is being
Properly Contested or (c) such Tax, charge or levy is required to be paid or
discharged by Citadel Cinemas or any of its Affiliates under the terms of the
Operational Agreements. The Borrower will file all federal, state and local Tax
returns and other reports which the Borrower is required by Applicable Law to
file.
6.2 Preservation of Existence. The Borrower will preserve and maintain its
existence, rights, franchises and privileges, except such rights, franchises and
privileges the loss of which would not reasonably be expected to have a Material
Adverse Effect, and shall maintain its qualification and good standing in the
State of New York and in all other states in which the failure to be qualified
might reasonably be expected to have a Material Adverse Effect.
6.3 Compliance with Laws. The Borrower will comply with the requirements
of all Applicable Laws, except if (a) non-compliance, singly or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect, (b) the compliance with which is being Properly Contested by the
Borrower or (c) the compliance with such laws is the responsibility of Citadel
Cinemas or any of its Affiliates under the Operational Agreements.
6.4 Keeping of Books and Records; Inspection. The Borrower will maintain,
or cause to be maintained, at all times a system of accounting used for federal
income tax purposes. Upon reasonable notice from the Lender, the Borrower will
permit the Lender or any duly authorized representatives to have access to and
examine and inspect the books and records and properties of the Borrower and
confer with its agents and employees at any reasonable time and from time to
time and reasonably to copy memoranda and extracts therefrom.
6.5 Notice of Certain Events. The Borrower will promptly upon obtaining
Actual Knowledge thereof notify the Lender of (a) the occurrence of any Event of
Default of which it has Actual Knowledge, (b) the service upon, or other actual
receipt by, the Borrower of written notice of the commencement of any litigation
or governmental proceeding affecting the Borrower or any of its Assets which, if
adversely determined, could reasonably be expected to result in a Material
Adverse
23
Effect, (c) any material adverse change in the condition or operations of the
Borrower, financial or otherwise unless resulting from a Tenant Event, (d) the
receipt by the Borrower of written notice of the occurrence of any action or
event which might reasonably be expected to have a Material Adverse Effect, (e)
any change in its name, (f) any proposed amendment requested in writing to any
Site Lease or the Option Agreement which is not requested or consented to by
Citadel Cinemas or Fee Sub, as the case may be, or (g) any Person giving any
written notice to the Borrower or taking any other material action with respect
to a claimed default or event or condition of the type referred to in paragraph
(e) of Section 9.1 hereof. The Borrower shall promptly give notice thereof to
the Lender specifying the nature and period of existence of any such condition
or event, or specifying the notice given or action taken and the nature of such
claimed Event of Default or condition and what action the Borrower has taken, is
taking and proposes to take with respect thereto.
6.6 Financial Statements and Other Information. The Borrower will deliver,
or cause to be delivered, to the Lender:
(a) as soon as available and in any event within one hundred twenty
(120) days after the end of each of its fiscal years, a balance sheet of
the Borrower at the end of such year and statements of operations and
statements of changes in member's capital and statements of cash flows of
the Borrower for such year, setting forth in each (other than its first)
fiscal year in comparative form the figures for the previous year;
(b) from and after the date the initial Loan is made, and
simultaneously with the delivery of each set of financial statements
referred to in clause (a) of this Section 6.6, a certificate of the
Borrower stating, to its Actual Knowledge, whether there exists on the
date of such certificate any Event of Default, and if any Event of Default
exists, specifying the nature and period of existence thereof and the
action the Borrower is taking and proposes to take with respect thereto;
and
(c) from and after the date the initial Loan is made, and from time
to time thereafter, such additional information regarding the financial
condition or business of the Borrower as the Lender may reasonably
request.
All such financial statements shall be complete and correct in all material
respects and shall be prepared in accordance with tax accounting principles used
by the Borrower for its federal tax reporting purposes applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officers, as the case may be, and disclosed
therein).
6.7 Maintenance of Property. The Borrower will maintain its Assets in good
condition, except to the extent Citadel Cinemas or any of its Affiliates has
assumed such responsibility pursuant to the terms of the Operational Agreements.
24
6.8 Use of Proceeds. The Borrower will use the proceeds of each Loan, if
any, solely for the purposes described in clause (h) of Section 4.1 hereof.
6.9 Separate Existence. The Borrower shall continue to observe and
maintain the requisite legal formalities in order that the Borrower may be
treated as a legally separate entity. The Borrower shall maintain separate
financial records to reflect its Assets and liabilities, separate and apart from
the financial records of its Member and its Affiliates. The Borrower shall
maintain its Assets in such a manner that it is not costly or difficult to
segregate, identify or ascertain such Assets. The Borrower shall conduct
business in its own name, and use separate stationery, invoices and checks. The
Borrower shall not commingle its Assets or funds with those of any other Person
and shall correct any known misunderstanding as to its separate identity.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that from the date hereof until
the Obligations have been paid and performed in full and this Agreement shall
have terminated, unless the Lender shall otherwise consent in writing:
7.1 Change in Nature of Business. The Borrower will not (a) enter into any
business other than the business contemplated by the Lease Agreement or (b)
become subject to or a party to any Contract, without the written consent of the
Lender, other than this Agreement, the other Related Documents to which the
Borrower is (or may become) a party, Contracts incidental to the performance of
its obligations under the Operational Agreements and this Agreement, and
extensions, renewals and replacements of the Nationwide Indebtedness, the other
Indebtedness listed on Schedule 5.17 hereto and Indebtedness arising or
permitted pursuant to the terms hereof.
7.2 Liens. The Borrower will not create, incur, assume or permit to exist
any Lien on any of its Assets or any portion thereof, whether now owned or
hereafter acquired, other than as follows (each a "Permitted Lien"): (a) Liens
in favor of the Lender (or for the benefit of the Lender) under this Agreement
and the other Related Documents; (b) existing Liens, and other matters affecting
title, listed on Schedule 7.2 hereto; (c) Liens for Taxes and governmental
charges and levies not delinquent, which are being Properly Contested or which
are the obligation of Citadel Cinemas or any of its Affiliates to pay pursuant
to the Operational Agreements; (d) mechanics', workers', materialmen's,
warehousemen's, operators', carriers', or other like Liens arising in the
ordinary and normal course of business with respect to obligations which are not
overdue for a period of more than thirty (30) days or which are being Properly
Contested by the Borrower; (e) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation; (f)
deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary and normal course of the Borrower's business;
25
(g) extensions, renewals and replacements of Liens described in paragraph (b)
hereof, provided that such extension, renewal or replacement Lien is limited to
the property covered by the Lien so extended, renewed or replaced and does not
secure any Indebtedness or amount that is in excess of that secured immediately
prior to such extension or renewal; (h) easements, rights-of-way, restrictions,
imperfections in title, liens, charges and other encumbrances on owned or leased
real property, landlord's and lessor's Liens under any of the Site Leases,
restrictions under federal and state securities laws on the transfer of
securities and other restrictions not securing Indebtedness that are incurred in
the ordinary and normal course of business, all of which (other than landlord's
or lessor's Liens under the Site Leases), in the aggregate, are not substantial
in amount and which do not in any case materially detract from the value of the
property subject thereto or will not have a Material Adverse Effect; (i) Liens
created by the Nationwide Agreement (subject to Section 7.3 hereof) or Liens to
secure Indebtedness permitted to exist pursuant to Section 7.3 hereof; (j) Liens
not created by the Borrower, Citadel Cinemas or any of its Affiliates which are
being Properly Contested; and (k) Liens placed on the Assets of the Borrower by,
or arising from, a Tenant Event, whether or not such Liens are permitted to
exist pursuant to the terms of the Operational Agreements; provided, however,
that the fact that a Lien described in any of foregoing clauses other than
clause (k) above is a Permitted Lien for purposes of this Agreement does not
affect Citadel Cinemas' rights or the Borrower's obligations as landlord
pursuant to the Lease Agreement if Citadel Cinemas properly exercises its
Purchase Option thereunder; provided, further, however, that the Liens described
in paragraphs (d), (e) and (f) shall only constitute Permitted Liens in the
event that Citadel Cinemas or any of its Affiliates either has requested that
the Borrower allow such Liens to be incurred or permitted to exist on the
Borrower's Assets or has failed to perform any obligation under any of the
Operational Agreements and as a result thereof, the Borrower, in its reasonable
discretion, creates, incurs, assumes or permits to exist such Liens.
7.3 Other Indebtedness. The Borrower will not create, assume, incur or
permit to exist or otherwise become or remain liable in respect of any
Indebtedness other than (a) Indebtedness pursuant to the Related Documents; (b)
the existing Indebtedness listed on Schedule 5.17 hereto; (c) the Nationwide
Indebtedness; (d) prior to drawing down a Loan hereunder, any other Indebtedness
(but any such other Indebtedness shall be repaid with proceeds of the initial
Loan hereunder); and (e) extensions, renewals and replacements of the
Indebtedness described in clauses (a), (b), (c), and (d) above; provided,
however, that the Borrower may only incur or permit to exist such extensions,
renewals, or replacements, or any Indebtedness described in clause (b) or (d)
which is secured by a Lien on any material Assets of the Borrower, if each
lender of any portion of such Indebtedness (excluding for this purpose
Nationwide and the Lender and any of its Affiliates) shall have executed and
delivered agreements (x) with Citadel Cinemas and Fee Sub which in Citadel
Cinemas' reasonable judgment will assure to Citadel Cinemas its rights under the
Lease Agreement (including the Purchase Option), absent the existence of an
Event of Default by Citadel Cinemas under the Lease Agreement, and assure to Fee
Sub its rights under the Fee Option Agreement and (y) in the case of such
Indebtedness referred to in clause (b) only, with the Lender, in form and
substance reasonably satisfactory to the Lender, providing to the Lender
substantially the same rights as the Lender has under Sections 2.02(e), 2.03,
2.08(b), 2.10(c), 2.11(g), 2.11(h)(i), 2.11(h)(iii), 2.12 and 2.13 of the
Intercreditor Agreement (except that the Borrower shall have complied with its
obligation
26
in respect of this clause (y) to obtain an agreement of such other lender as
aforesaid if such other lender has offered to enter into such an agreement
provided the Lender hereunder agrees in such agreement to provisions in favor of
such other lender similar to those set forth in Sections 2.02(e), 2.12 and
2.13(a) of the Intercreditor Agreement and, if such other lender is then
providing financing to replace the Nationwide Indebtedness, Sections 2.02(a),
(b) and (d), 2.04, 2.09(a), 2.10(b) and 2.11(f) thereof). Notwithstanding
anything to the contrary herein, in no event will the Borrower create, assume,
incur or permit to exist or otherwise become or remain liable in respect of any
Indebtedness if, as a result thereof, (x) the outstanding principal amount of
such Indebtedness under the Nationwide Agreement would exceed eleven million
Dollars ($11,000,000), or (y) the total outstanding principal amount of such
Indebtedness, including the Indebtedness under this Agreement, would exceed
twenty nine million Dollars ($29,000,000) less any reductions made to the
Acquisition Cost under the Lease (subject to the provisions of Section 2.6(c) as
to the time period within which to reduce such Indebtedness if there is any
Indebtedness outstanding hereunder).
7.4 Consolidations, Mergers, etc. The Borrower will not merge with or
into, or consolidate with, any other Person.
7.5 Pension Plans. The Borrower will not establish or become party to any
employee benefit plan of the type referred to in Section 5.9 hereof.
7.6 Location of Borrower. The Borrower will not maintain its chief
executive office at any place other than the place specified in Section 5.11
hereof or change the places where the books and records of the Borrower are
located unless the Borrower shall have given the Lender not less than thirty
(30) days' prior written notice of such change in location, which shall be
within the United States.
7.7 Sale, Lease, etc. The Borrower will not sell, lease, license,
transfer, liquidate or otherwise dispose of any of its Assets, to or in favor of
any Person without the prior written consent of the Lender.
7.8 Fiscal Year. The Borrower will not change its fiscal year.
7.9 Liquidation, Dissolution, etc. The Borrower will not liquidate, wind
up its affairs or dissolve itself.
7.10 Loans. The Borrower will not acquire obligations of or securities of
or make any loans or advances to any Person.
7.11 Change of Ownership or Management. The Borrower will not permit
anyone other than the Persons specified in Section 5.13 to own beneficially or
of record any of the membership interests of the Borrower without the prior
written consent of the Lender, which consent shall not be unreasonably withheld
or delayed. The Borrower will not, during the shorter of the four year period
commencing on the date hereof or the period from the date hereof until James J.
Cotter shall cease to
27
be active in the business of the Borrower other than by involuntary replacement,
terminate as an Operating Manager James J. Cotter.
7.12 Dividends. The Borrower will not declare or pay any dividend in
respect of, or make any distribution in respect of, or redemption or purchase
of, any of its membership interests; provided, however, that so long as no Event
of Default has occurred and is continuing or would result therefrom, the
Borrower may make distributions or returns of capital to its Member in respect
of any fiscal quarter of the Borrower, provided that the aggregate amount of
distributions so paid would not render the Borrower insolvent within the meaning
of Section 101(32) (A) of the Bankruptcy Code, provided, however, that a "fair
valuation" (as defined in that Section) of the Assets (less cash held by the
Borrower) shall in no event be valued at less than $32,500,000.
7.13 Prohibition of Amendments or Waivers. The Borrower will not amend,
alter, modify, or waive, or consent to any amendment, alteration, modification
or waiver of: the Borrower's certificate of formation, the Limited Liability
Company Agreement, any Site Lease or the Option Agreement, except to effect
administrative changes that could not adversely affect the interests of the
Lender or Citadel Cinemas or, in the case of Site Lease or the Option Agreement,
are incidental to performance of its obligations under the Operational
Agreements, provided that the Borrower shall provide written notice to the
Lender of any such change promptly, and in any event not more than five (5)
Business Days after such change is effective; or any Contract (including those
referred to above) if such amendment, alteration, modification or waiver might
have a Material Adverse Effect.
7.14 Subsidiaries. The Borrower will not create or acquire any
Subsidiaries.
ARTICLE VIII
TERMS OF SUBORDINATION
8.1 Subordination of Indebtedness. The Indebtedness of the Borrower to the
Lender pursuant hereto and the Liens on the Collateral in favor of the Lender
are subject and subordinate to Indebtedness of the Borrower to Nationwide and
the Liens on the Collateral in favor of Nationwide as more particularly
described in and subject to the terms and conditions of the Intercreditor
Agreement.
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default. If any one or more of the following events or
conditions (herein called "Events of Default") shall occur and be continuing
(each of which shall be deemed to exist and be continuing unless and until cured
by the Borrower, or waived by the Lender, in its sole and absolute discretion),
the Lender shall be entitled to exercise the remedies set forth in Section 9.2
hereof:
28
(a) Failure of the Borrower to pay (i) any installment of principal
owing on any Loan, as and when due and payable, whether by reason of
maturity, mandatory prepayment, acceleration or otherwise, or (ii) any
installment of interest or any other amount payable to the Lender
hereunder or under any other Related Document to which the Borrower is a
party within ten (10) Business Days after receipt of notice from the
Lender that the payment thereof is due; provided, however, that no such
failure described in clause (i) or (ii) shall constitute an Event of
Default hereunder for any purpose to the extent arising from (x) a failure
by Citadel Cinemas to pay any amount of Basic Rent or Additional Rent
(each as defined in the Lease Agreement) as and when due thereunder or (y)
the use by the Borrower of such cash or cash equivalents or other
reasonably liquid assets to perform any obligations which Citadel Cinemas
has failed to perform under any of the Operational Agreements; or
(b) Any representation or warranty made by the Borrower in this
Agreement, any other Related Document to which it is a party or any
certificate, financial statement or other document delivered pursuant
hereto or thereto proves to be false or inaccurate in any material respect
when made or delivered unless each of the following conditions shall
exist: (i) such representation or warranty is of a nature that it is
capable of being cured within thirty (30) days after written notice shall
have been given to the Borrower by the Lender specifying the falsity or
inaccuracy of such representation or warranty, (ii) the Borrower shall
have given such notice promptly after having obtained Actual Knowledge of
such falsity or inaccuracy, (iii) the Borrower shall have diligently
commenced curing such default and is proceeding diligently and in good
faith to cure such false or inaccurate representation or warranty within
such thirty (30) day period, and (iv) such false or inaccurate
representation has not resulted in a Material Adverse Effect; or
(c) Default on the part of the Borrower in the due performance or
observance of any covenant or obligation contained in Section 6.5 or 6.8
or Article VII hereof, provided, however, in the event such default occurs
prior to the commencement of the Commitment Period (or, if earlier, the
making of a Loan), such default shall not constitute an Event of Default
hereunder unless such default continues for thirty (30) days after written
notice from the Lender; or
(d) Default on the part of the Borrower in the due performance or
observance of any other covenant or obligation of the Borrower contained
herein, and, if such default is capable of cure, the continuance of such
default for thirty (30) days after written notice to the Lender by the
Borrower; provided that, if such default is of a nature that it is capable
of being cured but not within such thirty (30) day period and the Borrower
shall have proceeded diligently and in good faith to complete curing such
default, such thirty (30) day period shall be extended to one hundred
eighty (180) days; or
(e) (i) The entry of a decree or order for relief in respect of the
Borrower by a court having jurisdiction in the premises, or the
appointment of a receiver, liquidator,
29
assignee, custodian, trustee, sequestrator (or other similar official) of
the Borrower or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, in an involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law;
or the commencement against the Borrower of an involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law,
and the continuance of any such case unstayed and in effect for a period
of sixty (60) consecutive days; or
(ii) The commencement by the Borrower of a voluntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar
law, or the consent by it to the entry of an order for relief in an
involuntary case under any such law or the consent by it to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the
Borrower or of any substantial part of its property, or the making by it
of a general assignment for the benefit of creditors, or the failure of
the Borrower generally to pay its debts as such debts become due, or the
taking of any action in furtherance of any of the foregoing; provided,
however, that, if any of the events described in clauses (i) and (ii) of
this paragraph (e) shall arise as a result of a Tenant Event, such event
shall not constitute an Event of Default for purposes hereof; or
(f) Any of the Equity Collateral or any material portion of the
Borrower Collateral (taken as a whole) shall be attached for execution or
become subject to the order of any court or any other process for
execution and attachment and such attachment, order or process shall
remain in effect and undischarged for sixty (60) consecutive days and is
not related to or does not arise from or by reason of a Tenant Event; or
(g) One or more final judgments for the payment of money shall be
rendered against the Borrower in an aggregate amount in excess of $500,000
(against which the Borrower is uninsured or which is not the obligation of
Citadel Cinemas or any of its Affiliates pursuant to the Operational
Agreements) and the same shall remain undischarged for a period of sixty
(60) days during which execution of such judgment shall not be effectively
stayed; or
(g) Sale, lease or encumbrance of any of the Equity Collateral, or,
except as permitted pursuant to the Security Agreement (whether or not
then in effect), any material portion of the Borrower Collateral (taken as
a whole), or the making of any levy, seizure or attachment of or on the
Equity Collateral or any material portion of the Borrower Collateral
(taken as a whole) except in all cases described in this paragraph (h) as
may be specifically permitted by other provisions of this Agreement or any
Related Document or pursuant to any of the Operational Agreements; or
30
(h) (i) The Borrower shall default in the payment when due of any
principal of or premium (if any) or interest on any Nationwide
Indebtedness and such default shall continue beyond any applicable grace
period, or shall fail to observe or perform any terms of any instrument
pursuant to which any such Nationwide Indebtedness was created or of any
mortgage, indenture or other agreement relating thereto if the effect of
such failure is to cause the acceleration of such Indebtedness, or permit
Nationwide to accelerate the maturity thereof, and such Nationwide failure
shall not have been waived in writing pursuant thereto; or
(ii) The Borrower shall default in the payment when due of any
principal of or premium (if any) or interest on any other Indebtedness and
such default shall continue beyond any applicable grace period, or shall
fail to observe or perform any terms of any instrument pursuant to which
any such other Indebtedness was created or of any mortgage, indenture or
other agreement relating thereto if the effect of such failure is to cause
the acceleration of such Indebtedness and such failure shall not have been
waived pursuant thereto; provided, however, that no such failure to pay by
the Borrower shall constitute an Event of Default hereunder to the extent
arising from (x) a failure by Citadel Cinemas to pay any amount of Basic
Rent or Additional Rent as and when due pursuant to the Lease Agreement or
(y) the use by the Borrower of such cash or cash equivalents or other
reasonably liquid assets to perform any obligations which Citadel Cinemas
has failed to perform under any of the Operational Agreements; or
(i) The representation contained in Section 5.10 hereof shall at any
time become untrue as relates to the Equity Collateral or any material
element or portion of the Borrower Collateral (taken as a whole) and the
Borrower fails to cure such condition within ten (10) days after written
notice by the Lender that such a condition exists; or
(j) (i) Any Related Document shall, for any reason, be declared to
be null and void or shall not give or shall cease to give the Lender the
Liens or the material rights, powers and privileges purported to be
created thereby in favor of the Lender as relates to the Equity
Collateral, or to any material element or portion of the Borrower
Collateral (taken as a whole), superior to and prior to the rights of all
third Persons and subject to no other Liens (except to the extent
expressly permitted herein or therein), provided, however, if any of the
events described in this clause (i) of this paragraph (k) shall arise as a
result of a Tenant Event, such an event shall not constitute an Event of
Default hereunder, or (ii) the validity or enforceability of the Liens
granted, to be granted, or purported to be granted, by this Agreement or
the other Related Documents shall be contested by the Borrower or any of
its Affiliates; or
(k) Any Site Lease or the Option Agreement shall be declared to be
null and void or shall not give or shall cease to give the Borrower the
material rights, powers and privileges purported to be created thereby,
solely as a result of any action or inaction by the Borrower or an event
or condition relating solely to the Borrower; or
31
(l) The Lease Agreement shall be declared to be null and void or
shall not give or shall cease to give Citadel Cinemas the material rights,
powers and privileges purported to be created thereby, solely as a result
of any action or inaction by the Borrower or any event or condition
relating solely to Borrower; or
(m) Any material representation or warranty made by either Indemnity
Guarantor in his Indemnity Guarantee proves to be false or inaccurate in
any material respect; or
(n) (i) The Indemnity Guarantee ceases to be in full force and
effect; or
(ii) A default occurs and continues after the expiration of
any applicable grace period under the Indemnity Guarantee such that the
ability of the Lender to realize thereon is materially compromised.
9.2 Default Remedies. (a) If any Event of Default (other than Events of
Default specified in paragraph (e) of Section 9.1 hereof) shall occur and be
continuing, then and in every such event, and at any time thereafter during the
continuance of such Event of Default, the Lender may by written notice to the
Borrower declare the Obligations to be forthwith due and payable, whereupon (i)
the Commitment shall immediately reduce to zero and (ii) the Obligations shall
become forthwith due and payable both as to principal and interest together with
all other amounts payable by the Borrower under this Agreement which may be due
or accrued and unpaid, without presentment, demand, protest or any other notice
of any kind, all of which are expressly waived. Notwithstanding anything in the
preceding sentence to the contrary, if an Event of Default occurs priors to the
advance of the initial Loan and the Lender elects to reduce the Commitment to
zero, then if the Borrower cures such Event of Default before the Termination
Date, the rights of the parties hereto shall be reinstated as if the Event of
Default never occurred.
(b) In addition, if an Event of Default occurs following the date of the
initial Loan but prior to the Termination Date, then if the Borrower cures such
Event of Default prior to the earlier of (i) the completion of the sale of any
Collateral pursuant to the Pledge Agreement or the Security Agreement and (ii)
the Termination Date, then the rights of the parties hereto shall be reinstated
as if the Event of Default never occurred, provided that the Borrower has made
good any missed payments.
(c) If an Event of Default set forth in paragraph (e) of Section 9.1
hereof shall occur with respect to the Borrower, then without any notice to the
Borrower or any other act by the Lender or any other Person (i) the Commitment
shall be immediately reduced to zero, and (ii) the Obligations shall become
forthwith due and payable, all without presentment, demand, protest or notice of
any kind, all of which are expressly waived.
(d) If the Lender shall declare the Obligations to be forthwith due and
payable pursuant to the terms of this Section 9.2, the Lender may, subject in
all cases to the terms of the Intercreditor
32
Agreement, enforce its rights hereunder and under any other instrument or
agreement delivered in connection herewith and take any other action to which it
is entitled hereunder, thereunder, or by law, whether for the specific
performance of any covenant or agreement contained in this Agreement, in any
such instrument or agreement or to enforce payment as provided herein, therein,
or by law, and, in such event, the Lender shall be entitled to receive from the
Borrower, in addition to all other amounts provided for herein, all costs,
expenses and fees reasonably incurred by the Lender, including reasonable
attorneys fees and disbursements.
(e) The Lender shall endeavor to give the Borrower notice within 30 days
of the Lender becoming aware of any Event or Default (or event which, with
notice or passage of time or both, would become an Event of Default), provided
that (i) if Lender fails to give such notice within five Business Days of
obtaining knowledge of such default (which shall not include knowledge of James
J. Cotter), and Borrower does not otherwise have knowledge of such default on or
before such fifth Business Day, then any period provided herein for Borrower to
cure such default shall be extended by the number of days in the period from
such fifth Business day to the date on which Borrower obtains Actual Knowledge
of such default (whether by notice from Lender or otherwise) and (ii) failure to
give such notice shall not act as a waiver of or prejudice any rights or
remedies of the Lender, except as specifically provided in Section 9.2(e)(i).
9.3 Setoff. The Lender is hereby authorized at any time and from time to
time, upon the occurrence and during the continuance of any Event of Default,
without prior notice to the Borrower, to the fullest extent permitted by law, to
set-off and apply any and all balances, credits, deposits (general or special,
time or demand, provisional or final), accounts or monies at any time held and
other indebtedness at any time owing by the Lender or any Affiliate to or for
the account of the Borrower against any and all of the amounts owing by the
Borrower under this Agreement or the Related Documents to which it is a party,
whether or not the Lender shall have made any demand hereunder or thereunder;
provided, however, that no setoff will be made by any Affiliate of the Lender
unless and until such Affiliate has provided not less than five (5) Business
Days' notice to the Borrower of such anticipated action. The rights of the
Lender under this Section 9.3 are in addition to, and do not derogate from or
impair, other rights and remedies (including, without limitation, other rights
of setoff) which the Lender may have.
9.4 Default Interest. Notwithstanding any other provision of this
Agreement to the contrary, so long as an Event of Default shall have occurred
and be continuing (after, as well as before judgment), but with regard to Events
of Default other than pursuant to Section 9.1(a) only after notice from the
Lender electing to impose the default rate, then to the extent permitted by
Applicable Law, the Borrower shall from time to time pay interest to the Lender
on any amount not paid within five (5) days after demand from the date such
payment became due until payment in full at a rate equal to the sum of the rate
of interest payable by the Borrower pursuant to Section 2.4 hereof plus 1.5% per
annum.
33
9.5 Restrictions on Remedies. Notwithstanding any provision in this
Agreement, including in Article IX hereof, the rights of the Lender hereunder
shall be subject in all cases to the limitations imposed by the Intercreditor
Agreement.
ARTICLE X
COLLATERAL
10.1 Borrower Collateral. In order to secure the due payment and
performance by the Borrower of all of the Obligations of the Borrower to the
Lender, the Borrower shall grant to the Lender a Lien on all of the Borrower
Collateral by the execution and delivery to the Lender of the Security
Agreement.
10.2 Equity Collateral. In order to secure the Obligations, Sutton Hill
shall grant to the Lender a Lien on the Equity Collateral, by the execution and
delivery of the Pledge Agreement.
ARTICLE XI
GENERAL PROVISIONS
11.1 Modification of Agreement; No Sale of Interest. Any provision of this
Agreement or any other Related Document may be modified, altered, amended or
waived if, but only if, such modification, alteration, amendment or waiver is in
writing and is signed by the Borrower and the Lender. The Lender may assign,
grant or sell any participation, interest, obligation or right in or to this
Agreement or any other Related Document, or any portion hereof or thereof, to
any Person without the prior written consent of the Borrower; provided, however,
that no such assignment, grant, or sale shall relieve the assigning Lender of
its obligations to lend (before or after such assignment) or of any other
obligations hereunder theretofore accruing; and, provided, further, that the
Lender may grant participations to Affiliates so long as the Lender's
obligations to the Borrower hereunder are not affected thereby.
11.2 Indulgences Not Waivers. The Lender's failure, at any time or times
hereafter, to require strict performance by the Borrower of any provision of
this Agreement or the other Related Documents shall not waive, affect or
diminish any right of the Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by the Lender of an Event of
Default by the Borrower under this Agreement or the other Related Documents
shall not suspend, waive or affect any other Event of Default by the Borrower
under this Agreement or the other Related Documents, whether the same is prior
or subsequent thereto and whether of the same or of a different type. None of
the undertakings, agreements, warranties, covenants and representations of the
Borrower contained in this Agreement or the other Related Documents and no Event
of Default by the Borrower under this Agreement or the other Related Documents
shall be deemed to have been suspended or waived by the Lender, unless such
suspension or waiver is by an instrument in writing
34
specifying such suspension or waiver and is signed by a duly authorized
representative of the Lender and directed to the Borrower.
11.3 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
11.4 Cumulative Rights; No Waiver. The rights, powers and remedies of the
Lender hereunder are cumulative and in addition to all rights, powers and
remedies provided under any and all agreements between the Borrower and the
Lender relating hereto, at law, in equity or otherwise. Neither any delay nor
any omission by the Lender to exercise any right, power or remedy shall operate
as a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise of any other right, power or remedy.
11.5 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.
11.6 Notices. All notices, offers, acceptances, approvals, waivers,
requests, demands and other communications hereunder or under any other Related
Document shall be in writing, shall be addressed as provided below and shall be
considered as properly given (a) if delivered in person, (b) if sent by express
courier service (including Federal Express, Emery, DHL, Airborne Express, and
other similar express delivery services), (c) in the event overnight delivery
services are not readily available, if mailed by United States Postal Service,
postage prepaid, registered or certified with return receipt requested, or (d)
if sent by telecopy and confirmed; provided, that in the case of a notice by
telecopy, the sender shall in addition confirm such notice by writing sent in
the manner specified in clause (a), (b) or (c) of this Section 11.6. All notices
shall be effective upon receipt by the addressee; provided, however, that if any
notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. For the purposes of
notice, the addresses of the parties shall be as set forth below; provided,
however, that any party shall have the right to change its address for notice
hereunder to any other location by giving written notice to the other party in
the manner set forth herein. The initial addresses of the parties hereto are as
follows:
35
(i) If to the Lender:
Reading International, Inc.
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Attention: Chief Financial Officer
Telecopier No.: (212) 235-2229
and
S. Craig Tompkins
Reading International, Inc.
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Telecopier No. (213) 235-2229
(ii) If to the Borrower:
Sutton Hill Capital, L.L.C.
120 North Robertson Boulevard
Los Angeles, California 90048
Attention: Legal Department
Telecopier No.: (310) 652-6490
and
Ira Levin
Pacific Theatres
120 North Robertson Boulevard
Los Angeles, CA 90048
Telecopier No. (310) 652-6490
Each such notice, request or other communication shall be effective when
actually received.
11.7 Entire Agreement. This Agreement embodies the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, understandings and inducements which
relate to Loans, if any, to be made hereunder, whether express or implied, oral
or written.
36
11.8 Governing Law. THIS AGREEMENT HAS BEEN DELIVERED AT, AND SHALL BE
EFFECTIVE WHEN ACCEPTED BY THE LENDER IN, NEW YORK, NEW YORK, WHEREUPON THIS
AGREEMENT SHALL BE DEEMED A CONTRACT MADE IN NEW YORK AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11.9 Waiver of Jury Trial. THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND
EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ENFORCING OR DEFENDING ANY RIGHTS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION 11.9 HAVE BEEN BARGAINED FOR
AND THAT IT HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION HEREWITH.
11.10 General Waivers. The Borrower waives (a) presentment, demand and
protest and notice of presentment, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any Indebtedness at any
time held by the Lender on which the Borrower may in any way be liable and
hereby ratifies and confirms whatever the Lender may do in this regard; (b)
notice prior to the Lender's taking possession or control of any of the
Collateral or any bond or security which might be required by any court prior to
allowing the Lender to exercise any of the Lender's remedies, including the
issuance of an immediate writ of possession; and (c) notice of the Lender's
acceptance hereof. Each party hereto waives the right to interpose counterclaims
(other than mandatory counterclaims) of any kind or description in any
litigation between the Borrower and the Lender involving this Agreement,
provided that the foregoing shall not limit set-off rights any party may have.
11.11 Limited Recourse. Except to the extent of, and under the
circumstances specifically provided for in, Section 5 of the Pledge Agreement,
no recourse for the payment of the principal of, or interest on, the Loans or
any other amount due under this Agreement or any Related Document, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
direct or indirect member of the Borrower or any incorporator, partner,
shareholder, officer, member, Affiliate or director, as such, past, present or
future, of any such direct or indirect member, it being understood that the
Borrower is a special purpose limited liability company formed on the express
understanding aforesaid. Nothing contained in this Section 11.11 shall be
construed to limit the exercise or enforcement, in accordance with the terms of
this Agreement and the other documents referred to herein, of rights and
remedies against the Borrower or its Assets, or any other Person expressly
undertaking in writing obligations in connection with the transactions
contemplated hereby.
11.12 Headings. The Article and Section headings in this Agreement and the
table of contents are for convenience of reference only and shall not affect the
interpretation hereof.
11.13 Termination by Borrower. The Borrower may terminate this Agreement
at any time upon not less than thirty (30) days' prior written notice to the
Lender; provided, however, that on the
37
date specified by the Borrower for termination (a) there shall not be any Loans
then Outstanding and (b) all amounts then due and payable to the Lender under
this Agreement or the other Related Documents shall have been paid in full. No
termination of this Agreement, for whatever reason, shall affect the obligations
and liabilities of the Borrower hereunder which arose prior to such termination
or the Lender's rights, powers and remedies with respect thereto.
11.14 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, except as otherwise stated
herein.
11.15 Incorporation. All appendices and schedules attached to this
Agreement are incorporated herein by this reference.
11.16 Tax Forms. On or before the date hereof or, if later, the date on
which it acquires the rights and obligations of a Lender pursuant to this
Agreement, the Lender if it is not a United States person (within the meaning of
Section 7701 of the Internal Revenue Code of 1986) will deliver to the Borrower
a fully completed and duly executed copy of the United States Internal Revenue
Service Form 4224 or Form 1001 confirming that such Lender is entitled under
Section 1442 of the Internal Revenue Code or any other applicable provision
thereof or under any applicable tax treaty or convention to receive payments
under this Agreement without deduction or withholding of United States federal
income tax. So long as the Loans are Outstanding and until the Obligations have
been paid and performed in full, the Lender shall also deliver a further copy of
such Form 4224 or Form 1001 or any successor forms thereto to the Borrower upon
expiration of the form previously delivered by the Lender hereunder, unless any
change in law or regulation of the United States or any taxing authority thereof
has occurred prior to the date on which such delivery would otherwise be
required which renders such form inapplicable or which would prevent the Lender
from completing and delivering such form. Notwithstanding anything to the
contrary in this Agreement, the Borrower shall not be required to gross-up any
payment for withholding taxes imposed on the Lender which has failed to comply
with its obligations under this Section 11.16 if such compliance would have
avoided such withholding taxes.
ARTICLE XII
LENDER COOPERATION
12.1 Lender Cooperation. In the event the Borrower has not drawn down, or
elects not to draw down, the entire Commitment hereunder, the Lender shall, to
the extent reasonably requested by the Borrower and subject to the terms and
conditions herein, and at the Borrower's cost and expense, cooperate to allow
the Borrower to refinance its Indebtedness existing on the date hereof with any
other Person, including at any time and from time to time, upon the reasonable
request of the Borrower, and at the Borrower's cost and expense, to execute and
deliver any and all such further instruments and documents as the Borrower may
reasonably request in order to carry out such refinancing, provided that such
financing otherwise complies with the terms of Sections 7.2 and 7.3 hereof.
38
IN WITNESS WHEREOF, this Agreement has been duly executed under seal in
New York, New York, on the day and year specified at the beginning hereof.
SUTTON HILL CAPITAL, L.L.C.
("Borrower")
By:
------------------------------------------
Name: James J. Cotter
Title: Operating Manager
READING INTERNATIONAL, INC.
("Lender")
By:
------------------------------------------
Name: Andrzej Matyczynski
Title: Chief Financial Officer
39
EXHIBIT A
FORM OF NOTE
SUTTON HILL CAPITAL, L.L.C.
NOTE
New York, New York
$18,000,000 ___________, _____
Sutton Hill Capital, L.L.C., a New York limited liability company (the
"Borrower"), for value received, hereby promises to pay to the order of READING
INTERNATIONAL, INC. (the "Lender") the principal amount of EIGHTEEN MILLION
DOLLARS ($18,000,000) or, if less, the unpaid principal amount of the Lender's
Loans outstanding under the Citadel Standby Credit Facility dated as of July 28,
2000 between the Borrower and the Lender, as amended and restated as of January
29, 2002 (as the same may from time to time be amended, modified, supplemented
or extended, the "Credit Agreement"). Capitalized terms used herein have the
meanings given to them in the Credit Agreement. The principal amount of each
Loan shall be due and payable as provided in the Credit Agreement. The Borrower
also promises to pay interest on the unpaid principal amount hereof from time to
time outstanding, at such interest rates and on such dates as are determined
pursuant to the Credit Agreement. All such principal and interest shall be
payable in lawful money of the United States of America in immediately available
funds at the office of the Lender as provided in the Credit Agreement.
The date and amount of each Loan and each repayment and prepayment of
principal thereof shall be endorsed by the Lender on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof, provided that the failure to make or any error in making any such
endorsement on such schedule shall not limit, extinguish or in any way modify
the obligation of the Borrower to repay the Lender's Loans strictly in
accordance with the Credit Agreement.
This Note is the Note referred to in the Credit Agreement and is entitled
to the benefits thereof. This Note is subject to prepayment and its maturity is
subject to acceleration upon the terms provided in the Credit Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any
kind in connection with this Note.
All indebtedness arising under this Note and all interest payable
hereunder shall be subordinate and junior in right of payment to the Nationwide
Indebtedness now or hereafter owing,
in the manner and to the extent set forth in the Credit Agreement and the
Intercreditor Agreement (as defined in the Credit Agreement).
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
SUTTON HILL CAPITAL, L.L.C.
By:____________________________
Name:
Title:
SCHEDULE OF LOANS
Payments or
Principal Prepayments of Balance
Date of Loan Amount of Loan Principal Outstanding Notation Made By
EXHIBIT B
Form of Notice of Borrowing
NOTICE OF BORROWING
Reading International, Inc.
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Attention: Chief Financial Officer
Gentlemen:
Pursuant to Section 2.2 of the Citadel Standby Credit Agreement dated as
of July 28, 2000 as amended and restated as of January 29, 2002 (the "Credit
Agreement") between Sutton Hill Capital, L.L.C. and you, we hereby give you
irrevocable notice that we request a Loan as follows:
1. Amount of Loan: __________________ .
2. Date of borrowing: ________________ __, ____.
3. Account Information: _______________________.
We hereby confirm that all conditions to such Loan will be satisfied on
the date of such Loan.
Capitalized terms used herein but not defined shall have the meanings
given to them in the Credit Agreement.
Dated this ________ day of ____________, ____.
SUTTON HILL CAPITAL, L.L.C.
By:_________________________________
Name:
Title:
EXHIBIT E
AMENDED AND RESTATED PLEDGE AGREEMENT
AMENDED AND RESTATED
PLEDGE AGREEMENT
THE PLEDGE AGREEMENT, dated as of July 28, 2000 (as amended, modified and
supplemented from time to time, this "Agreement"), is entered into by and
between SUTTON HILL ASSOCIATES, a California general partnership (the
"Pledgor"), and CITADEL HOLDING CORPORATION, a Nevada corporation now known as
Reading International, Inc. (together with its permitted successors and assigns,
the "Pledgee") is hereby amended and restated as of January 29, 2002.
WITNESSETH:
WHEREAS, the Pledgor is (a) the sole member of Sutton Hill Capital,
L.L.C., a limited liability company formed under the laws of the State of New
York ("Sutton Hill Capital"), and (b) the legal and beneficial owner of the
Membership Interest (as hereinafter defined);
WHEREAS, Sutton Hill Capital and the Pledgee have entered into a certain
Citadel Standby Credit Facility, dated as of July28, 2000 as amended and
restated as of January 29, 2002 (as the same may be amended, restated, modified,
or supplemented from time to time, the "Credit Agreement"), pursuant to which,
at the election of Sutton Hill Capital and upon the satisfaction of certain
conditions precedent provided for therein, the Pledgee has agreed to make to
Sutton Hill Capital certain loans in an aggregate principal amount up to
eighteen million Dollars ($18,000,000) (hereinafter referred to as the "Loans");
WHEREAS, as an inducement to the Pledgee to make the Loans, if any, to
Sutton Hill Capital pursuant to the terms of the Credit Agreement, the Pledgor
has agreed, in accordance with the terms of Section 4.1(f) of the Credit
Agreement, to execute and deliver this Agreement pursuant to which the Pledgor
will pledge the Collateral (as hereinafter defined) in favor of the Pledgee to
secure the performance and repayment of Sutton Hill Capital's Obligations (as
hereinafter defined), to the extent and in accordance with the terms hereof;
WHEREAS, Sutton Hill Capital has also acquired certain interests in
various theatre properties in New York City, including the option (the "Sutton
Fee Option") to acquire the fee interests in and to one of such properties (the
"Sutton Fee");
WHEREAS, Citadel Cinemas, Inc., a Nevada corporation ("Citadel Cinemas"),
has subleased from Sutton Hill Capital certain of the theatre properties,
including the improvements and equipment located therein or thereon
(collectively, the "Leased Interests"), pursuant to provisions of a certain
Lease Agreement, dated as of July 28, 2000, as amended and restated as of
January 29, 2002 (the "Lease Agreement"), between Sutton Hill Capital, as
lessor, and Citadel Cinemas, as lessee;
WHEREAS, included in the Lease Agreement is an option in favor of Citadel
Cinemas (the "Lease Option") to acquire from Sutton Hill Capital the Leased
Interests;
WHEREAS, pursuant to an agreement, dated as of July 28, 2000 as amended
and restated as of January 29, 2002 (the "Fee Option Agreement"), between
Citadel Realty, Inc. ("Fee Sub") and Sutton Hill Capital, Sutton Hill Capital
has granted to Fee Sub the right (the "Fee Option Right"), subject to the
exercise by Citadel Cinemas of the Lease Option and payment by Citadel Cinemas
of the exercise price under the Lease Option, to require Sutton Hill Capital to
exercise the Sutton Fee Option and direct the delivery of the Sutton Fee to or
as directed by Fee Sub, upon payment by Fee Sub or its designee of the exercise
price under the Sutton Fee Option;
WHEREAS, the Collateral will be subject to the prior pledge thereof to
Nationwide, as described in a certain Intercreditor Agreement among Nationwide,
Sutton Hill Capital and the Pledgee;
WHEREAS, it is the intention of the Pledgor in executing and delivering
this Agreement to assure to the Pledgee that, if it forecloses on the pledge of
the Membership Interest, the Membership Interest will not be subject to any
claims thereto or rights therein arising from any action of Sutton Hill Capital
or its Affiliates, except for Pledgor Permitted Liens (as hereinafter defined);
and
WHEREAS, it is the Pledgee's expectation that, if it were to foreclose on
the pledge of the Membership Interest, Sutton Hill Capital's interest in the
Sutton Fee Option and in the Leased Interests would be subject only to Pledgor
Permitted Liens;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Unless otherwise defined herein, terms that are
defined in the Credit Agreement and used herein are so used as so defined, and
the following terms shall have the following meanings:
"Accounts" shall have the meaning assigned to that term in Article 9 of
the Code.
"Certificate of Title" shall mean a title search or report provided by a
title insurance company or agency licensed to do business in the state where the
Leased Interests are located.
"Chattel Paper" shall have the meaning assigned to that term in Article 9
of the Code.
"Citadel Cinemas" shall mean Citadel Cinemas, Inc., a Nevada corporation
and its successors and assigns (including successors or assigns as tenant under
the Lease Agreement).
"Code" shall mean the Uniform Commercial Code from time to time in effect
in the State of New York.
"Collateral" shall have the meaning assigned to that term in Section 2 of
this Agreement.
"Cure" (including grammatical alternatives thereof) shall mean (i) the
removal of the Lien or Title Impairment in question, either of record or by
arrangement for the title company insuring the interest of the transferee to
"omit" the Lien or Title Impairment in question, or (ii) the causing of the
title company involved to insure against collection or to insure against loss or
forfeiture of title with respect to the Lien or Title Impairment in question,
provided, that, in the case of a Cure described in clause (ii) hereof, the title
company must agree to "omit" such Lien or Title Impairment in question in
connection with any mortgagee title insurance policy with respect to any third
party financing.
"Designated Payment" shall mean the amounts (if any) required to be paid
to satisfy amounts then payable by the Pledgor to Nationwide pursuant to the
Nationwide Agreement.
"Event of Default" shall mean the occurrence of any of the following
events: (1) an Event of Default (as defined in the Credit Agreement), or (2) a
default on the part of the Pledgor in the due performance or observance of any
covenant or obligation of the Pledgor contained herein, and, if such default is
capable of cure, the continuance of such default for thirty (30) days after
written notice from the Pledgee to the Pledgor; provided, however, that if such
default is of a nature that it is capable of being cured but not within such
thirty (30) day period and the Pledgor shall have proceeded diligently and in
good faith to complete curing such default, such thirty (30) day period shall be
extended to one hundred eighty (180) days.
"Fee Option Agreement" shall have the meaning assigned to that term in the
recitals hereto.
"Fee Option Right" shall have the meaning assigned to that term in the
recitals hereto.
"General Intangibles" shall have the meaning assigned to that term in
Section 9-106 of the Code and shall include, without limitation, the Membership
Interest and all rights of the Pledgor to receive, directly or indirectly,
moneys or any other rights or benefits therefrom.
"Insolvency or Liquidation Proceeding" of any person shall mean:
(a) The entry of a decree or order for relief in respect of such
person by a court having jurisdiction in the premises, or the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of such person or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law; or the commencement against such person
of an involuntary case under the Federal bankruptcy
3
laws, as now or hereafter constituted, or any other applicable Federal or
state bankruptcy, insolvency or other similar law; or
(b) The commencement by such person of a voluntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law,
or the consent by it to the entry of an order for relief in an involuntary
case under such law or the consent by it to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of such person or of any
substantial part of its property, or the making by it of a general
assignment for the benefit of creditors, or the taking of any action in
furtherance of any of the foregoing;
provided, however, that, if any of the events described in clauses (i) and (ii)
of this definition shall arise as a result of a Tenant Event, then such an event
shall not constitute an Insolvency or Liquidation Proceeding.
"Instruments" shall have the meaning assigned to that term in Article 9 of
the Code.
"Intercreditor Agreement" shall mean the Intercreditor Agreement, dated as
of July 28, 2000 as amended and restated as of January 29, 2002, entered into by
and among the Pledgor, the Pledgee, and Nationwide Theatres Corp., a California
corporation and its successors and assigns (hereinafter referred to as
"Nationwide") as amended and restated as of January 29, 2002.
"Lease Agreement" shall mean the Lease Agreement between Sutton Hill
Capital, as lessor, and Citadel Cinemas, as lessee, dated as of July 28, 2000,
as amended and restated as of January 29, 2002 as amended, modified and
supplemented from time to time.
"Lease Option" shall have the meaning assigned to that term in the
recitals hereto.
"Leased Interests" shall have the meaning assigned to that term in the
recitals hereto.
"Legal Requirements" shall mean all laws, judgments, decrees, ordinances
and regulations and any other governmental rules, orders and determinations and
all requirements having the force of law, now or hereinafter enacted, made or
issued, whether or not presently contemplated (including without limitation the
Americans with Disabilities Act, 42 U.S.C. " 12181 et seq., and local and state
laws of similar impact or effect and rules, regulations and (to the extent
Citadel Cinemas receives notice and a copy thereof pursuant to the Lease
Agreement) orders issued under any thereof) and all existing recorded
agreements, covenants, conditions and restrictions (or any such of which Citadel
Cinemas has notice), applicable to any Leased Interest and/or the construction,
ownership, operation or use thereof, including, without limitation, compliance
with all requirements of labor laws and all federal, state, local and foreign
laws, statutes, codes, ordinances, rules, regulations, directives, binding
policies, permits or orders relating to or addressing the environment or human
health, including, but not limited to, any law, statute, code, ordinance, rule,
regulation, directive, binding
4
policy, permit, authorization or order, compliance with which is required at any
time from the date hereof through the Lease Termination Date as such term is
defined in the Lease Agreement (or thereafter as therein set forth), if any,
whether or not such compliance shall require structural, unforeseen or
extraordinary changes to any Leased Interest or the operation, occupancy or use
thereof
"Lien" shall mean any security interest, mortgage, pledge, hypothecation,
assignment as collateral, encumbrance, lien (statutory or other), or other
security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Code or
comparable law of any jurisdiction in respect of any of the foregoing).
"Limited Liability Company Agreement" shall mean the Limited Liability
Company Agreement of Sutton Hill Capital, dated as of April 8, 1999, as the same
may be amended, restated, modified or supplemented from time to time.
"Membership Interest" shall have the meaning assigned to that term in
Section 2 of this Agreement.
"Nationwide Accrued Interest" shall mean any interest that has accrued
with respect to the Nationwide Indebtedness so long as such interest has not
arisen as a result of a Tenant Event.
"Nationwide Pledge Agreement" shall mean the agreement, dated as of July
28, 2000, entered into between the Pledgor and Nationwide as amended and
restated as of January 29, 2002, pursuant to which the Pledgor has granted a
first security interest in the Collateral to Nationwide.
"Obligations" shall mean any and all indebtedness, debts, obligations, and
liabilities of Sutton Hill Capital to the Pledgee from time to time outstanding
under the Related Documents to which Sutton Hill Capital is a party, whether
fixed or contingent, due or not due, liquidated or unliquidated, determined or
undetermined, and whether for principal, interest, fees, expenses or otherwise,
including principal of and interest on any other amounts payable in respect of
the Loans, if any, and including, further, any rights of subrogation or
contribution arising under the Related Documents.
"Operational Agreements" shall have the meaning assigned to that term in
the Credit Agreement.
"Pledgor Permitted Liens" shall mean (a) with respect to the Membership
Interest, the Lien created pursuant to the Nationwide Agreement or any Lien
resulting from or attributable to a Tenant Event and (b) with respect to the
Leased Interests and the Sutton Fee Option, the following Liens and other
matters affecting the title thereto: (i) Liens securing the payment of taxes,
assessments and other governmental charges or levies which are not yet
delinquent to the extent not the obligations of Citadel Cinemas pursuant to the
Lease Agreement; (ii) Legal Requirements, zoning and planning restrictions,
subdivision and platting restrictions, easements, rights-of-way, licenses,
reservations,
5
covenants, conditions, waivers, or restrictions on the use of any material
component of real estate comprising the Leased Interests, which exist on the
date hereof and either are set forth in the title insurance policy delivered to
Citadel Cinemas in connection with the Lease Agreement or are not disclosed
therein; (iii) encroachments or irregularities of title none of which materially
impairs the current use or value of the affected Leased Interests; (iv) the
Liens created pursuant to the Nationwide Agreement provided that such Liens are
paid with the applicable Designated Payment; (v) leases and licenses in effect
with respect to any Leased Interest which are permitted by the Lease Agreement;
(vi) mechanics' and materialmen's liens or Liens not disclosed in the title
insurance policy and existing on the date hereof; (vii) exceptions to the title
of any material component of real estate comprising the Leased Interests, of the
Sutton Fee or of the Sutton Fee Option, as the case may be, as set forth in the
title insurance policy delivered to Citadel Cinemas in connection with the Lease
Agreement; (viii) existing Liens listed on Exhibit A attached hereto; (ix) any
Lien which is or results from a Tenant Event or is approved by Citadel Cinemas
for purposes of the Lease Agreement; (x) Liens, including Legal Requirements,
zoning and planning restrictions, subdivision and platting restrictions and any
of the matters affecting title, which result from acts of any agency,
department, court or other administrative, legislative or regulatory authority
of any Federal, state, local or foreign governmental body from and after the
date hereof not caused by or resulting from a Landlord Act (as such term is
defined in the Lease Agreement); and (xi) such other or additional matters as
may be approved in writing by Citadel Cinemas in its sole discretion.
"Proceeds" shall mean all "proceeds" as such term is defined in Section
9-306(1) of the Code on the date hereof and, in any event, shall include,
without limitation, all dividends or other income from the Membership Interest
and any and all collections on the foregoing or distributions with respect to
the foregoing.
"Sutton Fee" shall have the meaning assigned to that term in the recitals
hereto.
"Sutton Fee Option" shall have the meaning assigned to that term in the
recitals hereto.
"Taxes" shall mean any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of whatever nature,
including income, receipts, excise, property, sales, use, transfer, license,
payroll, withholding, social security and franchise taxes now or hereafter
imposed or levied by the United States, or any state, local or foreign
government or by any department, agency or other political subdivision or taxing
authority thereof or therein and all interest, penalties, additions to tax and
similar liabilities with respect thereto.
"Title Impairment" shall mean a claim, charge or other matter affecting
title to an Asset or interest therein, other than a Lien, which materially
impairs the intended use or value of the Asset (or interest therein) in question
excluding, however, the matters affecting title as of the date hereof, the Site
Leases and the terms and conditions thereof and matters which constitute Tenant
Events.
SECTION 2. Grant of Security. As security for the prompt and complete
payment when due of the Obligations, the Pledgor hereby assigns, pledges,
transfers and grants to the Pledgee a
6
continuing security interest (which shall be subject and subordinate to the
prior security interest granted to Nationwide pursuant to the Nationwide Pledge
Agreement as and to the extent provided in the Intercreditor Agreement) in, and
a lien upon, all of the Pledgor's right, title and interest in the following
property now owned or at any time hereafter acquired by the Pledgor, or in which
the Pledgor may acquire any right, title or interest, as collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations (collectively, the
"Collateral"):
a) any and all of its membership interest in Sutton Hill Capital,
including, without limitation, all its rights, title and interest to
participate in the operation or management of Sutton Hill Capital and all
its rights to properties, assets and distributions under the Limited
Liability Company Agreement, and all certificates evidencing any of such
membership interests (collectively, the "Membership Interest");
b) all Accounts arising out of the Limited Liability Company
Agreement in respect of the Membership Interest;
c) all General Intangibles arising out of or constituted by the
Limited Liability Company Agreement in respect of the Membership Interest;
and
d) to the extent not otherwise included, all Proceeds of any and all
of the foregoing.
This Agreement shall create a continuing security interest in the
Collateral which shall be subject and subordinate to the prior security interest
granted to Nationwide as provided in the Intercreditor Agreement and shall
remain in effect until all the Obligations, now existing or hereafter arising,
shall have been paid in full, the Commitments shall have been terminated and the
Credit Agreement and the Related Documents shall no longer be in effect.
SECTION 3. Representations and Warranties of Pledgor. The Pledgor hereby
represents and warrants to the Pledgee that: (i) the Pledgor is the sole member
of Sutton Hill Capital and no other Person owns or holds any other ownership
rights in the Membership Interest; (ii) the execution, delivery, and performance
of this Agreement are not in violation of any indenture, agreement, or
undertaking to which the Pledgor is a party or by which the Pledgor is bound;
(iii) the execution, delivery and performance of this Agreement will not result
in the creation or imposition of any lien or charge on, security interest in or
other encumbrance on any of the assets of the Pledgor except as contemplated by
this Agreement; (iv) the Pledgor's chief executive office and the place where
the Pledgor keeps its business records is 120 North Robertson Boulevard, Los
Angeles, California 90048; and (v) this Agreement will create and grant to the
Pledgee (upon the filing of appropriate UCC-1 financing statements) a valid lien
on, and a perfected security interest in favor of the Pledgee in, all right,
title or interest of the Pledgor in or to the Collateral, subject to the prior
lien in favor of Nationwide as provided in the Intercreditor Agreement, Liens
for Taxes and governmental charges and levies which are not delinquent, which
are being Properly Contested by or on behalf of the
7
Pledgor or which are the obligation of Citadel Cinemas or any of its Affiliates
to pay pursuant to any of the Operational Agreements and Liens placed on the
Collateral by, or arising from, the actions or inactions of, or any event or
condition relating to, Citadel Cinemas or any of its Affiliates, whether or not
such Liens are permitted to exist pursuant to the terms of any of the
Operational Agreements.
The Pledgor agrees that the foregoing representations and warranties shall
be deemed to have been made by it on each date of a Notice of Borrowing on or
after the date hereof by Sutton Hill Capital under the Credit Agreement on and
as of such date as though made hereunder on and as of such date.
SECTION 4. Further Assurances; Affirmative Covenants.
The Pledgor covenants and agrees that, from and after the date of this
Agreement until the Obligations are paid in full and the Commitment is
terminated:
a) The Pledgor will promptly execute and deliver and will cause to
be executed and delivered all further instruments and documents,
including, without limitation, financing and continuation statements, and
will take all further action and will cause all further action to be
taken, that the Pledgee may reasonably request in order to create,
preserve, perfect and protect the security interest in the Collateral or
to enable the Pledgee to exercise and enforce its rights and remedies
hereunder or to preserve, perfect and protect the Pledgee's right, title
and interest in and to the Collateral.
b) The Pledgor will at all times keep accurate and complete books
and records with respect to the Collateral and agrees that the Pledgee or
its representative shall have the right at any time and from time to time
to call at the Pledgor's place of business during normal business hours to
inspect and examine the books and records of the Pledgor relating to the
Collateral and to make extracts therefrom and copies thereof.
c) The Pledgor will keep the Collateral free and clear of all
security interests, liens and claims other than the security interest and
lien herein granted and the security interest and lien granted to
Nationwide, Liens for Taxes and governmental charges and levies which are
not delinquent, which are being Properly Contested by or on behalf of the
Pledgor or which are the obligation of Citadel Cinemas or any of its
Affiliates to pay pursuant to any of the Operational Agreements and Liens
placed on the Collateral by, or arising from, the actions or inactions of,
or any event or condition relating to, Citadel Cinemas or any of its
Affiliates, whether or not such Liens are permitted to exist pursuant to
the terms of any of the Operational Agreements, and will not sell, assign,
transfer, exchange or otherwise dispose of, or grant any option with
respect to, the Collateral, except by assignment to the Pledgee and
Nationwide.
8
d) The Pledgor will defend the Pledgee's right, title and security
interest in and to the Collateral against claims and demands of all
persons whomsoever, other than Nationwide.
e) If the Pledgor shall, as a result of its ownership of the
Collateral, receive any certificate representing its ownership of the
Membership Interest and all of the Nationwide Indebtedness now or
hereafter owing has been paid in full in accordance with the terms of the
Nationwide Agreement, the Pledgor shall accept the same as the agent of
the Pledgee, hold the same in trust for the Pledgee and deliver the same
forthwith to the Pledgee in the exact form received, duly indorsed by the
Pledgor to the Pledgee, if required.
f) The Pledgor will at all times remain the sole member of Sutton
Hill Capital and will allow no other Person to own or hold any other
ownership rights in the Membership Interest; provided, however, that the
failure to comply with the terms hereof shall not constitute a breach
hereunder if the failure to comply arises as a result of any action or
inaction of, or any condition or event relating to, Citadel Cinemas or any
of its Affiliates.
SECTION 5. Lien or Title Impairment.
a) Subject to the limitations set forth in Section 19 hereof, if, at
the time of the exercise by the Pledgee of its rights and remedies
involving the Membership Interest, title thereto or to any of the Leased
Interests or the Sutton Fee Option shall be subject to a Lien or to a
Title Impairment other than a Pledgor Permitted Lien, the Pledgor shall be
obligated to pay, bond, or otherwise Cure such Lien and to Cure such Title
Impairment.
b) Not less than ten days prior to the date of the anticipated
exercise described in the preceding sentence, the Pledgee shall deliver to
the Pledgor a lien search with respect to the Membership Interest and a
Certificate of Title with respect to the Leased Interests and the Sutton
Fee Option, indicating whether or not any Liens encumbering such
Membership Interest or the interest of Sutton Hill Capital in such other
assets constitute such Liens other than Pledgor Permitted Liens and
whether there exists as to Sutton Hill Capital's title to any of such
assets any such Title Impairment, each as described in the preceding
paragraph.
c) If by reason of the occurrence of an Insolvency or Liquidation
Proceeding of Sutton Hill Capital, Pledgee shall be prevented from
foreclosing on the Membership Interest or its security interest under the
Security Agreement (as defined in the Credit Agreement), Pledgor shall
cause such Insolvency or Liquidation Proceeding to be terminated or
otherwise to be resolved as promptly as practicable and in a manner such
that the applicable transaction can be consummated in accordance with its
terms. All times referred to in Section 5(d) hereof shall be determined
without regard to any additional time that may be permitted or authorized
under any statute or order entered in or applicable to such Insolvency or
Liquidation Proceeding.
9
d) In the event the Pledgor does not timely perform any of the
obligations set forth in paragraphs (a), (b) or (c) of this Section 5, the
Pledgee may, after written demand to perform has been served upon the
Pledgor and the Pledgor has been given 15 days to perform, perform said
obligations at the Pledgor's sole cost and expense; provided, however,
that the Pledgee shall not exercise its option to perform said obligations
for up to 90 days if within said 15-day period the Pledgor has commenced
to perform the obligation or obligations in question and thereafter to the
reasonable satisfaction of the Pledgee continues to perform such
obligation or obligations with reasonable diligence. The Pledgor shall,
upon written demand from the Pledgee, reimburse the Pledgee for all costs,
including reasonable attorney's fees and out-of-pocket expenses, and all
liabilities incurred by the Pledgee by reason of the foregoing set forth
in this Section 5, with interest thereon at the rate of eleven and one
quarter percent (11.25%) per annum.
e) The obligations of the Pledgor under this Section 5 hereof and
with respect to the Nationwide Accrued Interest shall be unlimited, with
full recourse to all of the assets of the Pledgor and its partners. The
Pledgor and its partners agree not to request or permit, in any Insolvency
or Liquidation Proceeding of the Pledgor, (i) any plan of reorganization,
or confirmation order with respect thereto, which would include a
provision that would discharge the partners of Pledgor from their
obligations to Pledgee under this Section 5 or (ii) any party in interest
to obtain an injunction that would enjoin or limit the Pledgee's rights
against the partners of the Pledgee or their assets.
SECTION 6. Remedies. (a) Subject in all cases to the terms of the
Intercreditor Agreement, upon the occurrence of an Event of Default and an
acceleration of the Loans, the Pledgee may, in its sole discretion, exercise
with respect to the Collateral, in addition to any other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies of
a secured party under the New York Uniform Commercial Code or other applicable
law, and the Pledgee may also, upon reasonable notice as specified below, sell
the Collateral at public or private sale, at any exchange, broker's board or at
any of the Pledgee's offices or elsewhere, for cash, on credit or for future
delivery, and at such price and upon such other terms as the Pledgee may in good
faith deem commercially reasonable. The Pledgee or any of its Affiliates may be
the purchaser of the Collateral at any such sale and shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
the Collateral, to use and apply any of the Obligations as a credit on account
of the purchase price of the Collateral payable by such Person at such sale.
Each purchaser at any such sale shall acquire the property sold absolutely free
from any claim or right on the part of the Pledgor, and the Pledgor hereby
waives (to the fullest extent permitted by law) all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. The Pledgor agrees
that at least fifteen (15) days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notice. The Pledgee will not be obligated to make any sale
regardless of notice of sale having been given. The Pledgee may adjourn any
public or private sale from time to time by announcement of the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was adjourned. The Pledgor
10
hereby waives any claims against the Pledgee arising by reason of the fact that
the price at which the Collateral may have been sold at such private sale was
less than the price which might have been obtained at a public sale, even if the
Pledgee accepts the first offer received and does not offer the Collateral to
more than one offeree.
(b) The proceeds of any sale of the Collateral under subsection (a) above
shall be applied in the following manner:
i. FIRST, to the payment of all costs and expenses reasonably
incurred in connection with the sale, collection or other
realization, including reasonable costs, fees and expenses of the
Pledgee and its agents and counsel, all other reasonable expenses,
liabilities and advances made or incurred by the Pledgee in
connection therewith;
ii. SECOND, to the payment, in whole or in part, of the
Nationwide Indebtedness (as defined in the Intercreditor Agreement);
iii. THIRD, to the payment, in whole or in part, of the
Obligations; and
iv. FOURTH, the balance, if any, shall be paid to the Pledgor
or to whomsoever may be lawfully entitled to receive the same, or as
a court of competent jurisdiction may direct.
If the Pledgee or any of its Affiliates is the successful bidder at such sale,
the amount owing to Nationwide must be paid in cash.
(c) The Pledgee has the right to enforce any and all remedies provided in
this Agreement, successively and concurrently, and such action will not operate
to estop or prevent the Pledgee from pursuing any other remedy which the Pledgee
may have at law or in equity or under any other document.
(d) THE PLEDGOR ACKNOWLEDGES THAT ANY PRIVATE SALE OF THE COLLATERAL MAY
RESULT IN PRICES AND OTHER TERMS LESS FAVORABLE TO THE PLEDGOR THAN IF SUCH SALE
WERE A PUBLIC SALE AND THE PLEDGOR AGREES THAT ANY SUCH PRIVATE SALE SHALL BE
DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY REASONABLE MANNER.
SECTION 7. Pledgee Appointed Attorney-in-Fact.
Subject in all cases to the terms of the Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default which is not waived
by the Pledgee and following an acceleration of the Loans, the Pledgor hereby
irrevocably makes, constitutes and appoints the Pledgee or any of its officers
or designees its true and lawful attorney-in-fact, with full authority in
11
the place and stead of the Pledgor and in the name of the Pledgor or otherwise,
from time to time after the occurrence and during the continuation of an Event
of Default which is not waived by the Pledgee and following an acceleration of
the Loans, to take any action, to execute any instruments and to exercise any
rights, privileges, elections or power of the Pledgor pertaining or relating to
the Collateral which the Pledgee may reasonably deem necessary or desirable to
preserve and enforce its security interest in the Collateral and otherwise to
accomplish the purposes of this Agreement.
SECTION 8. Pledgee May Perform. If the Pledgor fails to perform any
agreement contained herein other than any agreement set forth in Section 5
hereof, the Pledgee may (but shall not be obligated to) itself perform, or cause
performance of, such agreement; provided, however, that the Pledgee shall first
have provided to the Pledgor five (5) Business Days' prior written notice of the
Pledgee's intention so to act (except in cases of emergency when no such notice
shall be required). Any sums expended by the Pledgee pursuant to this Section 7
shall be added to the Obligations and secured by the Collateral.
SECTION 9. Amendments, etc. No amendment, waiver or modification of any
provision of this Agreement, nor consent to any departure by the Pledgor
therefrom, shall in any event be effective unless the same shall be in writing
making specific reference to this Agreement and such amendment, waiver,
modification or consent shall be consented to in one or more writings and signed
by the Pledgor, the Pledgee and Nationwide, and then such amendment, waiver,
modification or consent shall be effective only in the specific instance for the
specific purpose for which given.
SECTION 10. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (a) except with respect
to the provisions in Section 5 hereof, remain in full force and effect until the
later of (i) the termination of the Commitment or (ii) the payment in full of
the Obligations, (b) be binding upon the Pledgor and (c) inure to the benefit of
the Pledgee and its successors and assigns. If the Pledgee shall have instituted
any proceeding to enforce any right, power or remedy under this instrument by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Pledgee, then and in every such case, the Pledgor and the Pledgee shall
be restored to their respective former positions and rights hereunder with
respect to the Collateral, and all right, remedies and powers of the Pledgee
shall continue as if no such proceeding had been instituted.
SECTION 11. Notices. All notices, offers, acceptances, approvals, waivers,
requests, demands and other communication hereunder or under any other Related
Document shall be in writing, shall be addressed as provided below and shall be
considered as properly given (a) if delivered in person, (b) if sent by express
courier service (including Federal Express, Emery, DHL, Airborne Express, and
other similar express delivery services), (c) in the event overnight delivery
services are not readily available, if mailed by United States Postal Service,
postage prepaid, registered or certified with return receipt requested, or (d)
if sent by telecopy and confirmed; provided, that in the case of a notice by
telecopy, the sender shall in addition confirm such notice by writing sent in
the manner specified in clause (a), (b) or (c) of this Section 10. All notices
shall be effective upon receipt by the addressee; provided, however, that if any
notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be
12
effective upon such tender. For the purposes of notice, the addresses of the
parties shall be as set forth below; provided, however, that any party shall
have the right to change its address for notice hereunder to any other location
by giving written notice to the other party in the manner set forth herein. The
initial addresses of the parties hereto are as follows:
(a) If to the Pledgor:
Sutton Hill Associates
120 North Robertson Blvd.
Los Angeles, California 90048
Attention: Legal Department
Telecopier: (310) 652-6490
with required copies to:
Ira Levin
Pacific Theatres
120 North Robertson Boulevard
Los Angeles, CA 90048
Telecopier: (310) 652-6490
(b) If to the Pledgee:
Reading International, Inc.
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Attention: Chief Financial Officer
Telecopier No.: (213) 235-2229
with required copies to:
S. Craig Tompkins
Reading International, Inc.
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Telecopier No. (213) 235-2229
Each such notice, request or other communication shall be effective when
actually received.
13
SECTION 12. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED AT, AND SHALL
BE EFFECTIVE WHEN EXECUTED BY THE PLEDGOR AND THE PLEDGEE IN, NEW YORK, NEW
YORK, WHEREUPON THIS AGREEMENT SHALL BE DEEMED A CONTRACT MADE IN NEW YORK AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
SECTIO 13. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 14. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when executed and delivered, shall be deemed an original and
all of which counterparts, taken together, shall constitute one and the same
instrument.
SECTION 15. Benefits. The rights and privileges of the Pledgee hereunder
shall inure to the benefit of its successors and assigns and the obligations of
the Pledgor shall be binding on the Pledgor's successors and assigns.
SECTION 16. Powers Coupled With An Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
SECTION 17. Paragraph Headings. The Article and Section headings in this
Agreement and the table of contents are for convenience of reference only and
shall not affect the construction hereof or be taken into consideration in the
interpretation hereof.
SECTION 18. Waiver of Jury Trial. THE PARTIES HERETO KNOWINGLY,
VOLUNTARILY AND EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ENFORCING OR DEFENDING ANY RIGHTS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE PLEDGOR
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION 18 HAVE BEEN BARGAINED FOR AND
THAT IT HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION HEREWITH.
SECTION 19. Termination. After the later of (i) the termination of the
Commitment or (ii) the payment in full of the Obligations, this Agreement shall
terminate and the Pledgee at the request of the Pledgor will execute and deliver
to the Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement, and will duly assign, transfer and deliver to
the Pledgor such of the Collateral as may be in the possession of the Pledgee
and as has not theretofore been sold or otherwise applied or released pursuant
to this Agreement, together with any moneys at the time held by the Pledgee.
Notwithstanding anything contained herein to the contrary,
14
the provisions of Section 5 hereof and the obligations of the Pledgor arising
with respect thereto shall terminate and be of no further force and effect on
and as of the day following the repayment in full of the Loan, provided that
such obligations shall be reinstated if at any time payment or performance of
Sutton Hill Capital is rescinded or must otherwise be returned as a result of an
Insolvency or Liquidation Proceeding.
SECTION 20. Conflict Of Provisions. In the event of any conflict between
any term, covenant or condition of this Agreement and any term, covenant or
condition of the Intercreditor Agreement, the provisions of the Intercreditor
Agreement shall control and govern.
SECTION 21. Limited Recourse. Except to the extent of and under the
circumstances specifically provided for in Section 5 hereof and except with
respect to the Nationwide Accrued Interest, no recourse for the payment of the
principal of, or interest on, the Obligations or obligations of the Pledgor
hereunder or any other amount due under this Agreement, or for any claim based
thereon or otherwise in respect thereof or hereof, shall be had against any
direct or indirect partner or owner of the Pledgor or any incorporator, partner,
shareholder, officer, member, Affiliate or director, as such, past, present or
future, of any such direct or indirect partner. Nothing contained in this
Section 21 shall be construed to limit the exercise or enforcement, in
accordance with the terms of this Agreement and the other documents referred to
herein, of rights and remedies against the Collateral, or any other Person
expressly undertaking in writing obligations in connection with the transactions
contemplated hereby. In no event shall the Pledgor have any liability to the
Pledgee hereunder for any lost or prospective profits or any other special,
punitive, exemplary, consequential, incidental or indirect losses or damages (in
tort, contract or otherwise). The parties further agree that no claim for direct
damages by a party hereunder shall include any amounts for which such party has
been reimbursed or is entitled to be reimbursed under any insurance required to
be obtained under the Lease Agreement or acquired in connection therewith.
SECTION 22. Cumulative Rights; No Waiver. No failure on the part of the
Pledgee to exercise, no course of dealing with respect to, and no delay on the
part of the Pledgee in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies herein
provided are cumulative and are not exclusive of any remedies provided by law.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PLEDGOR:
SUTTON HILL ASSOCIATES
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
PLEDGEE:
READING INTERNATIONAL, INC.
By:_________________________________
Name:
Title:
Agreed to as to Section 5 hereof
and as to payment of the Nationwide
Accrued Interest
___________________________________
James J. Cotter
___________________________________
Michael R. Forman
16
EXHIBIT F
AMENDED AND RESTATED SECURITY AGREEMENT
17
AMENDED AND RESTATED SECURITY AGREEMENT
THE SECURITY AGREEMENT, dated as of July 28, 2000 (as amended, modified
and supplemented from time to time, this "Agreement"), by and between SUTTON
HILL CAPITAL, L.L.C., a New York limited liability company (the "Grantor"), and
CITADEL HOLDING CORPORATION, a Nevada corporation now known as READING
INTERNATIONAL, INC. (the "Company"), is hereby amended and restated as of
January 29, 2002.
W I T N E S S E T H:
WHEREAS, the Grantor and the Company have entered into a certain Citadel
Standby Credit Facility, dated as of July 28, 2000 as amended and restated as of
January 29, 2002 (as the same may be amended, restated, modified, or
supplemented from time to time, the "Credit Agreement"), pursuant to which, at
the election of the Grantor and upon the satisfaction of certain conditions
precedent provided for therein, the Company has agreed to make to the Grantor
certain loans in an aggregate principal amount up to eighteen million Dollars
($18,000,000) (hereinafter referred to as the "Loans"); and
WHEREAS, as an inducement to the Company to make the Loans, if any, to the
Grantor, pursuant to the terms of the Credit Agreement, the Grantor has agreed,
in accordance with the terms of Section 4.1(f) of the Credit Agreement, to
execute and deliver this Agreement pursuant to which the Grantor will pledge the
Collateral (as hereinafter defined) in favor of the Company to secure the
performance and repayment of the Grantor's Obligations (as hereinafter defined),
to the extent and in accordance with the terms hereof;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Unless otherwise defined herein, terms that are
defined in the Intercreditor Agreement and used herein are so used as so
defined, and the following terms shall have the following meanings:
"Accounts" shall have the meaning assigned to that term in Article 9 of
the Code.
"Citadel Cinemas" shall mean Citadel Cinemas, Inc., a Nevada corporation,
and its successors or assigns (including successors or assigns as tenant under
the Lease Agreement).
"Code" shall mean the Uniform Commercial Code from time to time in effect
in the State of New York.
1
"Collateral" shall have the meaning assigned to that term in Section 2 of
this Agreement.
"Equipment" shall have the meaning assigned to that term in Article 9 of
the Code.
"Event of Default" shall mean the occurrence of any of the following
events: (1) an Event of Default (as defined in the Credit Agreement), or (2) a
default on the part of the Grantor in the due performance or observance of any
covenant or obligation of the Grantor contained herein, and, if such default is
capable of cure, the continuance of such default for thirty (30) days after
written notice from the Company to the Grantor; provided, however, that if such
default is of a nature that it is capable of being cured but not within such
thirty (30) day period and the Grantor shall have proceeded diligently and in
good faith to complete curing such default, such thirty (30) day period shall be
extended to one hundred eighty (180) days.
"General Intangibles" shall have the meaning assigned to that term in
Article 9-106 of the Code.
"Intercreditor Agreement" shall mean the Intercreditor Agreement, dated as
of July 28, 2000, entered into by and among the Grantor, the Company and
Nationwide Theatres Corp., a California corporation and its successors and
assigns (hereinafter referred to as "Nationwide") as amended and restated as of
January 29, 2002.
"Lease Agreement" shall mean the lease agreement between the Grantor, as
lessor, and Citadel Cinemas, as lessee, dated as of July 28, 2000, as amended
and restated as of January 29, 2002, as amended, modified and supplemented from
time to time.
"Lien" shall mean any security interest, mortgage, pledge, hypothecation,
assignment as collateral, encumbrance, lien (statutory or other), or other
security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Code or
comparable law of any jurisdiction in respect of any of the foregoing).
"Nationwide Security Agreement" shall mean the agreement, dated as of July
28, 2000, entered into between the Grantor and Nationwide, as amended and
restated as of January 29, 2002 pursuant to which the Grantor has granted a
first security interest in the Collateral to Nationwide.
"Obligations" shall mean any and all indebtedness, debts, obligations, and
liabilities of the Grantor to the Company from time to time outstanding under
the Related Documents to which the Grantor is a party, whether fixed or
contingent, due or not due, liquidated or unliquidated, determined or
undetermined, and whether for principal, interest, fees, expenses or otherwise,
including principal of and interest on any other amounts payable in respect of
the Loans, if any, and including, further, any rights of subrogation or
contribution arising under the Related Documents.
2
"Operational Agreements" shall have the meaning assigned to that term in
the Credit Agreement.
"Proceeds" shall mean all "proceeds" as such term is defined in Section
9-306(1) of the Code on the date hereof and, in any event, shall include,
without limitation, any and all collections on the foregoing.
"Properly Contested" shall have the meaning assigned to that term in the
Lease Agreement.
"Taxes" shall mean any present or future taxes, levies, imposts, duties,
fees, deductions, withholdings or other charges of whatever nature, including
income, receipts, excise, property, sales, use, transfer, license, payroll,
withholding, social security and franchise taxes now or hereafter imposed or
levied by the United States, or any state, local or foreign government or by any
department, agency or other political subdivision or taxing authority thereof or
therein and all interest, penalties, additions to tax and similar liabilities
with respect thereto.
SECTION 2. Grant of Security. As security for the prompt and complete
payment when due of the Obligations, the Grantor hereby assigns, pledges,
transfers and grants to the Company a continuing security interest (which shall
be subject and subordinate to the prior security interest granted to Nationwide
pursuant to the Nationwide Security Agreement as and to the extent provided in
the Intercreditor Agreement) in, and a lien upon, all of the Grantor's right,
title and interest in the following property now owned or at any time hereafter
acquired by the Grantor, or in which the Grantor may acquire any right, title or
interest, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations (collectively, the "Collateral"):
a) all of the Grantor's right, title and interest, whether now owned
or hereafter acquired, in and to all Equipment, wherever located, now or
hereafter existing, together with any manufacturers' warranties with
respect to the foregoing;
b) all Accounts;
c) all General Intangibles;
d) any and all insurance policies, proceeds or benefits thereof
related to the Collateral, provided that such policies do not expressly
prohibit the grant of such security interest; and
e) to the extent not otherwise included, all Proceeds of any and all
of the foregoing.
Notwithstanding the foregoing, "Collateral" shall not include any general
intangibles, or other rights, arising under any contracts, licenses or other
documents as to which the grant of a security
3
interest would constitute a violation of a valid and enforceable restriction in
favor of a third party on such grant, unless and until any required consents
shall have been obtained. The Grantor agrees to use commercially reasonable
efforts to obtain any such required consent with respect to any material items
of such Collateral.
This Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until all the Obligations, now existing
or hereafter arising, shall have been paid in full, the Commitments shall have
been terminated and the Credit Agreement and the Related Documents shall no
longer be in effect.
SECTION 3. Representations and Warranties of Grantor. The Grantor hereby
represents and warrants to the Company that: (i) except as otherwise provided in
the Operational Agreements, no other Person owns or holds any ownership rights
in the Collateral; (ii) the execution, delivery, and performance of this
Agreement are not in violation of any indenture, agreement, or undertaking to
which the Grantor is a party or by which the Grantor is bound; (iii) the
execution, delivery and performance of this Agreement will not result in the
creation or imposition of any lien or charge on, security interest in or other
encumbrance on any of the assets of the Grantor except as contemplated by this
Agreement; (iv) the Grantor's chief executive office and the place where the
Grantor keeps its business records is 120 North Robertson Boulevard, Los
Angeles, California 90048; and (v) this Agreement will create and grant to the
Company (upon the filing of appropriate UCC-1 financing statements) a valid lien
on, and a perfected security interest in favor of the Company in, all right,
title or interest of the Grantor in or to the Collateral, subject only to the
prior lien in favor of Nationwide as provided in the Intercreditor Agreement,
Liens for Taxes and governmental charges and levies which are not delinquent,
which are being Properly Contested by or on behalf of the Grantor or which are
the obligation of Citadel Cinemas or any of its Affiliates to pay pursuant to
any of the Operational Agreements and Liens placed on the Collateral by, or
arising from, the actions or inactions of, or any event or condition relating
to, Citadel Cinemas or any of its Affiliates, whether or not such Liens are
permitted to exist pursuant to the terms of any of the Operational Agreements.
SECTION 4. Further Assurances; Affirmative Covenants.
The Grantor covenants and agrees that, from and after the date of this
Agreement until the Obligations are paid in full and the Commitment is
terminated:
a) The Grantor will promptly execute and deliver and will cause to
be executed and delivered all further instruments and documents,
including, without limitation, financing and continuation statements, and
will take all further action and will cause all further action to be
taken, that the Company may reasonably request in order to create,
preserve, perfect and protect the security interest in the Collateral or
to enable the Company to exercise and enforce its rights and remedies
hereunder or to preserve, perfect and protect the Company's right, title
and interest in and to the Collateral.
4
b) The Grantor will at all times keep accurate and complete books
and records with respect to the Collateral and agrees that the Company or
its representative shall have the right at any time and from time to time
to call at the Grantor's place of business during normal business hours to
inspect and examine the books and records of the Grantor relating to the
Collateral and to make extracts therefrom and copies thereof.
c) The Grantor will keep the Collateral free and clear of all
security interests, liens and claims other than the security interest and
lien herein granted and the security interest and lien granted to
Nationwide or otherwise permitted to exist pursuant to the Credit
Agreement, Liens for Taxes and governmental charges and levies which are
not delinquent, which are being Properly Contested by or on behalf of the
Grantor or which are the obligation of Citadel Cinemas or any of its
Affiliates to pay pursuant to any of the Operational Agreements and Liens
placed on the Collateral by, or arising from, the actions or inactions of,
or any event or condition relating to, Citadel Cinemas or any of its
Affiliates, whether or not such Liens are permitted to exist pursuant to
the terms of any of the Operational Agreements, and will not sell, assign,
transfer, exchange or otherwise dispose of, or grant any option with
respect to, the Collateral, except by assignment to the Company and
Nationwide or the holder of any such other permitted lien.
d) The Grantor will defend the Company's right, title and security
interest in and to the Collateral against claims and demands of all
persons whomsoever, other than Nationwide.
SECTION 5. Remedies. Subject in all cases to the terms of the
Intercreditor Agreement, upon the occurrence of an Event of Default and an
acceleration of the Loans, the Company may, in its sole discretion, exercise
with respect to the Collateral, in addition to any other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies of
a secured party under the Code or other applicable law, and the Company may
also, upon reasonable notice as specified below, sell the Collateral at public
or private sale, at any exchange, broker's board or at any of the Company's
offices or elsewhere, for cash, on credit or for future delivery, and at such
price and upon such other terms as the Company may in good faith deem
commercially reasonable. The Company or any of its Affiliates may be the
purchaser of the Collateral at any such sale and shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
the Collateral, to use and apply any of the Obligations as a credit on account
of the purchase price of the Collateral payable by such Person at such sale.
Each purchaser at any such sale shall acquire the property sold absolutely free
from any claim or right on the part of the Grantor, and the Grantor hereby
waives (to the fullest extent permitted by law) all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. The Grantor agrees
that at least fifteen (15) days' notice to the Grantor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notice. The Company will not be obligated to make any sale
regardless of notice of sale having been given. The Company may adjourn any
public or private sale from time to time by announcement of the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to
5
which it was adjourned. The Grantor hereby waives any claims against the Company
arising by reason of the fact that the price at which the Collateral may have
been sold at such private sale was less than the price which might have been
obtained at a public sale, even if the Company accepts the first offer received
and does not offer the Collateral to more than one offeree.
(b) The proceeds of any sale of the Collateral under subsection (a)
above shall be applied in the following manner:
(i) FIRST, to the payment of all costs and expenses
reasonably incurred in connection with the sale, collection or other
realization, including reasonable costs, fees and expenses of the
Company and its agents and counsel, all other reasonable expenses,
liabilities and advances made or incurred by the Company in
connection therewith;
(ii) SECOND, to the payment, in whole or in part, of the
Nationwide Indebtedness (as defined in the Intercreditor Agreement).
(iii) THIRD, to the payment, in whole or in part, of the
Obligations; and
(iv) FOURTH, the balance, if any, shall be paid to the
Grantor or to whomsoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.
If the Company or any of its Affiliates is the successful bidder at
such sale, the amount owing to Nationwide in respect of the Nationwide
Indebtedness (as defined in the Intercreditor Agreement) must be paid in full in
cash.
(c) The Company has the right to enforce any and all remedies
provided in this Agreement, successively and concurrently, and such action will
not operate to estop or prevent the Company from pursuing any other remedy which
the Company may have at law or in equity or under any other document.
(d) THE GRANTOR ACKNOWLEDGES THAT ANY PRIVATE SALE OF THE COLLATERAL
MAY RESULT IN PRICES AND OTHER TERMS LESS FAVORABLE TO THE GRANTOR THAN IF SUCH
SALE WERE A PUBLIC SALE AND THE GRANTOR AGREES THAT ANY SUCH PRIVATE SALE SHALL
BE DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY REASONABLE MANNER.
SECTION 6. Company Appointed Attorney-in-Fact. Subject in all cases to the
terms of the Intercreditor Agreement, upon the occurrence and during the
continuance of an Event of Default which is not waived by the Company and
following an acceleration of the Loans, the Grantor hereby irrevocably makes,
constitutes and appoints the Company or any of its officers or designees its
true
6
and lawful attorney-in-fact, with full authority in the place and stead of the
Grantor and in the name of the Grantor or otherwise, from time to time after the
occurrence and during the continuation of an Event of Default which is not
waived by the Company and following an acceleration of the Loans, to take any
action, to execute any instruments and to exercise any rights, privileges,
elections or power of the Grantor pertaining or relating to the Collateral which
the Company may reasonably deem necessary or desirable to preserve and enforce
its security interest in the Collateral and otherwise to accomplish the purposes
of this Agreement.
SECOND 7. Company May Perform. If the Grantor fails to perform any
agreement contained herein, the Company may (but shall not be obligated to)
itself perform, or cause performance of, such agreement; provided, however, that
the Company shall first have provided to the Grantor five (5) Business Days'
prior written notice of the Company's intention so to act (except in cases of
emergency when no such notice shall be required). Any sums expended by the
Company pursuant to this Section 7 shall be added to the Obligations and secured
by the Collateral.
SECTION 8. Amendments, etc. No amendment, waiver or modification of any
provision of this Agreement, nor consent to any departure by the Grantor
therefrom, shall in any event be effective unless the same shall be in writing
making specific reference to this Agreement and such amendment, waiver,
modification or consent shall be consented to in one or more writings and signed
by the Grantor, the Company and Nationwide, and then such amendment, waiver,
modification or consent shall be effective only in the specific instance for the
specific purpose for which given.
SECTION 9. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the later of (i) the termination of the Commitment or
(ii) the payment in full of the Obligations, (b) be binding upon the Grantor and
(c) inure to the benefit of the Company and its successors and assigns. If the
Company shall have instituted any proceeding to enforce any right, power or
remedy under this instrument by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Company, then and in every such case, the
Grantor and the Company shall be restored to their respective former positions
and rights hereunder with respect to the Collateral, and all right, remedies and
powers of the Company shall continue as if no such proceeding had been
instituted.
SECTION 10. Notices. All notices, offers, acceptances, approvals, waivers,
requests, demands and other communication hereunder or under any other Related
Document shall be in writing, shall be addressed as provided below and shall be
considered as properly given (a) if delivered in person, (b) if sent by express
courier service (including Federal Express, Emery, DHL, Airborne Express, and
other similar express delivery services), (c) in the event overnight delivery
services are not readily available, if mailed by United States Postal Service,
postage prepaid, registered or certified with return receipt requested, or (d)
if sent by telecopy and confirmed; provided, that in the case of a notice by
telecopy, the sender shall in addition confirm such notice by writing sent in
the manner specified in clause (a), (b) or (c) of this Section 10. All notices
shall be
7
effective upon receipt by the addressee; provided, however, that if any notice
is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. For the purposes of
notice, the addresses of the parties shall be as set forth below; provided,
however, that any party shall have the right to change its address for notice
hereunder to any other location by giving written notice to the other party in
the manner set forth herein. The initial addresses of the parties hereto are as
follows:
(a) If to the Grantor:
Sutton Hill Capital, L.L.C.
120 North Robertson Blvd.
Los Angeles, California 90048
Attention: Legal Department
Telecopier: (310) 652-6490
with required copies to:
Ira Levin
Pacific Theatres
120 North Robertson Boulevard
Los Angeles, CA 90048
Telecopier: (310) 652-6490
(b) If to the Company:
Reading International, Inc.
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Attention: Chief Financial Officer
Telecopier No.: (213) 235-2229
with required copies to:
S. Craig Tompkins
Reading International, Inc.
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Telecopier No. (213) 235-2229
8
Each such notice, request or other communication shall be effective when
actually received.
SECTION 11. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED AT, AND SHALL
BE EFFECTIVE WHEN EXECUTED BY THE GRANTOR AND THE COMPANY IN, NEW YORK, NEW
YORK, WHEREUPON THIS AGREEMENT SHALL BE DEEMED A CONTRACT MADE IN NEW YORK AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
SECTION 12. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when executed and delivered, shall be deemed an original and
all of which counterparts, taken together, shall constitute one and the same
instrument.
SECTION 14. Benefits. The rights and privileges of the Company hereunder
shall inure to the benefit of its successors and assigns and the obligations of
the Grantor shall be binding on the Grantor's successors and assigns.
SECTION 15. Powers Coupled With An Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
SECTION 16. Paragraph Headings. The Article and Section headings in this
Agreement and the table of contents are for convenience of reference only and
shall not affect the construction hereof or be taken into consideration in the
interpretation hereof.
SECTION 17. Waiver of Jury Trial. THE PARTIES HERETO KNOWINGLY,
VOLUNTARILY AND EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ENFORCING OR DEFENDING ANY RIGHTS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE GRANTOR
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION 17 HAVE BEEN BARGAINED FOR AND
THAT IT HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION HEREWITH.
SECTION 18. Termination. After the later of (i) the termination of the
Commitment or (ii) the payment in full of the Obligations, this Agreement shall
terminate and the Company at the request of the Grantor will execute and deliver
to the Grantor a proper instrument or instruments
9
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, transfer and deliver to the Grantor such of the Collateral as may be in
the possession of the Company and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with any moneys at the
time held by the Company.
SECTION 19. Conflict Of Provisions. In the event of any conflict between
any term, covenant or condition of this Agreement and any term, covenant or
condition of the Intercreditor Agreement, the provisions of the Intercreditor
Agreement shall control and govern.
SECTION 20. Limited Recourse. No recourse for the payment of the principal
of, or interest on, the Obligations or obligations of the Grantor hereunder or
any other amount due under this Agreement, or for any claim based thereon or
otherwise in respect thereof or hereof, shall be had against any direct or
indirect member or owner of the Grantor or any incorporator, partner,
shareholder, officer, member, Affiliate or director, as such, past, present or
future, of any such direct or indirect member or owner except as provided in the
Pledge Agreement (as defined in the Credit Agreement). Nothing contained in this
Section 20 shall be construed to limit the exercise or enforcement, in
accordance with the terms of this Agreement and the other documents referred to
herein, of rights and remedies against the Collateral, or any other Person
expressly undertaking in writing obligations in connection with the transactions
contemplated hereby.
SECTION 21. Cumulative Rights; No Waiver. No failure on the part of the
Company to exercise, no course of dealing with respect to, and no delay on the
part of the Company in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies herein
provided are cumulative and are not exclusive of any remedies provided by law.
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
GRANTOR:
SUTTON HILL CAPITAL, L.L.C.
By:____________________________________
Name:
Title:
COMPANY:
READING INTERNATIONAL, INC.
By:___________________________________
Name:
Title:
11
EXHIBIT G
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
THE INTERCREDITOR AGREEMENT, dated as of July 28, 2000 (the "Original
Agreement") as amended, supplemented or modified from time to time, this
"Agreement"), entered into by and among: Citadel Holding Corporation, a Nevada
corporation now known as Reading International, Inc. (together with its
permitted successors and assigns, "Citadel"); Sutton Hill Capital, L.L.C., a New
York limited liability company (together with its permitted successors and
assigns, "SHC"); and Nationwide Theatres Corp., a California corporation
(together with its permitted successors and assigns, "Nationwide") is hereby
amended and restated as of January 29, 2002.
R E C I T A L S
WHEREAS, Nationwide is the holder of certain obligations of Sutton Hill
Associates, a California general partnership ("Sutton Hill"), which relate to
various assets of Sutton Hill or its Affiliates (the "Affected Assets") (such
agreements, documents and instruments between Nationwide and Sutton Hill
evidencing such obligations and representing a principal indebtedness of
$11,000,000, collectively referred to as the "Existing Nationwide Agreement,"
the balance of such obligations of Sutton Hill to Nationwide being unaffected by
this Agreement and not included in the "Existing Nationwide Agreement");
WHEREAS, pursuant to the Existing Nationwide Agreement, there are
outstanding loans in the aggregate principal amount of eleven million Dollars
($11,000,000);
WHEREAS, the Affected Assets are being transferred from Sutton Hill or its
Affiliates to SHC, which is wholly owned by Sutton Hill, and, in connection with
such transfer, Sutton Hill desires to amend and modify the Existing Nationwide
Agreement;
WHEREAS, SHC and Citadel have entered into an agreement dated as of July
28, 2000 as amended and restated of January 29, 2002 (as amended, restated,
modified or supplemented from time to time, the "Citadel Agreement"), pursuant
to which Citadel will make available to SHC a standby credit facility in an
aggregate principal amount up to eighteen million Dollars ($18,000,000);
WHEREAS, as a condition precedent of borrowing under the Citadel
Agreement, SHC and Citadel must enter into the Subordinated Documents (as
hereinafter defined);
WHEREAS, Nationwide required that, in order to satisfy a condition to the
amendment and modification of the Existing Nationwide Agreement (the Existing
Nationwide Agreement, as so amended and modified, the "Nationwide Agreement"),
that the Original Agreement and this Agreement be entered into among the parties
hereto; and
WHEREAS, the purpose of this Agreement is to confirm, as between
Nationwide and Citadel, their respective rights and priorities with respect to
the obligations of SHC and with respect to the Equity Collateral and the
Borrower Collateral (as such terms are defined in the Citadel Agreement) now or
hereafter held as security by Nationwide in respect of the Nationwide
Indebtedness and by Citadel in respect of the Citadel Indebtedness.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. Unless otherwise defined herein, terms
that are defined in the Citadel Agreement and used herein are so used as so
defined, and the following terms shall have the following meanings:
"Affiliate" of any Person means any other Person controlling,
controlled by or under direct or indirect common control with such Person.
For the purposes of this definition, "control," when used with respect to
any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled by" have the meanings correlative to the
foregoing. Notwithstanding the foregoing: (a) SHC and its Affiliates
("SHC's Affiliates") shall not include Reading, Citadel and their
respective direct or indirect Subsidiaries; (b) Reading, Citadel and their
respective direct or indirect Subsidiaries, on the one hand, and SHC and
SHC's Affiliates, on the other hand, shall not be considered Affiliates of
each other; (c) SHC and SHC's Affiliates shall not include Nationwide and
its direct or indirect Subsidiaries; (d) none of Nationwide or any of its
direct or indirect Subsidiaries, on the one hand, and SHC or any of SHC's
Affiliates, on the other hand, shall be considered Affiliates of each
other; (e) Citadel and its Affiliates ("Citadel's Affiliates") shall not
include Nationwide and its direct or indirect Subsidiaries; (f) Reading
and its Affiliates ("Reading's Affiliates") shall not include Nationwide
and its direct or indirect Subsidiaries; and (f) none of Nationwide or any
of its direct or indirect Subsidiaries, on the one hand, and either
Citadel or any of Citadel's Affiliates or Reading and any of Reading's
Affiliates, on the other hand, shall be considered Affiliates of each
other.
"Agreement" has the meaning specified in the preamble to this
Agreement.
"Bad Faith Determination" with respect to a Citadel Proceeding means
the entry of one or more Final Orders (i)(a) dismissing such Citadel
Proceeding if (I) neither Nationwide
nor SHC consented to such Citadel Proceeding and at least one of
Nationwide or SHC opposed such Citadel Proceeding and (II) such Final
Order is based on a finding by the court that (A) in the case of a Citadel
Proceeding under the Federal bankruptcy laws, the criteria in 11 U.S.C.
'303(b) are not satisfied or (B) in any other case, the relevant statutory
criteria for bringing such Citadel Proceeding are not satisfied and (b)
finding that any Petitioning Creditor in such Citadel Proceeding which is
Citadel or a Citadel Affiliate, at the time such petition or other action
was filed or taken, initiated such Citadel Proceeding in "bad faith" (or
words of similar import) or (ii) granting judgment against a Petitioning
Creditor therein which is Citadel or an Affiliate of Citadel under 11
U.S.C. '303(i)(2) (as any such statutory section referenced herein may
hereafter be modified, restated or amended).
"Blockage Period" has the meaning specified in Section 2.02(b).
"Change" has the meaning specified in paragraph (b) of Section 2.10.
"Citadel" has the meaning specified in the preamble to this
Agreement.
"Citadel Agreement Payment Default" means an Event of Default under
Section 9.1(a) of the Citadel Agreement.
"Citadel Event of Default" means an Event of Default as such term is
defined in the Citadel Agreement.
"Citadel Indebtedness" means any and all amounts of money from time
to time owing by, and any and all obligations and liabilities from time to
time of, SHC under the Subordinated Documents, whether now existing or
hereafter arising (as limited by the terms of this Agreement), fixed or
contingent, due or not due, liquidated or unliquidated, determined or
undetermined, and whether for fees, indemnities, costs, expenses or
otherwise, including without limitation any rights of indemnification,
reimbursement, subrogation or contribution arising under the Subordinated
Documents.
"Citadel Proceeding" means an Insolvency or Liquidation Proceeding
in which Citadel or any Citadel Affiliate is a Petitioning Creditor;
provided, however, that, if the Citadel Indebtedness is transferred, the
term Citadel Proceeding shall mean an Insolvency or Liquidation Proceeding
in which the holder of the Citadel Indebtedness or an Affiliate of such
holder is a Petitioning Creditor.
"Credit Agreement" shall mean each credit agreement, loan agreement,
note purchase agreement and each other agreement or arrangement between
SHC and a lender or lenders to SHC or other Person or Persons providing
credit support to SHC or to debt issued by or on behalf of SHC, as the
same may be amended, restated, modified or supplemented from time
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to time, including without limitation the Nationwide Agreement and
collectively, the Citadel Agreement and the Subordinated Documents.
"Creditor" shall mean each of Nationwide and Citadel, in their
respective roles as lender to SHC.
"Final Order" means a judgment by a court of competent jurisdiction,
not subject to further appeal or with respect to which the time to appeal
has lapsed.
"Fully Paid" means, with respect to the Nationwide Indebtedness, for
purposes only of this Agreement, as of any date, that on or before such
date (i) the principal of such Nationwide Indebtedness shall have been
paid in full in immediately available funds or such other manner
satisfactory to Nationwide, (ii) all interest accrued on such Nationwide
Indebtedness as of such date (including interest accrued after, or that
would have accrued but for, the filing of a petition under Title 11 of the
United States Code (or any successor statute thereto) or the institution
or initiation of any other Insolvency or Liquidation Proceeding, in
accordance with the terms of such Nationwide Indebtedness) shall have been
paid in full in immediately available funds or such other manner
satisfactory to Nationwide, and (iii) all fees and expenses and other
amounts then due and payable that constitute Nationwide Indebtedness shall
have been paid in full in immediately available funds or such other manner
satisfactory to Nationwide; provided, however, that if, at any time after
the Nationwide Indebtedness is determined to be "Fully Paid" for purposes
of this Agreement, any other amounts that constitute Nationwide
Indebtedness become due and payable, such other Nationwide Indebtedness
shall be "Fully Paid" for such purpose only upon satisfaction of the
conditions specified in foregoing clause (i), (ii) or (iii), as the case
may be, and the provisions of this Agreement shall remain, or shall be
revived and thereafter remain, in full force and effect, with respect only
to the principal amount of the Citadel Indebtedness then outstanding and
accrued interest thereon, and any other amounts payable with respect
thereto, then unpaid, until such other Nationwide Indebtedness shall be
Fully Paid pursuant hereto.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy case or proceeding (including any case under the Bankruptcy
Code), or any receivership, liquidation, reorganization or other similar
case or proceeding relative to SHC or all or substantially all of its
assets, or (ii) any liquidation, dissolution, reorganization or winding up
of SHC, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (iii) any assignment of all or substantially
all of the assets of SHC for the benefit of creditors or any other
marshaling of assets and liabilities of SHC.
"Nationwide" has the meaning specified in the preamble to this
Agreement.
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"Nationwide Accrual" means interest on the principal of the
Nationwide Indebtedness (i) relating to any period in respect of which
either (x) Citadel Cinemas has failed to pay any amount of Basic Rent or
Additional Rent (each as defined in the Lease Agreement) or (y) as a
result of the failure by Citadel Cinemas to perform any of its obligations
under any of the Operational Documents, SHC has applied Basic Rent
received by it to perform such obligations, in each case under clause (x)
or (y) limited to the lesser of (a) the amount which Citadel Cinemas
failed to so pay or the amount which SHC has so applied, as the case may
be, and (b) the amount of such interest, or (ii) which remains unpaid and
accruing on such principal (or, but for the filing of a Citadel
Proceeding, that would have accrued on such principal) during the pendency
of a Citadel Proceeding if there is a Bad Faith Determination with respect
to such Citadel Proceeding.
"Nationwide Agreement" has the meaning specified in the recitals to
this Agreement, as any document, instrument or agreement comprising the
Nationwide Agreement may from time to time be amended, modified or
supplemented, and any agreement or other document or instrument pursuant
to which any principal of or interest on or other amounts payable in
respect of indebtedness thereunder of SHC (or any successor Person to SHC
(whether by merger, consolidation, or acquisition of all or substantially
all of its assets)) may be renewed, extended, refinanced, restructured,
refunded or guaranteed, in each case as permitted in accordance with
Section 2.10(c) of this Agreement.
"Nationwide Event of Default" means an Event of Default as such term
may be defined in the Nationwide Agreement.
"Nationwide Indebtedness" means any and all indebtedness,
obligations and liabilities of SHC from time to time outstanding under the
Nationwide Agreement, in a principal amount not to exceed the amount
permitted pursuant to the last sentence of Section 7.3 of the Citadel
Agreement, whether now existing or hereafter arising, fixed or contingent,
due or not due, liquidated or unliquidated, determined or undetermined,
and whether for principal (subject to the aforesaid limitation), premium,
interest (including interest accruing before or after the commencement of
any Insolvency or Liquidation Proceeding or interest that would have
accrued but for the commencement of such Insolvency or Liquidation
Proceeding, to the date of payment, even if the claim for such interest is
not allowed pursuant to Applicable Law), fees, indemnities, costs,
expenses or otherwise.
"Petitioning Creditor" with respect to any Insolvency or Liquidation
Proceeding means each of the creditors that filed the petition to commence
or otherwise commenced such Insolvency or Liquidation Proceeding.
"Reading" means Reading Entertainment, Inc., a Nevada corporation,
and its successors.
5
"Retained Claims" has the meaning specified in Section 2.11(h)
hereof.
"SHC" has the meaning specified in the preamble to this Agreement.
"Subordinated Documents" means the Citadel Agreement and the Note
(if and when executed) and all other promissory notes and other
instruments, agreements and documents executed at any time pursuant to the
Citadel Agreement or in connection therewith between SHC and Citadel,
including all other Related Documents, and all amendments, modifications,
supplements, extensions, renewals, restatements, refundings and
refinancings affecting the Citadel Agreement and all such other notes,
instruments, agreements and documents.
"Trigger Event" means the occurrence of any of the following events:
(a) An Insolvency or Liquidation Proceeding excluding such
Insolvency or Liquidation Proceeding caused by or in any way resulting
from a Tenant Event;
(b) Acceleration of the Nationwide Indebtedness;
(c) Acceleration of the Citadel Indebtedness as a result of a
Citadel Agreement Payment Default or a failure to make payment when due
under the Nationwide Agreement following the expiration of applicable
notice or grace period thereunder; or
(d) The occurrence of an Event of Default under the Citadel
Agreement pursuant to Section 9.1(c) thereof arising as a result of a
default by SHC under any of Section 6.8, 6.9, 7.1, 7.2, 7.3, 7.4, 7.5,
7.7, 7.9, 7.11, 7.12 or 7.13 thereof.
Section 1.02 Construction. References herein to the plural form include
the singular, and the singular include the plural; the word "including" is not
limiting; and the word "or" is not exclusive. The words "hereof", "wherein",
"hereby", and "hereunder" refer to this Agreement as a whole and not to any
particular provision of this Agreement. Article, section, exhibit and schedule
references are to articles and sections of, and exhibits and schedules to, this
Agreement, unless otherwise expressly indicated.
ARTICLE II
TERMS OF SUBORDINATION
Section 2.0 Subordination of Indebtedness. Citadel, for itself and its
successors and assigns, hereby agrees that (a) to the extent and in the manner
provided in this Agreement, and under
6
the circumstances provided in Sections 2.02 and 2.04 hereof, the Citadel
Indebtedness is hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Nationwide Indebtedness, (b) the
subordination provided herein is for the benefit of Nationwide and its permitted
successors and assigns, (c) Nationwide shall be deemed to have extended or
acquired the Nationwide Indebtedness, whether now outstanding or hereafter
created, incurred, assumed or guarantied, in reliance upon the covenants and
provisions contained in this Agreement, and (d) the provisions of this Agreement
apply notwithstanding anything to the contrary in the Subordinated Documents.
Notwithstanding anything contained herein or in any other document related
hereto to the contrary, however, in no event shall the Citadel Indebtedness be
subordinate to a principal amount of Nationwide Indebtedness which exceeds the
amount permitted pursuant to the last sentence of Section 7.3 of the Citadel
Agreement.
Section 2.0 No Payment on Citadel Indebtedness in Certain Circumstances.
(a) Upon the maturity of any Nationwide Indebtedness, whether at the
final maturity thereof, by lapse of time, acceleration or otherwise
(including the scheduled time of payment (including any mandatory
prepayment) of any principal or interest), all principal thereof that is
then due and payable (up to the amount permitted pursuant to the last
sentence of Section 7.3 of the Citadel Agreement) and interest thereon and
interest thereafter accruing pursuant to the terms of the Nationwide
Agreement (including interest that would have accrued but for the
commencement of any Insolvency or Liquidation Proceeding) and other
amounts constituting Nationwide Indebtedness that are then due and payable
or thereafter accruing in accordance with the Nationwide Agreement and, to
the extent so provided for therein or otherwise permitted by law, interest
on such other amounts shall first be Fully Paid, before any payment or
distribution is made by SHC on account of the Citadel Indebtedness.
(b) Upon the occurrence and during the continuation of a Nationwide
Event of Default, no direct or indirect payment or distribution shall be
made by SHC on account of any Citadel Indebtedness, for a period (the
"Blockage Period") beginning on the date of the occurrence of the
Nationwide Event of Default in question and ending upon the earliest to
occur of the following: (i) when such Nationwide Event of Default shall
have been cured by SHC or waived in writing by Nationwide, (ii) when
Nationwide shall have waived in writing the application of this Section
2.02(b) to such Nationwide Event of Default, or (iii) when the Nationwide
Indebtedness is Fully Paid.
(c) Except as expressly prohibited in paragraphs (a) and (b) of this
Section 2.02, nothing contained herein or in any other document or
agreement shall prohibit or restrict SHC from paying the Citadel
Indebtedness as and when due.
7
(d) If Citadel shall have received any payment or distribution in
contravention of the provisions of paragraph (a) or (b) of this Section
2.02, such payment or distribution shall be held in trust for Nationwide
and shall be promptly paid over to Nationwide for application to the
payment of the Nationwide Indebtedness, until any of the events described
in Sections 2.02(b)(i), 2.02(b)(ii) and 2.02(b)(iii) shall have occurred.
(e) Each of the Creditors shall give prompt notice to the other
Creditor of the occurrence and the type of any Nationwide Event of Default
or Citadel Event of Default, as the case may be, or if a payment or
distribution would constitute or result in a Nationwide Event of Default
or Citadel Event of Default, as the case may be. Nationwide shall confirm
in writing, in response to a written request from Citadel or any of its
Affiliates, whether or not Nationwide shall have received payment from SHC
of any obligation of SHC to Nationwide specified in such request. If such
confirmation is not provided within ten (10) Business Days following
Nationwide's receipt thereof, the requesting party can assume that such
payment(s) had not been made. Failure to give any of such notices in the
foregoing sentences shall not affect the subordination of the Citadel
Indebtedness to the Nationwide Indebtedness as provided herein.
(f) The provisions of this Section 2.02 shall not modify or limit in
any way the application of Section 2.04.
Section 2.03. Actions in Respect of Citadel Indebtedness.
(a) Subject in all cases to the terms of this Agreement, Citadel may
(1) accelerate the Citadel Indebtedness in accordance with the terms of
the Subordinated Documents; (2) file a claim in respect of the Citadel
Indebtedness in any Insolvency or Liquidation Proceeding; and (3) take all
other action necessary to enforce and protect its rights with respect to
the Citadel Indebtedness.
(b) In the event of a Citadel Agreement Payment Default, Citadel is
entitled to exercise all rights and remedies pursuant to the terms of the
Citadel Agreement and the Subordinated Documents. In the event of a
Citadel Event of Default other than a Citadel Agreement Payment Default,
Citadel is entitled to exercise all rights and remedies pursuant to the
terms of the Citadel Agreement and the Subordinated Documents following
the earliest to occur of the following: (i) Nationwide has waived this
provision in writing; (ii) the Nationwide Indebtedness is Fully Paid;
(iii) the Nationwide Indebtedness is accelerated; and (iv) the expiration
of ninety (90) days from the occurrence of the Citadel Event of Default in
question. If the Citadel Event of Default in question is cured within the
time period set forth in clause (iv) of this paragraph (b) and prior to
the occurrence of the event described in clause (i), (ii) or (iii) above,
then, for all purposes of this Agreement, such Citadel Event of Default
shall be deemed never to have existed. Nothing contained in this Section
2.03 shall
8
in any way affect the rights and remedies of the parties contained in the
other provisions of this Agreement in the event of an Insolvency or
Liquidation Proceeding.
(c) Notwithstanding anything contained herein to the contrary,
Nationwide, for itself and its successors and assigns, agrees that (i) it
will not voluntarily release, subordinate or surrender, or, except in
connection with an assignment of the Nationwide Indebtedness, sell or
exchange, its Lien on the Equity Collateral unless and until the
Nationwide Indebtedness shall have been Fully Paid or Citadel shall have
given its prior consent to such release, and (ii) if Citadel shall be
subrogated to the rights and interests of Nationwide pursuant to Section
2.06 hereof or shall acquire the Nationwide Indebtedness pursuant to
Section 2.11(h) hereof, Nationwide shall assign to Citadel, without
recourse to, or representation or warranty by, Nationwide, Nationwide's
Lien on the Equity Collateral and the Borrower Collateral to the extent of
such Lien.
Section 2.04 Subordination on Dissolution, Liquidation or Reorganization
of SHC. In the event of any Insolvency or Liquidation Proceeding:
(a) Unless Nationwide agrees to a different treatment with respect
to its claim for the Nationwide Indebtedness (as to which Nationwide shall
have absolutely no obligation), upon any distribution of assets of SHC of
any kind or character, whether in cash, securities or other property,
arising out of such Insolvency or Liquidation Proceeding, all Nationwide
Indebtedness shall be Fully Paid before Citadel is entitled to receive any
payment or distribution on account of any Citadel Indebtedness;
(b) Any payment or distribution of assets of SHC of any kind or
character, whether in cash, securities or other property (including any
such payment or distribution which may be payable or deliverable by reason
of the payment of any other indebtedness of SHC being subordinated to the
Citadel Indebtedness), to which Citadel would be entitled except for the
provisions of this Section 2.04, shall be paid by SHC, as debtor in
possession, or any bankruptcy trustee or other agent or other Person
making such payment or distribution directly to Nationwide, until all
Nationwide Indebtedness remaining unpaid is Fully Paid, after giving
effect to any concurrent payments or distributions to or for Nationwide
for application to the payment of the Nationwide Indebtedness, or any of
the events described in Section 2.02(b)(i), (ii) or (iii) shall have
occurred; and
(c) If, notwithstanding the foregoing provisions of this Section
2.04, Citadel shall have received any payment or distribution of assets of
SHC, or the estate created by the commencement of any such Insolvency or
Liquidation Proceeding, of any kind or character in respect of the Citadel
Indebtedness, whether in cash, securities or other property, before all
Nationwide Indebtedness shall have been Fully Paid, such payment or
distribution shall be received and held in trust for Nationwide, and shall
promptly be paid over or delivered to
9
Nationwide, for the benefit of Nationwide, until all Nationwide
Indebtedness then remaining unpaid is Fully Paid, after giving effect to
any concurrent payments or distributions to or for Nationwide for
application to the Nationwide Indebtedness, or any of the events described
in Section 2.02(b)(i), (ii) or (iii) shall have occurred.
Section 2.05. Liens. The Liens on the Collateral in favor of Citadel shall
be subject and subordinate in all respects to the Liens in favor of Nationwide.
Section 2.06 Citadel to Be Subrogated to Rights of Nationwide. Only after
the Nationwide Indebtedness shall have been Fully Paid, Citadel, to the extent
of any payments or distributions of cash, securities and other assets with
respect to the Citadel Indebtedness made to or for Nationwide pursuant to this
Agreement, shall be subrogated to the rights of Nationwide to receive any and
all payments or distributions of cash, securities and other assets payable with
respect to the Nationwide Indebtedness until all amounts owing on the Citadel
Indebtedness shall have been paid in full. For the purpose of such subrogation,
no such payments or distributions to or for Nationwide that otherwise would have
been made to Citadel but for this Agreement shall, as between SHC and Citadel,
be deemed to be payment by SHC on account of the Citadel Indebtedness; provided,
however, that (x) unless and until, as between Nationwide and Citadel, the
Nationwide Indebtedness is Fully Paid, Citadel shall not have the right, ability
or power to exercise any rights or remedies in respect of or by reason of such
subrogation and (y) such rights of subrogation, and any claims of Citadel with
respect thereto, are nevertheless limited by and subject to Section 11.12 of the
Citadel Agreement.
Section 2.07. Relative Rights. (a) This Agreement defines the relative
rights of Citadel, on the one hand, and Nationwide, on the other hand. Nothing
in this Agreement is intended to or shall:
(i) impair, as between SHC and Citadel, the obligation of SHC
to pay the amounts payable with respect to the Citadel Indebtedness as and
when the same shall become due and payable in accordance with its terms;
or
(ii) affect the relative rights against SHC of Citadel and
creditors of Citadel other than Nationwide.
(b) Notwithstanding anything herein or elsewhere to the contrary, if
SHC fails, because of this Agreement or otherwise, to pay principal of or
interest on the Citadel Indebtedness on the due date thereof, such failure
shall still be considered an Event of Default under paragraph (a) of
Section 9.1 of the Citadel Agreement except as otherwise provided in said
paragraph (a).
10
Section 2.08 Continued Effectiveness of this Agreement.
(a) The terms of this Agreement, the subordination effected hereby,
and the rights of Nationwide and the obligations of Citadel arising
hereunder, shall not be affected, modified or impaired in any manner or to
any extent by: (i) any amendment, modification or termination of or
supplement to the Nationwide Indebtedness or the Nationwide Agreement, or
any agreement, instrument or document executed or delivered pursuant
thereto; (ii) the validity or enforceability of any such document; (iii)
the release, sale, exchange or surrender, in whole or in part, of any
collateral security, now or hereafter existing, for any of the Nationwide
Indebtedness or any other indebtedness, liability or obligations of SHC to
Nationwide, now existing or hereafter arising; (iv) any exercise or
non-exercise of any right, power or remedy under or in respect of the
Nationwide Indebtedness or any of such instruments and documents referred
to in clause (i) above or arising at law; or (v) any waiver, consent,
release, indulgence, extension, renewal, modification, delay or other
action, inaction or omission in respect of the Nationwide Indebtedness or
any of the agreements, instruments or documents referred to in clause (i)
above or in respect of any collateral security for the Nationwide
Indebtedness or any other indebtedness, liability or obligation of SHC to
Nationwide, now existing or hereafter arising, all whether or not Citadel
shall have had notice or knowledge of any of the foregoing and whether or
not Citadel shall have consented thereto.
(b) The terms of this Agreement, and the rights of Citadel and the
obligations of Nationwide arising hereunder, shall not be affected,
modified or impaired in any manner or to any extent by: (i) any amendment,
modification or termination of or supplement to the Citadel Indebtedness
or the Subordinated Documents, or any agreement, instrument or document
executed or delivered pursuant thereto; (ii) the validity or
enforceability of any such document; (iii) the release, sale, exchange or
surrender, in whole or in part, of any collateral security, now or
hereafter existing, for any of the Citadel Indebtedness or any other
indebtedness, liability or obligations of SHC to Citadel, now existing or
hereafter arising; (iv) any exercise or non-exercise of any right, power
or remedy under or in respect of the Citadel Indebtedness or any of such
instruments and documents referred to in clause (i) above or arising at
law; or (v) any waiver, consent, release, indulgence, extension, renewal,
modification, delay or other action, inaction or omission in respect of
the Citadel Indebtedness or any of the agreements, instruments or
documents referred to in clause (i) above or in respect of any collateral
security for the Citadel Indebtedness or any other indebtedness, liability
or obligation of SHC to Citadel, now existing or hereafter arising, all
whether or not Nationwide shall have had notice or knowledge of any of the
foregoing and whether or not Nationwide shall have consented thereto.
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Section 2.09 Provisions to Effectuate Subordination of Citadel
Indebtedness.
(a) In the event of any Insolvency or Liquidation Proceeding,
Nationwide is irrevocably authorized and empowered, in its discretion, to
make and present for and on behalf of Citadel such proofs of claim against
SHC on account of the Citadel Indebtedness or other motions or pleadings
as Nationwide may deem expedient or proper, to vote such proofs of claim
in any such Insolvency or Liquidation Proceeding, to the extent permitted
by law, and to receive and collect any and all payments or distributions
made thereon in whatever form and to apply such payments or distributions
on account of any of the Nationwide Indebtedness. Citadel irrevocably
authorizes and empowers Nationwide to demand, sue for, collect and receive
each of such payments and distributions and to file claims and take such
other actions, in the name of Nationwide or Citadel or otherwise, as
Nationwide may deem necessary or advisable for the enforcement of this
Agreement. To the extent that payments or distributions are made in
property other than cash, Citadel authorizes Nationwide to sell such
property to such buyers and on such terms as Nationwide, in its reasonable
discretion, shall determine. Citadel will execute and deliver to
Nationwide such powers of attorney, assignments and other instruments or
documents as may be requested by Nationwide in order to enable Nationwide
to enforce any and all claims upon or with respect to the Citadel
Indebtedness and to collect and receive any and all payments and
distributions which may be payable or deliverable at any time with respect
thereto.
(b) Nationwide agrees that it will not exercise any of the rights or
remedies under paragraph (a) of this Section 2.09 unless Citadel has
failed to implement any action in question within ten (10) days prior to
when such action is required pursuant to an Insolvency or Liquidation
Proceeding.
(c) Citadel specifically waives: unless Nationwide shall otherwise
give its prior written consent or the Nationwide Indebtedness is Fully
Paid, (i) the right to seek to give its credit (secured or otherwise) to
SHC in any way under Section 364 of the Bankruptcy Code unless the same is
subordinated in all respects to the Nationwide Indebtedness in accordance
with the terms and conditions of this Agreement; (ii) the right to take a
position inconsistent with or contrary to that of Nationwide (including a
position by Nationwide to take no action) if SHC seeks to use, sell or
lease the Collateral under Section 363 of the Bankruptcy Code or seeks to
accept or reject any executory contract or lease under Section 365 of the
Bankruptcy Code; (iii) the right to receive any collateral (including any
"super priority" or equal or "priming" or replacement Lien) for the
Citadel Indebtedness, other than the Equity Collateral and the Borrower
Collateral, in each case subject to Nationwide's Liens thereon to the
extent provided herein; and (iv) the right to seek adequate protection in
respect of the Collateral under Section 363 or 361 of the Bankruptcy Code,
unless and then only to the extent that
12
Nationwide does and then only to the extent consistent with the
subordinated position of Citadel.
Section 2.10 Subordination not Impaired by Acts or Omissions of SHC or
Nationwide. (a) No right of Nationwide to enforce subordination as provided
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of SHC or, except as provided in Section 2.10(c), by
any act or failure to act by Nationwide, or by any noncompliance by SHC with the
provisions and covenants of the Nationwide Agreement or the Subordinated
Documents, regardless of any knowledge thereof that Nationwide may have or be
otherwise charged with and regardless of whether such action or failure to act
diminishes or destroys any subrogation or other rights that Citadel may have or
reduces or eliminates any eventual recovery in respect of the Citadel
Indebtedness. Without in any way limiting the generality of the foregoing,
Nationwide may, at any time and from time to time, without the consent of or
notice to Citadel, except as provided in Section 2.10(c), without incurring
responsibility to Citadel and without impairing or releasing the subordination
and other benefits provided in this Agreement or the obligations hereunder of
Citadel to Nationwide, do any one or more of the following even if any right to
reimbursement or subrogation or other right or remedy of Citadel is affected,
impaired or extinguished thereby:
(i) change the manner, place or terms of payment or extend,
renew, modify or amend the terms of the Nationwide Indebtedness or any
agreement or instrument evidencing, securing or guarantying any Nationwide
Indebtedness (including increasing the amount of principal, changing the
time and amount of repayments, increasing the rate of interest or
otherwise changing the terms of the Nationwide Agreement), exercise or
delay in or refrain from exercising any right or remedy against SHC and
otherwise deal freely with SHC or any liability of SHC;
(ii) release, exercise or delay in or refrain from exercising
any right or remedy against, change the terms of any agreement or
instrument with or otherwise deal freely with any guarantor or any other
Person liable or contingently liable in any manner for the Nationwide
Indebtedness or any such liability or contingent liability;
(iii) settle or compromise any of the Nationwide Indebtedness
or any other liability of SHC or any guarantor of the Nationwide
Indebtedness to Nationwide and apply any sums by whomsoever paid and
however realized to any liability (including, without limitation, the
Nationwide Indebtedness) in any manner or order; and
(iv) fail to take or to record or otherwise perfect, for any
reason or for no reason, any Lien securing the Nationwide Indebtedness by
whomsoever granted, and release, sell, exercise or delay in or refrain
from exercising any right or remedy against, exchange, enforce, realize
upon, or otherwise deal freely with, in any manner and in any order, any
of the Collateral.
13
(b) Except as provided in Section 2.10(c), Citadel hereby waives any
and all notice of the creation, modification, renewal, extension or
accrual of any Nationwide Indebtedness and notice of or proof of reliance
by Nationwide upon this Agreement, and the Nationwide Indebtedness shall
conclusively be deemed to have been created, contracted or incurred in
reliance upon this Agreement, and all dealings between SHC and Nationwide
shall be deemed to have been consummated in reliance on this Agreement.
(c) Notwithstanding anything contained in this Agreement or any
other agreement to the contrary, the consent of Citadel shall be required
for (i) any amendment or modification of the Nationwide Agreement (any of
the foregoing being a "Change") (A) changing the dates of payment of
interest, principal, fees or costs in respect of the Nationwide
Indebtedness or shortening the maturity of or requiring the earlier
payment of any principal or interest in respect of the Nationwide
Indebtedness, (B) increasing the rate of interest or the amount of any
payments (including the amount of any fees payable in respect of the
Nationwide Indebtedness), except for the increase in rate provided for
therein following maturity thereof, whether at stated maturity, by
acceleration or otherwise, or (C) adding any requirement for SHC to pay
any additional fees in respect of the Nationwide Indebtedness, or (ii) any
Change making any material terms and conditions of the Nationwide
Agreement more restrictive or burdensome on SHC than the terms and
conditions of the Nationwide Agreement delivered to Citadel and in effect
on the date hereof. If any Change is made in contravention of this Section
2.10(c), any additional liabilities or obligations to Nationwide imposed
thereby on SHC shall not constitute obligations secured by the Collateral
and, with respect to such additional liabilities or obligations,
Nationwide shall not be entitled to any of the benefits of this Agreement,
the Security Agreement or the Pledge Agreement.
Section 2.11 Additional Agreements and Waivers.
(a) Citadel hereby waives (i) any requirement for marshaling of
assets by Nationwide in connection with any foreclosure of the Liens of
Nationwide on any Collateral or any other realization upon such
Collateral, and (ii) any other principle of election of remedies.
(b) Nationwide shall not have any obligation or duty, nor shall
Citadel have any right to direct Nationwide, to retain, perfect, protect
or release any Collateral (except as provided in Section 2.03(c)), to
foreclose or refrain from foreclosing the Lien of Nationwide on any
Collateral, to act or refrain from acting with respect to any Nationwide
Event of Default, to act or refrain from acting with respect to the
collection of any claim from any account debtor, guarantor or any other
party, to realize upon any collateral or otherwise to
14
exercise or refrain from exercising any rights or remedies in respect of
such Lien or such Collateral. Except with respect to a violation of
Section 2.03(c), Nationwide shall not be subject to any liability on
account of taking or refraining from taking any action referred to in this
Section 2.11(b), and Citadel waives and agrees to refrain from asserting
against Nationwide any claim seeking damages or other relief by way of
specific performance, injunction or otherwise, with respect to any action
taken or not taken by Nationwide with respect to SHC, the Collateral or
any other Person. Without limiting the foregoing, Citadel waives the right
to commence or pursue any legal action on account of the exercise or
non-exercise of rights, remedies or other conduct of Nationwide under the
Nationwide Agreement or any document entered into in connection therewith,
including allegations based on a theory of breach of fiduciary obligations
of Nationwide, duty of care, duty of good faith, duty of reasonableness,
negligence, equitable subordination of claims, interference with
contractual relationships, conflicts of interest or otherwise, except for
willful misconduct by Nationwide or a violation of Section 2.03(c) hereof.
(c) Solely between Nationwide and Citadel, Citadel assumes
responsibility for keeping itself informed as to the condition (financial
or otherwise), business, assets and operations of SHC, the condition of
the Collateral and all other circumstances that might in any way affect
Citadel's risk under the Subordinated Documents and this Agreement
(including without limitation the risk of non-payment of the Nationwide
Indebtedness), and Nationwide shall have no duty or obligation whatsoever
to obtain or disclose to Citadel any information or documents relative to
such condition (financial or otherwise), business, assets or operations of
SHC, such Collateral or such risk, whether acquired by Nationwide in the
course of its relationship with SHC or otherwise. The terms of this
Section 2.11(c) shall not impair or affect SHC's obligations arising under
any Credit Agreement or any of the Subordinated Documents.
(d) Citadel agrees that the subordination hereunder applies
regardless of the validity or enforceability of the Nationwide
Indebtedness or the Nationwide Agreement or the validity, perfection or
enforceability of the Liens securing the Nationwide Indebtedness.
(e) Citadel agrees not to (i) take any action to challenge the
validity, enforceability or amount of any guaranty of the Nationwide
Indebtedness given by any other Person, (ii) induce any other Person to
take such action, or (iii) cooperate with any other Person in taking such
action.
(f) Within fifteen (15) days following the written request from
Nationwide or SHC, Citadel shall deliver to SHC and Nationwide an estoppel
certificate setting forth (i) the amount of principal and interest then
due, if any, and other amounts then payable (to the extent then
ascertainable), if any, in respect of the Citadel Indebtedness and (ii)
whether or not the Subordinated Documents have been amended since the date
hereof or the date of the
15
last such certificate delivered pursuant hereto, as the case may be, and
if so, providing a copy of the relevant amendment documents.
(g) Within fifteen (15) days following the written request from
Citadel, each of Nationwide and SHC shall deliver to Citadel an estoppel
certificate setting forth (i) the amount of principal and interest then
due, and other amounts then payable (to the extent ascertainable), in
respect of the Nationwide Indebtedness and (ii) whether or not the
Nationwide Agreement has been amended since the date hereof or the date of
the last such certificate delivered pursuant hereto, as the case may be,
and, if so, providing a copy of the relevant amendment documents.
Nationwide confirms that, as of the date hereof, the outstanding principal
sum of the Nationwide Indebtedness is eleven million Dollars
($11,000,000), and no other sums are now accrued or payable under the
Nationwide Agreement except accrued interest, not currently due, in
accordance with the terms of the Nationwide Agreement.
(h) (i) At any time following a Trigger Event, upon the request of
Citadel and upon at least five (5) Business Days' prior written notice to
Nationwide, Nationwide will assign to Citadel, without any recourse to, or
representation or warranty by, Nationwide, the Nationwide Agreement (other
than Nationwide's claims, if any, in respect of interest and other fees
and costs thereunder, to the extent not included in the Nationwide
Accrual) (the "Retained Claims"), which Retained Claims shall be retained
by and remain the property of Nationwide) upon the payment to Nationwide,
or as it may direct in writing, of the sum of (x) the principal amount of
the Nationwide Indebtedness or $11,000,000, whichever is less, and (y) the
Nationwide Accrual; provided, however, that the Nationwide Indebtedness
and the Nationwide Agreement, as assigned, will then be subject to Section
11.12 of the Citadel Agreement. Upon such assignment, this Agreement shall
terminate and all rights and obligations between Nationwide and Citadel
shall terminate, except as provided in this Section 2.11(h). Upon such
assignment, the combined assigned Nationwide Indebtedness and the Citadel
Indebtedness shall be treated for purposes of this Agreement as if such
combined Indebtedness were the Nationwide Indebtedness and the Retained
Claims shall be treated as if such Retained Claims were the Citadel
Indebtedness; provided, however, that nothing herein shall affect, limit
or impair the right of Nationwide to enforce, collect and retain free from
any limitations or restrictions of this Agreement payment of the Retained
Claims from any Person other than SHC.
(ii) At Citadel's election, payment to Nationwide or an Affiliate
thereof for the amount required to be paid pursuant to subsection
2.11(h)(i) may be made by it or an Affiliate making and delivering a note
for the full amount due, payable in full ninety (90) days from its date,
with interest thereon payable at the rate of 8.25% monthly in arrears and
on the date of payment in full (increasing to 9.75% following maturity
thereof, whether at stated maturity, by acceleration or otherwise);
provided, however, that Nationwide (or such
16
Affiliate) may require that the maturity date of the note be extended to
such later date, not beyond the expiration of the Initial Term of the
Lease Agreement as may be requested by Nationwide (or such Affiliate) in a
notice given to Citadel not later than sixty (60) days prior to the
originally stated maturity date of such note, in which case the maker of
the note and, if applicable, the guarantor thereof shall execute and
deliver such additional documents to confirm such extension as may be
appropriate. Such note, if made by an Affiliate of Citadel, shall be fully
guaranteed as to payment by Citadel, or may in the first instance be made
by Citadel (in which case no guaranty shall be required). The note and, if
applicable, the guaranty shall be on terms and conditions reasonably
satisfactory to Nationwide. The option provided herein in favor of Citadel
to pay through delivery of a note and, if applicable, a guaranty shall not
be available in connection with the exercise of the Purchase Option
pursuant to the Lease Agreement and any such note shall be pre-payable in
full upon the closing pursuant to the Purchase Option or the purchase or
other acquisition by Citadel (or an Affiliate) of the Membership Interest
in SHC.
(iii) Upon the payment to Nationwide of the amount required to
be paid to it pursuant to subsection 2.11(h)(i) (whether in cash or by the
making and delivery of a note and, if applicable, a guaranty), Nationwide
shall, as Citadel may request, either satisfy or assign (without recourse
to, or representation or warranty by, Nationwide) as Citadel shall direct
any and all Liens securing the Nationwide Indebtedness and any claims
(other than the Retained Claims) with respect thereto; provided, however,
that such Liens and claims, if so assigned, will be subject to the
limitations of Section 11.12 of the Citadel Agreement. Any and all
Retained Claims shall be unsecured claims and any judgment thereon shall
not be enforced against or be or become Liens on any assets of SHC.
(iv) If the Trigger Event is a Citadel Proceeding and if a Bad
Faith Determination is entered with respect thereto, then Citadel shall be
liable: (x) to Nationwide, for all costs and expenses (including
reasonable fees and expenses of counsel and other professional advisors)
incurred by Nationwide in connection with the Citadel Proceeding and in
seeking such Bad Faith Determination and for interest (at the
Reimbursement Rate) on any taxes paid by Nationwide as a result of the
transfer or repayment of the Nationwide Indebtedness for the period from
the date such taxes were paid until the date such taxes would have been
paid if the Nationwide Indebtedness had been repaid at the maturity date
thereof; and (y) to SHC and its Affiliates, for all costs and expenses
(including reasonable fees and expenses of counsel and other professional
advisors) incurred by SHC and its Affiliates in connection with the
Citadel Proceeding and in seeking such Bad Faith Determination. If
following the initiation of a Citadel Proceeding either Nationwide or any
of its Affiliates or SHC or any of its Affiliates, or any other Person
acting in concert with or with the support of any of them, unsuccessfully
asserts a claim for a Bad Faith Determination, then Nationwide (if it or
any of its Affiliates asserted such claim) or James J. Cotter and Michael
R. Forman (if SHC or any of its Affiliates asserted such claim) shall be
17
liable to Citadel for all costs and expenses (including reasonable fees
and expenses of counsel and other professionals) incurred by Citadel in
defending against the claim for a Bad Faith Determination.
Section 2.12. Transferees of Creditors; Notice of Subordination.
(a) Each Creditor shall not at any time sell, assign, pledge,
hypothecate, or otherwise transfer its Credit Agreement (or any of its
respective rights or interests therein), unless and until the transferee,
pledgee, or other appropriate party shall have assumed in a writing,
reasonably satisfactory to the other, all of the transferring, pledging,
or hypothecating Creditor's obligations under this Agreement.
(b) Each Creditor warrants and represents to the other Creditor that
it has not previously assigned any interest in its respective
Indebtedness, that no party owns an interest in its Indebtedness other
than itself and that its entire Indebtedness is owing only to it. Each
Creditor covenants that its entire Indebtedness shall continue to be owing
only to it, unless assigned or transferred in accordance with the terms of
this Agreement.
Section 2.13. Representations and Warranties. (a) Each Creditor hereby
represents and warrants for the benefit of the other as follows: (i) the
execution, delivery and performance of this Agreement are within its corporate
power and authority and have been duly authorized by all necessary corporate
action and this Agreement constitutes the legal, valid and binding obligation of
each Creditor enforceable against it in accordance with its terms, except as
enforceability may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally; and (ii) all consents for, in the case of
Nationwide, the amending of the Existing Nationwide Agreement to the Nationwide
Agreement and, in the case of Citadel, the funding to SHC pursuant to the
Citadel Agreement have been obtained and are in effect (or will be obtained and
in effect upon the date of funding).
(b) Nationwide hereby represents to Citadel that, upon the tender in
cash of the amount of the Nationwide Indebtedness in the amount and
subject to the conditions set forth in Section 2.11(h)(i) hereof, the
assignment provided for in said Section 2.11(h)(i) will be provided
whether or not Nationwide is then the holder of the Nationwide
Indebtedness.
Section 2.14. Restriction on Amendments to Subordinated Documents. Neither
SHC nor Citadel shall, without the prior written consent of Nationwide, waive,
amend or modify any of the terms and conditions of any Subordinated Document if
the effect of such waiver, amendment or modification is to (a) advance maturity
dates, (b) increase rates or amounts of payments, (c) change any provision
herein, or (d) otherwise make any such terms and conditions more restrictive or
burdensome on SHC than the terms and conditions of the Subordinated Documents
delivered to Nationwide and in effect on the date hereof or at the time of such
amendment or modification.
18
Section 2.15. Continuing Agreement of Subordination. This is a continuing
agreement of subordination and Nationwide may continue, at any time and without
notice to Citadel, to extend credit or other financial accommodations to or for
the benefit of SHC in reliance hereon. This Agreement shall be effective and may
not be terminated or otherwise revoked by Citadel until the Nationwide
Indebtedness has been Fully Paid. If Citadel shall have any right under
Applicable Law or otherwise to terminate or revoke this Agreement which cannot
be waived, then, to the extent permitted by law, such termination or revocation
shall not be effective until written notice of such termination or revocation,
signed by Citadel, is given to the holder of such Nationwide Indebtedness. Any
such termination or revocation shall not affect this Agreement in relation to
(a) any Nationwide Indebtedness which arose prior to the receipt thereof, or (b)
any of the Nationwide Indebtedness created after receipt thereof, if such
Nationwide Indebtedness was incurred either through committed advances or
re-advances by Nationwide pursuant to the Nationwide Agreement.
Section 2.16. Further Assurances.
(a) Upon the occurrence and during the continuation of a Nationwide
Default, Citadel shall duly and promptly take such action as Nationwide
may reasonably request (a) to collect the Citadel Indebtedness for the
account of Nationwide and to file appropriate claims or proofs of claims
in respect of the Citadel Indebtedness, (b) to execute and deliver to
Nationwide such assignments or other instruments as Nationwide may
reasonably request in order to enable it to enforce any and all claims
with respect to the Citadel Indebtedness and any security interests
securing payment of the Citadel Indebtedness, and (c) to collect and
receive any and all payments or distributions which may be payable or
deliverable with respect to the Citadel Indebtedness.
(b) Nothing contained in this Agreement shall affect Citadel's
obligations to make any advances pursuant to the terms of the Citadel
Agreement.
ARTICLE III
MISCELLANEOUS
Section 3.01 Amendments, Etc. No amendment, waiver or modification of any
provision of this Agreement, nor consent to any departure by any party hereto
therefrom, shall in any event be effective unless the same shall be in writing,
making specific reference to this Agreement and such amendment, waiver,
modification or consent shall be consented to in one or more writings signed by
or consented to by all the parties hereto, and then such amendment, waiver,
modification or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 3.02 Notices, Etc. All notices, offers, acceptances, approvals,
waivers, requests, demands and other communications required or permitted
hereunder or under any other instrument,
19
certificate or other document delivered in connection with the transactions
described herein shall be in writing, shall be addressed as provided below and
shall be considered as properly given (a) if delivered in person, (b) if sent by
express courier service (including, without limitation, Federal Express, Emery,
DHL, Airborne Express, and other similar express delivery services), (c) in the
event overnight delivery services are not readily available, if mailed by United
States Postal Service, postage prepaid, registered or certified with return
receipt requested, or (d) if sent by telecopy and confirmed; provided, that in
the case of a notice by telecopy, the sender shall in addition confirm such
notice by writing sent in the manner specified in clause (a), (b) or (c) of this
Section 3.02. All notices shall be effective upon receipt by the addressee;
provided, however, that if any notice is tendered to an addressee and the
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender. For the purposes of notice, the addresses of the parties shall
be as set forth below; provided, however, that any party shall have the right to
change its address for notice hereunder to any other location by giving written
notice to the other party in the manner set forth herein. The initial addresses
of the parties hereto are as follows:
If to Citadel:
Reading International, Inc.
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Facsimile: (213) 235-2220
Attention: Chief Financial Officer
with required copies to
S. Craig Tompkins
Reading International, Inc.
550 South Hope Street, Suite 1825
Los Angeles, CA 90071
Facsimile: (213) 235-2229
If to SHC:
Sutton Hill Capital, L.L.C.
120 North Robertson Blvd.
Los Angeles, California 90048
Attention: Legal Department
Telecopier No.: (310) 652-6490
20
If to Nationwide:
Nationwide Theatres Corp.
c/o Pacific Theatres
Los Angeles, California 90048
Attention: Legal Department
Telecopier No.: (310) 652-6490
with required copies to
Ira Levin
Pacific Theatres
120 North Robertson Boulevard
Los Angeles, CA 90048
Telecopier: (310) 652-6490
Each such notice, request or other communication shall be effective when
actually received.
Section 3.03 No Waiver; Remedies. No failure on the part of any party
hereto to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Section 3.04 Costs and Expenses. Each Creditor agrees to pay on demand all
costs and expenses of the other Creditor in connection with the successful
enforcement of this Agreement against the first Creditor (including without
limitation for reasonable fees and expenses of counsel).
Section 3.05 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 3.06 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 3.07 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature
21
page to this Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Agreement.
Section 3.08 Waiver of Jury Trial. THE PARTIES HERETO HEREBY IRREVOC"BLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 3.09 Evidence of Understanding. Citadel shall, promptly upon the
request of Nationwide, and Nationwide shall, promptly upon the request of
Citadel, execute and deliver such other documents and instruments as Nationwide
or Citadel, as the case may be, may deem reasonably necessary or appropriate (in
proper form for recording or filing, if requested) to more fully implement or
further evidence the understandings and agreements contained in this Agreement.
Section 3.10 Conflict of Provisions. In the event of any conflict between
any term, covenant or condition of this Agreement and any term, covenant or
condition of the Nationwide Agreement, the Subordinated Documents, or any
documents executed in connection therewith or the indebtedness evidenced
thereby, the provisions of this Agreement shall control and govern.
Section 3.11 Respective Rights. This Agreement sets forth the respective
rights of Citadel, on the one hand, and Nationwide, on the other hand, and, as
such, has not been entered into for the benefit of SHC and may not be enforced
by SHC. SHC is executing and delivering this Agreement solely to confirm to the
other parties that it is aware that such other parties have entered into this
Agreement and that it consents to the other parties' entering into this
Agreement (though the foregoing shall not imply that SHC's consent was or is
required for the execution and delivery of this Agreement by such other parties,
or that its obligations pursuant to the Nationwide Agreement or the Subordinated
Documents are affected in any way if an amendment is made hereto, or a waiver is
granted hereunder, without SHC's consent).
Section 3.12 Termination. This Agreement shall terminate upon payment in
full of the Nationwide Indebtedness and all other amounts due under the
Nationwide Agreement.
Section 3.13. Section Headings. The Section headings in this Agreement are
for convenience of reference only and shall not affect the interpretation
hereof.
Section 3.14. Limited Recourse. SHC's obligations hereunder are intended
to be the obligations of the limited liability company only and no recourse for
the payment of any amount due hereunder, or for any claim based thereon or
otherwise in respect thereof, shall
22
be had against any member of SHC or any incorporator, member, officer, director
or Affiliate, as such, past, present or future of such limited liability
company, it being understood that SHC is a limited liability company formed for
the purpose of the transactions involved in and relating to the Citadel
Agreement on the express understanding aforesaid. Nothing contained in this
Section shall be construed to limit the exercise or enforcement, in accordance
with the terms of this Agreement, of the rights and remedies against the limited
liability company or the assets of the limited liability company or affect
claims under Section 5 of the Pledge Agreement or under the Indemnity Guarantee
(as such terms are defined in the Citadel Agreement).
Section 3.15 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
Section 3.16 Bankruptcy. This Agreement shall be applicable both before
and after the commencement, whether voluntary or involuntary, of any case under
the Bankruptcy Code (or similar state law) involving SHC, and all references
herein to SHC shall be deemed to apply to SHC as a debtor-in-possession and to
any trustee in bankruptcy for the estate of SHC.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
READING INTERNATIONAL, INC.
By:__________________________________
Name:
Title:
NATIONWIDE THEATRES CORP.,
By:__________________________________
Name:
Time:
SUTTON HILL CAPITAL, L.L.C.,
By:__________________________________
Name:
Title:
24
FOR PURPOSES OF THE LAST SENTENCE OF
SECTION 2.11(h)(iv) ONLY:
_________________________________
James J. Cotter
_________________________________
Michael R. Forman
25
EXHIBIT H
THEATRE PROPERTIES
1. The Village East Cinemas located at 181 Second Avenue, New York, New York
10013
2. The Sutton Theatre located at 205 East 57th Street, New York, New York
10022.
3. Cinemas 1, 2 and 3 located at 1001 Third Avenue, New York, New York 10022
26
EXHIBIT I
SITE LEASES
(a) That certain Indenture of Lease dated as of January 31, 1987 between Senyar
Holding Company, as landlord, and M-Square Theaters, Inc., as tenant, covering
premises at 181-189 Second Avenue, New York, New York 10003, containing the
Village East Theatre, as amended by that certain First Amendment to Lease, dated
as of June 15, 1989, between Senyar Holding Company and M-Square Theaters, Inc.
and the letter regarding notices, dated December 20, 1993 from Senyar Holding
Company to M-Square Theatres, Inc.;
(b) The ground lease dated February 9, 1961 between Andrew C. Mayer, et al., as
landlord, and Turtle Bay Theatre Corporation, as tenant, covering premises at
1001, 1003 1005 and 1007 Third Avenue, New York, New York 10022, containing
Cinemas 1, 2 and 3, the tenant's interest therein having been assigned to (i)
Sutcin Holding Corp. pursuant to that Assignment & Assumption of Lease dated
December 31, 1984 between Cinemas 5 Ltd., as successor in liquidation to Turtle
Bay Theatre Corporation, and Sutcin Holding Corp., and (ii) Sutton Hill
Associates pursuant to that Agreement of Purchase and Sale and related
Assignment of Lease, each dated July 3, 1986 between Sutcin Holding Corp. and
Sutton Hill Associates; and
(c) That certain Ground Lease dated as of August 16, 1985, between Sutcin
Holding Corp., as landlord, and Sutton Hill Associates, as tenant, covering the
premises at 205 East 57th Street, New York, New York 10022, containing the
Sutton Theater as amended by the First Addendum to Ground Lease, dated as of
January 1, 1992, between Sutcin Holding Corp. and Sutton Hill Associates, Second
Addendum to Ground Lease, dated as of January 1, 1995, between Sutcin Holding
Corp. and Sutton Hill Associates, Third Addendum to Ground Lease, dated as of
July 1, 1996, between Nationwide (successor-in-interest to Sutcin Holding Corp.)
and Sutton Hill Associates, Fourth Addendum to Ground Lease, dated as of July
28, 2002, between Nationwide and Sutton Hill Associates and Fifth Addendum to
Ground Lease, dated as of January 29, 2002 between Nationwide and Sutton Hill
Associates.
27