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EXHIBIT 10.2
PROMISSORY NOTE
TWO MILLION TWO
HUNDRED FIFTY THOUSAND DOLLARS New York, New York
$2,250,000 July 28, 2000
FOR VALUE RECEIVED, CITADEL CINEMAS, INC., a Nevada corporation (the
"Maker"), hereby promises to pay to JAMES J. COTTER (the "Holder"), at such
place as the Holder may designate in writing, the principal amount of Two
Million Two Hundred Fifty Thousand Dollars ($2,250,000), payable on the second
anniversary of the date of this Note (the "Maturity Date"), together with
interest thereon at the rate of eight and one-quarter percent (8.25%) per annum,
calculated on the basis of a year of 360 days and the actual number of days
elapsed, such interest to be payable in arrears on a quarterly basis on the
first day of September, December, March and June of each year, commencing on
September 1, 2000.
Capitalized terms used but not otherwise defined herein shall have the
meanings given to them in the Agreement of Purchase and Sale of Membership
Interest, dated as of the date hereof, among the Maker, the Holder, and Michael
R. Forman (the "Other Holder"), as the same may be amended, modified,
supplemented or extended (the "Agreement of Purchase and Sale"). This Note and a
similar note issued to the Other Holder (the "Other Note") are made and
delivered pursuant to the Agreement of Purchase and Sale, representing the
Purchase Price payable in accordance with the terms thereof.
1. Payments and Prepayments. All payments of principal and interest
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hereunder shall be payable in lawful money of the United States and in same day
funds. If any payment on this Note becomes due and payable on a Saturday,
Sunday or other day on which commercial banks in New York, New York are
authorized or required by law to close, the maturity thereof shall be extended
to the next succeeding business day and, with respect to payments of principal,
interest thereon shall be payable during such extension at the then applicable
rate.
2. Events of Default; Remedies. (a) The Maker shall be in default
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hereunder upon the occurrence of any of the following events:
(i) Failure of the Maker to pay any installment of principal or
interest, as and when due and payable, whether by reason of maturity,
acceleration or otherwise, provided, in the case of interest, that such
failure continues for ten (10) business days after notice from the Holder;
(ii) The entry of a decree or order for relief in respect of the Maker
or Guarantor by a court having jurisdiction in the premises, or the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Maker or Guarantor or of
any substantial part of their respective property, or ordering the winding
up or liquidation of their affairs, in an involuntary case under the
Federal
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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 Maker or Guarantor 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;
(iii) The commencement by the Maker or Guarantor 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 either of them 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 Maker
or Guarantor or of any substantial part of their respective property, or
the making by either of them of a general assignment for the benefit of
creditors, or the taking of any action in furtherance of any of the
foregoing;
(iv) A default by the Maker shall have occurred and not been cured
after the giving of any notice of default required and passage of any time
for cure permitted under the Other Note or the Lease entered into or
contemplated to be entered into between the Maker and Sutton Hill Capital,
L.L.C.
(v) A default by the Guarantor under the Citadel Guarantee in favor
of the Holder past notice and time to cure if required or if the Citadel
Guarantee ceases to be in full force and effect.
(b) Upon the occurrence of any event or condition of default hereunder, or
any time thereafter, the Holder at its option may, by notice to the Maker
(except that, in the case of a default described in Section 2(a)(ii) or (iii),
no such notice shall be required), accelerate the maturity of this Note and
declare all of the indebtedness or any portion thereof to be immediately due and
payable together with accrued interest thereon, and payment thereof may be
enforced by suit or other process of law.
(c) From and after acceleration or upon the maturity hereof (whether at the
Maturity Date or otherwise), this Note shall bear interest, until repaid in
full, at the rate of 9:%.
3. Collection Expenses. If the Holder shall institute any proceedings to
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enforce payment of all or any part of any sum due the Holder hereunder, or if
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, the Maker agrees to pay all costs,
expenses and fees incurred by the Holder, including reasonable attorney's fees.
4. Obligation Absolute. The obligations under this Note are absolute and
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unconditional obligations of the Maker and no modification, release, consent,
waiver,
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rearrangement or amendment shall impair the obligations of the Maker hereunder.
5. Governing Law. THIS NOTE SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING
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AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES THEREOF.
6. Waivers. Except as otherwise provided herein or in the Citadel
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Guarantee, the Maker and each surety, guarantor, endorser and other party ever
liable for payment of any sum of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before and after maturity,
all without prejudice to the Holder. The Maker waives the right to interpose
counterclaims (other than mandatory counterclaims) of any kind or description in
any litigation between the Maker and the Holder relating to this Note, provided
that the foregoing shall not limit set-off rights any party may have. THE MAKER
WAIVES THE RIGHT, IN ANY LITIGATION INVOLVING THIS NOTE, TO TRIAL BY JURY.
The Holder shall similarly have the right to deal in any way, at any time,
with one or more of the foregoing parties without notice to any other party, and
to grant any such party any extensions of time for payment of said indebtedness,
or to release or substitute any such party, or to grant any other indulgences or
forebearances whatsoever, without notice to any party and without in any way
affecting the personal liability of any party hereunder.
7. Modification of Note. Any provision of this Note may be modified,
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altered, amended, waived, discharged or terminated if, but only if, such
modification, alteration, amendment, waiver, discharge or termination is in
writing and is signed by the Holder and Maker. Any such modification,
alteration, amendment or waiver shall constitute a modification, alteration,
amendment or waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such
modification, alteration, amendment or waiver in any other respect or at any
other time.
8. Successors. The Holder may not assign, negotiate, pledge, encumber or
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otherwise transfer or grant a participation in this Note or any interest of the
Holder herein without the written consent of the Maker, which may be withheld in
its sole discretion. The term "Maker" shall include the Maker's successors and
assigns and the term "Holder" shall include the Holder's permitted successors
and assigns.
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IN WITNESS WHEREOF, the Maker has hereby caused this Note to be signed on
its behalf, in its corporate name and by its duly authorized officer, as of the
date first written above.
CITADEL CINEMAS, INC.
By: /s/ Andrzej Matyczynski
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Name: Andrzej Matyczynski
Title: Chief Financial Officer
