EXHIBIT 10.11(a)
SENIOR SECURED
CREDIT AGREEMENT
By and Between
CINEMARK II, INC.
A TEXAS CORPORATION
and
CINEMARK MEXICO (USA), INC.
A TEXAS CORPORATION
Dated as of December 4, 1995
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TABLE OF CONTENTS
Page
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ARTICLE 1 Definitions.................................................................1
ARTICLE 2 Loan........................................................................8
2.1. Commitment..........................................................8
2.2. Procedure for Loans.................................................8
2.3. Interest............................................................8
2.4. Payments............................................................9
ARTICLE 3 Conditions Precedent........................................................9
3.1. Initial Loan........................................................9
3.2. All Remaining Loans.................................................9
3.3. Satisfaction of Conditions.........................................10
ARTICLE 4 Representations and Warranties of Borrower.................................11
4.1. Due Organization...................................................11
4.2. Requisite Power....................................................11
4.3. Authorization......................................................11
4.4. Representative Authorization.......................................11
4.5. Binding Nature.....................................................11
4.6. No Conflict........................................................11
4.7. Litigation and Contingent Liabilities..............................11
4.8. No Event of Default................................................12
4.9. Compliance With Laws...............................................12
4.10. Title to Properties................................................12
ARTICLE 5 Covenants..................................................................12
5.1. Accounting Records.................................................12
5.2. Corporate Existence................................................12
5.3. Qualification to Do Business.......................................12
5.4. Compliance with Laws...............................................12
5.5. Taxes and Other Liabilities........................................12
5.6. Payment of Indebtedness and Performance of Obligations.............13
5.7. Use of Proceeds....................................................13
5.8. Maintenance of Property............................................13
5.9. Conduct of Business................................................13
5.10. Authorizations.....................................................13
5.11. Notification of Events of Default and Adverse Developments.........13
5.12. Further Assurances.................................................14
5.13. Borrower Security Agreement........................................14
5.14. Further Identification of Collateral...............................14
5.15. Limitation on Consolidated Debt....................................14
5.16. Maintenance of Interest............................................14
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ARTICLE 6 Negative Covenants.........................................................15
6.1. Indebtedness.......................................................15
6.2. Liens..............................................................15
6.3. Merger or Acquisition..............................................15
6.4. Disposition of Assets..............................................15
6.5. Manager............................................................15
6.6. Permitted Investments..............................................15
ARTICLE 7 Events of Default..........................................................16
7.1. Events of Default..................................................16
7.2. Termination of Obligations and Acceleration........................17
7.3. Other Remedies.....................................................18
7.4. Application of Proceeds............................................18
ARTICLE 8 Security Interest..........................................................19
8.1. Grant of Security Interest.........................................19
8.2. Affirmative Covenants of Borrower..................................19
8.3. Negative Covenants of Borrower.....................................20
8.4. Perfection.........................................................20
8.5. Expenses...........................................................20
8.6. Waivers............................................................20
8.7. Termination of Security Interests; Release of Collateral...........20
8.8. Cumulative Rights..................................................20
ARTICLE 9 Miscellaneous..............................................................21
9.1. Successors and Assigns.............................................21
9.2. Sale of Interests..................................................21
9.3. Lost Promissory Note...............................................21
9.4. No Implied Waiver..................................................21
9.5. Amendments; Waivers................................................21
9.6. Severability.......................................................22
9.7. Notices............................................................22
9.8. Interpretation.....................................................22
9.9. No Right of Set Off................................................22
9.10. Attorneys' Fees and Other Expenses.................................23
9.11. Governing Law......................................................23
9.12. WAIVER OF JURY TRIAL...............................................23
9.13. Indemnification....................................................23
9.14. Counterparts.......................................................24
9.15. Headings and Sections..............................................24
Exhibit
Exhibit A -- Promissory Note
Exhibit B -- Borrowing Notice
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SENIOR SECURED CREDIT AGREEMENT
THIS
SENIOR SECURED CREDIT AGREEMENT ("Agreement"), is made and entered
into as of December 4, 1995 by and between Cinemark II, Inc. ("Lender") and
Cinemark Mexico (USA), Inc., a
Texas corporation ("Borrower").
WITNESSETH:
WHEREAS, Lender has agreed to make available to the Borrower a senior
secured credit facility upon the terms and conditions set forth in this
Agreement.
WHEREAS, this indebtedness of Borrower under this Credit Agreement is
intended to be and shall be Senior Debt as such term is defined in that certain
Indenture dated July 30, 1993 among Borrower, Cinemark de Mexico, S.A. de C.V.,
as guarantor, and United States Trust Company of New York, as trustee (the
"Indenture").
WHEREAS, Lender is willing to lend to Borrower up to $10,000,000
subject to the terms and conditions of this Agreement and Borrower desires to
borrow from Lender such amount subject to the terms and conditions hereinafter
set forth;
WHEREAS, the purpose of this Borrowing to permit Borrower to relend the
funds to its wholly owned subsidiary, Cinemark de Mexico S.A. de C.V. (de
Mexico);
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
In addition to any terms defined elsewhere in this Agreement, the
following terms have the meanings indicated for purposes of this Agreement (such
definitions being equally applicable to the singular and plural forms of the
defined term):
"Acceleration" means that the Loans (i) shall not have been paid at the
Maturity Date, or (ii) shall have become due and payable prior to the Maturity
Date pursuant to Section 7.2.
"Account" means all "accounts" (as defined in the UCC) now owned or
hereafter created or acquired by Borrower including, without limitation, all of
the following now owned or hereafter created or acquired by Borrower: (a)
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to Borrower arising from the sale, lease or
exchange of goods or other property and/or the performance of services; (b)
Borrower's rights in, to and under all purchase orders for goods, services or
other property; (c) Borrower's rights to any goods, services or other property
represented by any of the foregoing (including returned or repossessed goods and
unpaid seller's rights of rescission, replevin, reclamation and rights to
stoppage in transit); (d) monies due to or to become due to Borrower under all
contracts for the
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sale, lease or exchange of goods or other property and/or the performance of
Borrower); and (e) Proceeds of any of the foregoing and all collateral security
and guaranties of any kind given by any person with respect to any of the
foregoing.
"Capital Stock" of any Person means any and all shares interests,
participations or other equipment (however designated) of corporate stock of
such Person.
"Cash Flow Coverage Ratio" of any Person means for any period the ratio
of (i) the Consolidated Cash Flow of such Person for the four fiscal quarters
immediately preceding the date as of which such ratio is to be calculated to (i)
the Consolidated Interest Expense of such Person for such four fiscal quarters.
"Chattel Paper" means a writing or writings which evidence both a
monetary obligation and a security interest in or a lease of specific goods.
"Closing Date" means December 4, 1995.
"Collateral" refers to the following: (i) all of Borrower's Accounts
now existing or hereafter arising; (ii) all of Borrower's Contract Rights now
existing or hereafter arising; (iii) all of Borrower's General Intangibles,
Chattel Paper and Instruments, now existing or hereafter acquired or arising;
(iv) the goods or the services the sale or lease or performance of which gave
rise to any Account, Contract Right or General Intangible of Borrower including
any returned goods; (v) any balance or share belonging to Borrower of any
deposit, agency or other account with any bank and any other amounts which may
be owing from time to time by any bank to Borrower; (vi) all property of any
nature whatsoever of Borrower now or hereafter in the possession of or assigned
or hypothecated to the Lender for any purpose; and (vii) all Products and
Proceeds of all of the foregoing, including all Proceeds of other Proceeds.
"Consolidated" shall mean, when used in reference to any term, that
term as applied to the accounts of the Borrower (or other specified Person) and
all of its Subsidiaries (or other specified group of Persons), or such of its
Subsidiaries as may be specified, consolidated (or combined) in accordance with
generally accepted accounting principles and with appropriate deductions for
minority interests in Subsidiaries.
"Consolidated Cash Flow" of any Person means for any period the
Consolidated Net Income for such period increased by the sum of (i) Consolidated
Interest Expense of such Person for such period, plus (ii) Consolidated Income
Tax Expense of such Person for such period, plus (iii) the consolidated
depreciation and amortization expense included in the income statement of such
Person for such period, plus (iv) other non-cash items reducing Consolidated Net
Income for such period.
"Consolidated Income Tax Expense" of any Person means for any period
the consolidated provision for income taxes of such Person for such period
included in the consolidated financial statements in accordance with generally
accepted accounting principles.
"Consolidated Interest Expense" for any Person means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person for such period included
in the consolidated financial statements in
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accordance with generally accepted accounting principles, including without
limitation or duplication (or, to the extent not so included, with the addition
of), (i) the amortization of debt discounts, excluding the amortization of any
discount arising out of the sale of the Borrower's 12% Senior Subordinated
Notes; (ii) any payments or fees with respect to letters of credit, bankers
acceptances or similar facilities; (iii) fees with respect to interest rate swap
or similar agreements or foreign currency hedge, exchange or similar agreements;
(iv) preferred stock dividends declared and payable in cash; and (v) the portion
of any rental obligation allocable to interest expense.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person for such period determined on a
consolidated basis in accordance with generally accepted accounting principles;
provided that there shall be excluded therefrom (a) the net income (or loss) of
any Person acquired by such Person or a Subsidiary of such Person in a
pooling-of-interests transaction for any period prior to the date of such
transaction, (b) the net income (or net loss) of any Subsidiary of such Person
which is subject to restrictions which prevent the payment of dividends or the
making of distributions to such Person to the extent of such restrictions, (c)
the net income (or loss) of any Person that is not a Subsidiary of such Person
except to the extent of the amount of dividends or other distributions actually
paid to such Person by such other Person during such period, (d) gains or losses
on asset dispositions by such Person, (e) all extraordinary gains and
extraordinary losses and (f) amortization of any discount arising out of the
sale of the Borrower's 12 % Senior Subordinated Notes.
"Consolidated Net Worth" of any Person as of any date of determination
means, at any date the stockholder's equity of such Person and its Subsidiaries
at such date determined in accordance with generally accepted accounting
principles on a Consolidated basis, adjusted (x) to exclude (i) the effects, as
disclosed in a separate line item of the consolidated financial statements of
such Person, relating to foreign currency fluctuations, and (ii) any reduction
in stockholders' equity attributable to any redemption, retirement or repurchase
by the Company of the Warrants in excess of the purchase price attributed to the
Initial Warrants and the Additional Warrants and (y) to include the respective
purchase price attributable to the Initial Warrants and the Additional Warrants.
"Contract Right" means any right to payment under a contract
(including, but not limited to, contracts for the sale or leasing of goods or
for the rendering of services) not yet earned by performance and not evidenced
by an Instrument or Chattel Paper.
"Event of Default" shall have the meaning set forth in Article 7
hereof.
"Financing Statements" shall mean the form of financing statements as
shall be necessary to perfect, upon filing, a security interest in the
Collateral in each jurisdiction in which such Collateral is located or in which
a filing is required under the UCC to perfect such security interest.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant
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segment of the accounting profession, which are applicable to the circumstances
as of the date of determination.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) now owned or hereafter acquired by Borrower including, without
limitation, all right, title and interest of Borrower in and to: (a) all
agreements, leases, licenses and contracts other than Accounts or Contract
Rights to which Borrower is or may become a party; (b) all obligations or
indebtedness owing to Borrower (other than Accounts) from whatever source
arising including payment of funds advanced from borrowings by Borrower of the
Subordinated Debt; (c) all tax refunds; (d) all Trademarks; and (e) all
Trademark Licenses.
"Governmental Approvals" means any consent, right, exemption,
concession, permit, license, authorization, certificate, order, franchise,
determination or approval of any federal, state, provincial, municipal or
governmental department, commission, board, bureau, agency or instrumentality
required for the ownership of properties by or activities of Borrower.
"Governmental Authority" means any nation or government, any state,
province or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Governmental Requirements" means all legal requirements in effect from
time to time including all laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, certificates, orders, franchises, determinations, approvals,
consents, notices, demand letters, directions and requirements of all
governments, departments, commissions, boards, courts, authorities, agencies,
officials and officers, and all instruments of record, foreseen or unforeseen,
ordinary or extraordinary, including, but not limited to, any change in any law,
regulation or the interpretation thereof by any foreign or domestic governmental
or other authority (whether or not having the force of law), relating now or at
any time heretofore or hereafter to the business or operations of Borrower or de
Mexico or to any of the property owned, leased or used by Borrower or de Mexico,
including, without limitation, the development, design, construction,
acquisition, start-up, ownership and operation and maintenance of property.
"Indebtedness" of any Person means all liabilities, obligations and
reserves, contingent or otherwise of such Person.
"Incipient Default" shall have the meaning set forth in Section 3.2(a)
of this Agreement.
"Indenture" shall mean that certain Indenture dated July 30, 1993 among
the Borrower, de Mexico, or guarantor and United States Trust Company of New
York as trustee governing the turnover 12% Series A Senior Subordinated Notes,
12% Series B Senior Subordinated Notes and 12 % Series C Senior Subordinated
Notes.
"Instrument" means a negotiable instrument or a security or any other
writing which evidences a right to the payment of money and is not itself a
security agreement or lease and is of a type which is in ordinary course of
business transferred by delivery with any necessary indorsement or assignment.
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"Liens" shall mean any lien, mortgage, pledge, security interest charge
or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, operations or financial condition of Borrower or de Mexico,
(ii) the ability of Borrower to pay the Obligations or de Mexico to pay its
Senior Notes to Borrower in accordance with their terms, or (iii) Lender's
perfected first priority lien in the Collateral (as defined in this Agreement)
or the value of such Collateral.
"Maturity" means any date on which the Loans or any portion thereof
become due and payable, whether as stated or by virtue of mandatory prepayment,
by Acceleration or otherwise.
"Maturity Date" means December 31, 2001.
"Obligations" means all loans, advances, debts, liabilities,
obligations, covenants and duties owing to Lender by Borrower, of any Kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under this Agreement, the Senior Note, and all
extensions, amendments, modifications, restructurings and refinancings of any of
the above.
"Person" means any individual, corporation, partnership, trust,
association or other entity or organization, including any government, political
subdivision, agency or instrumentality thereof.
"Permitted Investments" shall include:
(i) certificates of deposit with final maturities of two years or
less issued by commercial banks organized under the laws of
either the United States of America or the Mexican Republic
having capital and surplus in excess of $100,000,000;
(ii) commercial paper with minimum grade of A1 or P1;
(iii) a direct obligation of the United States of America or the
Mexican Republic or of a United States of America agency with
a maturity of two years or less;
(iv) money market preferred stock rated "A" or above;
(v) shares of money market mutual or similar funds having assets
in excess of $100,000,000;
(vi) any Investment as defined in the Indentures made solely with
assets, the payment or application of which is not restricted
by Section 10.10 of the Indenture;
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(vii) Hedge Agreements entered into by the Company or any Subsidiary
to the extent any such agreement is otherwise permitted
hereunder;
(viii) Bank accounts maintained in any commercial bank;
(ix) Direct or beneficial interests in corporations, partnerships
or other business entities as "joint venturer"; provided
however, that such joint venture engages in the business
described in Section 10.14(c) hereof;
(x) equity interests acquired by the Borrower or any Subsidiary of
the Borrower in any Person engaged in the indoor motion
picture exhibition business if (i) such Person's theaters are
managed by the Borrower or such Subsidiary of the Borrower,
(ii) such equity interest is acquired solely in exchange for
services rendered in connection with the management of such
Persons theaters, and (iii) the Board of Directors of the
Borrower determines that such acquisition is in the best
interests of the Borrower;
(xi) endorsements of instruments for collection in the ordinary
course of business; and
(xii) Investments in any Person which, upon the making of such
Investment, becomes a Subsidiary of the Borrower.
"Proceeds" means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any
Collateral including, without limitation, all claims of Borrower against third
parties for loss of, damage to or destruction of, or for proceeds payable for
loss of, damage to or destruction of, or for proceeds payable under, or unearned
premiums with respect to, policies of insurance with respect to any Collateral,
and any condemnation or requisition payments with respect to any Collateral, in
each case whether now existing or hereafter arising.
"Pro Forma Cash Flow Coverage Ratio" of any Person means for any period
the ratio of (i) the aggregate amount of Consolidated Cash Flow of such Person
for the four fiscal quarters immediately prior to the last day of such period or
the date of the transaction giving rise to the need to calculate the Pro Forma
Cash Flow Coverage Ratio, as the case may be (the "Determination Date"), to (ii)
the aggregate Consolidated Interest Expense which such person shall accrue
during the fiscal quarters in which the Determination Date occurs and the three
fiscal quarters immediately subsequent to such fiscal quarter, assuming that the
Consolidated Interest Expense shall accrue on the amount of such Person's Debt
on the Determination Date, including any Debt proposed to be incurred on such
date (as though all such Debt was incurred on the first day of the quarter in
which the Determination Date occurred), and any additional amounts of Debt
reasonably anticipated by such Person in good faith to be outstanding from time
to time during such period; provided that if during the four quarter period
referred to in clause (i) above, the Person for which the Pro Forma Cash Flow
Coverage Ratio is being determined or any of its Subsidiaries shall have
acquired any assets other than assets acquired as a result of capital
expenditures made in the ordinary course of business of such Person (including,
without limitation, acquisitions by merger or consolidation), the Pro Forma Cash
Flow Coverage Ratio of Such Person as of such Determination Date shall be
calculated on a pro forma basis, as if such
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acquisition had occurred at the beginning of such four quarter period. For
purposes of this definition, interest on debt determined on a fluctuating basis
for periods succeeding the Determination Date shall be calculated as if the rate
in effect on the Determination Date had been the applicable rate for the entire
period.
"Senior Note" means the senior note executed by Borrower in the form of
Exhibit A hereto.
"Subsidiary" of any Person means (i) a corporation, more than 50% of
the outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Trademark" means collectively all of the following now owned or
hereafter created or acquired by Borrower: (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, other business identifiers, prints and labels on
which any of the foregoing have appeared or appear, all registrations and
recordings thereof, and all applications in connection therewith including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; (c) all income, payable under any of
the foregoing or with respect to any of the foregoing including damages or
payments for past or future infringements of any of the foregoing; (d) the right
to xxx for past, present and future infringements of any of the foregoing; (e)
all rights corresponding to any of the foregoing throughout the world; and (f)
all goodwill associated with any symbolized by any of the foregoing.
"Trademark License" means any written agreement now or hereafter in
existence granting to Borrower or de Mexico any right to use any Trademark.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of
Texas, as amended from time to time, and any successor statute;
provided that if by reason of mandatory provisions of law, the perfection or the
effect of perfection or non-perfection of the security interest in any
Collateral is governed by the Uniform Commercial Code, or other applicable
statute, law or provision relating to the perfection or the effect of perfection
or non-perfection of any such security interest, as in effect on or after the
date hereof in any other jurisdiction, "UCC" means the Uniform Commercial Code
or such other statute, law or provision as in effect in such other jurisdiction
for purposes of the provision hereof relating to such perfection or the effect
of perfection or non-perfection.
Any accounting term not defined herein shall have the meaning given to
it under GAAP.
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ARTICLE 2
LOAN
2.1. Commitment. Subject to the terms and conditions of this Agreement
and in reliance on the representations and warranties of Borrower set forth
herein, Lender may make senior loans (the "Loans") to Borrower from time to time
within one year after the Initial Loan (the "Funding Termination Date") in an
aggregate principal amount (excluding accrued interest as provided in 2.3(b))
not to exceed $10,000,000. Lender shall make an initial Loan (the "Initial
Loan") of $2,500,000 to Borrowers on the Closing Date. Amounts repaid in respect
of the Loans may not be reborrowed. Borrower's obligation to repay each Loan
shall be evidenced by a senior note of Borrower (the "Senior Note") in the form
attached hereto as Exhibit A and a senior note, in form satisfactory to Lender,
executed by de Mexico to Borrower (the "de Mexico Note") and endorsed with
recourse by Borrower, and delivered to Lender as pledgee together with
assignments of any de Mexico pledges of equipment, leaseholds, consents, and
proceeds of operations. Upon prior or contemporaneous satisfaction of the
conditions precedent contained in Article 3 hereof, or waiver by Lender of any
conditions not so satisfied, Lender shall disburse the Initial Loan to Borrower.
2.2. Procedure for Loans. Borrower may borrow pursuant to this Article
2 by executing and delivering to Lender borrowing notice substantially in the
form of Exhibit B attached hereto not less than three Business Days' prior to
the date of the requested loan, which shall be an integral multiple of $500,000
(as long as at least $500,000 remains undrawn hereunder). Such notice shall
specify the date of the proposed borrowing (the "Borrowing Date") and the use of
the proceeds of such Loan. Upon satisfaction of the conditions set forth in
Article 3 hereof, Lender shall disburse to Borrower the Loan requested in such
notice.
2.3. Interest.
(a) Interest. Each Loan shall bear interest from the date of
disbursement on the unpaid principal amount thereof until such amount is paid
(whether upon Maturity, by Acceleration or otherwise) at a rate per annum equal
to 12%.
(b) Computation of Interest. Interest shall accrue daily and
shall be computed for the actual number of days elapsed on the basis of a year
consisting of 365 days.
(c) Post-Maturity Interest. After Maturity (whether by
acceleration or otherwise) of the Loans, the Loans shall bear interest, payable
on demand, at a rate per annum equal to 15%.
(d) Maximum Interest Rate. Nothing in this Agreement shall
require Borrower to pay interest at a rate exceeding the maximum amount
permitted by applicable law to be charged by Lender (the "Maximum Rate"). If the
amount of interest payable for the account of Lender on any day in respect of
the immediately preceding interest computation period, computed pursuant to this
Article 2, would exceed the Maximum Rate, the amount of interest payable for its
account on such interest payment date shall automatically be reduced to the
Maximum Rate.
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2.4. Payments.
(a) Payments of Loans. Borrower shall pay (i) all accrued and
unpaid interest on the Loans on the first anniversary of the Initial Loan and
quarterly thereafter on January 15, April 15, July 15, and October 15 and (ii)
on the Maturity Date, the unpaid principal, accrued but unpaid interest and fees
on the Loans.
(b) Optional Prepayment. Borrower may at any time, and from
time to time, prepay outstanding principal under the Senior Note in whole or in
part, without penalty or premium.
(c) Payments. All payments of interest and principal shall be
in United States dollars and immediately available funds to Lender at its
address for notices in this Agreement and shall be made prior to 2:00 P.M.
Central Time on the date of the scheduled payment. All payments received after
such time shall be credited the next succeeding Business Day, and interest shall
continue to accrue.
ARTICLE 3
CONDITIONS PRECEDENT
3.1. Initial Loan. The obligation of Lender to make the Initial Loan
hereunder shall be, in addition to the conditions specified in Section 3.2,
subject to Lender having received the following, dated and in full force and
effect on the Closing Date:
(a) the Senior Note, duly executed by Borrower;
(b) a certificate, signed by an authorized representative of
Borrower on the Borrowing Date, stating (i) that the representations and
warranties contained in Article 4 hereof are then true and accurate in all
material respects as though made on and as of such date, and (ii) that there has
then occurred no Event of Default which is continuing;
(c) the Financing Statements, duly executed by Borrower;
(d) a note executed by de Mexico under U.S. law with similar
payment terms to the Borrower Senior Note duly endorsed to Lender as pledgee;
(e) a side letter agreement executed by de Mexico in form
attached as Exhibit B; and
(f) such other instruments or documents as Lender may
reasonably request relating to the existence and good standing of Borrower or
the authority for execution, delivery and performance of this Agreement or the
granting and/or perfection of security interest in the Collateral as
contemplated herein.
3.2. All Remaining Loans. The obligation of Lender to make each
subsequent Loan is subject to the sole and absolute discretion of the Lender and
to the further following conditions precedent:
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(a) No Existing Default. No Event of Default or event which,
upon the lapse of time or the giving of notice or both, would constitute an
Event of Default (an "Incipient Default") shall exist on the Borrowing Date.
(b) Representations and Warranties Correct. The
representations and warranties set forth in Article 4 shall be true and correct
in all material respects as of the Borrowing Date.
(c) No Material Adverse Change. There shall have been no
Material Adverse Effect upon the financial or business condition of Borrower or
its assets or of de Mexico or its assets.
(d) Borrowing Notice. Lender shall have received the notice of
borrowing with such other certifications as may reasonably be requested by
Lender in substantially the form of Exhibit "B" attached hereto.
(e) Lender Approval. Lender shall in the exercise of its sole
discretion have approved the use of the proceeds of any such Loan as set forth
in Borrower's written notice requesting such Loan of such funds.
(f) The Borrower shall have executed and delivered the
following documents in form and substance satisfactory to the Lender prior to or
concurrent with the date of requested Loan:
(i) Borrower's Senior Note;
(ii) The de Mexico senior note enforceable under
Mexican law by executory process with
parallel payment terms to the Borrower's
Senior Note duly endorsed to Lender as
pledgee;
(iii) Credito Refaccianario from de Mexico
pledging its equipment in all locations,
leaseholds (to the extent landlord consent
for each such leasehold has been obtained),
and proceeds of operation of each operating
location;
(iv) Consents of de Mexico in the event of
default to be delivered not later than five
business days after such default;
(g) Such other conditions as the Lender, in its sole and
absolute discretion, may deem necessary or appropriate.
3.3. Satisfaction of Conditions. The making of each Loan by Lender and
the acceptance thereof by Borrower shall be conclusive evidence of the
satisfaction or waiver of the conditions precedent contained in Sections 3.1 and
3.2.
10
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement and to make the
Loans, Borrower makes the following representations and warranties to Lender:
4.1. Due Organization. Borrower is a corporation duly organized and
validly existing under the laws of the State of
Texas.
4.2. Requisite Power. Borrower and de Mexico each have all requisite
power and all material Governmental Approvals necessary to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted. Borrower has all requisite power to borrow the sums provided for in
this Agreement, and Borrower has all requisite power to execute, deliver and
issue this Agreement and the Senior Note.
4.3. Authorization. All action on the part of Borrower necessary for
the authorization, execution, delivery and performance of this Agreement, the
Senior Note and the Financing Statement, and all other documents, certificates
or instruments contemplated hereby or thereby has been duly taken and is in full
force and effect. All action on the part of de Mexico necessary for the
authorization, execution, delivery and performance of this Agreement, the de
Mexico Note and all other documents, certificates, or instruments contemplated
hereby or thereby has been duly taken and is in full force and effect.
4.4. Representative Authorization. Each Person executing this
Agreement, Borrower's Senior Notes, any of de Mexico's Senior Notes, and any
Borrowing Notice on behalf of Borrower is, or upon execution thereof will be,
fully authorized to execute and deliver the same.
4.5. Binding Nature. This Agreement and the Senior Note are, or upon
the execution thereof will be, legal, valid and binding obligations of Borrower,
in full force and effect and enforceable in accordance with their respective
terms, except for the effect of applicable laws regarding bankruptcy, or
insolvency, or laws affecting the rights of creditors generally.
4.6. No Conflict. Neither the execution and delivery of this Agreement
or the Senior Note, nor fulfillment of or compliance with the terms and
provisions hereof or thereof will (a) conflict with or result in a breach of any
Governmental Requirement or of any agreement or installment binding upon
Borrower or upon de Mexico or conflict with or result in a breach of any
provision of the constituent documents of Borrower or de Mexico or (b) result in
the creation or imposition of any lien upon any property of Borrower pursuant to
any such agreement or instrument except for the liens created pursuant to this
Agreement. No authorization, consent or approval or other action by, and no
notice to or filing with, any Governmental Authority is required to be obtained
or made prior to the Closing Date, for the due execution, delivery and
performance by Borrower or de Mexico of this Agreement, the Senior Note, the de
Mexico Note or for the validity or enforceability of any thereof.
4.7. Litigation and Contingent Liabilities. There is no action, suit,
investigation, claim or proceeding pending or, to the knowledge or Borrower,
threatened in writing against or
11
affecting Borrower or the property or business of Borrower, before any court,
arbitrator or administrative or governmental body, the adverse determination of
which could have a Material Adverse Effect.
4.8. No Event of Default. No Event of Default or Incipient Default has
occurred and is continuing or would result from the execution of or any
borrowing under this Agreement.
4.9. Compliance With Laws. Borrower and de Mexico are each in
compliance with all Governmental Requirements applicable to its properties,
assets and business with only such exceptions as in the aggregate have no
Material Adverse Effect. There are no proceedings pending or, to the best of its
knowledge, threatened, to terminate or modify any Governmental Approvals.
4.10. Title to Properties. Borrower has good and marketable title to
all of the Collateral free and clear of all Liens except the Liens created
pursuant to this Agreement.
ARTICLE 5
COVENANTS
Unless Lender shall agree otherwise, Borrower shall, comply with the
following provisions so long as any Loan is outstanding:
5.1. Accounting Records. Borrower shall maintain adequate books and
accounts in accordance with GAAP consistently applied. Borrower shall deliver to
Lender any information regarding the Business or the finances of Borrower as
Lender may reasonably request.
5.2. Corporate Existence. Borrower shall preserve and maintain its
corporate existence in good standing in the jurisdiction of its formation and
all of its licenses, privileges and franchises and other rights necessary or
desirable in the ordinary course of its businesses, except to the extent that
the failure to do so would not have a Material Adverse Effect.
5.3. Qualification to Do Business. Borrower shall qualify to do
business and shall be and remain in good standing in each jurisdiction in which
the nature of its business requires it to be so qualified, except to the extent
that the failure to be so qualified and in good standing would not have a
Material Adverse Effect.
5.4. Compliance with Laws. Borrower and de Mexico will observe and
comply in all material respects with all laws, ordinances, orders, judgments,
rules, regulations, certifications, franchises, permits, licenses, directions
and requirements of all Governmental Authorities, which now or at any time may
be applicable to Borrower or de Mexico, a violation of which could be reasonably
expected to have a Material Adverse Effect.
5.5. Taxes and Other Liabilities. Borrower will pay and discharge prior
to the date on which penalties attach thereto all taxes, assessments and
governmental charges, license fees and levies upon or with respect to Borrower,
and upon the income, profits and property of Borrower, unless and to the extent
that such taxes, assessments, charges, license fees and levies are being
contested in good faith and by appropriate proceedings diligently conducted by
Borrower, and
12
provided that such reserve or other appropriate provisions as are required in
accordance with GAAP will have been made therefor.
5.6. Payment of Indebtedness and Performance of Obligations. Borrower
and de Mexico will each pay and when due when due all lawful Indebtedness,
obligations and claims for labor, materials and supplies or otherwise which, if
unpaid, could (i) have a Material Adverse Effect or (ii) become a Lien on its
property (except as otherwise permitted by this Agreement), provided that
Borrower or de Mexico will not be required to pay and discharge or cause to be
paid and discharged any such Indebtedness, obligation or claim so long as the
validity thereof is being contested in good faith and by appropriate proceedings
diligently conducted by Borrower, and that such reserve or other appropriate
provisions as are required by the Accountants in accordance with GAAP will have
been made therefor.
5.7. Use of Proceeds. The proceeds of the Loans shall be used only for
loans to de Mexico for general corporate purposes and working capital of de
Mexico including without limitation the construction of uncompleted locations
and the acquisition and installation of furniture, fixtures and equipment at
such locations.
5.8. Maintenance of Property. Borrower and de Mexico shall each (i)
maintain, keep and preserve all of its properties in good repair, working order
and condition and from time to time make all necessary and proper repairs,
renewals, replacement and improvements thereto, and (ii) maintain, preserve and
protect all franchises, licenses, copyrights, patents and trademarks material to
its Business, so that the Business carried on in connection therewith may be
properly and advantageously conducted at all times.
5.9. Conduct of Business. Borrower and de Mexico shall each (i) engage
in the movie business as its principal business, (ii) preserve, renew and keep
in full force and effect all of its material contracts, except where it is in
Borrower's or de Mexico's best interest to terminate any such contract, and
(iii) comply in all material respects with the terms of all instruments which
evidence, secure or govern indebtedness of Borrower or de Mexico and all
Governmental Requirements.
5.10. Authorizations. Borrower and de Mexico shall each obtain, make
and keep in full force and effect all authorizations from and registrations with
Governmental Authorities that may be required for the validity and
enforceability of this Agreement, the Senior Note, and the documents and
instruments executed in connection therewith against Borrower.
5.11. Notification of Events of Default and Adverse Developments.
Borrower shall promptly notify Lender of the occurrence of (i) any Incipient
Event of Default or Event of Default hereunder; (ii) any event, development or
circumstance whereby any financial statements most recently furnished to Lender
fail in any material respect to present fairly, in accordance with GAAP, the
financial condition and operating results of Borrower and de Mexico as of the
date of such financial statements; (iii) any material litigation or proceedings
that are instituted or threatened (to the knowledge of Borrower) against
Borrower or de Mexico, or any of its respective assets; (iv) each and every
event which would be an Event of Default (or an event which with the giving of
notice or lapse of time or both would be an Event of Default) under any
Indebtedness of Borrower, such notice to include the names and addresses of the
holders of such
13
indebtedness and the amount thereof; and (v) any other development in the
business or affairs of Borrower or de Mexico if the effect thereof involves a
significant risk of a Material Adverse Effect, in each case describing the
nature thereof and the action Borrower proposes to take with respect thereto.
5.12. Further Assurances. Borrower shall execute, acknowledge and
deliver any and all such further assurances and other deeds, agreements or
instruments, and take or cause to be taken all such other action, as shall be
requested by Lender from time to time in order to give full effect to this
Agreement and the Senior Note and to maintain, preserve, safeguard and continue
at all times all or any of the rights, remedies, powers and privileges of Lender
under this Agreement and the Senior Note as well as any de Mexico Note and any
de Mexico collateral securing such Senior Note, all without any cost or expense
to Lender.
5.13. Borrower Security Agreement. Borrower will not create, permit or
suffer to exist, and will defend the Collateral against and take such other
action as is necessary to remove, any Lien on the Collateral and will defend the
right, title and interest of Lender in and to any of Borrower's rights under the
Collateral against the claims and demands of all Persons whomsoever.
5.14. Further Identification of Collateral. Borrower will if so
requested by Lender furnish to Lender, as often as Lender reasonably requests,
statements and schedules further identifying and describing the Collateral as
Lender may reasonably request, all in reasonable detail.
5.15. Limitation on Consolidated Debt. After December 4, 1995, the
Borrower may incur debt, if at the date of and after giving effect the
incurrence of such debt is equal to or greater than:
Period Coverage Ratio
------ --------------
December 4, 1995 to March 30, 1998 2.25 to 1.0
March 31, 1998 to March 30, 1989 2.75 to 1.0
After March 30, 1999 3.25 to 1.0
5.16. Maintenance of Interest. "At the end of any two consecutive
fiscal quarters during each of the periods specified in the table below, the
Cash Flow Coverage of the Company for such two fiscal quarters then ending shall
equal or exceed the ration set opposite that period:
Period Coverage Ratio
------ --------------
September 30, 1997 to March 30, 1999 2.0 to 1.0
After March 30, 1999 2.5 to 1.0
14
ARTICLE 6
NEGATIVE COVENANTS
Borrower covenants and agrees that, unless the Lender otherwise agrees
in writing, as long as any of the Loans remain outstanding, Borrower and de
Mexico each will not:
6.1. Indebtedness. Create, incur, assume or suffer to exist any
liability for Indebtedness except for (i) Indebtedness under this Agreement or
the Senior Note or the de Mexico Note; (ii) Indebtedness constituting account or
trade payables incurred in the ordinary course of business; (iii) Indebtedness
outstanding as of the date hereof, provided, however that the terms of any such
Indebtedness may not be amended or modified following the date hereof; (iv)
Indebtedness not to exceed $100,000 in the aggregate at any time secured by
purchase money liens; and (v) any indebtedness incurred to repay the Loans in
full.
6.2. Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property or assets (including, without limitation, the Collateral),
whether now owned or hereafter acquired except for (i) Liens for taxes,
assessments or similar charges incurred in the ordinary course of business and
not delinquent or being contested in accordance with Section 5.5, (ii)
mechanics', carriers', workmen's, repairmen's or other like statutory liens
incurred by Borrower in the ordinary course of business, provided that the
obligations secured thereby are not past due, (iii) Liens granted to Lender
pursuant to this Agreement; and (iv) liens for purchase money obligations not to
exceed $100,000.
6.3. Merger or Acquisition. Consolidate or merge into or with any
Person or acquire all or substantially all of the stock, property or assets of
any Person.
6.4. Disposition of Assets. Neither the Borrower nor a subsidiary of
Borrower shall make an Asset Disposition unless at least 95% of the aggregate
sales price from such Asset Disposition shall be paid in cash and the net
proceeds from such Asset Disposition shall be used to prepay the indebtedness
under the Senior Note. For purposes of this Section 6.4 "Asset Disposition"
means any sale, conveyance, transfer or disposition of any capital stock of the
Borrower or any Subsidiary of the Borrower, or any property or other assets by
the Borrower or any Subsidiary of the Borrower whether for cash or other
consideration, other than (i) a disposition by a Subsidiary to the Borrower or
another Subsidiary; (ii) a disposition by the Borrower to a Subsidiary, (iii)
transactions in which theatre properties shall be transferred in exchange for
one or more other theatre properties.
6.5. Manager. Neither Borrower nor de Mexico shall change the manager
operating the theaters owned by de Mexico under the existing management
agreement.
6.6. Permitted Investments. The Company shall not, and shall not permit
any Subsidiary to, make any Investment other than a Permitted Investment.
15
ARTICLE 7
EVENTS OF DEFAULT
7.1. Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
(a) Borrower or de Mexico shall fail to pay when due any
payment of principal, or shall fail to pay interest within five days after such
interest is due, or shall fail to pay any other sum payable hereunder under the
Senior Note or the de Mexico Note;
(b) Borrower shall fail to comply with any agreement contained
in Articles 5 or 6;
(c) Borrower shall default in the performance of any of its
material agreements under any provision of this Agreement;
(d) Any warranty or representation made by Borrower shall be
untrue in any material respect, in any case on any date as of which the facts
set forth are stated or certified;
(e) Borrower shall institute a voluntary case seeking
liquidation or reorganization under Chapter 7 or Chapter 11, respectively, of
the United States Bankruptcy Code, or shall consent to the institution of an
involuntary case thereunder against it; or Borrower shall file a petition
initiating or shall otherwise institute any similar proceeding under any other
applicable federal or state law, or shall consent thereto; or Borrower shall
apply for, or by consent or acquiescence there shall be an appointment of a
receiver, liquidator, sequestrator, trustee or other officer with similar
powers; or Borrower shall make an assignment for the benefit of creditors; or
Borrower shall admit in writing its inability to pay its debts generally as they
become due; or, if an involuntary case shall be commenced seeking the
liquidation or reorganization of Borrower under Chapter 7 or Chapter 11,
respectively, of the United States Bankruptcy Code, or any similar proceeding
shall be commenced against Borrower under any other applicable federal or state
law, and (i) the petition commencing the involuntary case is not timely
controverted; or (ii) the petition commencing the involuntary case is not
dismissed within 30 days of its filing; or (iii) an interim trustee is appointed
to take possession of all or a portion of the property, to operate all or any
part of the business of Borrower, or both; or (iv) an order for relief shall
have been issued or entered therein; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee or other officer;
(f) de Mexico shall file or suffer to be filed a bankruptcy,
suspension of payments proceeding, a receivership or interventer proceeding
under Mexican law;
(g) Any obligation (other than the Loans) of Borrower or de
Mexico for the payment of indebtedness becomes or is declared to be due and
payable prior to the expressed maturity thereof; or
(h) One or more judgments against Borrower or de Mexico or
attachments against its property or the property of de Mexico, which in the
aggregate exceed $100,000, the operation or result of which could be to
interfere materially and adversely with the conduct of the
16
business of Borrower or de Mexico, remain unpaid, unstayed on appeal,
undischarged, unbonded and undismissed for a period of 30 days.
(i) Lender does not have or ceases to have a valid and
perfected first priority security interest in the Collateral.
(j) Upon the occurrence of a Change of Control. For purposes
of this Section 7.10(i) "Change of Control" shall mean (i) the acquisition,
including through merger, consolidate or otherwise, by any Person or any Persons
acting together which would constitute a "group" (a "Group") for purposes of
Section 13(d) of the Exchange Act, together with all affiliates and associates
(as defined in Rule 12b-2 under the Exchange Act) thereof, of direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of more
than 50% of (A) the outstanding shares of Common Stock of the Borrower or (B)
the total voting power of all classes of Capital Stock of the Borrower entitled
to vote generally in the election of directors or (ii) the election by any
person or Group, together with all affiliated and associates thereof, of a
sufficient number of its of their nominees to the Board of Directors of the
Borrower such that such nominees, when added to any existing directors remaining
on such Board of Directors after such election who are affiliates of associates
of such Person or Group, shall constitute a majority of such Board of Directors;
provided, however, that, for purposes of this definition, the terms "person" and
"Group" shall be deemed not to include (i) Cinemark USA, Inc. and its
Subsidiaries, (ii) Xxx Xxx Xxxxxxxx or Xxxxx Xxxxxxxx, or any descendant of Xxx
Xxx Xxxxxxxx or the spouse of any such descendant, the estate of Xxx Xxx
Xxxxxxxx or the spouse of any such descendant or any trust or other arrangement
for the benefit of Xxx Xxx Xxxxxxxx, Xxxxx Xxxxxxxx, any descendant
(collectively the "Xxxxxxxx Family"), (iii) The Pebble Corp., The Pebble Group,
Ltd., Xxxx X. Xxxxxxxxx, his spouse or any descendant, the estate of Xxxx X.
Xxxxxxxxx, his spouse, any descendant of Xxxx X. Xxxxxxxxx or the spouse of any
such descendant or any trust or similar arrangement for the benefit of Xxxx X.
Xxxxxxxxx, his spouse, any descendant of Xxxx X. Xxxxxxxxx, his spouse, any
descendant of Xxxx X. Xxxxxxxxx or the spouse of any such descendant
(collectively, the "Xxxxxxxxx Family"), or (iv) any group which includes any
member or members of the Xxxxxxxx Family and/or Xxxxxxxxx Family if a majority
of the Capital Stock of the Borrower held by such group is beneficially owned
(including the power to vote such Capital Stock of the Borrower) by such members
or by one or more affiliates at least 80% of the equity interests of which are
owned by such member or members.
(k) Borrower or de Mexico is in default under the Indenture.
7.2. Termination of Obligations and Acceleration. If any Event of
Default described in Section 7.1 (e) or (f) shall occur, all Loans shall become
immediately due and payable, all without notice of any kind, and Lender shall
have no obligation to make further Loans hereunder. If any Event of Default
described in Section 7.1 (other than an Event of Default described in Section
7.1 (e) or (f)) shall occur and not be cured within ten days after notice and in
the case of 7.1(h), within two (2) days after notice, Lender may declare all
Loans to be due and payable, whereupon all Loans shall immediately become due
and payable, and Lender shall have no obligation to make further Loans
hereunder. Any such declaration made pursuant to this Section 7.2 may be
rescinded by Lender.
17
7.3. Other Remedies. If any Event of Default shall have occurred and be
continuing, Lender may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Collateral) and also may: (a) require
Borrower to, and Borrower hereby agrees that it will, at its expense and upon
request of Lender forthwith, assemble all or part of the Collateral as directed
by Lender and make it available to Lender at a place to be designated by Lender
which is reasonably convenient to both parties; (b) with five (5) days written
notice, enter upon any premises of Borrower and take possession of the
Collateral; and (c) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Lender's offices or elsewhere, at such time or times, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as Lender may deem commercially reasonable. Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten days' notice to
Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification; provided
however, Lender shall not change manager operating the theaters owned by de
Mexico under the existing management agreement. At any sale of the Collateral,
if permitted by law, Lender may bid (which bid may be, in whole or in part, in
the form of cancellation of indebtedness) for the purchase of the Collateral of
any portion thereof for the account of Lender (on behalf of Lender). Lender
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Lender may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. To the extent permitted by law, Borrower hereby specifically waives
all rights of redemption, stay or appraisal which it has or may have under any
law now existing or hereafter enacted.
If an Event of Default has occurred and is continuing, Borrower hereby
irrevocably authorizes and empowers Lender to assert, either directly or on
behalf of Borrower, any claims Borrower may have, from time to time, against any
other party to the Collateral or to otherwise exercise any right or remedy of
Borrower under the Collateral (including, without limitation, the right to
enforce directly against any party all of Borrower's rights thereunder, to make
all demands and give all notices and to make all requests required or permitted
to be made by Borrower under the Collateral.)
Beyond the safe custody thereof, Lender shall have no duty with respect
to any Collateral in its possession or control (or in the possession or control
of any agent or bailee) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto. Lender shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property. Lender shall not be liable or responsible for any loss or damage to
any of the Collateral, or for any diminution in the value thereof, by reason of
the act or omission of any warehouseman, carrier, forwarding agency, consignee
or other agent or bailee selected by Lender in good faith.
7.4. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied: first, to
all fees, costs and expenses incurred by Lender with respect
18
to the Loan Agreement; second, to all fees due and owing to Lender; third, to
accrued and unpaid interest on the Obligations; fourth, to the principal amounts
of the Obligations outstanding; fifth, to any other indebtedness or obligations
of Borrower owing to Lender.
ARTICLE 8
SECURITY INTEREST
8.1. Grant of Security Interest. Borrower hereby grants to Lender a
continuing security interest in and to all right, title and interest of Borrower
in the Collateral, whether now owned or existing or hereafter acquired or
arising regardless of where located, to secure payment and performance of the
Obligations. Anything herein to the contrary notwithstanding: (a) Borrower shall
remain liable under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed; (b)
the exercise by Lender of any of the rights hereunder shall not release Borrower
from any of its duties or obligations under the contracts and agreements
included in the Collateral; and (c) Lender shall not have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Lender be obligated to perform any of the
obligations or duties of Borrower thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder. The security interest granted
hereby secures the payment and performance of the obligations, liabilities and
indebtedness of every nature of Borrower to Lender now or hereafter existing
under this Agreement, and all renewals, extensions, restructurings and
refinancing of any of the above, including, without limitation, the principal
amount of all debts, claims and indebtedness, accrued and unpaid interest
(including, without limitation, interest which but for the filing of a petition
in bankruptcy, would accrue on such obligations) and all fees, costs and
expenses now or from time to time owing, due or payable.
8.2. Affirmative Covenants of Borrower. Borrower shall: (a) do all acts
that may be necessary to maintain, preserve and protect the Collateral; (b) pay
promptly when due all taxes, assessments, charges, encumbrances and liens now or
hereafter imposed upon or affecting the Collateral; (c) procure, execute and
deliver from time to time any endorsements, assignments, financing statements
and other writing necessary or appropriate to perfect, maintain and protect
Lender's security interest hereunder and the priority thereof and to deliver
promptly to Lender all records of (1) Collateral or (2) insurance proceeds; (d)
appear in and defend any action or proceeding which may affect its title to or
Lender's interest in the Collateral; (e) if Lender gives value to enable
Borrower to acquire rights in or the use of any Collateral, use such value for
such purpose; (f) keep separate, accurate and complete records of the Collateral
and provide Lender with such books, records and such other reports and
information relating to the Collateral as Lender may reasonably request from
time to time; (g) when an Event of Default under this Agreement has occurred and
after demand, account fully for and immediately deliver to Lender in the form
received, all Collateral and all proceeds, endorsed to Lender as appropriate,
and unless so delivered all Collateral and all such proceeds shall be held by
Borrower in trust for Lender, separate from all other property of Borrower and
identified as the property of Lender; (h) keep the Collateral in good condition
and repair; (i) at any reasonable time, upon demand by Lender, exhibit to and
allow inspection by Lender (or persons designated by Lender) of the Collateral;
(j) give thirty (30) days prior written notice of any change in Borrower's chief
place
19
of business or trade name(s) or style(s) set forth therein; (k) comply with all
laws, regulation and ordinances relating to the possession, operation,
maintenance and control of the Collateral; (1) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Lender may request, in order to
perfect and preserve the security interest granted or purported to be granted
hereby under the laws of any applicable jurisdiction, and (m) upon Lender's
request, appear in and defend any action or proceeding that may affect
Borrower's title to or Lender's security interest in the Collateral.
8.3. Negative Covenants of Borrower. Borrower shall not, without the
prior written consent of Lender: (a) Use or permit the Collateral to be used
unlawfully or in violation of any provision of this Agreement, or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral; (b) Execute a financing statement covering the Collateral except in
favor of Lender; (c) Encumber, lease, rent, sell or dispose in bulk, the
Collateral or any interest therein; (d) Cause any waste or unusual or
unreasonable depreciation of the Collateral; or (e) After default under this
Agreement and upon demand, modify, waive or release any provisions of any
Account, Contract Right, item of Chattel Paper, Instrument or other right to the
payment of money constituting Collateral.
8.4. Perfection. Borrower represents and warrants this Agreement
creates a valid, perfected and first priority security interest in the
Collateral, securing the payment of the Obligations, and all filings and other
actions necessary or desirable to perfect and protect such interest have been
duly taken.
8.5. Expenses. Lender may incur expenses in connection with preparation
of this Agreement and all documents contemplated hereby, the retaking, holding
or preparing for sale of the Collateral including, with limitation, reasonable
attorneys' fees, appraisal fees, auction fees and advertising costs, and in
connection with protecting or enforcing its rights under this Agreement
including, but not limited to, reasonable attorneys' fees, which expenses
Borrower shall pay and are Obligations secured hereby.
8.6. Waivers. Borrower waives any right to require Lender to proceed
against any Person or to exhaust any Collateral or to pursue any remedy
available to Lender. Borrower waives any defenses it may have arising from
Lender's failure to perfect or maintain a perfected security interest in the
Collateral.
8.7. Termination of Security Interests; Release of Collateral. Upon
payment in full of all Obligations, the security interest created hereby shall
terminate. Upon such termination of the security interest or release of any
Collateral, Lender will, at the expense of Borrower, execute and deliver to
Borrower such documents as Borrower shall reasonably request to evidence the
termination of the security interest or the release of such Collateral which has
not yet theretofore been sold or otherwise applied or released. Such release
shall be without warranty or recourse to Lender, except as to the absence of any
prior assignments by Lender on behalf of its interest in the Collateral, as the
case may be.
8.8. Cumulative Rights. All rights and remedies of Lender under this
Agreement are in addition to all rights and remedies given to Lender contained
in any other agreement,
20
instrument or document or available to Lender at law or in equity. All such
rights and remedies are cumulative and not exclusive and may be exercised
successively or concurrently. No exercise of any right or remedy shall be deemed
an election of remedies and preclude exercise of any other right or remedy.
ARTICLE 9
MISCELLANEOUS
9.1. Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon, and the benefits thereof shall inure to, the parties
hereto and their respective permitted successors and assigns. Neither this
Agreement nor any rights or obligations hereunder may be assigned by Borrower
without the prior written consent of Lender.
9.2. Sale of Interests. Lender is expressly permitted to sell, assign,
transfer, negotiate or grant participation in all or any part of or any interest
in, its rights and obligations under this Agreement. Except with respect to a
transfer to an affiliate of Lender, notice of any such sale, assignment,
transfer, negotiation or grant by Lender shall be given to Borrower within a
reasonable time period after such event. Upon surrender of this Senior Note at
the office of the Borrower, the Borrower shall execute and deliver one or more
replacement Notes in the name of the transferee(s).
9.3. Lost Promissory Note. Upon receipt of evidence reasonably
satisfactory to Borrower of the ownership of and the loss, theft, destruction or
mutilation of the Senior Note and indemnification reasonably satisfactory to
Borrower or, in the case of any mutilation, upon the surrender of such Senior
Note for cancellation to Borrower at its principal office, Borrower at its
expense (except as provided below) will execute and deliver to Lender, in lieu
thereof a new Senior Note of like tenor, dated so that there will be no loss of
interest on such lost, stolen, destroyed or mutilated Senior Note. Borrower may
require payment by Lender of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such replacement. Any Senior Note
in lieu of which any such new Senior Note has been so executed and delivered by
Borrower shall not be deemed to be an outstanding Senior Note for any purpose of
this Agreement.
9.4. No Implied Waiver. No delay or omission to exercise any right,
power or remedy accruing to Lender upon any breach or default of Borrower under
this Agreement shall impair any such right, power or remedy of Lender, nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default occurring thereafter, nor
shall any waiver of any single breach or default be deemed a wavier of any other
breach or default occurring theretofore or thereafter.
9.5. Amendments; Waivers. No amendments, modification or waiver of or
consent with respect to, any provision of this Agreement, shall be effective
unless the same shall be in writing and signed and delivered by Lender and
Borrower. Any amendment, modification, waiver or consent hereunder shall be
effective only in the specific instance and for the specific purpose for which
given.
21
9.6. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall be, only as to such jurisdiction,
ineffective to the extent of such prohibition or unenforceability, but all the
remaining provisions of this Agreement shall remain valid.
9.7. Notices. Any notice which Lender or Borrower may be required or
may desire to give to the other party under any provision of this Agreement
shall be in writing by overnight delivery service, certified mail, telex or
electronic facsimile transmission and shall be deemed to have been given or made
when received and addressed as follows:
To Lender:
Cinemark II, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxx
With a copy similarly addressed to:
Cinemark USA, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxxx
If to Borrower, at:
Cinemark Mexico (USA), Inc.
0000 Xxxxxxxxxx Xxxxxx Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Any party may change the address to which all notices, requests and other
communications are to be sent to it by giving written notice of such address
change to the other parties in conformity with this paragraph, but such change
shall not be effective until notice of such change has been received by the
other parties.
9.8. Interpretation. This Agreement, together with the Exhibits to this
Agreement, is intended by Lender and Borrower as a final expression of their
agreement with respect to the subject matter hereof and is intended as a
complete statement of the terms and conditions of such agreement.
9.9. No Right of Set Off. Borrower will not be entitled to offset
against any of its financial obligation to Lender under this Agreement, any
obligation owed to it or any of its Affiliates by or for Lender or any
Affiliates of Lender.
22
9.10. Attorneys' Fees and Other Expenses. Borrower further agrees to
pay or reimburse Lender for all costs and expenses, including, without
limitation, reasonable attorneys' fees (including costs of settlement) incurred
by Lender after the occurrence of an Event of Default (i) in enforcing the Loans
or in foreclosing against the Collateral or exercising or enforcing any other
right or remedy available by reason of such Event of Default; (ii) in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or in any insolvency or bankruptcy
proceeding; (iii) in commencing, defending or intervening in any litigation or
in filing a petition, complaint, answer, motion or other pleadings in any legal
proceeding relating to Borrower and related to or arising out of the
transactions contemplated hereby; (iv) in taking any other action in or with
respect to any suit or proceeding arising out of this Agreement (bankruptcy or
otherwise); (v) in protecting, preserving, collecting, leasing, selling, taking
possession of or liquidation of any of the Collateral; or (vi) attempting to
enforce or enforcing any security interest in any of the Collateral or any other
rights relating to the Obligations.
9.11. Governing Law. THE VALIDITY, CONSTRUCTION AND EFFECT OF THIS
AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS. AT THE OPTION OF LENDER, AN ACTION MAY BE
BROUGHT TO ENFORCE THE OBLIGATIONS AND THIS AGREEMENT IN ANY COURT LOCATED IN
THE STATE OF
TEXAS, U.S.A. OR IN ANY OTHER COURT IN WHICH VENUE AND JURISDICTION
ARE PROPER.
9.12. WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. BORROWER AND LENDER ALSO WAIVE ANY BOND OR SURETY
OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
LENDERS. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Borrower and Lender each acknowledge that this waiver is a material inducement
to enter into a business relationship, that each has already relied on the
waiver in entering into this Agreement and that each will continue to rely on
the waiver in their related future dealings. Borrower and Lenders further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives it jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS AGREEMENT,
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
9.13. Indemnification. Borrower will indemnify and hold Lender and its
officers, directors, employees, Affiliates, attorneys and agents (collectively,
the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
without limitation, the reasonable fees and disbursements of counsel) which may
be
23
imposed on, incurred by or asserted against such Indemnitees in any manner
relating to or arising out of this Agreement or the making of the Loans
(collectively, the "Indemnified Matters"); provided, however, that Borrower will
have no obligation to an Indemnitee under this Section 9.13 with respect to
Indemnified Matters to the extent such Indemnified Matters were caused by or
resulted from the gross negligence or willful misconduct of an Indemnitee.
Borrower further agrees to pay or reimburse Lender for all costs and expenses,
including, without limitation, attorneys' fees (including costs of settlement)
incurred by Lender after the occurrence of an Event of Default (i) in enforcing
the Loans or in foreclosing against the Collateral or exercising or enforcing
any other right or remedy available by reason of such Event of Default; (ii) in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or in any insolvency
or bankruptcy proceeding; (iii) in commencing, defending or intervening in any
litigation or in filing a petition, complaint, answer, motion or other pleadings
in any legal proceeding relating to Borrower and related to or arising out of
the transactions contemplated hereby; (iv) in taking any other action in or with
respect to any suit or proceeding arising out of this Agreement (bankruptcy or
otherwise); (v) in protecting, preserving, collecting, leasing, selling, taking
possession of, or liquidation of any of the Collateral; or (vi) attempting to
enforce or enforcing any security interest in any of the Collateral or any other
rights relating to the Obligations.
9.14. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
9.15. Headings and Sections. Captions, headings and the table of
contents in this Agreement are for convenience only, and are not to be deemed
part of this Agreement. Unless otherwise specified, references in this Agreement
to Sections, Articles, Exhibits or Schedules are references to sections and
articles of and exhibits and schedules to, this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
LENDER: Cinemark II, Inc.
By: /s/ Xxxx X. Stock
----------------------------
Its: President
BORROWER: Cinemark Mexico (USA), Inc.
By: /s/ Xxxx Xxxxxxx
----------------------------
Its: Vice President
24
EXHIBIT "A"
SENIOR NOTE
U.S. $10,000,000 Dated: December 4, 1995
Principal Amount
For value received, Cinemark Mexico (USA), Inc., a
Texas corporation
(Maker), promises to pay to the order of Cinemark II, Inc., a
Texas corporation,
(Payee) at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx, 00000, the
aggregate unpaid principal sum shown on the schedule attached hereto up to
$10,000,000 U.S. dollars (U.S. TEN MILLION DOLLARS AND NO CENTS) in lawful money
of the United States of America in immediately payable funds on or before the
Maturity Date together with interest in accordance with the terms of the
Senior
Secured Credit Agreement between Payee as Lender and Maker as Borrower.
Principal amounts borrowed hereunder may be prepaid, but may not be reborrowed.
This Note is the Senior Note referred to in the
Senior Secured Credit
Agreement and is entitled to the benefits thereof and of all documents executed
in connection therewith. All capitalized terms not otherwise defined herein have
the meanings set forth in the
Senior Secured Credit Agreement. Reference is made
to the
Senior Secured Credit Agreement for provisions effecting this Senior Note
regarding applicable interest rates, principal and interest payment dates, place
of payment, final maturity, voluntary and mandatory payments and pre-payments,
acceleration of maturity, exercise of rights, payment of attorney's fees, court
costs and other costs of collection, certain waivers by Maker and security for
the payment hereof. Without limiting the immediately preceding sentence,
reference is made to Section 2.3(d) of the
Senior Secured Credit Agreement for
usury savings provisions.
Upon the occurrence and continuation of an Event of Default, the
principal hereof, any interest accrued hereon and fees incurred may be declared
to be, immediately due and payable, in
SENIOR NOTE - Page 1
the manner, upon the conditions and with the effect provided in the
Senior
Secured Credit Agreement.
This Senior Note evidences Senior Debt issued pursuant to a Credit
Agreement as that term is defined in the Indenture dated July 30, 1993 among
Cinemark Mexico (USA), Inc., Cinemark de Mexico, S.A. de C.V. as Guarantor, and
the United States Trust Company of New York as Trustee. The holder of this
Senior Note is authorized to record the date and amount of each advance
hereunder made by it and the date and amount of each payment or prepayment of
principal hereof on the schedule annexed hereto and made a part hereof or in
such holders' internal records and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded; provided,
however, that the failure of such holder to make such a notation or any error in
any such notation shall not effect the obligation of the Maker to repay all
advances hereunder in accordance with the terms hereof and of the
Senior Secured
Credit Agreement. This Senior Note and each note in its series is ratably
secured by the Collateral granted under the terms of such Senior Secured Credit
Agreement.
This Senior Note shall be construed and enforced in accordance with,
and governed by the laws of the United States of America and the State of
Texas
(without regard to principals of conflict of laws).
IN WITNESS WHEREOF Cinemark Mexico (USA), Inc. has executed this Senior
Note in Dallas, Texas effective as of the date first written above.
CINEMARK MEXICO (USA), INC.
By:
----------------------------
Its:
------------------------
SENIOR NOTE - Page 2
Lending and Payment Schedule
Amount Principal Unpaid Principal Name of Person
Date of Loan Interest Balance of Note Making Notation
---- ------- --------- ---------------- ---------------
SENIOR NOTE - Page 3
EXHIBIT "B"
FORM OF NOTICE OF BORROWING
TO: Cinemark II, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Pursuant to Section 3.2(d) of that certain Senior Secured Credit
Agreement dated as of December 4, 1995 (as from time to time amended, extended,
restated, modified or supplemented, the "Agreement;" capitalized terms used
herein shall have the meanings assigned to them in the Agreement), between
Cinemark II, Inc. (the "Lender") and Cinemark Mexico (USA), Inc. (the
"Borrower"), this represents the Company's request to borrow on
__________________ from Lender, $__________.
The undersigned officer of Borrower hereby certifies that:
(a) the representations and warranties of the Borrower
contained in the Agreement are true and correct in all material respects on and
as of the date hereof to the same extent as though made on and as of the date
hereof; and
(b) no Default, Event of Default or Incipient Default has
occurred and is continuing under the Credit Agreement or will result from the
proposed borrowing.
DATED:
---------------------------
CINEMARK MEXICO (USA), INC.
By:
-----------------------------
Title:
--------------------------
