Guaranty Agreement between Citadel Holding Corporation and Michael R. Forman (July 28, 2000)

Summary

This agreement is between Citadel Holding Corporation (the Guarantor) and Michael R. Forman (the Beneficiary). Citadel guarantees payment of all amounts owed by Citadel Cinemas, Inc. to Forman under a related purchase agreement and promissory note. If Citadel Cinemas fails to pay, Citadel Holding Corporation must pay Forman directly. The guaranty is unconditional, continuing, and remains in effect even if the underlying agreements are changed or if Citadel Cinemas becomes insolvent. The agreement ensures Forman receives payment regardless of circumstances affecting Citadel Cinemas.

EX-10.5 6 0006.txt GUARANTY, MICHAEL R. FORMAN EXHIBIT 10.5 CITADEL HOLDING CORPORATION GUARANTY GUARANTY AGREEMENT (this "Guaranty"), dated as of July 28, 2000, between CITADEL HOLDING CORPORATION, a Nevada corporation (together with its successors, the "Guarantor"), and MICHAEL R. FORMAN (a "Beneficiary"). RECITALS A. The Guarantor is the indirect owner of all of the outstanding common stock of Citadel Cinemas, Inc. (the "Company"). B. Pursuant to an Agreement of Purchase and Sale of Membership Interest, dated as of July 28, 2000 ("Purchase Agreement"), the Company is on the date hereof purchasing from the Beneficiary the Membership Interest (as defined in the Purchase Agreement) held by the Beneficiary in exchange for a note (the "Note") in the principal amount equal to the Purchase Price (as defined in the Purchase Agreement) payable to the Beneficiary and is assuming pursuant thereto certain obligations and indemnities for the benefit of the Beneficiary. C. It is a condition to the Beneficiary's obligations under the Purchase Agreement that this Guaranty shall have been executed and delivered by the Guarantor and shall be in full force and effect. NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby agrees as follows: i. Guaranty of Obligations. The Guarantor hereby unconditionally ----------------------- guarantees to the Beneficiary the due and punctual payment when due of all amounts now due or hereafter becoming due in respect of the Company's obligations arising under the Note and under the Purchase Agreement (including, without limitation, Section 7.2 thereof) (such obligations being herein called the "Obligations"), and agrees to pay any and all reasonable expenses incurred by the Beneficiary in enforcing any rights under this Guaranty. This Guaranty is a primary and original obligation of the Guarantor and is an absolute, unconditional, continuing and irrevocable guaranty of payment and not of collectibility or performance and is in no way conditioned or contingent upon any attempt to collect from the Company or to realize upon any property constituting security for the Obligations; provided, however, that, in respect of the Company's obligations arising under the Purchase Agreement and the Guarantor's obligations hereunder in respect of such obligations of the Company, the Guarantor shall be obligated hereunder to the same extent, except as otherwise specifically provided herein, as if the Guarantor were the Company under the Purchase Agreement; provided, further, however, that the immediately foregoing limitation on the Guarantor's Obligations hereunder in respect of the Company's obligations under the Purchase Agreement (except as set forth herein) shall not limit obligations of the Guarantor hereunder to the extent the limitations (including termination, disavowal, rejection or reduction) of any such obligation of the Company results from (a) any insolvency or bankruptcy case or proceeding (including any case under the U.S. Bankruptcy Code of 1978, as amended), or any receivership, liquidation, reorganization or other similar case or proceeding relative to the Company or all or substantially all of its assets, or (b) any liquidation, dissolution, reorganization or winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any assignment of all or substantially all of the assets of the Company for the benefit of creditors or any other marshalling of assets and liabilities of the Company (the events in clauses (a), (b) and (c) collectively referred to as an "Insolvency or Liquidation Proceeding"), and in such event the Guarantor shall be liable in respect of obligations of the Company pursuant to the Purchase Agreement as if no such Insolvency or Liquidation Proceeding had been initiated. If the Company shall fail to pay any of the Obligations when and as the same shall become due and payable, the Guarantor shall forthwith pay such Obligations, in immediately available funds, directly to the Beneficiary at his address specified herein or at such other place as the Beneficiary shall direct. If the Beneficiary shall be entitled to acceleration of payment of the Obligations and such acceleration is stayed, enjoined or otherwise prevented, the Guarantor, upon demand therefor, will pay to the Beneficiary the sums which would otherwise have been due to the Beneficiary in respect of the Obligations had such acceleration occurred. The Guarantor hereby waives diligence, presentment or protest. Each default in payment of any of the Obligations shall give rise to a separate cause of action hereunder and separate suits may be brought hereunder as each cause of action arises. ii. Character of Obligations Hereunder: Subrogation. (a) The right of ----------------------------------------------- the Beneficiary to enforce the obligations of the Guarantor hereunder by any proceedings, whether by action at law, suit in equity or otherwise, shall not be impaired by any right, claim or defense (against the Company or any other person, including the other Seller, as defined in the Purchase Agreement) of any character whatsoever, including without limitation any right, claim or defense of rescission, recoupment, reduction, limitation, termination, setoff, counterclaim, waiver, frustration, surrender, alteration or compromise. Without limiting the generality of the foregoing, such obligations of the Guarantor shall not be discharged, released or impaired or otherwise affected by: (i) any renewal, extension, amendment or modification of or addition or supplement to or deletion from this Guaranty or the Note; (ii) any inability or failure on the part of the Company to perform or comply with the Purchase Agreement; (iii) any waiver, consent, extension, indulgence or other action or inaction (including, without limitation, any lack of diligence) under or in respect of this Guaranty, the Note, or any obligation or liability of the Company, or any other person, or any exercise or nonexercise of any right, power or remedy under or in respect of any such agreement or any such obligation or liability; (iv) any bankruptcy, insolvency, moratorium, reorganization, arrangement, or the like, relating to the Company; and (v) any limitation or any party's obligation or liability under any such agreement or any such obligation or liability or any termination, cancellation, frustration, invalidity or enforceability, in whole or in part, of any such agreement or any such obligation or liability or any term of any thereof. Notwithstanding any provision hereof to the contrary, the Guarantor shall be entitled to exercise against its liability in respect of the Obligations hereunder any rights of offset or recoupment which the Company may be entitled to exercise in accordance with the Note (including under the New York State Debtor and Creditor Law) as if the Guarantor were the Company. (b) This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the Beneficiary upon the insolvency, bankruptcy or reorganization of the Company or otherwise, all as though such payment had not been made. (c) The Guarantor will not exercise any rights which it may acquire by way of subrogation under this Guaranty, by any payment made hereunder or otherwise, until all of the Obligations shall have been paid in full. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all the Obligations shall not have been indefeasibly paid in full, such amount shall be held in trust for the benefit of the Beneficiary and shall forthwith be paid to the Beneficiary and applied upon the Obligations, whether matured or unmatured. If (i) the Guarantor shall make payment to the Beneficiary of all or any part of the Obligations and (ii) all the Obligations shall be paid in full and the Note shall no longer be in effect, the Beneficiary will, at the Guarantor's request, execute and deliver to the Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Obligations resulting from such payment by the Guarantor. iii. Representations and Warranties of the Guarantor. The Guarantor ----------------------------------------------- represents and warrants to the Beneficiary that: (a) The Guarantor is a corporation duly organized and validly existing under the laws of Nevada and has full power, authority and legal right to carry on its business as currently conducted, to own its properties and to enter into and perform its obligations under this Guaranty; (b) The execution, delivery and performance by the Guarantor of this Guaranty have been duly authorized by all necessary corporate action and do not and will not contravene any presently existing law or any governmental rule, regulation or order applicable to the Guarantor or its properties; (c) The execution, delivery and performance by the Guarantor of this Guaranty do not require the consent or approval or authorization or order of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any governmental authority or agency, foreign or domestic, other than such as have been duly obtained, given or taken; and (d) This Guaranty has been duly executed and delivered by the Guarantor and constitutes the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms. iv. Miscellaneous. ------------- (a) No failure on the part of a Beneficiary to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any exercise of any other right or remedy. This Guaranty may not be amended or modified except by written agreement of the Guarantor and the Beneficiary. (b) All notices in connection with this Guaranty shall be in writing, shall be deemed given and shall become effective when delivered by hand or courier service or received by telex, telecopier, telegram, cable or registered or certified first-class mail, postage prepaid, addressed as follows: if to the Guarantor, at 550 South Hope Street, Suite 1825, Los Angeles, California 90071 if to the Beneficiary, addressed to: 120 North Robertson Blvd., Los Angeles, California 90048 or at such other addresses which either of the foregoing shall from time to time designate in writing. (c) If the Guarantor fails to pay any amount hereunder in respect of any of the guaranteed Obligations, a Beneficiary may (but shall not be obligated to) pay such amount. In such case, the amount paid, and the reasonable expenses of the Beneficiary incurred in connection therewith, shall be payable by the Guarantor to the Beneficiary upon demand. (d) The terms of this Guaranty shall be binding upon the Guarantor and its successors and assigns and shall inure to the benefit of, and be enforceable by, the Beneficiary and his respective successors and assigns. (e) This Guaranty shall be construed in accordance with and governed by the internal laws of the State of New York. (f) If any term of this Guaranty and any other application thereof shall be invalid or unenforceable, the remainder of this Guaranty and any other application of such terms shall not be affected thereby. (g) Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme Court of the State of New York, New York County (without prejudice to the right of any party to remove to the United States District Court for the Southern District of New York) and to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Guaranty or the subject matter hereof or any of the transactions contemplated hereby or thereby brought by either of the parties hereto or their successors or assigns, (ii) hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such Federal court, (iii) hereby waives any right it may have to trial by jury in respect of any litigation based on, arising out of, under or in connection with this Guaranty, and (iv) to the extent permitted by applicable law, hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense or otherwise, in any such suit, action or proceeding any claim that it is not subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Guaranty or the subject matter hereof may not be enforced in or by such court. A final judgment obtained in respect of any action, suit or proceeding referred to in this Section 4 shall be conclusive and may be enforced in other jurisdictions by suit or judgment or in any manner as provided by applicable law. Each of the parties hereto hereby consents to service of process by registered mail, Federal Express, DHL or similar courier at the address to which notices to it are to be given, it being agreed that service in such manner shall constitute valid service upon such party or its respective successors or assigns in connection with any such action or proceeding only; provided, however, that nothing in this Section 4 shall affect the right of any of such parties or their respective successors or assigns to serve legal process in any other manner permitted by applicable law or affect the right of any of such parties or its respective successors or assigns to bring any action or proceeding against any other one of such parties or its respective property in the courts of other jurisdictions. IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly executed as of the date first set forth herein. GUARANTOR: CITADEL HOLDING CORPORATION By: /s/ Andrzej Matyczynski --------------------------- Name: Andrzej Matyczynski Title: Chief Financial Officer BENEFICIARY: /s/ Michael R. Forman --------------------------- Michael R. Forman