Document:

exhibit10_74.htm

    PLEDGE
AND SECURITY AGREEMENT

     

    THIS
PLEDGE AND SECURITY AGREEMENT (this “Agreement”) dated as
of February 22, 2008, is made by READING CONSOLIDATED HOLDINGS, INC., a
Nevada corporation (“Pledgor”), in favor
of NATIONWIDE THEATRES CORP., a California corporation (“Pledgee”).

     

    W I T N E
S S E T H:

     

    WHEREAS,
reference is made to that certain Asset Purchase and Sale Agreement, dated as of
October 8, 2007, by and among Pacific Theatres Exhibition Corp., a California
corporation, Consolidated Amusement Theatres, Inc., a Hawaii corporation,
Michael Forman and Christopher Forman, on the one hand, and Consolidated
Amusement Theatres, Inc., a Nevada corporation (“Buyer”), and Reading
International, Inc., a Nevada corporation, on the other hand, as amended by
Amendment No. 1 thereto entered into as of February 8, 2008 and Amendment
No. 2 thereto entered into on February 14, 2008 (as so amended, the “Purchase
Agreement”);

     

    WHEREAS,
concurrent with the consummation of the transactions contemplated by the
Purchase Agreement and the execution of this Agreement, Pledgee is making a loan
to Pledgor evidenced by a promissory note in favor of Pledgee dated the date
hereof in the principal amount of $21,000,000 (the “Note”);
and

     

    WHEREAS,
Pledgee agrees to make further loans to Pledgor as provided in and to be
evidenced by the Note; and

     

    WHEREAS,
in order to secure all of Pledgor’s obligations to Pledgee under the Note,
Pledgor has agreed to pledge to Pledgee all of the issued and outstanding
capital stock (the “Pledged Shares”) of
Consolidated Amusement Holdings, Inc., a Nevada corporation (“CAH, Inc”), in
accordance with the terms of this Agreement.

     

    NOW,
THEREFORE, in consideration of the premises and the agreements herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:

     

    1.           Definition.  All
terms used in this Agreement which are defined in Article 9 of the Uniform
Commercial Code (the “Code”) as currently
in effect in the State of California and which are not otherwise defined herein
shall have the same meanings herein as set forth in the Code.  The
term “Default”
shall mean the occurrence of a “Default” under the Note or any material breach
of any of Pledgor's representations, warranties or covenants in this
Agreement.

     

    2.           Pledge and Grant of Security
Interest and Substituting and Release of Collateral.

     

    (a)           As
collateral security for all of the Obligations (as defined in Section 3 hereof),
Pledgor hereby pledges and assigns to Pledgee, and grants to Pledgee a
continuing security interest in, the following (collectively, the “Pledged
Collateral”):

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (i)           the
Pledged Shares, the certificates now or hereafter representing or evidencing the
Pledged Shares and all options and other rights, contractual or otherwise, in
respect thereof; and

     

    (ii)           all
proceeds of any and all of the foregoing, including all dividends,
distributions, redemption payments or liquidation payments with respect to the
foregoing;

     

    in each
case, as Pledgor’s interest therein may arise or appear (whether by ownership,
security interest, claim or otherwise).

     

    3.           Security for
Obligations.  The security interest created hereby in the
Pledged Collateral constitutes continuing collateral security for the following
(collectively, the “Obligations”):

     

    (a)           the
prompt payment and satisfaction by Pledgor of all of its liabilities and
obligations under the Note; and

     

    (b)           the
performance by Pledgor of all of his obligations arising under, or contemplated
by, this Agreement.

     

    4.           Delivery of the Pledged
Collateral.  All certificates currently representing the
Pledged Shares shall be delivered to Pledgee concurrently with the execution and
delivery of this Agreement, to be held by it hereunder.  All other
certificates and other instruments constituting Pledged Collateral from time to
time shall be delivered to Pledgee promptly upon the receipt thereof by or on
behalf of the Pledgor.  All such certificates and instruments shall be
held by Pledgee pursuant hereto and shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Pledgee.

     

    5.           Representations and
Warranties.  Pledgor represents and warrants to Pledgee as
follows:

     

    (a)           Pledgor
is and will be at all times the record and beneficial owner of the Pledged
Collateral, free and clear of any lien, security interest, option or other
charge or encumbrance, except for the security interest created by this
Agreement.

     

    (b)           This
Agreement creates a valid security interest in favor of Pledgee in the Pledged
Collateral, as security for the Obligations.  Such security interest
is, or in the case of Pledged Collateral in which Pledgor obtains rights after
the date hereof, will be, a perfected, first priority security
interest.

     

    (c)           Pledgor
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada. Pledgor has all requisite power to own, lease and
license its properties and assets and to carry on its business in the manner and
in the places where such properties and assets are owned, leased, licensed or
operated or such business is conducted.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (d)           Pledgor
has full right, power and authority to enter into this Agreement and to perform
its obligations hereunder. The entry into and performance of this Agreement has
been duly authorized by all necessary action on the part of Pledgor in
accordance with its governing documents and applicable law, and this Agreement
constitutes, and each other document, instrument and agreement to be entered
into by Pledgor pursuant to the terms of this Agreement will constitute, a valid
agreement binding upon and enforceable against Pledgor in accordance with its
terms (except as limited by bankruptcy or similar laws or the availability of
equitable remedies).

     

    (e)           The
execution, delivery and performance by Pledgor of this Agreement, and all other
agreements, instruments and documents referred to or contemplated herein or
therein do not require the consent, waiver, approval, license or authorization
of any Person or public authority which has not been obtained and do not and
will not contravene or violate (with or without the giving of notice or the
passage of time or both) the governing documents of Pledgor or any judgment,
injunction, order, law, rule or regulation applicable to
Pledgor.  Pledgor is not a party to, or subject to or bound by, any
judgment, injunction or decree of any court or governmental authority or any
lease, agreement, instrument or document which may restrict or interfere with
the performance by Pledgor of this Agreement, or such other leases, agreements,
instruments and documents.

     

    (f)           Each
of Pledgor and CAH, Inc. is a newly-formed entity, created for the purpose of
effectuating the transactions contemplated by this Agreement, the Note and the
Purchase Agreement. Neither Pledgor nor CAH, Inc. has conducted any business,
incurred any liabilities nor engaged in any transactions other than in
connection with (i) the organization and formation of Pledgor and CAH, Inc. and
(ii) the negotiation and execution of this Agreement, the Note and the Purchase
Agreement, the documents and instruments contemplated by the Purchase Agreement,
and the consummation of the transactions contemplated hereby and
thereby.

     

    (g)           No
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of Pledgor, threatened by
or against Pledgor or CAH, Inc. or against any of their respective properties
including, without limitation, the Pledged Collateral.

     

    (h)           Reading
International Services Company, a California corporation and wholly owned
subsidiary of RDI (as defined in the Purchase Agreement), owns, beneficially and
of record, 100% of the outstanding capital stock of Pledgor (determined on a
fully-diluted and as-converted basis).  Pledgor owns, beneficially and
of record, 100% of the outstanding capital stock of CAH, Inc. (determined on a
fully-diluted and as-converted basis).  CAH, Inc. owns, beneficially
and of record, 100% of the outstanding capital stock of Buyer (determined on a
fully-diluted and as-converted basis).  There are not outstanding any
options, warrants or rights to subscribe for or to purchase the capital stock or
any securities convertible into or exchangeable for the capital stock of any of
Pledgor, CAH, Inc. or Buyer.  All of the outstanding shares of the
capital stock of each of Pledgor, CAH, Inc. and Buyer are validly issued, fully
paid and nonassessable, and no such shares of capital stock are subject to, or
have been issued in violation of, preemptive rights.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    All
warranties and representations made herein shall survive the execution and
delivery of this Agreement and the enforcement of some or all of the rights
granted to Pledgee hereunder or pursuant to the Note.

     

    6.           Covenants.

     

    (a)           So
long as any of the Obligations shall remain outstanding, Pledgor shall, unless
Pledgee shall otherwise consent in writing:

     

    (i)           
keep adequate records concerning the Pledged Collateral and permit Pledgee and
its attorneys and other representatives at any reasonable time and from time to
time to examine and make copies of and abstracts from such records;

     

    (ii)           
at its expense, promptly deliver to Pledgee a copy of each notice or other
communication received by it in respect of the Pledged Collateral;

     

    (iii)           at
its expense, defend the Pledgor’s right, title and interest in and to the
Pledged Collateral and Pledgee’s security interest therein against the claims of
any person;

     

    (iv)           not
sell, assign (by operation of law or otherwise), exchange or otherwise dispose
of, or grant any option or warrant with respect to, any Pledged Collateral or
any interest therein;

     

    (v)           
not create or suffer to exist any lien, security interest or other charge or
encumbrance upon or with respect to any Pledged Collateral except for the
security interest created hereby;

     

    (vi)           not
make or consent to any amendment or other modification or waiver with respect to
any Pledged Collateral or enter into any agreement or permit to exist any
restriction with respect to any Pledged Collateral other than pursuant
hereto;

     

    (vii)          not
enter into any transaction which would result in a “Change of Control” of
Pledgor within the meaning of the Note;

     

    (viii)         not
cause or permit CAH, Inc. or Buyer to enter into any merger or consolidation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution);

     

    (ix)           not
cause or permit CAH, Inc. to dispose of all or any material part of its property
or business; and

     

    (x)           
not cause or permit CAH, Inc. or Buyer to issue or agree to issue, or grant any
option or warrant with respect to, any other shares of its capital stock, other
than any such issuances or grants to Pledgor which, when made, shall be
delivered to Pledgee and shall constitute Pledged Collateral
hereunder

     

    (b)           In
addition, Pledgor shall not do any of the following:

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

                    (i)           
cause or permit CAH, Inc. to engage in any business or commercial operations
other than holding the capital stock and securities and guaranteeing the
obligations of Buyer;

     

    (ii)           cause
or permit CAH, Inc. to incur any indebtedness, except that CAH, Inc. may incur
trade payables in the ordinary course of its business described in
Section 6(b)(i) and indebtedness in connection with CAH, Inc.’s guarantees
of obligations of Buyer; or

     

    (iii)           cause
or permit Buyer to make any payments or reimbursements to RDI or any of its
affiliates other than as provided in the Management Agreement attached as an
Exhibit to the Note (provided that it is understood that the obligation of the
Manager under the Management Agreement may be assigned to any affiliate of
RDI)

     

    7.           Voting Rights, Dividends,
Etc. in Respect of the Pledged Collateral.

     

    (a)           So
long as no Default shall have occurred and be continuing:

     

    (i)           Pledgor
may exercise any and all voting and other consensual rights pertaining to any
Pledged Collateral for any purpose not inconsistent with the terms of this
Agreement;

     

    (ii)           Pledgor
may receive and retain any and all dividends paid in cash with respect of the
Pledged Collateral; and

     

    (iii)           Pledgee
will execute and deliver (or cause to be executed and delivered) to Pledgor all
such proxies and other instruments as Pledgor may reasonably request for the
purpose of enabling Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to Section 7(a)(i) hereof, and to receive the
dividends which it is authorized to receive and retain pursuant to Section
7(a)(ii) of this Agreement.

     

    (b)           Upon
the occurrence and during the continuance of a Default;

     

    (i)           all
rights of Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 7(a)(i) of this
Agreement, and to receive the dividends which it would otherwise be authorized
to receive and retain pursuant to Section 7(a)(i) of this Agreement, shall
cease, and all such rights shall thereupon become vested in Pledgee, who shall
thereupon have the sole right to exercise such voting and other consensual
rights and to receive and hold as Pledged Collateral such
dividends;

     

    (ii)           without
limiting the generality of the foregoing, Pledgee may, at its option, exercise
any and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any of the Pledged Collateral as if it were
the absolute owner thereof, including, without limitation, the right to
exchange, in its discretion, any and all of the Pledged Collateral upon the
merger, consolidation, reorganization, recapitalization or other adjustment of
Pledgee, or upon the exercise by Pledgee of any right, privilege or option
pertaining to any Pledged Collateral, and, in connection therewith, to deposit
and deliver any and

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    all of
the Pledged Collateral with any committee, depository, transfer agent, registrar
or other designated agent upon such terms and conditions as it may determine;
and

     

    (iii)           all
dividends which are received by the Pledgor contrary to the provisions of
Section 7(b)(i) hereof shall be received in trust for the benefit of Pledgee,
shall be segregated from other funds of Pledgor, and shall be forthwith paid
over to Pledgee as Pledged Collateral in the exact form received with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by Pledgee as Pledged Collateral and as further collateral security for
the Obligations.

     

    8.           Additional Provisions
Concerning the Pledged Collateral.

     

    (a)           Upon
the occurrence and during the continuance of a Default, Pledgor hereby
irrevocably appoints Pledgee as Pledgor's attorney-in-fact and proxy, with full
authority in the place and stead of the Pledgor and in name of Pledgor or
otherwise, from time to time in Pledgee’s discretion, to take any action and to
execute any instrument which Pledgee may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, indorse and collect all instruments made payable to the Pledgor
representing any dividend or other distribution in respect of any Pledged
Collateral and to give full discharge for the same.

     

    (b)           If
Pledgor fails to perform any agreement or obligation contained herein, Pledgee
itself may perform, or cause performance of, such agreement or obligation, and
the expenses of Pledgee incurred in connection therewith shall be payable by
Pledgor.

     

    9.           Remedies Upon Default;
Application of Funds.

     

    (a)           Pledgee
may exercise all rights and remedies in respect of the Pledged Collateral
available to a secured party under the Code, by law or otherwise.

     

    (b)           Pledgee
may exercise any and all rights and remedies of Pledgor under or in respect of
the Pledged Collateral (including, but not limited to, any and all rights of
Pledgor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Pledged Collateral).

     

    (c)           Pledgee
may take possession of the Pledged Collateral.

     

    (d)           Pledgee
may, without notice to Pledgor, sell all or any part of the Pledged Collateral
in one or more parcels at public or private sale, at any of Pledgee’s offices,
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as Pledgee may deem commercially reasonable

     

    (e)           Any
cash held by Pledgee as Pledged Collateral and all cash proceeds received by
Pledgee in respect of any sale of, collection from, or other realization upon,
all or any part of the Pledged Collateral shall be applied as
follows:

     

    
      (i)           first,
to the payment of the reasonable costs and expenses, including reasonable
attorneys' fees and legal expenses, incurred by Pledgee in connection with

       

      
        
          
             

          

          
            6

            
              

            

          

          
             

          

        

      

    

     

    (A) the
administration of this Agreement, (B) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Pledged Collateral, (C) the exercise or enforcement of any of the rights of
Pledgee hereunder or (D) the failure of Pledgor to perform or observe any of the
provisions hereof;

     

    (ii)           second,
at the option of Pledgee, to the payment or other satisfaction of any liens and
other encumbrances upon any of the Pledged Collateral;

     

    (iii)           third,
to the payment of the Obligations;

     

    (iv)           fourth,
to the payment of any other amounts required by applicable law; and

     

    (v)           fifth,
the surplus proceeds, if any, to Pledgor or to whomsoever shall be lawfully
entitled to receive the same or as a court of competent jurisdiction shall
direct.

     

    10.           Expenses.  Subject
to Section 8(e) above, each party to this Agreement shall pay all of its own
expenses incurred in connection with this Agreement.

     

    11.           Notices,
Etc.  All notices and other communications provided for
hereunder shall be in writing and shall be given as provided in the Purchase
Agreement.

     

    12.           Miscellaneous.

     

    (a)           No
amendment of any provision of this Agreement shall be effective unless it is in
writing and signed by the parties hereto, and no waiver of any provision of this
Agreement, and no consent to any departure by Pledgor therefrom, shall be
effective unless it is in writing and signed by Pledgee, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

     

    (b)           No
failure on the part of the Pledgee to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.  The rights and remedies
of Pledgee provided herein are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law.

     

    (c)           Any
provision of this Agreement, which is prohibited or unenforceable in any
jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

     

    (d)           Upon
the satisfaction in full of the Obligations, (i) this Agreement and the security
interest created hereby shall terminate and all rights to the Pledged Collateral
shall revert to Pledgor, and (ii) the Pledgee will, upon Pledgor's request, (A)
return to Pledgor such of the Pledged Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms
hereof, and (B) execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (e)           This
Agreement shall be governed by and construed in accordance with the laws of the
State of California.

     

    (f)           Pledgor
agrees that, at any time and from time to time, at Pledgor’s expense, Pledgor
will promptly execute, deliver and file or record all further financing
statements instruments and documents, and will take all further actions, that
may be reasonably necessary or desirable, or that Pledgee may reasonably
request, in order to perfect and protect any pledge or security interest granted
hereby or to enable Pledgee to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.

     

    (g)           If
Pledgor shall fail to do any act or thing which Pledgor has covenanted to do
hereunder or any representation or warranty of Pledgor shall be breached and not
cured or remedied as provided herein, Pledgee may (but shall not be obligated
to) do the same or cause it to be done or remedy any such breach and there shall
be added to the Obligations the cost or expense incurred by Pledgee in so doing,
and any and all amounts expended by Pledgee in taking any such action shall be
repayable to it upon its demand therefor and shall bear interest at the maximum
rate permitted by applicable law from the date advanced to the date of
repayment.

     

    (h)           Any
dispute of any nature or character whatsoever between the parties and arising
under or with respect to this Agreement, or the subject matter hereof or
thereof, shall be resolved by a proceeding in accordance with the provisions of
California Code of Civil Procedure Section 638 et seq., for a determination to
be made which shall be binding upon the parties as if tried before a court or
jury.  The parties agree specifically as to the
following:

     

    (i)           Within
five (5) Business Days after service of a demand by a party hereto, the parties
shall agree upon a single referee who shall then try all issues, whether of fact
or law, and then report a finding or judgment thereon.  If the parties
are unable to agree upon a referee either party may seek to have one appointed,
pursuant to California Code of Civil Procedure Section 640, by the presiding
judge of the Los Angeles County Superior Court;

     

    (ii)           The
compensation of the referee shall be such charge as is customarily charged by
the referee for like services.  The cost of such proceedings shall
initially be borne equally by the parties.  However, the prevailing
party in such proceedings shall be entitled, in addition to all other costs, to
recover its contribution for the cost of the reference as an item of damages
and/or recoverable costs;

     

    (iii)           If
a reporter is requested by either party, then a reporter shall be present at all
proceedings, and the fees of such reporter shall be borne by the party
requesting such reporter.  Such fees shall be an item of recoverable
costs.  Only a party shall be authorized to request a
reporter;

     

    (iv)           The
referee shall apply all California Rules of Procedure and Evidence and shall
apply the substantive law of California in deciding the issues to be
heard.  Notice of any motions before the referee shall be given, and
all matters shall be set at the convenience of the referee;

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (v)           The
referee’s decision under California Code of Civil Procedure Section 644, shall
stand as the judgment of the court, subject to appellate review as provided by
the laws of the State of California; and

     

    (vi)           The
parties agree that they shall in good faith endeavor to cause any such dispute
to be decided within four (4) months.  The date of hearing for any
proceeding shall be determined by agreement of the parties and the referee, or
if the parties cannot agree, then by the referee. The referee shall have the
power to award damages and all other relief.

     

    (vii)           For
purposes of this Agreement, the term “Business Day” means
Monday through Friday, excluding any day of the year on which banks are required
or authorized to close in California.

     

    [Signature page
follows]

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date first above written.

     

    
      	 
      	
              PLEDGOR:

            
	 
      	 
      
	 
      	
              READING
      CONSOLIDATED HOLDINGS, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:            /s/ Andrzej
      Matyczynski                                                                

            
	 
      	
              Name:  Andrzej Matyczynski

            
	 
      	
              Title:  Chief Financial Officer

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              PLEDGEE:

            
	 
      	 
      
	 
      	
              NATIONWIDE
      THEATRES CORP.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:            /s/ Ira
      Levin                                                                

            
	 
      	
              Name:  Ira Levin

            
	 
      	
              Title:  Vice President

            
	 
      	 
      

    

     

    
      
         

      

      
        10exhibit10_75.htm

    

    PROMISSORY
NOTE

    

    

    $21,000,000                                                                                                    Los
Angeles, California

                                                                                                                           
February
22, 2008

    

    

    FOR VALUE RECEIVED, READING
CONSOLIDATED HOLDINGS, INC., a Nevada corporation having an office at 500
Citadel Drive, Suite 300, Commerce, California 90040 (“Maker”), promises to
pay to NATIONWIDE THEATRES CORP., a California corporation ("Holder"), or order,
at 120 N. Robertson Boulevard, Los Angeles, California 90048, or at such other
address as Holder may designate from time to time, without presenta­tion,
the principal amount of Twenty One Million Dollars
($21,000,000).  Unless payable earlier as provided below in this
Promissory Note (this “Note”), the entire
principal balance of this Note, together with interest on such principal balance
as provided herein, shall be due and payable on February 21, 2013 (the “Maturity
Date”).  Interest shall accrue on the unpaid principal balance
of this Note at interest rates per annum (calculated for the actual number of
days elapsed on the basis of a 365-day year) as follows: (1) with respect to
Eight Million Dollars ($8,000,000) of the principal amount hereof (the “$8,000,000 Portion”),
at annual rates equal to (i) 7.50%, for the period from the date hereof through
and including February 21, 2010, and (ii) 8.50%, for the period from February
22, 2010 through the Maturity Date, and (2) with respect to Thirteen Million
Dollars ($13,000,000) of the principal amount hereof (the “$13,000,000
Portion”), at annual rates equal to (i) 6.50%, for the period from the
date hereof through and including July 31, 2009, and (ii) 8.50%, for the period
from August 1, 2009 through the Maturity Date.  All accrued interest
under this Note (including all interest accrued on the borrowings made pursuant
to Section 4 below) shall be due and payable on February 21, 2011; thereafter,
accrued interest under this Note (including all interest accrued on the
borrowings made pursuant to Section 4 below) shall be due and payable, in
arrears, on the last day of each calendar quarter, commencing on June 30,
2011.  Any
reduction, adjustment or prepayment of interest or principal of this Note shall
be applied first against the $8,000,000 Portion, and next against the
$13,000,000 Portion.

    

    1.           Mandatory
Prepayments.  Notwithstanding the above, Maker shall pay to
Holder, as a mandatory prepayment hereunder, an amount equal to 50% of the
cumulative sum of any dividends or other distributions paid to Maker prior to
the Maturity Date by Consolidated Amusement Holdings, Inc., a Nevada
corporation, in excess of the sum of (i) $1,000,000 per year  (the
“Excluded
Dividends”), plus (ii) any interest paid on this Note other than pursuant
to this sentence.  Notwithstanding the foregoing, no sale or other
transfer by “Buyer” (as defined below) or any affiliate of Buyer of any interest
in the Dallas Angelika theater located at Mockingbird Center in Dallas, Texas to
Maker or any affiliate of Maker shall require Maker to make any mandatory
prepayments pursuant to this Section 1; provided, however, that from and after
the date of such transfer, the maximum annual amount of Excluded Dividends shall
be reduced from $1,000,000 to $750,000.  Maker shall afford Holder
with reasonable

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    access to
the books and records of Maker and all applicable affiliates of Maker necessary
to confirm the accuracy of the payments, if any, to which Holder is entitled
pursuant to the immediately preceding sentence. Any payments made under the
second immediately preceding sentence shall be applied first against accrued
interest and then against principal.  Maker may, in the alternative,
elect at any time to substitute for this mandatory pre-payment obligation the
guarantee of Reading International, Inc., a Nevada corporation (“RDI”), of all
of Maker’s obligations under this Note in a form reasonably acceptable to
Holder, in which case any obligation to make the mandatory pre-payments provided
for under the terms of this paragraph shall cease upon the delivery of such
guarantee.

    

    2.           Acceleration.  Notwithstanding
the foregoing, all accrued interest and the entire unpaid principal balance of
this Note shall become immediately due and payable upon written notice from
Holder to Maker in the event that either Maker, Buyer or RDI, fails to perform
in any material respect their respective indemnification obligations under (i)
the Asset Purchase and Sale Agreement dated as of October 8, 2007 by and among
Pacific Theatres Exhibition Corp., a California corporation, Consolidated
Amusement Theatres, Inc., a Hawaii corporation, Consolidated Amusement Theatres,
Inc., a Nevada corporation (“Buyer”), and the
other parties thereto (as amended from time to time, the “APSA”) or (ii) any
other document, instrument or agreement entered into among Buyer, Maker, RDI and
any affiliate of Holder in connection with or with respect to the properties
affected by the APSA, in each case within the time period required by the APSA
or such other document, instrument or agreement (or, if any such document,
instrument or agreement does not contain such a time period, within thirty (30)
days after receipt by Maker, Buyer or RDI, as applicable, of notice of the
claim, action, lawsuit, proceeding, investigation or demand giving rise to such
indemnification obligation).

    

    3.           Reductions in Principal
Amount.  The principal amount of and interest on this Note are
subject to reduction as provided in Section 2.5 of the APSA.  In
addition, the principal amount and interest on this Note are subject to
reduction as follows:

    

    (a)  The Competitive Project
Adjustment:

    

    (i)           In
the event that a Competitive Cinema Project (as defined below) first opens for
business to the public on a full-time basis on or before the fifth anniversary
of the date of this Note, then the principal amount of this Note will be reduced
by the difference between (a) $14,700,000 and (b) the Bakersfield Cinema
Purchase Price.  The “Bakersfield Cinema Purchase
Price” will be equal to the sum of (i) the Bakersfield Adjusted Cash Flow
Multiple Amount and (ii) the Bakersfield Excess Cash Flow Amount.  The
“Bakersfield Adjusted
Cash Flow Multiple Amount” means:  (1) if the positive Theater
Level Cash Flow (as defined in the APSA) generated by Bakersfield Cinema (as
defined below) during the twelve-month period beginning as of the first day of
the first calendar month after the first such Competitive Cinema Project is
first fully open for business on a full-time basis (the

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      “Bakersfield Adjusted Cash
Flow” and the “Bakersfield Measurement
Period,” respectively) is greater than $1,000,000, then the Bakersfield
Adjusted Cash Flow Multiple Amount shall equal the Bakersfield Adjusted Cash
Flow multiplied by seven; (2) if the Bakersfield Adjusted Cash Flow is
$1,000,000 or less, but greater than $500,000, then the Bakersfield Adjusted
Cash Flow Multiple Amount shall equal the Bakersfield Adjusted Cash Flow
multiplied by six; and (3) if the Bakersfield Adjusted Cash Flow is $500,000 or
less, then the Bakersfield Adjusted Cash Flow Multiple Amount shall be
zero.    The “Bakersfield Excess Cash Flow
Amount” means the difference between (x) the aggregate positive Theater
Level Cash Flow generated by the Bakersfield Cinema during the period commencing
with the Closing (as defined in the APSA) and ending on the last day of the
month in which the first such Competitive Cinema Project fully opens for
business to the public on a full-time basis (the “Pre-Opening Period”)
and (y) the Bakersfield Adjusted Cash Flow multiplied by a fraction, the
numerator of which is the number of days in the Pre-Opening Period and the
denominator of which is 365.   For purposes of this Note, the
term “Bakersfield
Cinema” means that certain cinema described on Exhibit A-1 of the
APSA as the Valley Plaza 16; and the term “Competitive Cinema
Project” means a new multiplex cinema showing predominantly first run,
mainstream films, located either (i) in the area bounded by California Avenue,
Chester Avenue, Truxtun Avenue and S Street in downtown Bakersfield, California
or (ii) at the East Hills Mall, located at 3000 Mall View Road, Bakersfield, CA
93306 (which shall include, for this purpose, any such cinema located within the
current boundaries of the East Hills Mall, any such cinema located on any
property adjacent to or contiguous with the current boundaries of the East Hills
Mall, or any such cinema included in any expansion of the East Hills
Mall).

       

    

    (ii)           Maker
will each year cause to be prepared and delivered to Holder stand alone
operating statements for the Bakersfield Cinema in substantially the form of
Exhibit A
attached hereto, prepared in accordance with generally accepted accounting
principles (“GAAP”) (but without
footnotes), and certified by RDI’s Chief Financial Officer (each, a “Bakersfield Cinema Operating
Statement”).  The first Bakersfield Cinema Operating Statement
will be for the period commencing as of the date hereof and continuing until
December 31, 2008 and shall be due not later than March 31,
2009.  Thereafter, Maker shall cause a Bakersfield Cinema Operating
Statement for each succeeding calendar year (or, with respect to the calendar
year during which the Competitive Cinema Project fully opens for business to the
public on a full-time basis, the partial calendar year ending on the last day of
the Pre

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

      Opening
Period) to be prepared and delivered to Holder within ninety (90) days following
the end of such calendar year (or partial calendar
year)   Additionally, within sixty (60) days after the end of the
Bakersfield Measurement Period, Maker will cause to be prepared and delivered to
Holder (i) a Bakersfield Cinema Operating Statement for the Bakersfield
Measurement Period, and (ii) a written statement setting forth in reasonable
detail Maker’s calculation of the Bakersfield Cinema Purchase Price, including
Maker’s calculation of the Bakersfield Adjusted Cash Flow Multiple Amount and
the Bakersfield Excess Cash Flow Amount (the “Bakersfield Adjusted Cash
Flow Statement”).

    

     

    (iii)           Maker
shall keep at Maker’s principal executive offices located in California accurate
and complete books and records that reflect the results of operations of
the Bakersfield Cinema for all periods covered by the Bakersfield Cinema
Operating Statements.  Such books and records shall be retained by
Maker for at least two (2) years after the expiration of the calendar year to
which they relate.  Holder shall have the right, once during each
calendar year and once within ninety (90) days after receipt of the Bakersfield
Adjusted Cash Flow Statement, upon not less than ten (10) days advance notice to
Maker, to audit or cause to be audited such books and records at such
offices.  Such audit will be conducted by Deloitte & Touche, or
such other firm of independent accountants as may be selected by Maker and
Holder (each acting reasonably). Costs of any such audit shall be paid by Holder
unless the audit shows that Maker has understated the positive Theater Level
Cash Flow of the Bakersfield Cinema in any Bakersfield Cinema Operating
Statement by more than three percent (3%), in which case Maker shall pay the
entire reasonable cost of said audit.  Holder shall keep any
information gained from such audit confidential other than in litigation or
arbitration between the parties.

     

    (iv)  If
Holder disputes Maker’s determination of the Bakersfield Cinema Purchase Price,
it shall deliver to Maker a statement notifying Maker of such dispute within
thirty (30) days after its receipt of the Bakersfield Adjusted Cash Flow
Statement.  If Holder notifies Maker of its acceptance of the
Bakersfield Adjusted Cash Flow Statement, or if Holder fails to deliver its
statement within the thirty (30) day period specified in the preceding sentence,
Maker’s determination of the Bakersfield Cinema Purchase Price as set forth in
the Bakersfield Adjusted Cash Flow Statement shall be conclusive and binding on
the parties as of the date of notification of such acceptance or the last day of
the thirty (30) day period.  Holder and Maker shall use good faith
efforts to resolve any dispute involving the determination of

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      the
Bakersfield Cinema Purchase Price.  If the parties are unable to
resolve the dispute within sixty (60) days after Maker delivers the Bakersfield
Adjusted Cash Flow Statement to Holder, the dispute shall be resolved by the
Designated Arbitrator or the Replacement Arbitrator (each as defined in the
APSA) pursuant to the mechanism set forth in Section 2.2.3.4 of the
APSA.

    

     

    (v)           If
Buyer temporarily closes the Bakersfield Cinema for business at any time during
the Bakersfield Measurement Period for a period of more than two days (or for a
period of more than five days in any given period of thirty days), including due
to the occurrence of a casualty or event of force majeure or for renovation, the
actual Theater Level Cash Flow applicable to the Bakersfield Cinema for purposes
of Section 3(a)(i) for the period in which the Bakersfield Cinema is closed
shall be adjusted with the intentions of normalizing the Theatre Level Cash Flow
for the Pre-Opening Period and the Bakersfield Measurement Period in order to
fairly adjust for such closure.  Any dispute in this regard shall be
resolved by arbitration as provided in Section 2.2.3.4 of the APSA.

     

    (vi)           
Notwithstanding the foregoing, there shall be no reduction in the principal
amount of this Note pursuant to this Section 3(a) if Buyer sells the Bakersfield
Cinema to a third party or permanently closes the Bakersfield Cinema for
business to the public at any time during the Pre-Opening Period or the
Bakersfield Measurement Period; provided, however, that if Buyer sells the
Bakersfield Cinema to a third party and such third party (or its successor) (the
“Bakersfield
Assignee”) continues to keep open for business the Bakersfield Cinema
during such periods, then Maker shall be entitled to reduction in the principal
amount of this Note to the extent permitted by this Section 3(a) so long as the
then current Bakersfield Assignee assumes in writing for the benefit of Holder,
and at all relevant times complies with, Maker’s reporting obligations and
obligations to allow Holder to conduct audits, each as set forth in this Section
3(a).

     

    (vii)           Set
forth below are certain examples of how the adjustment described above in this
Section 3(a) would operate with respect to the Bakersfield Cinema.

     

    Example
#1. If the Competitive Theater Project opens on the second anniversary of the
Closing Date, the Theater Level Cash Flow for the Bakersfield Cinema remains
constant at $2,100,000 per year during the entire Pre-Opening Period, and that
following the opening of the Competitive Theater Project, the Bakersfield
Adjusted Cash Flow drops to $1,100,000 for the

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

      Bakersfield
Measurement Period, the outstanding principal amount of this Note will be
reduced by $5,000,000 (i.e., $14,700,000 less the sum of (i) seven times
$1,100,000 (or $7,700,000) plus (ii) two years of the difference between
$2,100,000 and $1,100,000 (or $2,000,000)).

       

    

    Example
#2.  Same as Example #1 but the Bakersfield Adjusted Cash Flow drops to
$100,000 during the Bakersfield Measurement Period.  In this case, the
outstanding principal amount of this Note will be reduced by $10,700,000 (i.e.,
$14,700,000 less the sum of (i) zero times $100,000 (or $0.00) plus (ii) two
years of the difference between $2,100,000 and $100,000 (or
$4,000,000)).

     

    Example
#3:  Same as Example #1 but the Bakersfield Adjusted Cash Flow drops to
$700,000 during the Bakersfield Measurement Period.  In this case, the
outstanding principal amount of this Note would be reduced by $7,700,000 (i.e.,
$14,700,000 less the sum of (i) six times $700,000 (or $4,200,000) plus (ii) two
years of the difference between $2,100,000 and $700,000 (or
$2,800,000).

     

    (viii)                      For
illustrative purposes, the parties acknowledge and agree that the Theater Level
Cash Flow of the Bakersfield Cinema for the 12 month period ended June 28, 2007
was $2,001,477.

    

    (b)           The Kapolei
Adjustment:

    

    (i)           In
the event that Buyer (or its successors or assigns) has within 30 months of the
Closing Date either expended at least $3,000,000, or entered into binding
contracts providing for the expenditure of at least $3,000,000 (provided that if
$3,000,000 is not expended within the first 30 months, contracts are in place
providing for the expenditure of funds which, when added to the funds previously
expended, aggregate to at least $3,000,000 and an aggregate of at least
$3,000,000 is expended within 33 months of the date hereof), in the improvement
or refurbishment (including without limitation demolition and waste removal
costs in connection with such improvement or refurbishment) of the property
subject to the Kapolei 16 Lease (as defined in Exhibit A-1 to the
APSA) (the “Kapolei Property”),
then the principal amount of this Note will be reduced by the amount of
$5,700,000.  Maker agrees to cause Buyer to keep an maintain for at
least four years following the date hereof copies of underlying invoices and
records supporting such expenditures, and to allow Holder (and

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      Holder’s
representatives) reasonable access to such underlying invoices and records for
audit purposes.

       

    

    (ii)           In
the event that Buyer (or its successors or assigns) does not expend the amounts
specified above within the time frames set forth above, then and in the event
that a first run multiplex cinema first opens for business to the public at the
“McNaughton Project” (also called the “Kapolei Commons” project) (the “Competitive Kapolei
Cinema”), which project is to be located on Kalaeloa Boulevard, between
the H1 Freeway and Kapolei Parkway, in Oahu, Hawaii, on or before the fifth
anniversary of the date hereof, the principal amount of this Note will be
reduced by the difference between (a) $5,700,000 and (b) the Kapolei Cinema
Purchase Price.  The “Kapolei Cinema Purchase
Price” will be equal to the positive Theater Level Cash Flow generated by
Kapolei Cinema (as defined below) during the twelve-month period beginning as of
the first day of the first calendar month after the Competitive Kapolei Cinema
fully opens for business to the public on a full-time basis (the “Kapolei Adjusted Cash
Flow” and the “Kapolei Measurement
Period,” respectively) multiplied by five; provided that if the Kapolei
Adjusted Cash Flow is zero or less, then the reduction shall be
$5,700,000.  For purposes of this Note, the term “Kapolei Cinema” means
the cinema improvements comprising a portion of the improvements subject to the
Kapolei 16 Lease.

     

    (iii)           If
Buyer temporarily closes the Kapolei Cinema for business at any time during the
Kapolei Measurement Period for a period of more than two days (or for a period
of more than five days in any given period of thirty days), including due to the
occurrence of a casualty or an event of force majeure, or for renovation, the
actual Theater Level Cash Flow applicable to the Kapolei Cinema for purposes of
clause 3(b)(ii) for the period in which the Kapolei Cinema is closed shall be
adjusted with the intentions of normalizing the Theatre Level Cash Flow for the
Kapolei Measurement Period in order to fairly adjust for such
closure.  Any dispute in this regard shall be resolved by arbitration
as provided in Section  2.2.3.4  of the APSA.

     

    (iv)           If
the provisions of clause 3(b)(ii) rather than the provisions of clause 3(b)(i)
are then applicable (in other words, if Maker has not expended or committed to
expend and then expended the $3,000,000 amount referenced in clause 3(b)(i) as
provided in clause 3(b)(i)), and if Buyer sells the Kapolei Cinema to a third
party or permanently closes the Kapolei Cinema for business to the public at any
time during the Kapolei Measurement Period, then the principal amount of this
Note shall not be reduced

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      pursuant
to this Section 3(b); provided, however, that if Buyer sells the Kapolei Cinema
to a third party and such third party (or its successor) (the “Kapolei Assignee”) continues
to keep open for business the Kapolei Cinema during such periods, then Maker
shall be entitled to reduction in the principal amount of this Note to the
extent permitted by this Section 3(b) so long as the then current Kapolei
Assignee assumes in writing for the benefit of Holder, and at all relevant times
complies with, Maker’s reporting obligations and obligations to allow Holder to
conduct audits, each as set forth in this Section 3(b).

    

     

    (v)           Maker
will cause to be prepared and delivered to Holder stand alone operating
statements for the Kapolei Cinema in substantially the form of Exhibit A attached
hereto, prepared in accordance with GAAP (but without footnotes), and certified
by RDI’s Chief Financial Officer for the period of the Kapolei Measurement
Period, such statements to be delivered within sixty (60) days after the end of
the Kapolei Measurement Period together with a written statement setting forth
in reasonable detail Maker’s calculation of the Kapolei Cinema Purchase Price
(the “Kapolei Adjusted
Cash Flow Statement”).

     

    (vi)           Maker
shall keep at Maker’s principal executive offices located in California accurate
and complete books and records that reflect the results of operations of
the Kapolei Cinema for all periods covered by the Kapolei Cinema Adjusted Cash
Flow Statement.  Such books and records shall be retained by Maker for
at least two (2) years after the expiration of the calendar year to which they
relate.  Holder shall have the right within ninety (90) days after
receipt of the Kapolei Adjusted Cash Flow Statement, upon not less than ten (10)
days advance notice to Maker, to audit or cause to be audited such books and
records at such offices.  Such audit will be conducted by Deloitte
& Touche, or such other firm of independent accountants as may be selected
by Maker and Holder (each acting reasonably). Costs of any such audit shall be
paid by Holder unless the audit shows that Maker has understated the positive
Theater Level Cash Flow of the Kapolei Cinema by more than three percent (3%),
in which case Maker shall pay the entire reasonable cost of said
audit.  Holder shall keep any information gained from such audit
confidential other than in litigation or arbitration between the
parties.

     

    (vii)           If
Holder disputes Maker’s determination of the Kapolei Cinema Purchase Price, it
shall deliver to Maker a statement notifying Maker of such dispute within thirty
(30) days after its receipt of the Kapolei Adjusted Cash Flow
Statement.  If Holder notifies Maker of its acceptance of the Kapolei
Adjusted

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      Cash Flow
Statement, or if Holder fails to deliver its statement within the thirty (30)
day period specified in the preceding sentence, Maker’s determination of the
Kapolei Cinema Purchase Price as set forth in the Kapolei Adjusted Cash Flow
Statement shall be conclusive and binding on the parties as of the date of
notification of such acceptance or the last day of the thirty (30) day
period.  Holder and Maker shall use good faith efforts to resolve any
dispute involving the determination of the Kapolei Cinema Purchase
Price.  If the parties are unable to resolve the dispute within sixty
(60) days after Maker delivers the Kapolei Adjusted Cash Flow Statement to
Holder, the dispute shall be resolved by the Designated Arbitrator or the
Replacement Arbitrator pursuant to the mechanism set forth in Section 2.2.3.4 of
the APSA.

       

    

    (viii)                      For
illustrative purposes, the parties acknowledge and agree that the Theater Level
Cash Flow of the Kapolei Cinema for the 12 month period ended June 28, 2007 was
$1,139,390.

    

    (c)           2007 TLCF
Adjustment.

     

    
      (i)           If
the Theater Level Cash Flow (as defined in the APSA) of the Theaters (as defined
in the APSA) for the 12 month period ended December 27, 2007 (the “2007 TLCF”) is less
than the aggregate amount of Eleven Million Two Hundred Thousand Dollars
($11,200,000) (the “TLCF Threshold”),
then the principal amount of this Note shall be reduced by (a) the amount by
which the 2007 TLCF is less than the TLCF Threshold, multiplied by (b) seven;
provided, however, that the amount by which the principal amount of this Note
may be reduced pursuant to this Section 3(c) shall not exceed the sum of Six
Million Two Hundred Fifty Thousand Dollars ($6,250,000).

      

      (ii)           Not
later than February 28, 2008, Holder shall deliver to Maker a Theater Level Cash
Flow Report for the Theaters showing Holder’s calculation of the 2007 TLCF (the
“2007
Report”).  The 2007 Report shall be  prepared in
accordance with GAAP (other than the exclusion of certain financial statements
and the lack of footnote disclosures that are require by GAAP) and otherwise
shall be in substantially in the form of the “Theater P&Ls” (as defined in
the APSA).

      

      (iii)           Holder
shall keep at Holder’s principal executive offices located in California
accurate and complete books and records that reflect the results of operations
of the Theaters for the period covered by the 2007 Report.  Maker
shall have the right within thirty (30) days after receipt of the 2007 Report,
upon not less than ten (10) days advance notice to Holder, to audit or cause

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      to be
audited such books and records at such offices.  Such audit will be
conducted by Deloitte & Touche, or such other firm of independent
accountants as may be selected by Maker and Holder (each acting reasonably). All
of the costs of any such audit shall be paid by Maker, unless the audit shows
that Holder has overstated the positive 2007 TLCF by more than three percent
(3%), in which case Holder shall pay the entire reasonable cost of said
audit.  Maker shall keep any information gained from such audit
confidential other than in litigation or arbitration between the
parties.

      

      (iv)           If
Maker disputes Holder’s determination of the 2007 TLCF, it shall deliver to
Holder a statement notifying Holder of such dispute within ninety (90) days
after its receipt of the 2007 Report.  If Maker notifies Holder of its
acceptance of the 2007 Report, or if Maker fails to deliver its statement within
the ninety (90) day period specified in the preceding sentence, Holder’s
determination of the 2007 TLCF as set forth in the 2007 Report shall be
conclusive and binding on the parties as of the date of notification of such
acceptance or the last day of the ninety (90) day period.  Holder and
Maker shall use good faith efforts to resolve any dispute involving the
determination of the 2007 TLCF.  If the parties are unable to resolve
the dispute within one hundred twenty (120) days after Holder delivers the 2007
Report to Maker, the dispute shall be resolved by the Designated Arbitrator or
the Replacement Arbitrator (each as defined in the APSA) pursuant to the
mechanism set forth in Section 2.2.3.4 of the APSA.

    

    

    (d)           Outstanding Principal
Balance Adjustment.  On each anniversary date of the Closing
Date (as defined in the APSA) occurring prior to the Maturity Date, commencing
February 22, 2009, the principal amount of this Note shall be reduced by an
amount equal to 0.5% of the average outstanding principal balance under Buyer’s
credit facilities with General Electric Capital Corporation and certain other
lenders to be entered into at the Closing (as defined in the APSA) (the “GECC Facility”) for
the immediately preceding 12 month period; provided, however, that for purposes
of this provision, the average outstanding principal balance of the GECC
Facility will be calculated without taking into account (a) any principal amount
outstanding on the GECC Facility in excess of $50,000,000 or (b) any increase in
the principal amount outstanding on the GECC Facility in any 12 month period
from the average outstanding principal balance of the GECC Facility for the
immediately preceding 12 month period.   For example, if the
average outstanding principal balance of the GECC Facility in any such 12 month
period is $40,000,000, the 

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    principal
balance of this Note shall be reduced by $200,000 in respect of such 12 month
period.   Any reduction in the principal balance of this Note
pursuant to this paragraph in respect of any such 12 month period shall be
conditioned upon Maker’s delivery to Holder of a certificate of RDI’s Chief
Financial Officer certifying as to the average outstanding principal balance of
the GECC Facility for such 12 month period.  Notwithstanding the
foregoing, Maker shall be entitled to reductions of the principal balance of
this Note only for so long as the GECC Facility is outstanding, and shall not be
entitled to any further reductions in the principal balance of this Note from or
after the repayment or refinancing of the GECC Facility or in respect of any
other loan or credit facilities from any party.  Maker represents and
warrants to Holder that (i) RDI is, subject to certain limitations disclosed in
writing to Holder on or prior to the date hereof, guaranteeing Buyer’s
obligations under the GECC Facility, and (ii) the interest rate spread payable
under the GECC Facility has increased by 100 basis points from the interest rate
spread initially committed, and Maker acknowledges and agrees that such
representations and warranties are material inducements to Holder to agree to
the provisions of this paragraph and of Section 4 of this Note.

     

    (e)           In
the event of any adjustment in the principal amount of this Note as provided in
Section 2.5 of the APSA or as set forth above, interest will be adjusted
proportionally, as though such adjusted principal amount had been the initial
principal amount of this Note.  In the event that (i)
a  Competitive Cinema Project opens after the fourth anniversary of
the date hereof or (ii) the Competitive Kapolei Cinema Project opens after the
fourth anniversary of the date hereof and the Note is subject to adjustment
under clause 3(b)(ii), above, then the Maturity Date will be extended for one
year, in order to allow time for calculation of any adjustment to the principal
amount of this Note and the accrued interest on such adjusted principal
amount.

     

    (f)           In
the event that payments of interest and principal on this Note shall have
reduced the principal amount of, and the then accrued and unpaid interest on,
this Note to an amount below the adjusted interest and principal, then Seller
will repay such overpayment to Maker within 10 days after the determination
thereof, together with interest thereon at the rate of 8.5% per annum,
compounded quarterly in arrears.  Any payments of interest made which
are in excess of the amounts which should have been paid, had the principal
amount of this Note been initially as so adjusted will be deemed to have been
pre-payments of principal.   Any repayment or payment obligation
on the part of

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    Holder
not timely made will bear interest at the Default Rate (as such term is defined
below) until paid in full.

     

               4.           Covenant Support
Loan.  If, any time prior to the Maturity Date, Buyer is in
breach or anticipates that it will likely be in breach of its financial
covenants under the GECC Facility, but the additional infusion of equity capital
into Buyer would cure or prevent such breach (a “Potential Covenant
Breach”), Maker shall be permitted to borrow from Holder, and Holder
commits to loan to Maker, the amount of Three Million Dollars ($3,000,000) (the
“Covenant Support
Loan”).  Holder shall not be obligated to make more than one
Covenant Support Loan.  The full amount of the Covenant Support Loan
shall be added to the outstanding principal balance of this Note and shall be
deemed part of the $8,000,000 Portion.   Holder’s obligation to
make the Covenant Support Loan shall be subject to the following conditions: (i)
Maker shall deliver to Holder a written request for the Covenant Support Loan,
which request shall be accompanied by reasonable evidence of the Potential
Covenant Breach certified by RDI’s Chief Financial Officer and shall be
delivered to Holder not less than 45 days before the draw down date specified in
such written request, and (ii) all of the proceeds of the Covenant Support Loan
shall be used to pay down the GECC Facility within five business days after
Maker’s receipt of the Covenant Support Loan and Maker shall deliver reasonable
evidence of the same to Holder within three business days after such payments
are made on the GECC Facility.   Notwithstanding the foregoing,
Holder shall be obligated to make the Covenant Support Loan only for so long as
RDI’s guaranty of the GECC Facility is outstanding, and shall not be obligated
to make the Covenant Support Loan from or after the earlier of the date on which
such guaranty is terminated or released or the date on which the GECC Facility
is repaid or refinanced.

     

    5.           Pledge
Agreement.  This Note is secured by a pledge and security
agreement dated of even date herewith (the “Pledge
Agreement”).

     

    6.           Optional
Prepayment.  Maker may prepay this Note in full or in part,
without premium or penalty, upon not less than ten (10) days’ prior written
notice to Holder.  All payments received hereunder shall be applied
first to any accrued but unpaid interest and the remainder to the unpaid
principal balance.  No prepayment permitted

    hereunder
shall affect the obligation of Maker to pay as provided hereunder.

    

    7.           Reimbursement of
Costs.  Maker shall pay to Holder upon demand or reimburse
Holder for all costs and expenses (including reasonable attorneys’ fees)
incurred by or on behalf of Holder following any “Defaults” (as defined below)
in connection with the enforcement of the rights of Holder under this
Note.

    

    8.           Default
Interest.  In the event of any failure to pay any installment
of principal or interest under this Note when due, or after the occurrence of
any other Default, and for so long as such Default continues regardless of
whether or not there has been an acceleration of this Note, or if the
outstanding principal balance hereof and all accrued interest are not paid in
full on the Maturity Date (as the same may be accelerated pursuant to the terms
of this Note), Maker shall thereafter pay interest on the principal balance of
this Note from the date such installment of principal or interest was due, the

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    date of
such Default or the Maturity Date, as the case may be, until the date on which
any such installment is paid or such Default is cured, at a rate per annum
(calculated for the actual number of days elapsed on the basis of a 365-day
year), equal to the then current interest rate payable under this Note, plus
five percent (5%) (the "Default Rate"), and all such accrued interest shall be
paid in full as a condition precedent to the curing of such Default or the
repayment of this Note in full; provided, however, that such interest rate shall
in no event exceed the maximum interest rate which Maker may pay pursuant to
applicable law.

    

    9.           Defaults  Each
of the following shall constitute defaults or breaches (“Defaults”) under this
Note by Maker:

    

    (a)           Failure
to make any payment of principal or interest when due under this Note, or any
breach by Maker of any other covenant contained in this Note, which failure or
breach is not cured within five (5) calendar days after written notice thereof
from Holder to Maker;

    

    (b)           Any
breach of any representation or warranty of Maker contained in this Note,
including, without limitation, any of the representations and warranties
contained in Section 14 of this Note;

    

    (c)           The
bankruptcy or insolvency of Maker or the making by Maker of an assignment for
the benefit of creditors or the admission by Maker in writing of its inability
to pay its debts generally as they become due, or the taking of action by Maker
in furtherance of any such action, provided, however, that in the case of an
involuntary bankruptcy petition filed against Maker, the same is not dismissed
within sixty (60) calendar days; or the appointment of a receiver with respect
to all or any part of Maker's property, where possession is not restored to
Maker within sixty (60) calendar days;

    

    (d)           The
occurrence of a “Change of Control” involving Maker.  For purposes
hereof, a “Change of
Control” means any transaction or series of related transactions as a
result of which: (i) any individual, entity or group (as the term “group” is
defined in Section 13(d) of Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder) other than James J. Cotter and his heirs or
any one or more of his or their respective affiliates (collectively, “Cotter”) acquires
direct or indirect beneficial ownership of securities of Maker representing more
than fifty percent (50%) of the combined voting power of the then-outstanding
securities of Maker; or (ii) Maker consummates a merger, reorganization or
consolidation or sells all or substantially all of its assets (each such
transaction being referred to as a “Transaction”), unless
Cotter beneficially owns, directly or indirectly, immediately after the
consummation of the Transaction, in the aggregate, at least fifty percent (50%)
of the combined voting power of the then-outstanding securities of the entity
surviving or resulting from such Transaction (such Transaction, an “Excepted
Transaction”); or (iii) the dissolution or liquidation of Maker (each
such occurrence being referred to as a “Dissolution Event”),
unless Cotter beneficially owns, directly or indirectly, immediately after the
occurrence of the Dissolution Event. In the aggregate, at least fifty percent
(50%) of the combined voting power of the then-outstanding securities of the
entity or entities to which the assets 

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    and
properties of Maker are distributed pursuant to such Dissolution
Event.  Notwithstanding the foregoing, no Transaction involving Maker
and any Affiliate of Maker shall be deemed a Change of Control so long as Cotter
beneficially owns, directly or indirectly, immediately after the consummation of
the Transaction, in the aggregate, at least fifty percent (50%) of the combined
voting power of the then-outstanding securities of the entity surviving or
resulting from such Transaction; and

     

    
      (e)           
So long as Holder is in compliance with its obligations under the Note,
including its obligations under Section 4, above, the breach or default by Buyer
of any of its material obligations under the GECC Facility, where such breach or
default is not cured prior to the expiration of all applicable notice and cure
periods;

      

      (f)           The
occurrence of a “Default” (as such term is defined in the Pledge Agreement)
under the Pledge Agreement;

    

    

    Provided,
however, that any Default under any one or more of clauses (b) through (f) above
may be cured by a guarantee by RDI of Maker’s obligations under this Note, in a
form reasonably acceptable to Holder.

    

    10.           Remedies upon a
Default.  Upon the occurrence of any Default, and in addition
to any other rights or remedies available to Holder under applicable law or
otherwise, the entire principal balance and all accrued interest shall, at the
option of Holder, become due and payable upon demand.  Maker shall
also pay all reasonable costs of collection in connection with the enforcement
of this Note, including, without limita­tion, reasonable attorneys' fees
incurred or paid by Holder on account of such collection, whether or not suit is
filed.  Failure by Holder to enforce any remedy granted to it
hereunder shall not excuse any Default under this Note and no offset for claims
for such noncom­pliance may be made against any payment due hereunder. Any
pre-payment of this Note and any acceleration of this Note solely arising from a
Default under Section 9(e) above shall not impact the adjustment provisions set
forth in Section 3 above, which adjustment provisions shall survive any such
pre-payment or acceleration.

    

    11.           Waivers.  Except
as otherwise provided in this Note, Maker waives all redemption rights of any
nature, valuation and appraisement, presentment, protest and demand, notice of
protest, demand and dishonor, and non-payment of this Note, and all other
notices or demands in connection with the delivery, accept­ance, performance
or enforcement of this Note, in each case to the maximum extent permitted by
law.

    

    12.           Non-Cumulative
Remedies.  The remedies of Holder under or by virtue of this
Note shall be cumulative and non-exclusive, and may be exercised concurrently or
consecutively at the option of Holder.  No single or partial exercise
of any power granted to Holder under this Note shall preclude any other or
further exercise thereof or the exercise of any other power.  No delay
or omission on the part of Holder in exercising any right under this Note shall
operate as a waiver of such right or of any other right.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

       

    

    13.           Maximum Interest
Rate.  No provision of this Note shall be deemed to establish
or require the payment of interest at a rate in excess of the maximum rate
permitted by applicable law.  In the event that the rate of interest
required to be paid under this Note exceeds the maximum rate permitted by
applicable law, any amounts paid in excess of such maximum shall be applied to
reduce the unpaid principal balance hereunder and the rate of interest required
hereunder shall be automatically reduced to the maximum rate permitted by
applica­ble law.

    

    14.           Maker’s Representations and
Warranties.  Maker hereby represents and warrants to Holder as
follows, which representations and warranties shall survive the execution and
delivery of this Note:

    

    (a)           Maker
is a corporation duly formed and validly existing under the laws of the State of
Nevada and qualified to do business in the State of California, and Maker has
the requisite power to own its properties and assets and to enter into and
perform its obligations under this Note;

    

    (b)           This
Note has been duly authorized by all necessary action on the part of
Maker;

    

    (c)           This
Note constitutes the legally valid and binding obligation of Maker, enforceable
against Maker in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, arrangement or similar laws affecting
the enforcement of creditor’s rights generally and general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
law;

    

    (d)           The
execution and delivery by Maker of this Note, the consummation of the
transactions contemplated hereby, and the performance of the terms and
conditions hereof by Maker, do not conflict with, result in a breach of or
constitute a default under, any of the terms, conditions or provisions of (i)
the organizational documents of Maker; (ii) any order, writ, judgment or decree
by which Maker is bound or to which it is a party; (iii) any law, rule,
regulation or restriction of any governmental authority or agency applicable to
Maker; or (iv) any contract, commitment, indenture, instrument or other
agreement by which Maker is bound or to which Maker is a party; and

    

    (e)           No
consent or authorization of, filing with or other act by or in respect of any
governmental authority, bureau or agency is required to be obtained or made by
Maker in connection with the execution, delivery and performance of this
Note.

    

    15.           Miscellaneous.

    

    (a)           Governing
Law.  This Note shall be governed by and construed and enforced
in accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law of
such state.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

       

    

    (b)           Drafting.  This
Note has been jointly negotiated and drafted, and shall be construed as a whole
according to its fair meaning and not strictly for or against any
party.

    

    (c)           Further
Assurances.  Maker hereby agrees that it will, forthwith upon
any reasonable request by Holder, cooperate fully in the preparation, execution,
acknowledgement, delivery and recording of any agreements, instruments,
memoranda or documents reflecting or in furtherance of any of the transactions
contemplated by this Note.

    

    (d)           Section
Headings.  Section headings are provided herein for convenience
only and shall not serve as a basis for interpretation or construction of this
Note, nor as evidence of the intention of the parties hereto.

    

    (e)           Severability.  If
any provision of this Note as applied to either party or to any circumstance
shall be adjudged by a court to be void or unenforceable, the same shall in no
way affect any other provision of this Note, the application of any such
provision in any other circumstances or the validity or enforceability of this
Note as a whole.

    

    (f)           Reference.  Except
as otherwise expressly provided in this Note, any dispute of any nature or
character whatsoever between the parties and arising under or with respect to
this Note, or the subject matter hereof or thereof, shall be resolved by a
proceeding in accordance with the provisions of California Code of Civil
Procedure Section 638 et seq., for a determination to be made which shall be
binding upon the parties as if tried before a court or jury.  The
parties agree specifically as to the following:

     

    
      (i)           Within
five (5) Business Days after service of a demand by a party hereto, the parties
shall agree upon a single referee who shall then try all issues, whether of fact
or law, and then report a finding or judgment thereon.  If the parties
are unable to agree upon a referee either party may seek to have one appointed,
pursuant to California Code of Civil Procedure Section 640, by the presiding
judge of the Los Angeles County Superior Court;

      

      (ii)           The
compensation of the referee shall be such charge as is customarily charged by
the referee for like services.  The cost of such proceedings shall
initially be borne equally by the parties.  However, the prevailing
party in such proceedings shall be entitled, in addition to all other costs, to
recover its contribution for the cost of the reference as an item of damages
and/or recoverable costs;

      

      (iii)           If
a reporter is requested by either party, then a reporter shall be present at all
proceedings, and the fees of such reporter shall be borne by the party
requesting such reporter.  Such fees shall be an item of recoverable
costs.  Only a party shall be authorized to request a
reporter;

       

      
        (iv)           The
referee shall apply all California Rules of Procedure and Evidence and shall
apply the substantive law of California in deciding the issues to 

         

        
          
            
               

            

            
              16

              
                

              

            

            
               

            

          

        

        
be heard.  Notice of any motions before the referee
shall be given, and all matters shall be set at the convenience of the
referee;

      

    

    (v)           The
referee’s decision under California Code of Civil Procedure Section 644, shall
stand as the judgment of the court, subject to appellate review as provided by
the laws of the State of California; and

    

    (vi)           The
parties agree that they shall in good faith endeavor to cause any such dispute
to be decided within four (4) months.  The date of hearing for any
proceeding shall be determined by agreement of the parties and the referee, or
if the parties cannot agree, then by the referee. The referee shall have the
power to award damages and all other relief.

    

    For
purposes of this Note, the term “Business Day” means
Monday through Friday, excluding any day of the year on which banks are required
or authorized to close in California.

    

    (g)           Time of the
Essence.  Time is hereby declared to be of the essence of this
Note and every part hereof.

    

    (h)           Amendment.  This
Note may not be modified or changed except by written instruments signed by
Holder and Maker.

    

    (i)           No
Offset.  All amounts due under this Note shall be payable to
Holder, in lawful money of the United States of America, in currently available
funds at the address for Holder set forth above (or to such other person or at
such other place as Holder may from time to time designate in writing), without
notice, demand, offset, deduction or setoff, other than with respect to any
amounts which may be owed (i) by Seller to Maker under the APSA.

    

    16.           Assignment.  This
Note and the terms hereof shall bind Maker and its successors, but not shall not
be assignable, in whole or in part, voluntarily or involuntarily, by
Maker.  Maker acknowledges that Holder shall have the right, in
Holder’s sole and absolute discretion, without or without notice, to sell and
assign this Note or participation interests in this Note in such manner and on
such terms and conditions as Note shall deem to be appropriate.  Maker
shall cooperate, and shall cause each indemnitor and other person or party
associated or connected with this Note to cooperate in all respects with Holder
in connection with any sale, assignment or participation, and shall, in
connection therewith, execute and deliver such estoppel certificates,
instruments and documents as may be reasonably requested by Holder.

    

    

    (Signature
contained on next page)

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, Maker has caused
this Note to be executed and delivered as of the date first above
written.

    

    

    READING CONSOLIDATED HOLDINGS,
INC,

    a Nevada corporation

    

    

    By:  /s/ Andrzej
Matyczynski                                                                

    

    Its:  Chief Financial
Officer                                                                

     

    
      
         

      

      
        18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]