EXHIBIT 10.51
EXCHANGE AGREEMENT
DATED AS OF SEPTEMBER 4, 1996
BY AND AMONG
READING ENTERTAINMENT, INC.
READING COMPANY
XXXXX CORPORATION
XXXXX MANAGEMENT, INC.
CITADEL HOLDING CORPORATION
AND
CITADEL ACQUISITION CORP., INC.
TABLE OF CONTENTS
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Page
1. DEFINITIONS........................................................... 1
2. EXCHANGE.............................................................. 4
2.1 Assets to be Exchanged by Xxxxx................................. 4
2.2 Assets to be Exchanged by CMI................................... 4
2.3 Assets to be Transferred by CAC................................. 4
2.4 Assets to be Exchanged by Reading Entertainment and Citadel..... 4
2.5 Instruments of Conveyance and Transfer.......................... 4
2.6 Closing......................................................... 4
2.7 Dividends....................................................... 4
3. REPRESENTATIONS AND WARRANTIES OF READING AND
READING ENTERTAINMENT................................................. 5
3.1 Organization and Authorization.................................. 5
3.2 Non-Contravention............................................... 5
3.3 Capital Stock................................................... 5
3.4 SEC Reports..................................................... 7
3.5 No Adverse Changes.............................................. 7
3.6 Approvals....................................................... 8
3.7 Litigation...................................................... 8
3.8 Regulatory Compliance........................................... 8
3.9 Brokers......................................................... 8
3.10 Accuracy of Information Furnished............................... 8
3.11 Investment Representation....................................... 8
3.12 Title to Assets................................................. 9
3.13 Further Investment Representation............................... 9
4. REPRESENTATIONS AND WARRANTIES OF XXXXX AND CMI....................... 10
4.1 Organization and Authorization.................................. 10
4.2 Non-Contravention............................................... 10
4.3 Approvals....................................................... 11
4.4 Interest in Reading International............................... 11
4.5 Title to Assets................................................. 11
4.6 Accuracy of Information Furnished............................... 11
4.7 Securities Law Compliance....................................... 11
4.8 Brokers......................................................... 12
4.9 Stater Financial Condition...................................... 12
4.10 Investment Representation....................................... 12
4.11 CMI............................................................. 12
5. REPRESENTATIONS AND WARRANTIES OF CITADEL AND CAC..................... 13
5.1 Organization and Authorization.................................. 13
5.2 Non-Contravention............................................... 13
5.3 Approvals....................................................... 13
5.4 Accuracy of Information Furnished............................... 13
5.5 Securities Law Compliance....................................... 14
5.6 Brokers......................................................... 14
5.7 Investment Representation....................................... 14
5.8 Independent Continuing Directors................................ 15
5.9 Capital Stock................................................... 15
6. SHAREHOLDER APPROVAL; PROXY AND REGISTRATION FILINGS.................. 15
6.1 Shareholder Approval............................................ 15
6.2 Proxy Statement and Registration Statement...................... 15
7. COVENANTS............................................................. 16
7.1 Covenants of Xxxxx, CMI, Citadel and CAC........................ 16
7.2 Covenants of Reading and Reading Entertainment.................. 17
7.3 Access.......................................................... 18
7.4 Citadel Contributions........................................... 18
8. CONDITIONS............................................................ 18
8.1 Conditions Precedent to the Obligations of All Parties.......... 18
8.2 Additional Conditions Precedent to the Obligations of Reading
and Reading Entertainment....................................... 19
8.3 Additional Conditions Precedent to the Obligations of Xxxxx
and CMI......................................................... 20
8.4 Additional Conditions Precedent to the Obligations of CAC and
Citadel......................................................... 21
9. TERMINATION........................................................... 23
9.1 Termination..................................................... 23
9.2 Written Notice.................................................. 23
9.3 Effect of Termination........................................... 23
10. GENERAL PROVISIONS.................................................... 23
10.1 Survival of Representations and Warranties...................... 23
10.2 Notices......................................................... 23
10.3 Amendment and Waiver............................................ 24
10.4 Counterparts.................................................... 25
10.5 Assignability................................................... 25
10.6 Entire Agreement................................................ 25
10.7 Applicable Law.................................................. 25
10.8 Headings........................................................ 25
10.9 Costs and Expenses.............................................. 25
Exhibit 1 - Certificate of Designations, Preferences, and Rights of Series
A Voting Cumulative Convertible Preferred Stock and Series B
Voting Cumulative Convertible Preferred Stock of Reading
Entertainment, Inc.
ii
Exhibit 5.9 - Certificate of Designation of the Series B 3% Cumulative
Voting Convertible Preferred Stock of Citadel Holding
Corporation.
Exhibit 8.4(e) - Asset Put and Registration Rights Agreement
iii
EXCHANGE AGREEMENT
This Exchange Agreement (the "Agreement") is made and entered into as of
this 4th day of September, 1996 by and among Reading Entertainment, Inc., a
Delaware corporation ("Reading Entertainment"), Reading Company, a Pennsylvania
corporation ("Reading"), Xxxxx Corporation, a Delaware corporation ("Xxxxx"),
Xxxxx Management, Inc., a California corporation ("CMI"), Citadel Holding
Corporation, a Delaware corporation ("Citadel"), and Citadel Acquisition Corp.,
Inc., a Delaware corporation ("CAC"), with reference to the following:
A. Reading and Reading Entertainment desire that Reading
Entertainment exchange its securities for assets, including cash, as described
herein, for the purpose of enhancing its capitalization to further the
development and expansion of its Beyond-the-Home Entertainment business.
X. Xxxxx currently participates with Reading in its Beyond-the-Home
Entertainment business and Xxxxx desires to broaden its participation in
Reading's Beyond-the-Home Entertainment business by acquiring a further equity
interest in Reading Entertainment.
C. Citadel, which as a result of a recapitalization of its principal
asset in 1994, has assets currently consisting of cash and certain illiquid
assets, desires to deploy a portion of its available liquid assets in Reading's
Beyond-the-Home Entertainment business by acquiring an equity interest in
Reading Entertainment.
D. The parties hereto intend that the transaction qualify for
nonrecognition treatment as an exchange pursuant to Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code").
E. Prior to the exchange transaction described herein Reading
Entertainment intends to form a wholly owned subsidiary ("Entertainment
Subsidiary"), and Entertainment Subsidiary shall be merged into Reading in a
transaction qualifying as a reorganization under Section 368(a)(1)(A) of the
Code, with each holder of Reading Class A Common Stock and Reading Common Stock
receiving shares of Reading Entertainment Common Stock (the "Reorganization").
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements set forth herein the parties hereto
agree as follows:
1. DEFINITIONS
For purposes of this Agreement the following terms shall have the
meanings set forth:
"Asset Put" shall have the meaning set forth in the Option Agreement.
"CAC" shall have the meaning set forth in the preface to this Agreement.
CAC is a wholly owned subsidiary of Citadel.
"Certificate of Designations" shall have the meaning set forth in
Section 3.3(a) of this Agreement.
1.
"Citadel" shall have the meaning set forth in the preface to this
Agreement.
"Citadel Certificate of Designation" shall have the meaning set forth in
Section 5.9 of this Agreement.
"Citadel Common Stock" shall mean the Common Stock of Citadel.
"Citadel Preferred Stock" shall mean the 3% Cumulative Voting Convertible
Preferred Stock of Citadel, stated value $3.95 per share.
"Closing" and "Closing Date" shall have the meanings set forth in
Section 2.6 of this Agreement.
"CMI" shall have the meaning set forth in the preface to this Agreement.
CMI is a wholly owned subsidiary of Xxxxx.
"Code" shall have the meaning set forth in the preface to this Agreement.
"Xxxxx" shall have the meaning set forth in the preface to this
Agreement.
"Entertainment Subsidiary" shall have the meaning set forth in the
preface to this Agreement.
"Exchange" refers to and means the exchange of assets for Reading
Entertainment Preferred Stock described in Sections 2.1, 2.2 and 2.3 to this
Agreement.
"LLC Agreement" shall have the meaning set forth in Section 4.4 to this
Agreement.
"Option Agreement" shall have the meaning set forth in Section 8.4(e) to
this Agreement.
"Original Citadel Certificate of Designation" shall mean the Certificate
of Designation of the Citadel Preferred Stock.
"Prospectus" shall have the meaning set forth in Section 6.2(c) of this
Agreement.
"Proxy Statement" shall have the meaning set forth in Section 6.2(a) of
this Agreement.
"Reading" shall have the meaning set forth in the preface to this
Agreement.
"Reading Class A Common Stock" shall mean the Class A Common Stock of
Reading.
"Reading Common Stock" shall mean the Common Stock of Reading.
"Reading Entertainment" shall have the meaning set forth in the preface
to this Agreement.
"Reading Entertainment Common Stock" shall mean the $0.001 par value
Common Stock of Reading Entertainment.
2.
"Reading Entertainment Preferred Stock" shall mean the Reading
Entertainment Series A Preferred Stock and the Reading Entertainment Series B
Preferred Stock, collectively.
"Reading Entertainment Series A Preferred Stock" shall mean the Series A
Voting Cumulative Convertible Preferred Stock of Reading Entertainment, $100
stated value per share, having the rights, preferences and privileges set forth
in Exhibit 1 to this Agreement.
"Reading Entertainment Series B Preferred Stock" shall mean the Series B
Voting Cumulative Convertible Preferred Stock of Reading Entertainment, $100
stated value per share, having the rights, preferences and privileges set forth
in Exhibit 1 to this Agreement.
"Reading Holdings" shall mean Reading Holdings, Inc., a Delaware
corporation. Reading Holdings is a wholly owned subsidiary of Reading.
"Reading International" shall mean Reading International Cinemas LLC, a
Delaware limited liability company. Reading International is owned equally by
Xxxxx and Reading Investment.
"Reading Investment" shall mean Reading Investment Company, Inc., a
Delaware corporation. Reading Investment is an indirect wholly owned subsidiary
of Reading.
"Reading SEC Reports" shall have the meaning set forth in Section 3.4 of
this Agreement.
"Reading's Stock Option Plans" shall mean the 1982 Incentive Stock Option
Plan, the 1982 Non-qualified Option Plan and the 1992 Non-qualified Stock Option
Plan.
"Reading Shareholders" shall have the meaning set forth in Section 6.1 of
this Agreement.
"Registration Statement" shall have the meaning set forth in
Section 6.2(c) of this Agreement.
"Reorganization" shall have the meaning set forth in the preface to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"SEC" shall mean the Securities and Exchange Commission.
"Series B Citadel Preferred Stock" shall mean the Series B 3% Cumulative
Voting Convertible Preferred Stock of Citadel, stated value $3.95 per share.
"Stater" shall mean Stater Bros. Holdings Inc., a Delaware corporation.
"Stater Preferred Stock" shall mean the Series B Preferred Stock of
Stater.
3.
2. EXCHANGE
2.1 Assets to be Exchanged by Xxxxx. Subject to the terms and
-------------------------------
conditions of this Agreement, at the Closing, Xxxxx shall deliver to Reading
Entertainment all of Craig's right, title and interest in and to (i) its
ownership interest in Reading International and (ii) its 1,329,114 shares of
Citadel Preferred Stock, in exchange for 125,098 shares of Reading Entertainment
Series B Preferred Stock and 563,210 shares of Reading Entertainment Common
Stock.
2.2 Assets to be Exchanged by CMI. Subject to the terms and conditions
-----------------------------
of this Agreement, at the Closing, CMI shall deliver to Reading Entertainment
all of CMI's right, title and interest in and to 693,650 shares of Stater
Preferred Stock in exchange for 424,902 shares of Reading Entertainment Series B
Preferred Stock and 1,912,980 shares of Reading Entertainment Common Stock.
2.3 Assets to be Transferred by CAC. Subject to the terms and
-------------------------------
conditions of this Agreement, at the Closing, CAC shall purchase from Reading
Entertainment 70,000 shares of Reading Entertainment Series A Preferred Stock,
for an aggregate cash purchase price of $7.0 million, by wire transfer of
immediately available funds.
2.4 Assets to be Exchanged by Reading Entertainment and Citadel.
-----------------------------------------------------------
Subject to the terms and conditions of this Agreement, at the Closing, Reading
Entertainment shall deliver to Citadel all of Reading Entertainment's right,
title and interest in and to the 1,329,114 shares of Citadel Preferred Stock
which Xxxxx shall have delivered to Reading Entertainment pursuant to
Section 2.1 above, in exchange for 1,329,114 shares of Series B Citadel
Preferred Stock. Upon such exchange, the 1,329,114 shares of Citadel Preferred
Stock shall be cancelled by Citadel.
2.5 Instruments of Conveyance and Transfer. The conveyance, transfer
--------------------------------------
and delivery to Reading Entertainment of the assets being exchanged by Xxxxx and
CMI as herein provided, shall be effected by such stock powers, assignments,
bills of sale, checks and other instruments of transfer and conveyance as shall
be in form reasonably acceptable to Reading Entertainment.
2.6 Closing. Subject to the conditions set forth in Article 8, unless
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this Agreement shall have been terminated as provided in Article 9, the
consummation of the transactions described in Sections 2.1, 2.2, 2.3 and 2.4
above (the "Closing") shall take place at the offices of Duane, Morris &
Heckscher, 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000-0000, on
the day of the meeting of shareholders of Reading described in Article 6 of this
Agreement, or as soon thereafter as is practicable (the "Closing Date").
2.7 Dividends. At the Closing, Reading Entertainment shall pay to
---------
Xxxxx, by certified or cashiers check, any and all accrued but unpaid dividends
with respect to the Citadel Preferred Stock and shall pay to CMI, by certified
or cashiers check, any and all accrued but unpaid dividends with respect to the
Stater Preferred Stock (in each case, excluding dividends which have been
declared and are payable to holders of record on a date prior to the Closing
Date).
4.
3. REPRESENTATIONS AND WARRANTIES OF READING AND READING ENTERTAINMENT
Reading and Reading Entertainment hereby jointly and severally represent
and warrant to Xxxxx, CMI, Citadel and CAC as follows:
3.1 Organization and Authorization. Reading and Reading Entertainment
------------------------------
are corporations duly organized, validly existing and in good standing under the
laws of the States of Pennsylvania and Delaware, respectively, and each has full
corporate power and all necessary authorizations to own all of its properties
and assets and to carry on its business as it is now being conducted. Reading
and Reading Entertainment are each duly qualified to do business and are in good
standing in each jurisdiction in which the nature of its or their business or
character of its or their properties requires such qualification and where the
failure to be so qualified would materially and adversely affect either
corporation or its or their business, properties or rights. Reading and Reading
Entertainment have delivered to Xxxxx and Citadel complete and correct copies of
their Articles of Incorporation and Certificate of Incorporation, respectively,
and their By-Laws, as amended and in effect on the date of this Agreement.
Reading and Reading Entertainment each have all requisite corporate power to
execute, deliver and perform their obligations under this Agreement. The
execution, delivery and performance of this Agreement by Reading and Reading
Entertainment, and the consummation by each of them of the transactions
contemplated hereby, have been duly authorized by the Boards of Directors of
Reading and Reading Entertainment, subject only to obtaining shareholder
approval of the Reading Shareholders. This Agreement has been duly executed and
delivered by Reading and Reading Entertainment and constitutes a valid and
binding agreement of Reading and Reading Entertainment, enforceable in
accordance with its terms except to the extent the enforcement thereof may be
limited by bankruptcy, insolvency, rehabilitation, moratorium and similar laws
now or hereafter in effect relating to creditor's rights generally or by general
equitable principles.
3.2 Non-Contravention. The execution and delivery of this Agreement do
-----------------
not and the consummation of the transactions contemplated hereby will not
(a) violate the Articles of Incorporation or By-laws of Reading or the
Certificate of Incorporation or By-Laws of Reading Entertainment, (b) violate
any material provision of or result in the breach or the acceleration of or
entitle any party to accelerate (whether after the giving of notice or the lapse
of time or both) any material obligation under any material mortgage, lease,
agreement, judgment or decree, to which either Reading or Reading Entertainment
is a party or by which either is bound, (c) result in the creation or imposition
of any lien, charge, pledge, security interest or other encumbrance on any
property of Reading or Reading Entertainment, or (d) to the knowledge of either
Reading or Reading Entertainment, violate or conflict with any law, ordinance or
rule to which either is subject.
3.3 Capital Stock.
-------------
(a) The authorized and outstanding capital stock of Reading is
as set forth in the Reading SEC Reports (subject only to changes in the
outstanding Reading Class A Common Stock which may occur through the Closing
solely from the exercise of options granted pursuant to Reading's Stock Option
Plans or the exchange of shares of Reading Common Stock for shares of Reading
Class A Common Stock) and the outstanding capital stock of Reading Entertainment
will at the Closing consist solely of Reading Entertainment
5.
Common Stock, of which not more than 4,973,175 shares will be issued and
outstanding (plus any shares which may be issued and outstanding as a result of
the exercise of options granted pursuant to Reading's Stock Option Plans and the
shares of Reading Entertainment Common Stock and Reading Entertainment Preferred
Stock to be issued hereunder). All of such issued and outstanding shares of
capital stock are validly issued and outstanding, fully paid and nonassessable.
The shares of Reading Entertainment Preferred Stock and Reading Entertainment
Common Stock to be issued pursuant to this Agreement have been duly authorized,
and, when issued and paid for pursuant to the terms hereof, will be validly
issued, fully paid and non-assessable and will be entitled to all the rights,
preferences and privileges set forth in the Certificate of Designations,
Preferences and Rights of Series A Voting Cumulative Convertible Preferred Stock
and Series B Voting Cumulative Convertible Preferred Stock of Reading
Entertainment, Inc. (the "Certificate of Designations"), attached as Exhibit 1
hereto. The shares of Reading Entertainment Common Stock issuable upon
conversion of the Reading Entertainment Preferred Stock have been duly
authorized and reserved for issuance upon such conversion and, when issued and
delivered on such conversion in accordance with the terms of the Certificate of
Designations, will be validly issued, fully paid and non-assessable. The
certificates representing the shares of Reading Entertainment Preferred Stock
and Reading Entertainment Common Stock to be issued pursuant to this Agreement
will be in due and proper form. All corporate action required to be taken for
the authorization and issuance of the Reading Entertainment Preferred Stock and
the Reading Entertainment Common Stock to be issued pursuant to this Agreement
has been duly and validly taken. At or prior to the Closing, the Certificate of
Designations will have been filed with the Secretary of State of the State of
Delaware.
(b) Except as described herein and in the Reading SEC Reports,
there are no outstanding subscriptions, options, conversion rights, warrants or
other agreements or commitments of any nature whatsoever obligating either
Reading or Reading Entertainment to issue, deliver or sell, or cause to be
issued, delivered or sold, any additional shares of capital stock of either
Reading or Reading Entertainment or obligating either Reading or Reading
Entertainment to grant, extend or enter into any such agreement or commitment.
The shareholders of Reading and Reading Entertainment do not have any preemptive
rights or other rights to subscribe for additional shares of Reading or Reading
Entertainment, and no preemptive or similar rights will arise as a result of the
transactions contemplated by this Agreement. Except as set forth in the Reading
SEC Reports, there are no voting trusts, voting agreements, irrevocable proxies
or other agreements to which either Reading or Reading Entertainment is a party,
or of which either Reading or Reading Entertainment has knowledge, in effect
relating to the voting or transfer of any shares of Reading or Reading
Entertainment capital stock.
(c) Upon acquisition of the Reading Entertainment Series A
Preferred Stock pursuant to Section 2.3 of this Agreement, CAC will not be
prohibited or otherwise limited in any manner, including without limitation
under Delaware General Corporation Law Section 160(a), from voting in all
respects its shares of Reading Entertainment Series A Preferred Stock in
accordance with the Certificate of Incorporation of Reading Entertainment,
except that no such representation or warranty is given with respect to such
shares of Reading Entertainment Series A Preferred Stock, if any, as are
required by generally accepted accounting principles to be reflected on the
financial statements of Reading Entertainment as a reciprocal stockholding.
6.
3.4 SEC Reports. All reports required to be filed by Reading with the
-----------
SEC since December 1, 1995 (the "Reading SEC Reports") are in compliance in all
material respects with the respective report forms and were complete and correct
in all material respects as of the date on which the information was furnished.
As of the date each Reading SEC Report was filed with the SEC, such Reading SEC
Report did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading. The financial statements of Reading contained in the Reading
SEC Reports were prepared in accordance with the books and records of Reading
and were prepared in accordance with generally accepted accounting principles
applied on a consistent basis and present fairly the financial condition of
Reading as of the respective dates indicated therein and the results of
operations and changes in financial position for the periods so indicated.
3.5 No Adverse Changes. Except as set forth in the Reading SEC
------------------
Reports, since March 31, 1996, Reading has conducted its business only in the
ordinary course, there has not been any material adverse change in the business,
financial condition, assets, liabilities, properties or business operations of
Reading or Reading Entertainment, and, except as contemplated by the
Reorganization or this Agreement, neither Reading nor Reading Entertainment has:
(a) issued or sold any stock, notes, bonds or other securities,
or any option to purchase the same, or entered into any agreement with respect
thereto, except the issuance of Reading Class A Common Stock upon the exercise
of options granted under Reading's Stock Option Plans or the issuance of Reading
Class A Common Stock in exchange for Reading Common Stock;
(b) declared, set aside or made any dividend or other
distribution on capital stock or redeemed, purchased or acquired any shares
thereof or entered into any agreement in effect to the foregoing;
(c) amended its Articles of Incorporation or By-Laws;
(d) other than in the ordinary course of business, purchased,
sold, assigned or transferred any material tangible assets (except for an
interest in the Angelika Film Center as to which Reading Investment has entered
into a binding contract of purchase) or any material license, franchise or other
intangible asset; except as disclosed in the SEC Reports, mortgaged, pledged,
granted or suffered to exist any lien or other encumbrance or charge on any
material assets or properties, tangible or intangible, other than liens for
taxes not yet delinquent and such other liens, encumbrances or charges which do
not materially adversely affect the business or financial condition of Reading
or Reading Entertainment; or waived any rights of material value or cancelled
any material debts or claims;
(e) entered into any material contract or commitment other than
contracts or commitments made in the ordinary course of business or pursuant to
or in connection with this Agreement or the Reorganization;
(f) made or suffered any material amendment, modification or
termination of any material contract, commitment or obligation to which Reading
is a party;
7.
(g) borrowed or loaned any money other than pursuant to
agreements disclosed in the Reading SEC Reports;
(h) changed its method of accounting; or
(i) agreed, whether in writing or otherwise, to take any action
described in this Section 3.5.
3.6 Approvals. No consent, approval, order or authorization of, or
---------
registration, declaration or filing with any governmental authority is required
in connection with the execution and delivery of this Agreement by Reading and
Reading Entertainment or the consummation by Reading or Reading Entertainment of
the transactions contemplated hereby, except as contemplated by Article 6 of
this Agreement.
3.7 Litigation. Except as set forth in the Reading SEC Reports, there
----------
are no actions, suits or proceedings or investigations pending at law or in
equity in any court or before any foreign, federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
or, to the knowledge of Reading, threatened against or affecting it which, if
adversely determined would be reasonably likely to materially and adversely
affect the business, operations or financial condition of Reading or Reading
Entertainment.
3.8 Regulatory Compliance. Except as set forth in the Reading SEC
---------------------
Reports, each of Reading and Reading Entertainment is in substantial compliance
with all material federal, state, local and foreign laws and regulations
applicable to it, including, without limitation, environmental laws.
3.9 Brokers. All negotiations relating to this Agreement and the
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transactions contemplated hereby have been carried on without the intervention
of any person acting on behalf of either Reading or Reading Entertainment who
has or may have a valid claim against any of the parties to this Agreement for
any broker's or finder's fee or similar compensation, other than such fee as may
be payable by Reading to Berwind Financial Group, L.P., the financial advisor to
the Independent Committee of the Board of Directors of Reading.
3.10 Accuracy of Information Furnished. The certificates, statements,
---------------------------------
and other information furnished to Xxxxx, CMI, Citadel and CAC in writing by or
on behalf of Reading or Reading Entertainment in connection with the
transactions contemplated hereby do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that no representation is made as to any
financial projections contained in such information other than that any such
financial projections were prepared in good faith based upon assumptions that
Reading believes are reasonable.
3.11 Investment Representation. Reading Entertainment represents and
-------------------------
warrants to Xxxxx and CMI that the shares of Stater Preferred Stock and Citadel
Preferred Stock to be received by Reading Entertainment pursuant to Sections 2.1
and 2.2 hereof and any shares of Citadel Common Stock received upon conversion,
if any, of the Citadel Preferred Stock are being or will be acquired for
investment and not with a view to the sale or distribution of any part thereof,
and that it has no present intention of selling, granting participation in or
8.
otherwise distributing the same in a transaction which would result in a
violation of the Securities Act. Reading Entertainment and Reading further
represent that there is no contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person with respect to any of the shares of Stater Preferred Stock or
Citadel Preferred Stock being acquired pursuant to Sections 2.1 and 2.2 hereof.
Reading Entertainment understands that the shares being acquired by it as
described above have not been registered under the Securities Act on the ground
that the exchange provided for in this Agreement and the issuance of securities
are exempt pursuant to Sections 4(1) and 4(2) of the Securities Act, and that
Craig's and CMI's reliance on such exemption is predicated on the
representations set forth herein. Each certificate representing the Stater
Preferred Stock and the Citadel Preferred Stock and any shares of Citadel Common
Stock issued upon conversion of shares of the Citadel Preferred Stock may be
endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES AT OF 1933 (THE "ACT") OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
Reading Entertainment understands that Stater and/or Citadel may instruct their
transfer agent not to register the transfer of any of its securities unless the
transfer is under conditions which do not violate the Securities Act.
3.12 Title to Assets. Upon consummation of the exchange contemplated by
---------------
Section 2.1 of this Agreement, Reading will own and have, and at the Closing
will deliver to Citadel, to the extent received from Xxxxx, good and marketable
title to its interest in the Citadel Preferred Stock being transferred
hereunder, free and clear of any mortgage, lien, pledge, charge, claim,
conditional sales or other agreement, lease, right or encumbrance, other than
the provisions of the Original Citadel Certificate of Designation.
3.13 Further Investment Representation. Reading Entertainment
---------------------------------
represents and warrants to Citadel that the shares of Series B Citadel Preferred
Stock to be received by it pursuant to Section 2.4 hereof and any shares of
Citadel Common Stock received upon conversion of said shares of Series B Citadel
Preferred Stock are being or will be acquired for investment and not with a view
to the sale or distribution of any part thereof, and that Reading Entertainment
has no present intention of selling, granting participation in or otherwise
distributing the same in a transaction which would result in a violation of the
Securities Act. Reading Entertainment further represents that it has no
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person with
respect to any of the shares of Series B Citadel Preferred Stock being acquired
pursuant to Section 2.4 hereof. Reading Entertainment understands that the
shares of Series B Citadel Preferred Stock being acquired hereunder and the
shares of Citadel Common Stock received upon any conversion of the Series B
Citadel Preferred Stock have not been and will not be registered under the
Securities Act on the ground that the exchange provided for in this Agreement
and the issuance of such securities are exempt pursuant to Section 4(2) of the
Securities Act, and that Citadel's reliance on such exemption is predicated on
the
9.
representations set forth herein. Each certificate representing the Series B
Citadel Preferred Stock and any shares of Citadel Common Stock issued upon
conversion of shares of Series B Citadel Preferred Stock may be endorsed with
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
Citadel may also instruct its transfer agent not to register the transfer of any
securities unless the conditions specified in the foregoing legend are
satisfied.
4. REPRESENTATIONS AND WARRANTIES OF XXXXX AND CMI
Xxxxx and CMI hereby jointly and severally represent and warrant to
Reading, Reading Entertainment, Citadel and CAC as follows:
4.1 Organization and Authorization. Xxxxx and CMI are corporations
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware and California, respectively, and each has the full corporate
power and all necessary authorizations to own all of its properties and assets
and to carry on its business as it is now being conducted. Xxxxx and CMI are
each duly qualified to do business and are in good standing in each jurisdiction
in which the nature of its or their business or character of its or their
properties requires such qualification and where the failure to be so qualified
would materially and adversely affect either corporation or its or their
business, properties or rights. Xxxxx and CMI have each delivered to Reading and
Reading Entertainment complete and correct copies of their Certificate of
Incorporation and Articles of Incorporation, respectively, and their By-Laws, as
amended and in effect on the date of this Agreement. Xxxxx and CMI each have all
requisite corporate power to execute, deliver and perform their obligations
under this Agreement. The execution, delivery and performance of this Agreement
by Xxxxx and CMI, and the consummation by each of them of the transactions
contemplated hereby, have been duly authorized by the Boards of Directors of
Xxxxx and CMI and the shareholder of CMI, and no shareholder approval of Xxxxx
is required. Neither Xxxxx nor CMI is an "investment company" as defined in the
Investment Company Act of 1940, as amended. This Agreement has been duly
executed and delivered by Xxxxx and CMI and constitutes a valid and binding
agreement of Xxxxx and CMI, enforceable in accordance with its terms except to
the extent the enforcement thereof may be limited by bankruptcy, insolvency,
rehabilitation, moratorium and similar laws now or hereafter in effect relating
to creditor's rights generally or by general equitable principles.
4.2 Non-Contravention. The execution and delivery of this Agreement do
-----------------
not and the consummation of the transactions contemplated hereby will not (a)
violate the Articles of Incorporation or By-Laws of CMI or the Certificate of
Incorporation or By-Laws of Xxxxx, (b) violate any provision of or result in the
breach or the acceleration of or entitle any party to accelerate (whether after
the giving of notice or the lapse of time or both) any material obligation under
any mortgage, lease, agreement, license or instrument, or any order, arbitration
award, judgment or decree, to which Xxxxx or CMI is a party or by which either
is bound, (c)
10.
result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance on any property of Xxxxx or CMI, or (d) to the
knowledge of either Xxxxx or CMI, violate or conflict with any law, ordinance or
rule to which either is subject.
4.3 Approvals. No consent, approval, order or authorization of, or
---------
registration, declaration or filing with any governmental authority is required
in connection with the execution and delivery of this Agreement by Xxxxx and CMI
or the consummation by Xxxxx or CMI of the transactions contemplated hereby.
4.4 Interest in Reading International. Xxxxx owns a membership
---------------------------------
interest in Reading International entitling it to a 50% allocable share in the
net profits, net losses and similar items and in distributions from Reading
International. Craig's interest in Reading International is as set forth in
(i) the Limited Liability Company Agreement (the "LLC Agreement") entered into
as of November 9, 1995 between Xxxxx and Reading Investment, which LLC Agreement
is in full force and effect and has not been modified or amended, and (ii) the
RC Revocable Trust dated as of November 9, 1995 between Xxxxx, Reading
Investment and CMI as the trustee relating to rights upon the liquidation of
Reading International, which agreement is in full force and effect and has not
been modified or amended.
4.5 Title to Assets. Xxxxx owns and has, and Reading Entertainment
---------------
will receive, good and marketable title to its interest in Reading International
and the Citadel Preferred Stock being transferred hereunder, free and clear of
any mortgage, lien, pledge, charge, claim, conditional sales or other agreement,
lease, right or encumbrance, other than the provisions of the LLC Agreement with
respect to the interest in Reading International and the provisions of the
Original Citadel Certificate of Designation and the Stock Purchase and Sale
Agreement dated as of March 27, 1996 by and between Xxxxx and Reading Holdings,
Inc. with respect to the Citadel Preferred Stock. CMI owns and has, and Reading
Entertainment will receive, good and marketable title to the Stater Preferred
Stock being transferred to Reading Entertainment pursuant to Section 2.2 hereof,
free and clear of any mortgage, lien, pledge, charge, claim, conditional sales
or other agreement, lease, right or encumbrance, except for the provisions and
restrictions set forth in the Option Agreement described in Section 8.3(e) of
this Agreement.
4.6 Accuracy of Information Furnished. The certificates, statements,
---------------------------------
and other information furnished to Reading and Reading Entertainment in writing
by or on behalf of Xxxxx or CMI in connection with the transactions contemplated
hereby, do not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that no representation is made as to any financial projections contained in such
information other than that any such financial projections were prepared in good
faith based upon assumptions that Xxxxx believes are reasonable.
4.7 Securities Law Compliance. None of the information supplied by
-------------------------
Xxxxx or CMI in writing for inclusion in the Proxy Statement, the Registration
Statement or the Prospectus, or any amendments thereof or supplements thereto,
at the time of mailing of such Proxy Statement or such amendments or
supplements, at the time of any meeting of shareholders to be held in connection
herewith, at the time the Registration Statement becomes effective and at the
mailing of the Proxy Statement and the Prospectus, will contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
11.
4.8 Brokers. All negotiations relating to this Agreement and the
-------
transactions contemplated hereby have been carried on without the intervention
of any person acting on behalf of Xxxxx or CMI who has or may have a valid claim
against any of the parties to this Agreement for any broker's or finder's fee or
similar compensation, other than such fee as may be payable by Xxxxx to Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx, the financial advisor to the Independent Committee of the
Board of Directors of Xxxxx.
4.9 Stater Financial Condition. To the best knowledge of Xxxxx and
--------------------------
CMI, there has been no material adverse change in the financial condition of
Stater from that reflected in its audited financial statements for the year
ended September 24, 1995.
4.10 Investment Representation. Xxxxx and CMI each represent and
-------------------------
warrant to Reading Entertainment that the shares of Reading Entertainment Common
Stock and Reading Entertainment Series B Preferred Stock to be received by them
pursuant to Sections 2.1 and 2.2 hereof and any shares of Reading Entertainment
Common Stock received upon conversion of said shares of Reading Entertainment
Series B Preferred Stock are being or will be acquired for investment and not
with a view to the sale or distribution of any part thereof, and that neither
has any present intention of selling, granting participation in or otherwise
distributing the same in a transaction which would result in a violation of the
Securities Act. Xxxxx and CMI further represent that neither has any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person with respect to any of the
shares of Reading Entertainment Common Stock and Reading Entertainment Series B
Preferred Stock being acquired pursuant to Sections 2.1 and 2.2 hereof. Xxxxx
and CMI understand that the shares of Reading Entertainment Common Stock and
Reading Entertainment Series B Preferred Stock being acquired hereunder and the
shares of Reading Entertainment Common Stock received upon any conversion of the
Reading Entertainment Series B Preferred Stock have not been and will not be
registered under the Securities Act on the ground that the exchange provided for
in this Agreement and the issuance of such securities are exempt pursuant to
Section 4(2) of the Securities Act, and that Reading Entertainment's reliance on
such exemption is predicated on the representations set forth herein. Each
certificate representing the Reading Entertainment Common Stock and Reading
Entertainment Series B Preferred Stock and any shares of Reading Entertainment
Common Stock issued upon conversion of shares of Reading Entertainment Series B
Preferred Stock may be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
Reading Entertainment may also instruct its transfer agent not to register the
transfer of any securities unless the conditions specified in the foregoing
legend are satisfied.
4.11 CMI. Xxxxx has no present intention to liquidate CMI or to sell,
---
transfer or assign its ownership interest in CMI, nor to cause CMI to sell,
transfer or assign any of the Reading Entertainment Common Stock or Reading
Entertainment Series B Preferred Stock to be received by CMI pursuant to this
Agreement. CMI has no present intention to liquidate or
12.
to sell, transfer or assign any of the Reading Entertainment Common Stock or
Reading Entertainment Series B Preferred Stock to be received pursuant to this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF CITADEL AND CAC
Citadel and CAC hereby jointly and severally represent and warrant to
Reading, Reading Entertainment, Xxxxx and CMI as follows:
5.1 Organization and Authorization. CAC and Citadel are corporations
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and each has the corporate power and all necessary
authorizations to own all of its properties and assets and to carry on its
business as it is now being conducted. CAC and Citadel are each duly qualified
to do business and are in good standing in each jurisdiction in which the nature
of its or their business or character of its or their properties requires such
qualification and where the failure to be so qualified would materially and
adversely affect CAC or Citadel or its or their business, properties or rights.
CAC and Citadel have each delivered to Reading and Reading Entertainment
complete and correct copies of their Certificates of Incorporation and By-Laws,
as amended and in effect on the date of this Agreement. CAC and Citadel have
all requisite corporate power to execute, deliver and perform their obligations
under this Agreement. The execution, delivery and performance of this Agreement
by CAC and Citadel, and the consummation by CAC and Citadel of the transactions
contemplated hereby, have been duly authorized by the Board of Directors of CAC
and Citadel, and, except as may be required with respect to an exercise by
Citadel of the Asset Put, no approval of Citadel or CAC shareholders is
required. This Agreement has been duly executed and delivered by CAC and
Citadel and constitutes a valid and binding agreement of CAC and Citadel,
enforceable in accordance with its terms except to the extent the enforcement
thereof may be limited by bankruptcy, insolvency, rehabilitation, moratorium and
similar laws now or hereafter in effect relating to creditor's rights generally
or by general equitable principles.
5.2 Non-Contravention. The execution and delivery of this Agreement do
-----------------
not and the consummation of the transactions contemplated hereby will not
(a) violate the Certificate of Incorporation or By-Laws of either CAC or
Citadel, (b) violate any provision of or result in the breach or the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or the lapse of time or both) any material obligation under any mortgage,
lease, agreement, license or instrument, or any order, arbitration award,
judgment or decree, to which CAC or Citadel is a party or by which it is bound,
(c) result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance on any property of CAC or Citadel, or (d) to the
knowledge of either Citadel or CAC, violate or conflict with any law, ordinance
or rule to which either is subject.
5.3 Approvals. No consent, approval, order or authorization of, or
---------
registration, declaration or filing with any governmental authority is required
in connection with the execution and delivery of this Agreement by CAC or
Citadel or the consummation by CAC or Citadel of the transactions contemplated
hereby, except as may be required with respect to an exercise by Citadel of the
Asset Put.
5.4 Accuracy of Information Furnished. The certificates, statements,
---------------------------------
and other information furnished to Reading and Reading Entertainment in writing
by or on behalf of CAC or Citadel in connection with the transactions
contemplated hereby, do not contain any
13.
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that no representation is made as
to any financial projections contained in such information other than that any
such financial projections were prepared in good faith based upon assumptions
that Citadel believes are reasonable.
5.5 Securities Law Compliance. None of the information supplied by CAC
-------------------------
or Citadel in writing for inclusion in the Proxy Statement, the Registration
Statement or the Prospectus, or any amendments thereof or supplements thereto,
at the time of mailing of such Proxy Statement or such amendments or
supplements, at the time of any meeting of stockholders to be held in connection
herewith, at the time the Registration Statement becomes effective and at the
mailing of the Proxy Statement and the Prospectus, will contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
5.6 Brokers. All negotiations relating to this Agreement and the
-------
transactions contemplated hereby have been carried on without the intervention
of any person acting on behalf of CAC or Citadel who has or may have a valid
claim against any of the parties to this Agreement for any broker's or finder's
fee or similar compensation, other than such fee as may be payable by Citadel or
CAC to Xxxxxxx, Xxxxxx & Co., the financial advisor to the Independent Committee
of the Board of Directors of Citadel.
5.7 Investment Representation. CAC represents and warrants to Reading
-------------------------
Entertainment that the shares of Reading Entertainment Series A Preferred Stock
to be received by CAC pursuant to Section 2.3 hereof and any shares of Reading
Entertainment Common Stock received upon conversion of said shares are being or
will be acquired for investment and not with a view to the sale or distribution
of any part thereof, and that it has no present intention of selling, granting
participation in or otherwise distributing the same in a transaction which would
result in a violation of the Securities Act. Citadel and CAC further represent
that there is no contract, undertaking, agreement or arrangement with any person
to sell, transfer or grant participations to such person or to any third person
with respect to any of the shares of Reading Entertainment Series A Preferred
Stock being acquired pursuant to Section 2.3 hereof. CAC understands that the
shares being acquired by it hereunder and the shares of Reading Entertainment
Common Stock received upon any conversion thereof have not been and will not be
registered under the Securities Act on the ground that the exchange provided for
in this Agreement and the issuance of such securities are exempt pursuant to
Section 4(2) of the Securities Act, and that Reading Entertainment's reliance on
such exemption is predicated on the representations set forth herein. Each
certificate representing the Reading Entertainment Series A Preferred Stock and
any shares of Reading Entertainment Common Stock issued upon conversion of
shares of Reading Entertainment Series A Preferred Stock may be endorsed with
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
14.
Reading Entertainment may also instruct its transfer agent not to register the
transfer of any securities unless the conditions specified in the foregoing
legend are satisfied.
5.8 Independent Continuing Directors. As of the date hereof and the
--------------------------------
Closing Date, CAC has and will have not less than two Independent Continuing
Directors (as defined in Article IX of the Certificate of Incorporation of CAC).
5.9 Capital Stock. The shares of Series B Citadel Preferred Stock to
-------------
be issued pursuant to this Agreement have been duly authorized, and, when issued
and paid for pursuant to the terms hereof, will be validly issued, fully paid
and non-assessable and will be entitled to all the rights, preferences and
privileges set forth in the Certificate of Designation of the Series B 3%
Cumulative Voting Convertible Preferred Stock of Citadel Holding Corporation
(the "Citadel Certificate of Designation"), attached as Exhibit 5.9 hereto. The
shares of common stock of Citadel issuable upon conversion of the Series B
Citadel Preferred Stock have been duly authorized and reserved for issuance upon
such conversion and, when issued and delivered on such conversion in accordance
with the terms of the Citadel Certificate of Designation, will be validly
issued, fully paid and non-assessable. The form of certificates representing the
shares of Series B Citadel Preferred Stock to be issued pursuant to this
Agreement will comply with the Delaware General Corporation Law, as amended. All
corporate action required to be taken for the authorization and issuance of the
Series B Citadel Preferred Stock to be issued pursuant to the Agreement has been
duly and validly taken. At or prior to the Closing, the Citadel Certificate of
Designation will have been filed with the Secretary of State of the State of
Delaware.
6. SHAREHOLDER APPROVAL; PROXY AND REGISTRATION FILINGS
6.1 Shareholder Approval. A meeting of the shareholders of Reading
--------------------
(the "Reading Shareholders") shall be held in accordance with the laws of the
State of Pennsylvania on or before November 30, 1996 (or such later date or
dates as may be approved by the Boards of Directors of all of the parties to
this Agreement) to, among other things, consider and act upon the Exchange and
the Reorganization.
6.2 Proxy Statement and Registration Statement.
------------------------------------------
(a) Reading has prepared and filed with the SEC a Proxy Statement
and related proxy material meeting the requirements of Regulation 14A of the
Securities Exchange Act to be mailed to shareholders in connection with the
meeting of the Reading Shareholders (the "Proxy Statement") referred to above,
and Reading shall use its commercially reasonable efforts to clear these
materials with the SEC and mail said materials to the Reading Shareholders on or
before October 21, 1996, or as soon as practicable thereafter. Reading further
covenants that the Proxy Statement at the time of mailing to the Reading
Shareholders and at the time of the meeting of shareholders held to approve the
Reorganization and Exchange will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading and the Proxy Statement will comply as to form in all material
respects with the provisions of the Securities Exchange Act.
(b) Xxxxx, CMI, Citadel and CAC shall furnish in writing for
inclusion in the Proxy Statement and the Registration Statement, described
below, such information as may
15.
be reasonably necessary to comply with the provisions of the Securities Act and
the Securities Exchange Act and the rules and regulations thereunder and shall
have been requested in writing by Reading.
(c) Reading shall prepare a registration statement (the
"Registration Statement") including a form of prospectus (the "Prospectus") and
one or more amendments thereto, on Form S-4 or other appropriate form covering
the shares of Reading Entertainment Common Stock to be issued pursuant to the
Reorganization and shall use its commercially reasonable efforts to cause the
Registration Statement to become effective on or before October 21, 1996, or as
soon as practicable thereafter. Reading shall deliver to Xxxxx, CMI, Citadel and
CAC copies of the Registration Statement and each amendment thereto filed or
proposed to be filed (and of each related preliminary prospectus). The
Registration Statement and the Prospectus, as amended at the time the
Registration Statement becomes effective, are herein called the "Registration
Statement" and the "Prospectus." Reading shall advise Xxxxx, CMI, Citadel and
CAC and shall confirm in writing (i) when the Registration Statement or any
post-effective amendment thereto shall have become effective and when any
amendment of or supplement to the Prospectus is filed with the SEC, (ii) when
the SEC shall make a request or suggestion for any amendment to the Registration
Statement or the Prospectus or for additional information and the nature and
substance thereof, relating solely to the Reorganization or Exchange, and (iii)
of the issuance by the SEC of a stop order suspending the effectiveness of the
Registration Statement, and shall use its commercially reasonable efforts to
prevent the issuance of a stop order and, if such order shall be issued, to
obtain the withdrawal thereof at the earliest possible time. Reading represents
and warrants to Xxxxx, CMI, Citadel and CAC that the Registration Statement and
the Prospectus (including the information therein provided by Reading) and any
other amendments and supplements thereto, will, when they become effective,
conform in all material respects to the requirements of the Securities Act and
the rules and regulations thereunder, and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that Reading makes no representation or warranty as to statements or
omissions therein supplied by Xxxxx, CMI, Citadel and CAC.
(d) If, at any time prior to the Closing Date, it shall be
necessary to amend or supplement the Proxy Statement or the Registration
Statement to correct any statement or omission with respect to Reading, Reading
Entertainment, Xxxxx, CMI, Citadel or CAC in order to comply with any applicable
legal requirements, the appropriate party to this Agreement shall supply in
writing the necessary information to Reading. To the extent necessary to comply
with applicable legal requirements, Reading shall amend or supplement the Proxy
Statement and amend or supplement the Registration Statement and Prospectus.
7. COVENANTS
7.1 Covenants of Xxxxx, CMI, Citadel and CAC.
----------------------------------------
(a) Xxxxx, CMI, Citadel and CAC each hereby covenant and agree
that from the date of this Agreement until the Closing Date (or until the items
referred to have either been accomplished or, in good faith, abandoned), except
with the prior written consent of Reading, it:
16.
(i) shall use its commercially reasonable efforts to
promptly furnish such information to Reading or Reading Entertainment as shall
be necessary for Reading to comply with all filing and regulatory requirements
imposed on Reading or Reading Entertainment with respect to the Exchange and the
Reorganization; and
(ii) with respect to Xxxxx and CMI, will not transfer,
pledge, encumber or allow a mortgage, lien or other charge to be placed upon any
of the assets to be transferred to Reading Entertainment pursuant to Section 2.1
or 2.2 hereunder.
(b) Subject to the terms of this Agreement, Xxxxx agrees to vote
all shares of its Reading Class A Common Stock in favor of the Reorganization
and Exchange at the meeting of Reading Shareholders held to consider the same.
(c) Citadel hereby covenants and agrees that, so long as the
provisions of Article IX of the Certificate of Incorporation of CAC remain
applicable in accordance with their terms, Citadel (i) shall use its
commercially reasonable efforts to ensure that CAC at all times has at least one
Independent Continuing Director (as defined in such Article IX), and (ii) shall
not and shall not permit any of its subsidiaries to cause a "short-form" merger
of CAC into Citadel or any subsidiary of Citadel, or otherwise take any action
which, if taken by CAC, would violate the provisions of such Article IX.
(d) Xxxxx covenants and agrees that at the Closing it will
transfer and assign to Reading Entertainment all of Craig's rights, and Reading
Entertainment covenants and agrees that it will assume all of Craig's
obligations, under the Preferred Stock Purchase Agreement entered into on
November 10, 1994. Citadel consents to such transfer, assumption and assignment
and agrees that the provisions of such Preferred Stock Purchase Agreement shall
apply to the Series B Citadel Preferred Stock (and the shares of Citadel Common
Stock issuable upon conversion of the Series B Citadel Preferred Stock) as if
such shares were the "Shares" as defined in such Preferred Stock Purchase
Agreement.
7.2 Covenants of Reading and Reading Entertainment.
----------------------------------------------
(a) Reading and Reading Entertainment hereby covenant and agree
that from the date of this Agreement until the Closing Date, except with the
prior written consent of Xxxxx, CMI, Citadel and CAC, which will not be
unreasonably withheld or delayed, it:
(i) shall use its commercially reasonable efforts to
comply with all filing and regulatory requirements which may be imposed on
Reading and Reading Entertainment with respect to the Exchange and the
Reorganization, including the filing with the SEC of the Proxy Statement and the
Registration Statement;
(ii) shall use its commercially reasonable efforts to
obtain any consent, authorization or approval of, any governmental authority or
agency or other third party required to be obtained in connection with the
Exchange and the Reorganization or the taking of any action in connection with
the consummation thereof; and
(iii) use its commercially efforts to consummate the
Reorganization and hold a meeting of Reading Shareholders to approve the
Reorganization and the Exchange.
17.
(b) Reading and Reading Entertainment hereby covenant and agree
that prior to the Closing, the Reading Entertainment Common Stock issuable upon
conversion of the Reading Entertainment Series A and Series B Preferred Stock
shall have been reserved for issuance by Reading Entertainment out of its
authorized but unissued shares of Common Stock and the Reading Entertainment
Common Stock issuable upon such conversion and the Reading Entertainment Common
Stock being issued pursuant to Section 2.1 and 2.2 hereof shall have been
approved for listing on NASDAQ National Market as well as any stock exchange
where Reading Entertainment Common Stock may be listed, subject to official
notice of issuance.
7.3 Access. From the date of this Agreement to the Closing Date,
------
Reading shall afford to Xxxxx, CMI, Citadel and CAC and to the officers and
authorized representatives of each such entity (including, without limitation,
counsel, financial advisors and independent accountants) reasonable access to
its properties, personnel, books and records at such reasonable times and in
such manner as not to disrupt normal business operations; and the officers of
Reading will furnish such officers and representatives with such additional
financial and operating data and other information as to its business and
properties as may be reasonably requested. Likewise Xxxxx shall afford to
Reading, Citadel and CAC and to the authorized representatives of each such
entity (including without limitation, counsel, financial advisors and
independent accountants) reasonable access to all information held by Xxxxx with
respect to Stater. Each of the parties hereto shall insure that all
confidential information which such party or any of its officers, directors,
employees, counsel, agents, investment bankers, or accountants may receive under
this Section 7.3 or pursuant to Section 6.2(c)(ii) shall be kept confidential
and not published, disclosed, or made accessible by any of them to any other
person, except the persons referred to in this sentence who are advised of and
agree to maintain the confidential nature of such information; provided,
however, that the restrictions of this sentence shall not apply as may otherwise
be required by law, as may be necessary or appropriate in connection with the
enforcement of this Agreement, or to the extent such information shall have
otherwise become publicly available.
7.4 Citadel Contributions. Prior to the Closing, Citadel agrees to
---------------------
contribute $7.0 million to the capital of CAC to enable CAC to complete the
transfer described in Section 2.3 of this Agreement.
8. CONDITIONS
8.1 Conditions Precedent to the Obligations of All Parties.
------------------------------------------------------
Notwithstanding any other provision of this Agreement, the obligations of the
parties to effect the Exchange shall be subject to the fulfillment, as of the
Closing, of each of the following conditions (unless waived by the written
consent of the parties hereto):
(a) the Exchange and the Reorganization shall have been validly
approved and adopted by the affirmative vote of the holders of at least a
majority of the votes cast by the holders of the issued and outstanding shares
of Reading Class A Common Stock and Reading Common Stock, voting together as a
single class, at a duly called and held meeting of the Reading Shareholders at
which a quorum is present, and the Reorganization shall have been consummated;
18.
(b) all permits, approvals and consents of any governmental body
or agency or other third party necessary or appropriate for consummation of the
Exchange and the Reorganization shall have been obtained;
(c) the Registration Statement shall have become effective under
the Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued or proceedings for that purpose
instituted by the SEC; the Reading Entertainment Common Stock issuable upon
conversion of the Reading Entertainment Series A and Series B Preferred Stock
shall have been reserved for issuance by Reading Entertainment out of its
authorized but unissued shares of Common Stock and the Reading Entertainment
Common Stock issuable upon such conversion and the Reading Entertainment Common
Stock being issued pursuant to Section 2.1 and 2.2 hereof shall have been
approved for listing on NASDAQ National Market as well as any stock exchange
where Reading Entertainment Common Stock may be listed, subject to official
notice of issuance;
(d) there shall not be in effect an order or decision of a court
of competent jurisdiction or a governmental agency or authority which prevents,
or would materially alter the terms of, the Exchange or the Reorganization;
(e) there shall not be any action or proceeding commenced by or
before any governmental agency or authority or threatened by any governmental
agency or authority that enjoins, restrains or prohibits or seeks to enjoin,
restrain or prohibit the Exchange or the Reorganization;
(f) the requirement to close the transfers described in Sections
2.1, 2.2, 2.3 and 2.4 of this Agreement are conditioned on all such transfers
closing simultaneously;
(g) Reading and Reading Entertainment shall have received, on or
prior to the mailing date of the Proxy Statement, an opinion reasonably
satisfactory to them from Berwind Financial Group, L.P. to the effect that the
Exchange is fair from a financial point of view to Reading and Reading
Entertainment and said opinion shall not have been withdrawn or modified in a
manner which is not reasonably satisfactory to Reading or Reading Entertainment;
and
(h) the holders of Reading's Class A Common Stock shall not have
had any dissenter's rights under Pennsylvania law in connection with the
Reorganization.
8.2 Additional Conditions Precedent to the Obligations of Reading and
-----------------------------------------------------------------
Reading Entertainment. In addition to the conditions contained in Section 8.1,
---------------------
the obligations of Reading and Reading Entertainment to effect the Exchange
shall also be subject to the fulfillment as of the Closing Date of each of the
following conditions (unless waived in writing by Reading and Reading
Entertainment):
(a) the representations and warranties of Xxxxx, CMI, Citadel and
CAC contained in Section 4 and 5, respectively, shall be true in all material
respects at and as of the date hereof and as of the Closing Date as if made at
and as of the Closing Date; Xxxxx, CMI, Citadel and CAC shall have each duly
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed or
19.
complied with by them prior to or on the Closing Date; and each of Xxxxx, CMI,
Citadel and CAC shall have delivered to Reading and Reading Entertainment a
certificate dated the Closing Date and signed by its President or its Chief
Financial Officer to the effect set forth in this subparagraph.
(b) Reading and Reading Entertainment shall have received an
opinion letter from Xxxx & Xxxxx Professional Corporation, counsel to Xxxxx and
CMI, dated the Closing Date, substantially in the form previously delivered to
counsel to Reading.
(c) Reading and Reading Entertainment shall have received an
opinion letter from Xxxxxx, Xxxx & Xxxxxxxx, special counsel to CAC, and
Citadel, dated the Closing Date, substantially in the form previously delivered
to counsel to Reading. Reading and Reading Entertainment shall have received an
opinion letter from its counsel, Duane, Morris & Heckscher, dated the Closing
Date, substantially in the form of the draft dated the date hereof, previously
delivered to Reading.
(d) All necessary corporation action on the part of the directors
of Xxxxx, CMI, Citadel and CAC in connection with the transactions contemplated
in this Agreement shall have been duly and validly taken.
(e) From the date hereof, there shall have been no material
adverse change in the assets, business, financial condition or results of
operations of Stater and its subsidiaries, taken as a whole, or Citadel and its
subsidiaries, taken as a whole.
(f) The consummation of the Exchange and the Reorganization shall
not result in a "change of control" under the Code such that there would be a
material adverse impact on the net operating loss carryforwards of Reading or
Reading Entertainment.
(g) The Stater Stockholders Agreement, as amended, shall have been
terminated.
8.3 Additional Conditions Precedent to the Obligations of Xxxxx and
---------------------------------------------------------------
CMI. In addition to the conditions contained in Section 8.1, the obligations of
---
Xxxxx and CMI to effect the Exchange shall also be subject to the fulfillment at
the Closing Date of each of the following conditions (unless waived in writing
by Xxxxx and CMI):
(a) the representations and warranties of Reading and Reading
Entertainment contained in Section 3 and the representations and warranties of
Citadel and CAC contained in Section 5 shall be true in all material respects at
and as of the date hereof and as of the Closing Date as if made at and as of the
Closing Date; Reading, Reading Entertainment, Citadel and CAC shall each have
duly performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement to be performed or complied
with prior to or at the Closing Date; and Reading, Reading Entertainment,
Citadel and CAC shall have each delivered to Xxxxx and CMI a certificate dated
the Closing Date and signed by its President or Chief Financial Officer to the
respective effect set forth in this subparagraph;
(b) Xxxxx and CMI shall have received an opinion letter from
Duane, Morris & Heckscher, counsel to Reading and Reading Entertainment, dated
the Closing Date,
20.
substantially in the form previously delivered to counsel to Xxxxx. Xxxxx and
CMI shall have received an opinion letter from Duane, Morris & Heckscher, dated
the Closing Date, substantially in the form of the draft dated the date hereof,
previously delivered to counsel to Xxxxx.
(c) All necessary corporate action on the part of the directors
and shareholders of Reading and the directors of Reading Entertainment and
Reading Entertainment Subsidiary and the directors and shareholder of CAC in
connection with the transactions contemplated in this Agreement shall have been
taken by the Closing.
(d) From the date hereof, there shall have been no material
adverse change in the assets, business, financial condition or results of
operations of Reading or Reading Entertainment and its or their subsidiaries,
taken as a whole.
(e) Reading Entertainment shall have delivered to CMI its
agreement to be bound by the provisions of Article I and II of that Option
Agreement entered into as of September 3, 1993 by and among Xxxxxx, Xxxxx and
CMI with respect to the Stater Preferred Stock.
(f) Immediately prior to the Closing, Reading International and
Reading Investment shall have terminated any and all obligations of Xxxxx and
CMI under that Amended and Restated Capital Funding Agreement entered into as of
March 8, 1996 by and among Xxxxx, Reading Investment and CMI, and Reading
Holdings shall have terminated all of its rights with respect to the Warrant
Purchase Option set forth in Section 3.1 and the Preferred Purchase Option set
forth in Section 2.1 of the Stock Purchase and Sale Agreement entered into as of
March 27, 1996 by and between Xxxxx and Reading Holdings.
(g) The opinion of the law firm of Morris, Nichols, Arsht &
Xxxxxxx that no approval of the shareholders of Xxxxx is required under Delaware
law in connection with the Exchange shall have been reissued and dated as of the
Closing Date and shall not have been modified in a manner not reasonably
satisfactory to legal counsel for Xxxxx.
(h) The opinion of Duane, Morris & Heckscher dated as of the date
of this Agreement, and delivered to Xxxxx and CMI shall have been reissued and
dated as of the Closing Date and shall not have been modified in a manner not
reasonably satisfactory to legal counsel for Xxxxx.
(i) The fairness opinion of Xxxxxxxx Xxxxx Xxxxxx & Xxxxx
addressed to the Board of Directors of Xxxxx and dated as of the date of this
Agreement shall not have been withdrawn or modified in a manner not reasonably
satisfactory to Xxxxx.
(j) The total shareholders' equity of Reading as reflected in
financial statements set forth in the Form 10-Q filed with the SEC for the
quarter ended closest to the Closing shall not be less than $66,218,000.
8.4 Additional Conditions Precedent to the Obligations of CAC and
-------------------------------------------------------------
Citadel. In addition to the conditions contained in Section 8.1, the
-------
obligations of CAC and Citadel to effect the Exchange shall also be subject to
the fulfillment at the Closing Date of each of the following conditions (unless
waived in writing by CAC and Citadel):
21.
(a) the representations and warranties of Reading and Reading
Entertainment contained in Section 3 and the representations of Xxxxx and CMI
contained in Section 4 shall be true in all material respects at and as of the
date hereof and as of the Closing Date as if made at and as of the Closing Date;
each of Reading, Reading Entertainment, Xxxxx and CMI shall each have duly
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed or complied with prior
to or at the Closing Date; and each of Reading, Reading Entertainment, Xxxxx and
CMI shall have delivered to CAC and Citadel a certificate dated the Closing Date
and signed by its President or Chief Financial Officer to the respective effect
set forth in this subparagraph.
(b) CAC and Citadel shall have received an opinion letter from
Duane, Morris & Heckscher, counsel to Reading and Reading Entertainment, dated
the Closing Date, substantially in the form of the draft previously delivered to
counsel to Citadel. CAC and Citadel shall have received an opinion letter from
Duane, Morris & Heckscher, dated the Closing Date, substantially in the form of
the draft dated the date hereof previously delivered to counsel to Citadel.
(c) All necessary corporate action on the part of the directors
and shareholders of Reading and the directors of Reading Entertainment and
Reading Entertainment Subsidiary and the directors of Xxxxx and CMI in
connection with the transactions contemplated in this Agreement shall have been
taken by the Closing.
(d) From the date hereof, there shall have been no material
adverse change in the assets, business, financial condition, or results of
operations of Reading or Reading Entertainment and its or their subsidiaries,
taken as a whole.
(e) Each of Reading Entertainment and Xxxxx shall have executed
and delivered to Citadel and CAC an Asset Put and Registration Rights Agreement
substantially in the form attached hereto as Exhibit 8.4(e) (the "Option
Agreement").
(f) The fairness opinion of Xxxxxxx, Xxxxxx & Co. addressed to the
Board of Directors of Citadel and dated as of the date of this Agreement shall
not have been withdrawn or modified in a manner not reasonably satisfactory to
Citadel.
(g) The opinion of Duane, Morris & Heckscher dated as of the date
of this Agreement and delivered to Citadel and CAC shall have been reissued and
dated as of the Closing Date and shall not have been modified in a manner not
reasonably satisfactory to legal counsel for Citadel.
(h) The total shareholders' equity of Reading as reflected in
financial statements set forth in the Form 10-Q filed with the SEC for the
quarter ended closest to the Company shall not be less than $66,218,000.
22.
9. TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date, whether before or after approval by the Reading Shareholders;
(a) by mutual consent of the respective Boards of Directors of
Reading, Reading Entertainment, Xxxxx, CMI, Citadel and CAC;
(b) by any of the respective Boards of Directors of Reading,
Xxxxx, CMI, and Citadel if the Exchange and the Reorganization shall not have
been consummated on or before December 31, 1996, except as a result of the
wilful acts or omissions of the party (or, in the case of Reading, Citadel or
Xxxxx, its wholly owned subsidiary, or, in the case of CMI, its parent) seeking
to cancel this Agreement.
9.2 Written Notice. In order to terminate this Agreement pursuant to
--------------
Section 9.1, the party or parties so acting shall give written notice of such
termination to the other parties.
9.3 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to Section 9.1, the provisions of this Agreement shall become
void and have no effect, with no liability on the part of any party or its
shareholders or directors or officers in respect thereof, unless such
termination shall have occurred as a result of the wilful breach of this
Agreement by any party hereto.
10. GENERAL PROVISIONS
10.1 Survival of Representations and Warranties. Other than with respect
------------------------------------------
to Sections 3.3, 3.11, 4.5, 4.10, 5.7 and 5.9 of this Agreement, the
representations and warranties set forth in this Agreement shall survive the
Closing for a period of one year. The representations and warranties set forth
in Sections 3.3, 3.11, 4.5, 4.10, 5.7 and 5.9 of this Agreement shall survive in
perpetuity.
10.2 Notices. All notices, requests, demands or other communications
-------
required or authorized or contemplated to be given by this Agreement shall be in
writing and shall be deemed to have been duly given made and received when
delivered against receipt, upon receipt of a facsimile transmission, when
deposited in the United States mails (first class postage prepaid) or when
deposited with Federal Express, and addressed as follows:
If to Reading or
Reading Entertainment: Reading Company
The Xxxxxx Building
One Penn Square West
00 Xxxxx 00xx Xxxxxx,
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
Copies to: Duane, Morris & Heckscher
23.
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
and
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Nassau, Esq.
Fax: (000) 000-0000
If to Xxxxx or CMI: Xxxxx Corporation
000 X. Xxxx Xxxxxx,
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxx
Fax: (000) 000-0000
Copy to: Xxxx & Xxxxx Professional Corporation
0000 Xxxxxxx Xxxx Xxxx,
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to CAC or Citadel: Citadel Holding Corporation
000 X. Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Fax: (000) 000-0000
Copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 X. Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Dhiya El-Saden, Esq.
Fax: (000) 000-0000
or such other address and fax number as any of the parties hereto may from time
to time designate in writing, prior to the giving of such notice.
10.3 Amendment and Waiver. No amendment or waiver of any provision of
--------------------
this Agreement shall in any event be effective, unless the same shall be in
writing signed by the parties hereto, and then such amendment, waiver or consent
shall be effective only in a specific instance and for the specific purpose for
which given, except that the parties to this Agreement may (i) extend the time
for the performance of any of the obligations or other acts of the other
parties, (ii) waive any inaccuracies in the representations and warranties
contained
24.
in this Agreement or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the covenants or conditions contained in this Agreement.
10.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
10.5 Assignability. This Agreement shall not be assigned by any party
-------------
without the prior written consent of all of the parties hereto. In the event of
such assignment, this Agreement shall bind and inure to the benefit of the
parties named herein and their respective successors and assigns.
10.6 Entire Agreement. This Agreement and the documents referred to
----------------
herein contain the entire understanding among the parties with respect to the
transactions contemplated hereby and supersede all prior and contemporaneous
agreements and understandings whether oral or written, relating to the subject
matter hereof.
10.7 Applicable Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of Delaware, notwithstanding any
Delaware or other conflict-of-law provisions to the contrary.
10.8 Headings. The section and other headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of the terms and conditions contained therein or of
this Agreement.
10.9 Costs and Expenses. Each party hereto shall bear its own costs and
------------------
expenses (including fees and disbursements of legal counsel) incurred in
connection with the negotiation and preparation of this Agreement and the
consummation of the transactions provided for herein, except that Reading
Entertainment agrees to reimburse Citadel and CAC, regardless of whether the
Closing occurs, for their aggregate reasonable out-of-pocket costs and expenses
(including reasonable fees and expenses of legal counsel and financial advisors)
related to this Agreement and the transactions contemplated hereby up to a
maximum of $280,000.
25.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
READING COMPANY
By: /S/ XXXXX X. XXXXXXXX
--------------------------------
Its: Chief Operating Officer
READING ENTERTAINMENT, INC.
By: /S/ XXXXX X. XXXXXXXX
-----------------------------
Its: Chief Operating Officer
XXXXX CORPORATION
By: /S/ S. XXXXX XXXXXXXX
-------------------------------
Its: President
XXXXX MANAGEMENT, INC.
By: /S/ S. XXXXX XXXXXXXX
-------------------------------
Its: President
CITADEL HOLDING CORPORATION
By: /S/ XXXXX XXXXXX
------------------------------
Its: President
CITADEL ACQUISITION CORP., INC.
By: /S/ XXXXX XXXXXX
-----------------------------
Its: President
26.
