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Exhibit 10
AGREEMENT AND PLAN OF MERGER
AMONG
CITADEL HOLDING CORPORATION
XXXXX MERGER SUB, INC.
READING MERGER SUB, INC.
XXXXX CORPORATION
AND
READING ENTERTAINMENT, INC.
Dated as of August 17, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGERS....................................................................................... 1
Section 1.1 The Mergers............................................................................. 1
Section 1.2 Effective Time of the Mergers........................................................... 1
Section 1.3 Tax Treatment........................................................................... 2
Section 1.4 Accounting Treatment.................................................................... 2
ARTICLE II THE SURVIVING CORPORATIONS....................................................................... 2
Section 2.1 Articles of Incorporation............................................................... 2
Section 2.2 Bylaws.................................................................................. 2
Section 2.3 Directors and Officers.................................................................. 2
ARTICLE III CONVERSION OF SHARES............................................................................ 3
Section 3.1 Conversion of Capital Stock............................................................. 3
Section 3.2 Surrender and Payment................................................................... 6
Section 3.3 Stock Options........................................................................... 8
Section 3.4 No Fractional Shares.................................................................... 9
Section 3.5 Closing................................................................................. 9
Section 3.6 Affiliates.............................................................................. 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF XXXXX.......................................................... 9
Section 4.1 Organization and Qualification.......................................................... 9
Section 4.2 Capitalization.......................................................................... 10
Section 4.3 Authority............................................................................... 11
Section 4.4 Consents and Approvals; No Violation.................................................... 11
Section 4.5 Xxxxx SEC Reports....................................................................... 12
Section 4.6 Financial Statements.................................................................... 13
Section 4.7 Absence of Undisclosed Liabilities...................................................... 13
Section 4.8 Absence of Certain Changes.............................................................. 13
Section 4.9 Taxes................................................................................... 13
Section 4.10 Litigation.............................................................................. 14
Section 4.11 Employee Benefit Plans; ERISA........................................................... 15
Section 4.12 Environmental Liability................................................................. 16
Section 4.13 Compliance with Applicable Laws......................................................... 17
Section 4.14 Insurance............................................................................... 18
Section 4.15 Labor Matters; Employees................................................................ 18
Section 4.16 Permits................................................................................. 19
Section 4.17 Material Contracts...................................................................... 19
Section 4.18 Required Stockholder Vote or Consent.................................................... 19
Section 4.19 Proxy Statement/Prospectus; Registration Statement...................................... 20
Section 4.20 Intellectual Property................................................................... 20
Section 4.21 Brokers................................................................................. 20
Section 4.22 Fairness Opinion........................................................................ 21
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF READING......................................................... 21
Section 5.1 Organization and Qualification.......................................................... 21
Section 5.2 Capitalization.......................................................................... 22
Section 5.3 Authority............................................................................... 22
Section 5.4 Consents and Approvals; No Violation.................................................... 23
Section 5.5 Reading SEC Reports..................................................................... 24
Section 5.6 Financial Statements.................................................................... 24
Section 5.7 Absence of Undisclosed Liabilities...................................................... 24
Section 5.8 Absence of Certain Changes.............................................................. 24
Section 5.9 Taxes................................................................................... 25
Section 5.10 Litigation.............................................................................. 26
Section 5.11 Employee Benefit Plans; ERISA........................................................... 26
Section 5.12 Environmental Liability................................................................. 27
Section 5.13 Compliance with Applicable Laws......................................................... 28
Section 5.14 Insurance............................................................................... 29
Section 5.15 Labor Matters; Employees................................................................ 29
Section 5.16 Permits................................................................................. 30
Section 5.17 Material Contracts...................................................................... 30
Section 5.18 Required Stockholder Vote or Consent.................................................... 30
Section 5.19 Proxy Statement/Prospectus; Registration Statement...................................... 31
Section 5.20 Intellectual Property................................................................... 31
Section 5.21 Brokers................................................................................. 31
Section 5.22 Fairness Opinion........................................................................ 31
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT......................................................... 32
Section 6.1 Organization and Qualification.......................................................... 32
Section 6.2 Capitalization.......................................................................... 33
Section 6.3 Authority............................................................................... 33
Section 6.4 Consents and Approvals; No Violation.................................................... 34
Section 6.5 Parent SEC Reports...................................................................... 35
Section 6.6 Parent Financial Statements............................................................. 35
Section 6.7 Absence of Undisclosed Liabilities...................................................... 35
Section 6.8 Absence of Certain Changes.............................................................. 36
Section 6.9 Taxes................................................................................... 36
Section 6.10 Litigation.............................................................................. 37
Section 6.11 Employee Benefit Plans; ERISA........................................................... 37
Section 6.12 Environmental Liability................................................................. 38
Section 6.13 Compliance with Applicable Laws......................................................... 39
Section 6.14 Insurance............................................................................... 40
Section 6.15 Labor Matters; Employees................................................................ 40
Section 6.16 Permits................................................................................. 41
Section 6.17 Material Contracts...................................................................... 41
Section 6.18 Required Stockholder Vote or Consent.................................................... 42
Section 6.19 Proxy Statement/Prospectus; Registration Statement...................................... 42
Section 6.20 Intellectual Property................................................................... 42
Section 6.21 Brokers................................................................................. 43
Section 6.22 Fairness Opinion........................................................................ 43
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ARTICLE VII CONDUCT OF BUSINESS PENDING THE MERGERS......................................................... 43
Section 7.1 Conduct of Business by the Parent and the Companies Pending the Mergers................. 43
ARTICLE VIII ADDITIONAL AGREEMENTS.......................................................................... 45
Section 8.1 Access and Information.................................................................. 45
Section 8.2 Directors' and Officers' Indemnification................................................ 46
Section 8.3 Further Assurances...................................................................... 46
Section 8.4 Expenses................................................................................ 46
Section 8.5 Cooperation............................................................................. 46
Section 8.6 Publicity............................................................................... 47
Section 8.7 Additional Actions...................................................................... 47
Section 8.8 Filings................................................................................. 47
Section 8.9 Consents................................................................................ 47
Section 8.10 Employee Matters; Benefit Plans......................................................... 47
Section 8.11 Stockholders Meetings................................................................... 48
Section 8.12 Preparation of the Proxy Statement/Prospectus and Registration Statement................ 49
Section 8.13 Stock Exchange Listing.................................................................. 50
Section 8.14 Notice of Certain Events................................................................ 50
Section 8.15 Affiliate Agreements.................................................................... 51
Section 8.16 Stockholder Litigation.................................................................. 51
Section 8.17 Voting Covenant......................................................................... 51
Section 8.18 Repurchase Obligation................................................................... 52
ARTICLE IX CONDITIONS TO CONSUMMATION OF THE MERGERS........................................................ 52
Section 9.1 Conditions to the Obligation of Each Party.............................................. 52
Section 9.2 Conditions to the Obligations of Parent................................................. 53
Section 9.3 Conditions to the Obligations of Xxxxx.................................................. 53
Section 9.4 Conditions to the Obligations of Reading................................................ 54
ARTICLE X SURVIVAL.......................................................................................... 54
Section 10.1 Survival of Representations and Warranties.............................................. 54
Section 10.2 Survival of Covenants and Agreements.................................................... 55
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER................................................................ 55
Section 11.1 Termination............................................................................. 55
Section 11.2 Effect of Termination................................................................... 55
ARTICLE XII MISCELLANEOUS................................................................................... 56
Section 12.1 Notices................................................................................. 56
Section 12.2 Separability............................................................................ 57
Section 12.3 Assignment.............................................................................. 57
Section 12.4 Interpretation.......................................................................... 58
Section 12.5 Counterparts............................................................................ 58
Section 12.6 Entire Agreement........................................................................ 58
Section 12.7 Governing Law........................................................................... 58
Section 12.8 Attorneys' Fees......................................................................... 58
Section 12.9 No Third Party Beneficiaries............................................................ 58
Section 12.10 Amendments and Supplements.............................................................. 58
Section 12.11 Extensions, Waivers, Etc................................................................ 58
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EXHIBITS
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Exhibit 8.15 Affiliate Agreement
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DEFINED TERMS
affiliates.................................................... 51
Agreement..................................................... 1
AMEX.......................................................... 50
Ancillary Agreements...................................... 11, 22
Audit......................................................... 14
Closing....................................................... 9
Closing Date.................................................. 9
Code.......................................................... 1
cold comfort.................................................. 50
Company....................................................... 1
Xxxxx......................................................... 1
Xxxxx and Reading Stock....................................... 6
Xxxxx and Reading Stock Certificates.......................... 5
Xxxxx and Reading Stock Exchange Ratios....................... 8
Xxxxx and Reading Stock Merger Consideration.................. 5
Xxxxx and Reading Stock Options............................... 8
Xxxxx Benefit Plans........................................... 15
Xxxxx Capital Stock........................................... 10
Xxxxx Class B Stock........................................... 00
Xxxxx Xxxxxx Preference Stock................................. 3
Xxxxx Common Preference Stock Certificate..................... 4
Xxxxx Common Preference Stock Exchange Ratio.................. 4
Xxxxx Common Preference Stock Merger Consideration............ 4
Xxxxx Common Stock............................................ 3
Xxxxx Common Stock Certificate................................ 3
Xxxxx Common Stock Exchange Ratio............................. 3
Xxxxx Common Stock Merger Consideration....................... 3
Xxxxx Disclosure Letter....................................... 9
Xxxxx ERISA Affiliate......................................... 15
Xxxxx Financial Statements.................................... 13
Xxxxx Material Adverse Effect................................. 10
Xxxxx Material Contracts...................................... 19
Xxxxx Merger.................................................. 1
Xxxxx Merger Sub.............................................. 1
Xxxxx Merger Sub Common Stock................................. 5
Xxxxx Preferred Stock......................................... 10
Xxxxx SEC Reports............................................. 12
Xxxxx Special Meeting......................................... 49
Xxxxx Stockholders' Approval.................................. 19
Xxxxx Surviving Corporation................................... 1
Customary Post-Closing Consents............................... 11
Effective Time................................................ 1
Enforceability Exception...................................... 11
Environmental Laws............................................ 16
ERISA......................................................... 15
Exchange Act.................................................. 11
Exchange Agent................................................ 6
Exchange Fund................................................. 6
Expenses...................................................... 46
GAAP.......................................................... 2
Governmental Authority........................................ 11
Hazardous Substances.......................................... 16
Intellectual Property......................................... 20
Joint Fairness Opinion........................................ 21
Lien.......................................................... 12
Liens......................................................... 12
mass layoff................................................... 18
Mergers....................................................... 1
multi-employer plan........................................... 16
multiple employer plan........................................ 16
NRS........................................................... 1
Optionee Election............................................. 8
Parent........................................................ 1
Parent Annual Meeting......................................... 49
Parent Benefit Plans.......................................... 37
Parent Capital Stock.......................................... 33
Parent Class A Stock.......................................... 3
Parent Class B Stock.......................................... 5
Parent Disclosure Letter...................................... 32
Parent ERISA Affiliate........................................ 37
Parent Financial Statements................................... 35
Parent Material Adverse Effect................................ 32
Parent Material Contracts..................................... 41
Parent Preferred Stock........................................ 33
Parent SEC Reports............................................ 35
Parent Stock Option Plan...................................... 42
Parent Stockholders' Approval................................. 42
PBGC.......................................................... 15
Permits....................................................... 19
Person........................................................ 7
plant closing................................................. 18
Proxy Statement/Prospectus.................................... 20
Reading....................................................... 1
Reading Benefit Plans......................................... 26
Reading Capital Stock......................................... 00
Xxxxxxx Xxxxxx Xxxxx.......................................... 0
Xxxxxxx Xxxxxx Stock Certificate.............................. 4
Reading Common Stock Exchange Ratio........................... 4
Reading Common Stock Merger Consideration..................... 4
Reading Disclosure Letter..................................... 21
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Reading ERISA Affiliate....................................... 26
Reading Financial Statements.................................. 24
Reading Material Adverse Effect............................... 22
Reading Material Contracts.................................... 30
Reading Merger................................................ 1
Reading Merger Sub............................................ 1
Reading Merger Sub Common Stock............................... 5
Reading SEC Reports........................................... 24
Reading Series A Stock........................................ 4
Reading Series B Stock........................................ 5
Reading Special Meeting....................................... 49
Reading Stockholders' Approval................................ 31
Reading Surviving Corporation................................. 1
Registration Statement........................................ 20
Replacement Plans............................................. 48
reportable events............................................. 15
Retained Employees............................................ 47
SEC........................................................... 12
Securities Act................................................ 11
single employer............................................... 15
Subsidiary.................................................... 10
Surviving Corporations........................................ 1
Tax Authority................................................. 14
Tax Returns................................................... 14
Taxes......................................................... 14
Termination Date.............................................. 55
WARN Act...................................................... 18
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is entered into as of
August 17, 2001, by and among Citadel Holding Corporation, a Nevada corporation
("Parent"), Xxxxx Merger Sub, Inc., a Nevada corporation and direct, wholly-
owned subsidiary of Parent ("Xxxxx Merger Sub"), Reading Merger Sub, Inc., a
Nevada corporation and direct, wholly-owned subsidiary of Parent ("Reading
Merger Sub"), Xxxxx Corporation, a Nevada corporation ("Xxxxx"), and Reading
Entertainment, Inc., a Nevada corporation ("Reading" and together with "Xxxxx,"
the "Companies" or sometimes individually referred to as a "Company").
Whereas, the respective boards of directors of Parent, Xxxxx and Reading
deem it advisable and in the best interests of their respective stockholders
that Xxxxx Merger Sub merge with and into Xxxxx (the "Xxxxx Merger") and that
Reading Merger Sub merge with and into Reading (the "Reading Merger" and
together with the Xxxxx Merger, the "Mergers") upon the terms and subject to the
conditions set forth herein; and
Whereas, the respective conflicts committees of the respective boards of
directors of Parent, Xxxxx and Reading have recommended to their respective
boards of directors the exchange ratios set forth in this Agreement, based in
part on the fairness opinion referred to in Sections 4.22, 5.22 and 6.22 hereof,
and such boards of directors have approved the Mergers;
Now, Therefore, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGERS
Section 1.1 The Mergers
Upon the terms and subject to the conditions hereof, at the Effective Time
(as defined in Section 1.2 hereof), (a) Xxxxx Merger Sub shall merge with and
into Xxxxx and the separate corporate existence of Xxxxx Merger Sub shall
thereupon cease and Xxxxx shall be the surviving corporation in the Merger (the
"Xxxxx Surviving Corporation"), and (b) Reading Merger Sub shall merge with and
into Reading and the separate corporate existence of Reading Merger Sub shall
thereupon cease and Reading shall be the surviving corporation in the Merger
(the "Reading Surviving Corporation" and together with the Xxxxx Surviving
Corporation, the "Surviving Corporations"). The Mergers shall have the effect
set forth in Chapter 92A of the Nevada Revised Statutes (the "NRS").
Section 1.2 Effective Time of the Mergers
Each of the Mergers shall become effective (the "Effective Time") upon the
later of (i) the filing of properly executed articles of merger relating to each
of the Xxxxx Merger and the Reading Merger with the Nevada Secretary of State in
accordance with Chapter 92A of the NRS,
or (ii) at such later time as the parties shall agree and set forth in such
articles of merger. The filing of both of the articles of merger referred to
above shall be made simultaneously and as soon as practicable on the Closing
Date set forth in Section 3.5.
Section 1.3 Tax Treatment
It is intended that each of the Mergers shall be treated for federal income
tax purposes as taxable transactions under the Code.
Section 1.4 Accounting Treatment
It is intended that each of the Mergers shall be accounted for in
accordance with generally accepted accounting principles ("GAAP") as purchase
transactions for financial accounting purposes.
ARTICLE II
THE SURVIVING CORPORATIONS
Section 2.1 Articles of Incorporation
The articles of incorporation of Parent shall be amended to change Parent's
name to "Reading International, Inc." The articles of incorporation of Xxxxx in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Xxxxx Surviving Corporation at and after the Effective Time
until thereafter amended in accordance with the terms thereof and the NRS. The
articles of incorporation of Reading in effect immediately prior to the
Effective Time shall be the articles of incorporation of the Reading Surviving
Corporation at and after the Effective Time until thereafter amended in
accordance with the terms thereof and the NRS; provided, that at the Effective
Time such articles of incorporation shall be amended to change Reading Surviving
Corporation's name to "Reading Holdings, Inc."
Section 2.2 Bylaws
The bylaws of Parent shall be amended to reflect Parent's name change as
provided in Section 2.1. The bylaws of Xxxxx as in effect immediately prior to
the Effective Time shall be the bylaws of the Xxxxx Surviving Corporation at and
after the Effective Time, and thereafter may be amended in accordance with their
terms and as provided by the articles of incorporation of the Xxxxx Surviving
Corporation and the NRS. The bylaws of Reading as in effect immediately prior to
the Effective Time shall be the bylaws of the Reading Surviving Corporation at
and after the Effective Time, and thereafter may be amended in accordance with
their terms and as provided by the articles of incorporation of the Reading
Surviving Corporation and the NRS; provided, that at the Effective Time such
bylaws shall be amended to reflect Reading Surviving Corporation's name change
as provided in Section 2.1.
Section 2.3 Directors and Officers
At and after the Effective Time, the directors and officers of Parent shall
be the directors and officers of Parent immediately prior to the Effective Time,
until their respective successors
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have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the articles of incorporation and
bylaws of Parent. At and after the Effective Time, the directors and officers of
Xxxxx Surviving Corporation shall be the directors and officers of Xxxxx
immediately prior to the Effective Time, until their respective successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the articles of incorporation and
bylaws of Xxxxx Surviving Corporation. At and after the Effective Time, the
directors and officers of Reading Surviving Corporation shall be the directors
and officers of Reading immediately prior to the Effective Time, until their
respective successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the articles of
incorporation and bylaws of Reading Surviving Corporation.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Capital Stock
As of the Effective Time, by virtue of the Mergers and without any action
on the part of the holders of any capital stock described below:
x. Xxxxx
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(i) Each share of common stock, par value $0.25 per share, of
Xxxxx ("Xxxxx Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted (subject to Section 3.4) into the right to
receive 1.17 shares (the "Xxxxx Common Stock Exchange Ratio") of Class A non-
voting common stock, par value $0.01 per share, of Parent ("Parent Class A
Stock"). All such shares of Xxxxx Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and the holder of a certificate ("Xxxxx Common Stock
Certificate") that, immediately prior to the Effective Time, represented
outstanding shares of Xxxxx Common Stock shall cease to have any ownership or
other rights with respect thereto, except the right to receive, upon the
surrender of such Xxxxx Common Stock Certificate, the Parent Class A Stock (the
"Xxxxx Common Stock Merger Consideration") to which such holder is entitled
pursuant to this Section 3.1(a)(i), without interest. Until surrendered as
contemplated by this Section 3.1(a)(i), each Xxxxx Common Stock Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the Xxxxx Common Stock Merger Consideration as
contemplated by this Section 3.1. Notwithstanding the foregoing, if between the
date of this Agreement and the Effective Time the outstanding shares of Parent
Class A Stock or Xxxxx Common Stock shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Xxxxx Common Stock Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(ii) Each share of Class A common preference stock, par value
$0.01 per share, of Xxxxx ("Xxxxx Common Preference Stock") issued and
outstanding immediately prior to
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the Effective Time shall be converted (subject to Section 3.4) into the right to
receive 1.17 shares (the "Xxxxx Common Preference Stock Exchange Ratio") of
Parent Class A Stock. All such shares of Xxxxx Common Preference Stock, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and the holder of a certificate ("Xxxxx
Common Preference Stock Certificate") that, immediately prior to the Effective
Time, represented outstanding shares of Xxxxx Common Preference Stock shall
cease to have any ownership or other rights with respect thereto, except the
right to receive, upon the surrender of such Xxxxx Common Preference Stock
Certificate, the Parent Class A Stock (the "Xxxxx Common Preference Stock Merger
Consideration") to which such holder is entitled pursuant to this Section
3.1(a)(ii), without interest. Until surrendered as contemplated by this Section
3.1, each Xxxxx Common Preference Stock Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Xxxxx Common Preference Stock Merger Consideration as contemplated
by this Section 3.1. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of Parent Class A Stock
or Xxxxx Common Preference Stock shall have been changed into a different number
of shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Xxxxx Common Preference Stock Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
b. Reading
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(i) Each share of common stock, par value $0.001 per share, of
Reading ("Reading Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted (subject to Section 3.4) into the right to
receive 1.25 shares (the "Reading Common Stock Exchange Ratio") of Parent Class
A Stock. All such shares of Reading Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and the holder of a certificate ("Reading Common Stock
Certificate") that, immediately prior to the Effective Time, represented
outstanding shares of Reading Common Stock shall cease to have any ownership or
other rights with respect thereto, except the right to receive, upon the
surrender of such Reading Common Stock Certificate, the Parent Class A Stock
(the "Reading Common Stock Merger Consideration") to which such holder is
entitled pursuant to this Section 3.1(b)(i), without interest. Until surrendered
as contemplated by this Section 3.1, each Reading Common Stock Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Reading Common Stock Merger Consideration as
contemplated by this Section 3.1. Notwithstanding the foregoing, if between the
date of this Agreement and the Effective Time the outstanding shares of Parent
Class A Stock or Reading Common Stock shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Reading Common Stock Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(ii) Each share of Series A convertible redeemable preferred stock,
par value $0.001 per share, of Reading ("Reading Series A Stock") issued and
outstanding immediately prior to the Effective Time shall remain outstanding and
shall not be affected by the Reading Merger.
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(iii) Each share of Series B convertible preferred stock, par value
$0.001 per share, of Reading ("Reading Series B Stock") issued and outstanding
immediately prior to the Effective Time shall remain outstanding and shall not
be affected by the Reading Merger.
c. Parent
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Each share of Parent Class A Stock and Class B voting common stock,
par value $0.01 per share ("Parent Class B Stock"), issued and outstanding
immediately prior to the Effective Time shall remain outstanding and shall not
be affected by the Mergers.
x. Xxxxx Merger Sub
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Each share of common stock, par value $0.001 per share, of Xxxxx
Merger Sub (the "Xxxxx Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall automatically be converted into
and become one fully paid and nonassessable share of common stock, par value
$0.25 per share, of Xxxxx Surviving Corporation, and shall, after the Xxxxx
Merger, be the only shares of Xxxxx Surviving Corporation issued and
outstanding.
e. Reading Merger Sub
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Each share of common stock, par value $0.001 per share, of Reading
Merger Sub (the "Reading Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall automatically be converted into
and become one fully paid and nonassessable share of common stock, par value of
$0.001 per share, of Reading Surviving Corporation, and shall, after the Reading
Merger, be the only common shares of Reading Surviving Corporation issued and
outstanding.
f. General
-------
No dividends or other distributions declared or made after the
Effective Time with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Xxxxx Common Stock Certificate, Xxxxx Common
Preference Stock Certificate or Reading Common Stock Certificate (collectively,
the "Xxxxx and Reading Stock Certificates") with respect to the Xxxxx Common
Stock Merger Consideration, Xxxxx Common Preference Stock Merger Consideration
or Reading Common Stock Merger Consideration (collectively, the "Xxxxx and
Reading Stock Merger Consideration") represented thereby until the holder of
record of such Xxxxx and Reading Stock Certificate, as applicable, shall
surrender such Xxxxx and Reading Stock Certificate in accordance with Section
3.2. Subject to the effect of applicable laws (including, without limitation,
escheat and abandoned property laws), following surrender of any such Xxxxx and
Reading Stock Certificate, there shall be paid to the record holder of the
certificate or certificates representing the Xxxxx and Reading Stock Merger
Consideration, as applicable, issued in exchange therefor, without interest, (i)
the amount of any dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such Xxxxx and Reading Stock
Merger Consideration, as applicable, and (ii) if the payment date for any
dividend or distribution payable with respect to such Xxxxx and Reading Stock
Merger Consideration, as applicable, has not occurred prior to the surrender of
such Xxxxx and Reading Stock Certificate, as applicable, at the appropriate
payment date therefor, the amount of
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dividends or other distributions with a record date after the Effective Time but
prior to the surrender of such Xxxxx and Reading Stock Certificate and a payment
date subsequent to the surrender of such Xxxxx and Reading Stock Certificate.
g. All Parent Class A Stock issued upon the surrender of the Xxxxx and
Reading Stock Certificates, as applicable, in accordance with the terms hereof
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Xxxxx and Reading Stock Certificates, as applicable, and
Xxxxx Common Stock, Xxxxx Common Preference Stock and Reading Common Stock
(collectively, the "Xxxxx and Reading Stock") formerly represented thereby, and
from and after the Effective Time there shall be no further registration of
transfers effected on the stock transfer books of the Xxxxx Surviving
Corporation or the Reading Surviving Corporation of shares of the Xxxxx and
Reading Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Xxxxx and Reading Stock Certificates, as
applicable, are presented to either Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article III.
Section 3.2 Surrender and Payment
a. Prior to the Effective Time, Parent shall appoint an agent
reasonably acceptable to Xxxxx and Reading (the "Exchange Agent") for the
purpose of exchanging Xxxxx and Reading Stock Certificates formerly representing
Xxxxx and Reading Stock, as applicable. At or prior to the Effective Time,
Parent shall deposit with the Exchange Agent for the benefit of the holders of
Xxxxx and Reading Stock, for exchange in accordance with this Section 3.2
through the Exchange Agent, (i) as of the Effective Time, certificates
representing the Xxxxx and Reading Stock Merger Consideration to be issued
pursuant to Section 3.1(a) and Section 3.1(b), as applicable, and (ii) from time
to time as necessary, cash to be paid in lieu of fractional shares pursuant to
Section 3.4 (such certificates for the Xxxxx and Reading Stock Merger
Consideration and such cash being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions, deliver
the Xxxxx and Reading Stock Merger Consideration, as applicable, in exchange for
surrendered Xxxxx and Reading Stock Certificates formerly representing Xxxxx and
Reading Stock pursuant to Section 3.1 out of the Exchange Fund. Except as
contemplated by Section 3.2(e), the Exchange Fund shall not be used for any
other purpose.
b. Promptly after the Effective Time, Parent will send, or will cause
the Exchange Agent to send, to each holder of a Xxxxx and Reading Stock
Certificate or Certificates, as applicable, that immediately prior to the
Effective Time represented outstanding Xxxxx and Reading Stock a letter of
transmittal and instructions for use in effecting the exchange of such Xxxxx and
Reading Stock Certificate or Certificates, as applicable, for certificates
representing the Xxxxx and Reading Stock Merger Consideration and, if
applicable, cash in lieu of fractional shares. Provision also shall be made for
holders of Xxxxx and Reading Stock Certificates to procure in person immediately
after the Effective Time a letter of transmittal and instructions and to deliver
in person immediately after the Effective Time such letter of transmittal and
Xxxxx and Reading Stock Certificates in exchange for the Xxxxx and Reading Stock
Merger Consideration and, if applicable, cash, in lieu of fractional shares.
c. After the Effective Time, Xxxxx Common Stock Certificates, Xxxxx
Common Preference Stock Certificates and Reading Common Stock Certificates shall
represent the right,
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upon surrender thereof to the Exchange Agent, together with a duly executed and
properly completed letter of transmittal relating thereto, to receive in
exchange therefor that number of whole shares of Parent Class A Stock, and, if
applicable, cash that such holder has the right to receive pursuant to Sections
3.1 and 3.4 after giving effect to any required tax withholding, and the Xxxxx
Common Stock Certificates, Xxxxx Common Preference Stock Certificates and
Reading Common Stock Certificates so surrendered shall be canceled. No interest
will be paid or will accrue on any cash amount payable upon the surrender of any
such Xxxxx Common Stock Certificates, Xxxxx Common Preference Stock Certificates
and Reading Common Stock Certificates.
d. If any shares of Parent Class A Stock are to be issued and/or cash to
be paid to a Person other than the registered holder of the Xxxxx Common Stock
Certificates, Xxxxx Preference Stock Certificates or Reading Common Stock
Certificates surrendered in exchange therefor, it shall be a condition to such
issuance that the Xxxxx Common Stock Certificates, Xxxxx Preference Stock
Certificates or Reading Common Stock Certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such issuance shall pay to the Exchange Agent any transfer or
other taxes required as a result of such issuance to a Person other than the
registered holder or establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. For purposes of this Agreement,
"Person" means an individual, a corporation, a limited-liability company, a
partnership, an association, a trust or any other entity or organization,
including a governmental or political subdivision or any agency or
instrumentality thereof.
e. Any Xxxxx and Reading Stock Merger Consideration and any cash in the
Exchange Fund that remain unclaimed by the holders of Xxxxx and Reading Stock
one year after the Effective Time shall be returned to Parent, upon demand, and
any such holder who has not exchanged such xxxxxx'x Xxxxx and Reading Stock
Certificates in accordance with this Section 3.2 prior to that time shall
thereafter look only to Parent, as a general creditor thereof, to exchange such
Xxxxx and Reading Stock Certificates or to pay amounts to which such holder is
entitled pursuant to Section 3.1. If outstanding Xxxxx and Reading Stock
Certificates are not surrendered prior to six years after the Effective Time
(or, in any particular case, prior to such earlier date on which any Xxxxx and
Reading Stock Merger Consideration issuable in respect of such Xxxxx and Reading
Stock Certificates or the dividends and other distributions, if any, described
below would otherwise escheat to or become the property of any governmental unit
or agency), the Xxxxx and Reading Stock Merger Consideration issuable in respect
of such Xxxxx and Reading Stock Certificates, and the amount of dividends and
other distributions, if any, which have become payable and which thereafter
become payable on the Xxxxx and Reading Stock Merger Consideration evidenced by
such Xxxxx and Reading Stock Certificates as provided herein shall, to the
extent permitted by applicable law, become the property of Parent, free and
clear of all claims or interest of any Person previously entitled thereto.
Notwithstanding the foregoing, none of Parent, Xxxxx, Reading or the Surviving
Corporations shall be liable to any holder of Xxxxx and Reading Stock
Certificates for any amount paid, or Xxxxx and Reading Stock Merger
Consideration, cash or dividends delivered, to a public official pursuant to
applicable abandoned property, escheat or similar laws.
f. If any Xxxxx and Reading Stock Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Xxxxx and
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Reading Stock Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporations, the posting by such Person of a bond in such
reasonable amount as Parent may direct as indemnity against any claim that may
be made against it with respect to such Xxxxx and Reading Stock Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Xxxxx
and Reading Stock Certificate the Xxxxx and Reading Stock Merger Consideration
and, if applicable, cash and unpaid dividends and other distributions on any
Xxxxx and Reading Stock Merger Consideration deliverable in respect thereof
pursuant to this Agreement.
Section 3.3 Stock Options
a. At the Effective Time, automatically and without any action on the
part of the holder thereof, each outstanding stock option (including stock
options granted under stock option plans and stock options granted under
separate contracts) of Xxxxx and Reading outstanding at the Effective Time (the
"Xxxxx and Reading Stock Options") shall be assumed by Parent and converted into
an option to purchase, pursuant to a plan or separate contract, as the case may
be, that number of shares of either Parent Class A Stock or Parent Class B Stock
(as shall be specified in a written election (the "Optionee Election") by each
respective holder) set forth below. In the case where an option holder has made
an Optionee Election to receive either an option to purchase Parent Class A
Stock or Parent Class B Stock, the Xxxxx and Reading Stock Option shall
automatically be converted into an option to purchase that number of shares of
Parent Class A Stock (rounded down to the nearest whole share) of Parent Class A
Stock or Parent Class B Stock, as applicable, determined by multiplying the
number of shares of Xxxxx and Reading Stock, as applicable, issuable upon the
exercise of such Xxxxx and Reading Stock Option immediately prior to the
Effective Time by the applicable stock exchange ratio: Xxxxx Common Stock
Exchange Ratio, Xxxxx Common Preference Stock Exchange Ratio or Reading Common
Stock Exchange Ratio (collectively, the "Xxxxx and Reading Stock Exchange
Ratios"), at an exercise price per share equal to the per share exercise price
of such option divided by the appropriate Xxxxx and Reading Stock Exchange Ratio
(rounded up to the nearest whole cent) and otherwise upon the same terms and
conditions as such applicable Xxxxx and Reading Stock Option. Notwithstanding
the above, in the case of any option to which Section 421 of the Code applies by
reason of the qualifications under Section 422 or 423 of such Code, the exercise
price, the number of shares purchasable pursuant to such option and the terms
and conditions of exercise of such option shall comply with Section 424(a) of
the Code. Parent shall take all corporate actions necessary to reserve for
issuance a sufficient number of shares of Parent Class A Stock or Parent Class B
Stock, as applicable, for delivery upon exercise of Xxxxx and Reading Stock
Options assumed by Parent pursuant to this Section 3.3.
b. As promptly as practicable after the Effective Time, Parent shall file
a Registration Statement on Form S-8 (or any successor or other appropriate
forms, as the case may be) with respect to the shares of Parent Class A Stock
and Parent Class B Stock subject to Xxxxx and Reading Stock Options and shall
use all reasonable efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options remain
outstanding.
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Section 3.4 No Fractional Shares
No fractional shares of Parent Class A Stock shall be issued in the Mergers
and fractional share interests shall not entitle the owner thereof to vote or to
any rights of a stockholder of Parent. All holders of fractional shares of
Parent Class A Stock shall be entitled to receive, in lieu thereof, an amount in
cash determined by multiplying the fraction of a share of Parent Class A Stock
to which such holder would otherwise have been entitled by the average closing
sales price of Parent Class A Stock as reported by the American Stock Exchange
for the five trading days immediately prior to the Effective Time.
Section 3.5 Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of the Citadel Holding Corporation,
at 10:00 a.m., local time, on the day (the "Closing Date") on which all of the
conditions set forth in Article IX hereof are satisfied or waived, or at such
other date and time as Parent, Xxxxx and Reading shall otherwise agree.
Section 3.6 Affiliates
Notwithstanding anything to the contrary contained in Article III, Xxxxx
and Reading Stock Certificates surrendered for exchange by any affiliate (as
defined in Section 8.15) of Xxxxx or Reading shall not be exchanged until the
later of (a) the date Parent has received an Affiliate Agreement (as defined in
Section 8.15) from such affiliate or (b) the date such shares of Parent Class A
Stock are transferable pursuant to the Affiliate Agreement regardless of whether
such agreement was executed by the affiliate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx represents and warrants to Parent and to Reading that the statements
contained in this Article IV are true and correct except as set forth herein or
except as disclosed in a disclosure letter delivered by Xxxxx to Parent and
Reading as of the date hereof (the "Xxxxx Disclosure Letter"):
Section 4.1 Organization and Qualification
x. Xxxxx is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the character of Craig's properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure to
be so qualified would not result in a Xxxxx Material Adverse Effect (as defined
below). Xxxxx has all requisite corporate or other power and authority to own,
use or lease its properties and to carry on its business as it is now being
conducted. Xxxxx has made available to Parent and Reading a complete and
correct copy of its articles of incorporation and bylaws, each as amended to
date, and Craig's articles of incorporation and bylaws as so delivered are in
full force and effect. Xxxxx is not in default in any respect in the
performance, observation or fulfillment of any provision of its articles of
incorporation or bylaws.
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b. Each of Craig's Subsidiaries that is a corporation has been duly
organized, is validly existing and in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of such Subsidiary's properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure to
be so qualified would not result in a Xxxxx Material Adverse Effect. Each of
Craig's Subsidiaries that is not a corporation has been duly organized, is
validly existing and in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business as a foreign entity and is in
good standing in the jurisdictions in which the character of such Subsidiary's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Xxxxx Material Adverse Effect. Each of Craig's Subsidiaries has the
requisite corporate or other power and authority to own, use or lease its
properties and to carry on its business as it is now being conducted and as it
is now proposed to be conducted. No Subsidiary of Xxxxx is in default in any
respect in the performance, observation or fulfillment of any provision of its
articles of incorporation or bylaws (or similar organizational documents).
c. For purposes of this Agreement, (i) a "Xxxxx Material Adverse Effect"
shall mean any event, circumstance, condition, development or occurrence
causing, resulting in or having (or with the passage of time likely to cause,
result in or have) a material adverse effect on the financial condition,
business, assets, properties or results of operations of Xxxxx and its
Subsidiaries taken as a whole; provided, that such term shall not include
effects that are (a) not applicable primarily to Xxxxx resulting from market
conditions generally in the real estate, movie exhibition and/or off-Broadway
theater industries or (b) from any matter or facts previously disclosed in the
Xxxxx SEC Reports (as defined in Section 4.5 below), in this Agreement and/or in
the Xxxxx Disclosure Letter; and (ii) "Subsidiary" shall mean, with respect to
any party, any corporation or other organization, whether incorporated or
unincorporated, of which (x) at least a majority of the securities or other
interests having by their terms voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly beneficially owned
or controlled by such party or by any one or more of its subsidiaries, or by
such party and one or more of its subsidiaries, or (y) such party or any
Subsidiary of such party is a general partner of a partnership or a manager of a
limited-liability company. For purposes of this Agreement, neither Parent nor
Reading shall be deemed a "Subsidiary" of Xxxxx and Parent shall not be deemed a
"Subsidiary" of Reading.
Section 4.2 Capitalization
The authorized capital stock of Xxxxx consists of 7,500,000 shares of Xxxxx
Common Stock, 50,000,000 shares of Xxxxx Common Preference Stock, 20,000,000
shares of Class B common stock, par value of $0.01 per share ("Xxxxx Class B
Stock"), and 1,000,000 shares of Preferred Stock, par value of $0.01 per share
("Xxxxx Preferred Stock" and together with Xxxxx Common Stock, Xxxxx Common
Preference Stock, and Xxxxx Class B Stock, the "Xxxxx Capital Stock"). As of
the date of this Agreement, (a) 3,402,808 shares of Xxxxx Common Stock were
issued and outstanding, (b) 7,058,408 shares of Xxxxx Common Preference Stock
were issued and outstanding, (c) no shares of Xxxxx Class B Stock were issued
and outstanding, (d) no shares of Xxxxx Preferred Stock were issued and
outstanding and (e) stock options to acquire 664,940 shares of Xxxxx Common
Stock and 65,000 shares of Xxxxx Common Preference Stock were
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outstanding under all stock option plans and agreements of Xxxxx or its
Subsidiaries. All of the outstanding shares of Xxxxx Capital Stock are validly
issued, fully paid and nonassessable, and free of preemptive rights. Except as
set forth above, there are no outstanding subscriptions, options, rights,
warrants, convertible securities, stock appreciation rights, phantom equity, or
other agreements or commitments obligating Xxxxx to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its capital stock of any
class.
Section 4.3 Authority
Xxxxx has full corporate power and authority to execute and deliver this
Agreement and any other agreement executed and delivered in connection herewith
(the "Ancillary Agreements") to which Xxxxx is or will be a party and, subject
to obtaining Xxxxx Stockholders" Approval as contemplated by Section 8.11, to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Ancillary Agreements to which
Xxxxx is or will be a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by Craig's
Board of Directors, and no other corporate proceedings on the part of Xxxxx are
necessary to authorize this Agreement and the Ancillary Agreements to which
Xxxxx is or will be a party or to consummate the transactions contemplated
hereby or thereby, other than Xxxxx Stockholders" Approval as contemplated by
Section 8.11 hereof. This Agreement has been, and the Ancillary Agreements to
which Xxxxx is or will be a party are, or upon execution will be, duly and
validly executed and delivered by Xxxxx and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto, constitutes, or upon execution will constitute, valid and binding
obligations of Xxxxx enforceable against Xxxxx in accordance with their
respective terms, except as such enforceability may be subject to the effects of
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting the rights of creditors and of general principles of equity (the
"Enforceability Exception").
Section 4.4 Consents and Approvals; No Violation
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the performance by Xxxxx of its obligations
hereunder will not:
a. conflict with any provision of Craig's articles of incorporation or
bylaws or the articles of incorporation or bylaws (or other similar
organizational documents) of any of its Subsidiaries;
b. subject to obtaining of any requisite approvals of Craig's
stockholders as contemplated by Section 8.11 hereof, require any consent,
waiver, approval, order, authorization or permit of, or registration, filing
with or notification to, (i) any governmental or regulatory authority or agency
(a "Governmental Authority"), except for applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), state securities or blue
sky laws, and approvals that are ministerial in nature and are customarily
obtained from Governmental Authorities after the Effective Time in connection
with transactions of the same nature as are contemplated hereby ("Customary
Post-Closing Consents"(C)) or (ii) any third party other than a Governmental
Authority, other than such non-Governmental Authority third party consents,
waivers, approvals,
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orders, authorizations and permits that would not (x) result in a Xxxxx Material
Adverse Effect, (y) materially impair the ability of Xxxxx or any of its
Subsidiaries, as the case may be, to perform its obligations under this
Agreement or any Ancillary Agreement or (z) prevent the consummation of any of
the transactions contemplated by this Agreement;
c. result in any violation of or the breach of or constitute a default
(with notice or lapse of time or both) under, or give rise to any right of
termination, cancellation or acceleration or guaranteed payments or a loss of a
material benefit under, any of the terms, conditions or provisions of any note,
lease, mortgage, license, agreement or other instrument or obligation to which
Xxxxx or any of its Subsidiaries is a party or by which Xxxxx or any of its
Subsidiaries or any of their respective properties or assets may be bound,
except for such violations, breaches, defaults, or rights of termination,
cancellation or acceleration, or losses as to which requisite waivers or
consents have been obtained or which, individually or in the aggregate, would
not (i) result in a Xxxxx Material Adverse Effect, (ii) materially impair the
ability of Xxxxx or any of its Subsidiaries to perform its obligations under
this Agreement or any Ancillary Agreement or (iii) prevent the consummation of
any of the transactions contemplated by this Agreement;
d. violate the provisions of any order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to Xxxxx or any of its
Subsidiaries;
e. result in the creation of any lien, mortgage, pledge, security
interest, encumbrance, claim or change of any kind ("Lien," if singular, or
"Liens," if plural) upon any shares of capital stock or material properties or
assets of Xxxxx or any of its Subsidiaries under any agreement or instrument to
which Xxxxx or any of its Subsidiaries is a party or by which Xxxxx or any of
its Subsidiaries or any of their properties or assets is bound; or
f. result in any holder of any securities of Xxxxx being entitled to
appraisal, dissenters" or similar rights.
Section 4.5 Xxxxx SEC Reports
Xxxxx has filed with the Securities and Exchange Commission (the "SEC"),
and has heretofore made available to Parent and Reading true and complete copies
of, each form, registration statement, report, schedule, proxy or information
statement and other document (including exhibits and amendments thereto),
including without limitation its annual reports to stockholders, required to be
filed by it or its predecessors with the SEC since January 1, 1996 under the
Securities Act or the Exchange Act (collectively, the "Xxxxx SEC Reports"). As
of the respective dates such Xxxxx SEC Reports were filed or, if any such Xxxxx
SEC Reports were amended, as of the date such amendment was filed, each of the
Xxxxx SEC Reports, including without limitation any financial statements or
schedules included therein, (a) complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, as the case
may be, and the applicable rules and regulations promulgated thereunder, and (b)
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 therein, in light of the circumstances under which they were made,
not misleading.
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Section 4.6 Financial Statements
Each of the consolidated financial statements of Xxxxx contained in the
Xxxxx SEC Reports (including any related notes and schedules) (the "Xxxxx
Financial Statements") has been prepared from, and is in accordance with, the
books and records of Xxxxx and its consolidated Subsidiaries, complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, has been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto and subject, in the case of quarterly financial statements,
to normal and recurring year end adjustments) and fairly presents, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Xxxxx and its Subsidiaries as
of the date thereof and the consolidated results of operations and cash flows
(and changes in financial position, if any) of Xxxxx and its Subsidiaries for
the periods presented therein (subject to normal year end adjustments and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
Section 4.7 Absence of Undisclosed Liabilities
Except as reflected in the Xxxxx Financial Statements or in the Xxxxx SEC
Reports filed and publicly available prior to the date of this Agreement,
neither Xxxxx nor any of its Subsidiaries has incurred any liabilities or
obligations of any nature (contingent or otherwise) that, individually or in the
aggregate, would have a Xxxxx Material Adverse Effect.
Section 4.8 Absence of Certain Changes
Except as disclosed in the Xxxxx SEC Reports filed and publicly available
prior to the date of this Agreement or as contemplated by this Agreement, since
June 30, 2001 (a) Xxxxx and its Subsidiaries have conducted their business in
all material respects in the ordinary course consistent with past practices, (b)
there has not been any change or development, or combination of changes or
developments that, individually or in the aggregate, would have a Xxxxx Material
Adverse Effect, (c) there has not been any declaration, setting aside or payment
of any dividend or other distribution with respect to any shares of capital
stock of Xxxxx, or any repurchase, redemption or other acquisition by Xxxxx or
any of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, Xxxxx or any of its
Subsidiaries, (d) there has not been any amendment of any term of any
outstanding security of Xxxxx or any of its Subsidiaries, and (e) there has not
been any change in any method of accounting or accounting practice by Xxxxx or
any of its Subsidiaries, except for any such change required by reason of a
concurrent change in GAAP or to conform a Subsidiary's accounting policies and
practices to those of Xxxxx.
Section 4.9 Taxes
Except as otherwise disclosed in the Xxxxx SEC Reports filed and publicly
available prior to the date of this Agreement and for matters that would not
have a Xxxxx Material Adverse Effect:
x. Xxxxx and each of its Subsidiaries have timely filed (or have had
timely filed on their behalf) or will file or cause to be timely filed, all
material Tax Returns (as defined below)
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required by applicable law to be filed by any of them prior to or as of the
Closing Date. All such Tax Returns and amendments thereto are or will be true,
complete and correct in all material respects.
x. Xxxxx and each of its Subsidiaries have paid (or have had paid on
their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all material Taxes (as defined below) due with
respect to any period ending prior to or as of the Closing Date.
c. No Audit (as defined below) by a Tax Authority (as defined below)
is pending or threatened with respect to any Tax Returns filed by, or Taxes due
from, Xxxxx or any Subsidiary. No issue has been raised by any Tax Authority in
any Audit of Xxxxx or any of its Subsidiaries that if raised with respect to any
other period not so audited could be expected to result in a material proposed
deficiency for any period not so audited. No material deficiency or adjustment
for any Taxes has been assessed against Xxxxx or any of its Subsidiaries. There
are no liens for Taxes upon the assets of Xxxxx or any of its Subsidiaries,
except liens for current Taxes not yet delinquent.
d. Except with respect to the tax year ended June 30, 1997, neither
Xxxxx nor any of its Subsidiaries has given or been requested to give any waiver
of statutes of limitations relating to the payment of Taxes or have executed
powers of attorney with respect to Tax matters, which will be outstanding as of
the Closing Date.
e. Prior to the date hereof, Xxxxx and its Subsidiaries have
disclosed, and provided or made available true and complete copies to Parent of,
all material Tax sharing, Tax indemnity, or similar agreements to which Xxxxx or
any of its Subsidiaries are a party to, is bound by, or has any obligation or
liability for Taxes.
f. As used in this Agreement, (i) "Audit" shall mean any audit,
assessment of Taxes, other examination by any Tax Authority, proceeding or
appeal of such proceeding relating to Taxes; (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign Governmental Authority responsible for the administration of any Taxes;
and (iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
Section 4.10 Litigation
Except as disclosed in the Xxxxx SEC Reports filed and publicly available
prior to the date of this Agreement and for matters that would not have a Xxxxx
Material Adverse Effect, there is no suit, claim, action, proceeding or
investigation pending or, to Craig's knowledge, threatened against or directly
affecting Xxxxx, any Subsidiaries of Xxxxx or any of the directors or officers
of Xxxxx or any of its Subsidiaries in their capacity as such, nor is there any
reasonable basis therefor that could reasonably be expected to have a Xxxxx
Material Adverse Effect, if
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adversely determined. Neither Xxxxx nor any of its Subsidiaries, nor any
officer, director or employee of Xxxxx or any of its Subsidiaries, has been
permanently or temporarily enjoined by any order, judgment or decree of any
court or any other Governmental Authority from engaging in or continuing any
conduct or practice in connection with the business, assets or properties of
Xxxxx or such Subsidiary nor, to the knowledge of Xxxxx, is Xxxxx, any
Subsidiary or any officer, director or employee of Xxxxx or its Subsidiaries
under investigation by any Governmental Authority. Except as disclosed in the
Xxxxx SEC Reports filed and publicly available prior to the date of this
Agreement, there is not in existence any order, judgment or decree of any court
or other tribunal or other agency enjoining or requiring Xxxxx or any of its
Subsidiaries to take any action of any kind with respect to its business, assets
or properties. Notwithstanding the foregoing, no representation or warranty in
this Section 4.10 is made with respect to Environmental Laws, which are covered
exclusively by the provisions set forth in Section 4.12.
Section 4.11 Employee Benefit Plans; ERISA
a. With respect to each employee benefit, retirement or deferred
compensation plan or arrangement (including but not limited to any plans
described in section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), sponsored, maintained or contributed to by Xxxxx or
any trade or business, whether or not incorporated, which together with Xxxxx
would be deemed a "single employer" within the meaning of Section 414(b), (c) or
(m) of the Code or section 4001(b)(1) of ERISA (a "Xxxxx ERISA Affiliate")
within six years prior to the Effective Time (each a "Xxxxx Benefit Plan"): (i)
if intended to qualify under section 401(a) or 401(k) of the Code, such plan
satisfies the requirements of such sections, has received a favorable
determination letter from the Internal Revenue Service with respect to its
qualification, and its related trust has been determined to be exempt from tax
under section 501(a) of the Code and, to the knowledge of Xxxxx, nothing has
occurred since the date of such letter to adversely affect such qualification or
exemption; (ii) each such plan has been administered in substantial compliance
with its terms and applicable law, except for any noncompliance with respect to
any such plan that could not reasonably be expected to result in a Xxxxx
Material Adverse Effect; (iii) neither Xxxxx nor any Xxxxx ERISA Affiliate has
engaged in, and Xxxxx and each Xxxxx ERISA Affiliate do not have any knowledge
of any Person that has engaged in, any transaction or acted or failed to act in
any manner that would subject Xxxxx or any Xxxxx ERISA Affiliate to any
liability for a breach of fiduciary duty under ERISA that could reasonably be
expected to result in a Xxxxx Material Adverse Effect; (iv) no disputes are
pending or, to the knowledge of Xxxxx or any Company ERISA Affiliate,
threatened; (v) neither Xxxxx nor any Xxxxx ERISA Affiliate has engaged in, and
Xxxxx and each Xxxxx ERISA Affiliate do not have any knowledge of any person
that has engaged in, any transaction in violation of Section 406(a) or (b) of
ERISA or Section 4975 of the Code for which no exemption exists under Section
408 of ERISA or Section 4975(c) of the Code or Section 4975(d) of the Code that
could reasonably be expected to result in a Xxxxx Material Adverse Effect; (vi)
to the knowledge of Xxxxx, there have been no "reportable events" within the
meaning of Section 4043 of ERISA for which the 30 day notice requirement of
ERISA has not been waived by the Pension Benefit Guaranty Corporation (the
"PBGC"); (vii) all contributions due have been made on a timely basis (within,
where applicable, the time limit established under section 302 of ERISA or Code
section 412); (viii) no notice of intent to terminate such plan has been given
under section 4041 of ERISA and no proceeding has been instituted under section
4042 of ERISA to terminate such plan; and (ix) except for defined benefit plans
(if applicable), such plan may be terminated on a
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prospective basis without any continuing liability for benefits other than
benefits accrued to the date of such termination. All contributions made or
required to be made under any Xxxxx Benefit Plan meet the requirements for
deductibility under the Code, and all contributions which are required and which
have not been made have been properly recorded on the books of Xxxxx or a Xxxxx
ERISA Affiliate.
b. No Xxxxx Benefit Plan is a "multi-employer plan" (as defined in
section 4001(a)(3) of ERISA) or a "multiple employer plan" (within the meaning
of section 413(c) of the Code). No event has occurred with respect to Xxxxx or
a Xxxxx ERISA Affiliate in connection with which Xxxxx could be subject to any
liability, lien or encumbrance with respect to any Xxxxx Benefit Plan or any
employee benefit plan described in section 3(3) of ERISA maintained, sponsored
or contributed to by a Xxxxx ERISA Affiliate under ERISA or the Code.
c. Except as set forth in the Xxxxx SEC Reports filed and publicly
available prior to the date of this Agreement or except as could not reasonably
be expected to result in a Xxxxx Material Adverse Effect, no employees of Xxxxx
or any of its Subsidiaries are covered by any severance plan or similar
arrangement.
Section 4.12 Environmental Liability
Except as set forth in the Xxxxx SEC Reports filed and publicly available
prior to the date of this Agreement and except for matters that would not have a
Xxxxx Material Adverse Effect:
a. The businesses of Xxxxx and its Subsidiaries have been and are
operated in material compliance with all federal, state and local environmental
protection, health and safety or similar laws, statutes, ordinances,
restrictions, licenses, rules, regulations, permit conditions and legal
requirements, including without limitation the Federal Clean Water Act, Safe
Drinking Water Act, Resource Conservation & Recovery Act, Clean Air Act, Outer
Continental Shelf Lands Act, Comprehensive Environmental Response, Compensation
and Liability Act, and Emergency Planning and Community Right to Know Act, each
as amended and currently in effect (together, "Environmental Laws").
b. Neither Xxxxx nor any of its Subsidiaries has caused or allowed
the generation, treatment, manufacture, processing, distribution, use, storage,
discharge, release, disposal, transport or handling of any chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum, petroleum products or any substance regulated under any Environmental
Law ("Hazardous Substances") at any of its properties or facilities, except in
material compliance with all Environmental Laws, and, to Craig's knowledge, no
generation, manufacture, processing, distribution, use, treatment, handling,
storage, discharge, release, disposal, transport or handling of any Hazardous
Substances has occurred at any property or facility owned, leased or operated by
Xxxxx or any of its Subsidiaries except in material compliance with all
Environmental Laws.
c. Neither Xxxxx nor any of its Subsidiaries has received any written
notice from any Governmental Authority or third party or, to the knowledge of
Xxxxx, any other communication alleging or concerning any material violation by
Xxxxx or any of its Subsidiaries of, or responsibility or liability of Xxxxx or
any of its Subsidiaries under, any Environmental Law.
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There are no pending, or to the knowledge of Xxxxx, threatened, claims, suits,
actions, proceedings or investigations with respect to the businesses or
operations of Xxxxx or any of its Subsidiaries alleging or concerning any
material violation of or responsibility or liability under any Environmental Law
that, if adversely determined, could reasonably be expected to have a Xxxxx
Material Adverse Effect, nor does Xxxxx have any knowledge of any fact or
condition that could give rise to such a claim, suit, action, proceeding or
investigation.
x. Xxxxx and its Subsidiaries are in possession of all material
approvals, permits, licenses, registrations and similar type authorizations from
all Governmental Authorities under all Environmental Laws with respect to the
operation of the businesses of Xxxxx and its Subsidiaries; there are no pending
or, to the knowledge of Xxxxx, threatened, actions, proceedings or
investigations seeking to modify, revoke or deny renewal of any of such
approvals, permits, licenses, registrations and authorizations; and Xxxxx does
not have knowledge of any fact or condition that is reasonably likely to give
rise to any action, proceeding or investigation to modify, revoke or deny
renewal of any of such approvals, permits, licenses, registrations and
authorizations.
e. There has been no discharge, release or disposal by Xxxxx or its
Subsidiaries or, to Craig's knowledge, any predecessor in interest at any of the
properties owned or operated by Xxxxx, its Subsidiaries or a predecessor in
interest, or to the knowledge of Xxxxx, at any disposal or treatment facility
which received Hazardous Substances generated by Xxxxx, its Subsidiaries, or any
predecessor in interest which could reasonably be expected to result in
liabilities that have a Xxxxx Material Adverse Effect.
f. To Craig's knowledge, no pending claims have been asserted or
threatened to be asserted against Xxxxx or its Subsidiaries for any personal
injury (including wrongful death) or property damage (real or personal) arising
out of exposure to Hazardous Substances used, handled, generated, transported or
disposed by Xxxxx or its Subsidiaries at property owned or operated by Xxxxx or
its Subsidiaries, except as could not reasonably be expected to have a Xxxxx
Material Adverse Effect.
Section 4.13 Compliance with Applicable Xxxx
Xxxxx and each of its Subsidiaries hold all material approvals, licenses,
permits, registrations and similar type authorizations necessary for the lawful
conduct of their respective businesses, as now conducted, and such businesses
are not being, and neither Xxxxx nor any of its Subsidiaries has received any
notice from any Governmental Authority or person that any such business has been
or is being conducted in violation of any law, ordinance or regulation,
including without limitation any law, ordinance or regulation relating to
occupational health and safety, except for possible violations which either
individually or in the aggregate have not resulted and would not result in a
Xxxxx Material Adverse Effect; provided, however, notwithstanding the foregoing,
no representation or warranty in this Section 4.13 is made with respect to
Environmental Laws, which are covered exclusively by the provisions set forth in
Section 4.12.
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Section 4.14 Insurance
Xxxxx and its Subsidiaries currently have in place all policies of
insurance which are reasonably required in connection with the operation of the
businesses of Xxxxx and its Subsidiaries as currently conducted in accordance
with applicable laws and all agreements relating to Xxxxx and its Subsidiaries.
None of Xxxxx, any of its Subsidiaries or any other party to any such insurance
policy is in breach or default thereunder (including with respect to the payment
of premiums or the giving of notices), and Xxxxx does not know of any occurrence
or any event which (with notice or the lapse of time or both) would constitute
such a breach or default or permit termination, modification or acceleration
under the policy, except for such breaches or defaults which, individually or in
the aggregate, would not have a Xxxxx Material Adverse Effect.
Section 4.15 Labor Matters; Employees
a. Except as set forth in the Xxxxx SEC Reports filed and publicly
available prior to the date of this Agreement and except for such matters that
alone or in conjunction with other similar or related matters would not have a
Xxxxx Material Adverse Effect, (i) there is no labor strike, dispute, slowdown,
work stoppage or lockout actually pending or, to the knowledge of Xxxxx,
threatened against or affecting Xxxxx or any of its Subsidiaries, (ii) none of
Xxxxx or any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of Xxxxx or any of its Subsidiaries, (iii) none of the
employees of Xxxxx or any of its Subsidiaries are represented by any labor
organization, (iv) Xxxxx and its Subsidiaries have each at all times been in
material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation, (v) there is no unfair labor practice charge or
complaint against any of Xxxxx or any of its Subsidiaries pending or, to the
knowledge of Xxxxx, threatened before the National Labor Relations Board or any
similar state or foreign agency, (vi) there is no grievance or arbitration
proceeding arising out of any collective bargaining agreement or other grievance
procedure relating to Xxxxx or any of its Subsidiaries, (vii) neither the
Occupational Safety and Health Administration nor any corresponding state agency
has threatened to file any citation, and there are no pending citations,
relating to Xxxxx or any of its Subsidiaries, and (viii) there is no employee or
governmental claim or investigation, including any charges to the Equal
Employment Opportunity Commission or state employment practice agency,
investigations regarding Fair Labor Standards Act compliance, audits by the
Office of Federal Contractor Compliance Programs, sexual harassment complaints
or demand letters or threatened claims.
b. Since the enactment of the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN Act"), none of Xxxxx or any of its Subsidiaries
has effectuated (i) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility of any of Xxxxx or any of its Subsidiaries, or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of Xxxxx or any of its Subsidiaries, nor has Xxxxx or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in
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number to trigger application of any similar state or local law, in each case
that could reasonably be expected to have a Xxxxx Material Adverse Effect.
Section 4.16 Permits
Immediately prior to the Effective Time and except for Customary Post-
Closing Consents, Xxxxx and its Subsidiaries hold all of the permits, licenses,
certificates, consents, approvals, entitlements, plans, surveys, relocation
plans, environmental impact reports and other authorizations of Governmental
Authorities ("Permits") required or necessary to construct, own, operate, use
and/or maintain its properties and conduct its operations as presently
conducted, except for such Permits, the lack of which, individually or in the
aggregate, would not have a Xxxxx Material Adverse Effect; provided, however,
that notwithstanding the foregoing, no representation or warranty in this
Section 4.16 is made with respect to Permits issued pursuant to Environmental
Laws, which are covered exclusively by the provisions set forth in Section 4.12.
Section 4.17 Material Contracts
x. Xxxxx has filed as exhibits to the Xxxxx SEC Reports filed and
publicly available prior to the date of this Agreement a list of each contract,
lease, indenture, agreement, arrangement or understanding to which Xxxxx or any
of its Subsidiaries is subject that is of a type that would be required to be
included as an exhibit to a Form S-1 Registration Statement pursuant to the
rules and regulations of the SEC if such a registration statement was filed by
Xxxxx, exclusive of any contracts that would be required to be filed with the
SEC due to Craig's ownership of securities of Reading or Parent (collectively,
the "Xxxxx Material Contracts").
b. Except as set forth in the Xxxxx SEC Reports filed and publicly
available prior to the date of this Agreement, (i) all Xxxxx Material Contracts
are in full force and effect and are the valid and legally binding obligations
of the parties thereto and are enforceable in accordance with their respective
terms; (ii) Xxxxx is not in material breach or default with respect to, and to
the knowledge of Xxxxx, no other party to any Xxxxx Material Contract is in
material breach or default with respect to, its obligations thereunder,
including with respect to payments or otherwise; and (iii) no party to any Xxxxx
Material Contract has given notice of any action to terminate, cancel, rescind
or procure a judicial reformation thereof.
c. Except as set forth in the Xxxxx SEC Reports filed and publicly
available prior to the date of this Agreement, as of the date of this Agreement
with respect to authorizations for expenditures executed on or after June 30,
2001, there are no material outstanding calls for payments that are due or that
Xxxxx or its Subsidiaries are committed to make that have not been made.
Section 4.18 Required Stockholder Vote or Consent
The only vote of the holders of any class or series of capital stock of
Xxxxx that will be necessary to consummate the Xxxxx Merger and the other
transactions contemplated by this Agreement is the approval of this Agreement by
the holders of a majority of the voting power of the outstanding shares of Xxxxx
Common Stock and Xxxxx Common Preference Stock on the record date, voting
together as a single class ("Xxxxx Stockholders' Approval").
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Section 4.19 Proxy Statement/Prospectus; Registration Statement
None of the information to be supplied by Xxxxx or its Subsidiaries for
inclusion in (a) the joint proxy statement relating to the Xxxxx Special
Meeting, Reading Special Meeting and the Parent Annual Meeting (as defined
below) (also constituting the prospectus in respect of Parent Class A Stock into
which shares of Xxxxx and Reading Stock will be converted) (the "Proxy
Statement/Prospectus"), to be filed by the Companies and Parent with the SEC,
and any amendments or supplements thereto, or (b) the Registration Statement on
Form S-4 (the "Registration Statement") to be filed by Parent with the SEC in
connection with the Mergers, and any amendments or supplements thereto, will, at
the respective times such documents are filed, and, in the case of the Proxy
Statement/Prospectus, at the time the Proxy Statement/Prospectus or any
amendment or supplement thereto is first mailed to stockholders of Parent and
the Companies, at the time such stockholders vote on approval of this Agreement
and at the Effective Time, and, in the case of the Registration Statement, when
it becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be made therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
Section 4.20 Intellectual Property
Xxxxx or its Subsidiaries own, or are licensed or otherwise have the
right to use, all patents, patent rights, trademarks, rights, trade names, trade
name rights, service marks, service xxxx rights, copyrights, technology, know-
how, processes and other proprietary intellectual property rights and computer
programs ("Intellectual Property") currently used in the conduct of the business
of Xxxxx and its Subsidiaries, except where the failure to so own or otherwise
have the right to use such intellectual property would not, individually or in
the aggregate, have a Xxxxx Material Adverse Effect. No person has notified
either Xxxxx or any of its Subsidiaries that their use of the Intellectual
Property infringes on the rights of any person, subject to such claims and
infringements as do not, individually or in the aggregate, give rise to any
liability on the part of Xxxxx and its Subsidiaries that could have a Xxxxx
Material Adverse Effect, and, to Craig's knowledge, no person is infringing on
any right of Xxxxx or any of its Subsidiaries with respect to any such
Intellectual Property. No claims are pending or, to Craig's knowledge,
threatened that Xxxxx or any of its Subsidiaries is infringing or otherwise
adversely affecting the rights of any person with regard to any Intellectual
Property other than claims which, if adversely determined, would not be likely
to have a Xxxxx Material Adverse Effect.
Section 4.21 Brokers
No broker, finder or investment banker (other than Xxxxxxxx & Xxxxxxx,
Incorporated, the fees and expenses of which shall be paid in equal shares by
Parent, Xxxxx and Reading) is entitled to any brokerage, finder's fee or other
fee or commission payable by Xxxxx or any of its Subsidiaries in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of Xxxxx or any of its Subsidiaries.
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Section 4.22 Fairness Opinion
The Board of Directors of Xxxxx has received a written opinion from
Xxxxxxxx & Xxxxxxx, Incorporated addressed jointly to the Boards of Directors
and respective Conflicts Committees of the Boards of Directors (the "Joint
Fairness Opinion") to the effect that, as of the date of such opinion, the Xxxxx
Common Stock Exchange Ratio and Xxxxx Common Preference Stock Exchange Ratio are
fair from a financial point of view to the public holders of the Xxxxx Common
Stock and Xxxxx Common Preference Stock. True and complete copies of the Joint
Fairness Opinion have been given to Parent and Reading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF READING
Reading represents and warrants to Parent and Xxxxx that the statements
contained in this Article V are true and correct except as set forth herein
except as disclosed in a disclosure letter delivered by Reading to Parent and
Xxxxx as of the date hereof (the "Reading Disclosure Letter"):
Section 5.1 Organization and Qualification
a. Reading is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada, is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the character of Reading's properties or the nature of its business
makes such qualification necessary, except in jurisdictions, if any, where the
failure to be so qualified would not result in a Reading Material Adverse Effect
(as defined below). Reading has all requisite corporate or other power and
authority to own, use or lease its properties and to carry on its business as it
is now being conducted. Reading has made available to Parent and Xxxxx a
complete and correct copy of its articles of incorporation and bylaws, each as
amended to date, and Reading's articles of incorporation and bylaws as so
delivered are in full force and effect. Reading is not in default in any respect
in the performance, observation or fulfillment of any provision of its articles
of incorporation or bylaws.
b. Each of Reading's Subsidiaries that is a corporation has been duly
organized, is validly existing and in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of such Subsidiary's properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure to
be so qualified would not result in a Reading Material Adverse Effect. Each of
Reading's Subsidiaries that is not a corporation has been duly organized, is
validly existing and in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business as a foreign entity and is in
good standing in each jurisdiction in which the character of such Subsidiary's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Reading Material Adverse Effect. Each of Reading's Subsidiaries has
the requisite corporate or other power and authority to own, use or lease its
properties and to carry on its business as it is now being conducted and as it
is now proposed to be conducted. Reading has made available to Parent a complete
and correct copy of the articles of incorporation and bylaws (or similar
organizational documents) of each of
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Reading's Subsidiaries, each as amended to date, and the articles of
incorporation and bylaws (or similar organizational documents) as so delivered
are in full force and effect. No Subsidiary of Reading is in default in any
respect in the performance, observation or fulfillment of any provision of its
articles of incorporation or bylaws (or similar organizational documents).
c. For purposes of this Agreement, a "Reading Material Adverse Effect"
shall mean any event, circumstance, condition, development or occurrence
causing, resulting in or having (or with the passage of time likely to cause,
result in or have) a material adverse effect on the financial condition,
business, assets, properties or results of operations of Reading and its
Subsidiaries taken as a whole; provided, that such term shall not include
effects that are (a) not applicable primarily to Reading resulting from market
conditions generally in the motion picture theater industry or (b) from any
matter or facts previously disclosed in the Reading SEC Reports (as defined in
Section 5.5 below), in this Agreement and/or in the Reading Disclosure Letter.
Section 5.2 Capitalization
The authorized capital stock of Reading consists of 25,000,000 shares of
Reading Common Stock, 70,000 shares of Reading Series A Stock and 550,000 shares
of Reading Series B Stock (together, the "Reading Capital Stock"). As of the
date of this Agreement, (a) 7,449,364 shares of Reading Common Stock were issued
and outstanding, (b) 70,000 shares of Reading Series A Stock were issued and
outstanding, (c) 550,000 shares of Reading Series B Stock were issued and
outstanding, and (d) stock options to acquire 775,232 shares of Reading Common
Stock were outstanding under all stock option plans and agreements of Reading or
its Subsidiaries. All of the outstanding shares of Reading Capital Stock are
validly issued, fully paid and nonassessable, and free of preemptive rights.
Except as set forth above, there are no outstanding subscriptions, options,
rights, warrants, convertible securities, stock appreciation rights, phantom
equity, or other agreements or commitments obligating Reading to issue,
transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock of any class.
Section 5.3 Authority
Reading has full corporate power and authority to execute and deliver
this Agreement and any other agreement executed and delivered in connection
herewith (the "Ancillary Agreements") to which Reading is or will be a party
and, subject to obtaining Reading Stockholders' Approval as contemplated by
Section 8.11, to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the Ancillary
Agreements to which Reading is or will be a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by Reading's Board of Directors, and no other corporate proceedings
on the part of Reading are necessary to authorize this Agreement and the
Ancillary Agreements to which Reading is or will be a party or to consummate the
transactions contemplated hereby or thereby, other than Reading Stockholders?
Approval as contemplated by Section 8.11 hereof. This Agreement has been, and
the Ancillary Agreements to which Reading is or will be a party are, or upon
execution will be, duly and validly executed and delivered by Reading and,
assuming the due authorization, execution and delivery hereof and thereof by the
other parties hereto and thereto, constitutes, or upon execution will
constitute, valid and binding obligations of Reading enforceable against
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Reading in accordance with their respective terms, except as such enforceability
may be subject to the Enforceability Exception.
Section 5.4 Consents and Approvals; No Violation
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the performance by Reading of its
obligations hereunder will not:
a. conflict with any provision of Reading's articles of incorporation
or bylaws or the articles of incorporation or bylaws (or other similar
organizational documents) of any of its Subsidiaries;
b. subject to obtaining of any requisite approvals of Reading's
stockholders as contemplated by Section 8.11 hereof, require any consent,
waiver, approval, order, authorization or permit of, or registration, filing
with or notification to, (i) any Governmental Authority, except for applicable
requirements of the Securities Act, the Exchange Act, state securities or blue
sky laws, and Customary Post-Closing Consents or (ii) any third party other than
a Governmental Authority, other than such non-Governmental Authority third party
consents, waivers, approvals, orders, authorizations and permits that would not
(x) result in a Reading Material Adverse Effect, (y) materially impair the
ability of Reading or any of its Subsidiaries, as the case may be, to perform
its obligations under this Agreement or any Ancillary Agreement or (z) prevent
the consummation of any of the transactions contemplated by this Agreement;
c. result in any violation of or the breach of or constitute a default
(with notice or lapse of time or both) under, or give rise to any right of
termination, cancellation or acceleration or guaranteed payments or a loss of a
material benefit under, any of the terms, conditions or provisions of any note,
lease, mortgage, license, agreement or other instrument or obligation to which
Reading or any of its Subsidiaries is a party or by which Reading or any of its
Subsidiaries or any of their respective properties or assets may be bound,
except for such violations, breaches, defaults, or rights of termination,
cancellation or acceleration, or losses as to which requisite waivers or
consents have been obtained or which, individually or in the aggregate, would
not (i) result in a Reading Material Adverse Effect, (ii) materially impair the
ability of Reading or any of its Subsidiaries to perform its obligations under
this Agreement or any Ancillary Agreement or (iii) prevent the consummation of
any of the transactions contemplated by this Agreement;
d. violate the provisions of any order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to Reading or any of its
Subsidiaries;
e. result in the creation of any Lien upon any shares of capital stock
or material properties or assets of Reading or any of its Subsidiaries under any
agreement or instrument to which Reading or any of its Subsidiaries is a party
or by which Reading or any of its Subsidiaries or any of their properties or
assets is bound; or
f. result in any holder of any securities of Reading being entitled to
appraisal, dissenters' or similar rights.
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Section 5.5 Reading SEC Reports
Reading has filed with the SEC, and has heretofore made available to
Parent and Xxxxx true and complete copies of, each form, registration statement,
report, schedule, proxy or information statement and other document (including
exhibits and amendments thereto), including without limitation its annual
reports to stockholders, required to be filed by it or its predecessors with the
SEC since January 1, 1996 under the Securities Act or the Exchange Act
(collectively, the "Reading SEC Reports"). As of the respective dates such
Reading SEC Reports were filed or, if any such Reading SEC Reports were amended,
as of the date such amendment was filed, each of the Reading SEC Reports,
including without limitation any financial statements or schedules included
therein, (a) complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and the
applicable rules and regulations promulgated thereunder, and (b) 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
therein, in light of the circumstances under which they were made, not
misleading.
Section 5.6 Financial Statements
Each of the consolidated financial statements of Reading contained in the
Reading SEC Reports (including any related notes and schedules) ("Reading
Financial Statements") has been prepared from, and is in accordance with, the
books and records of Reading and its consolidated Subsidiaries, complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, has been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto and subject, in the case of quarterly financial statements,
to normal and recurring year end adjustments) and fairly presents, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Reading and its Subsidiaries as
of the date thereof and the consolidated results of operations and cash flows
(and changes in financial position, if any) of Reading and its Subsidiaries for
the periods presented therein (subject to normal year end adjustments and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
Section 5.7 Absence of Undisclosed Liabilities
Except as reflected in the Reading Financial Statements or in the Reading
SEC Reports filed and publicly available prior to the date of this Agreement,
neither Reading nor any of its Subsidiaries has incurred any liabilities or
obligations of any nature (contingent or otherwise) that, individually or in the
aggregate, would have a Reading Material Adverse Effect.
Section 5.8 Absence of Certain Changes
Except as disclosed in the Reading SEC Reports filed and publicly
available prior to the date of this Agreement or as contemplated by this
Agreement, since June 30, 2001 (a) Reading and its Subsidiaries have conducted
their business in all material respects in the ordinary course consistent with
past practices, (b) there has not been any change or development, or combination
of changes or developments that, individually or in the aggregate, would have a
Reading
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Material Adverse Effect, (c) there has not been any declaration, setting aside
or payment of any dividend or other distribution with respect to any shares of
capital stock of Reading, or any repurchase, redemption or other acquisition by
Reading or any of its Subsidiaries of any outstanding shares of capital stock or
other securities of, or other ownership interests in, Reading or any of its
Subsidiaries, (d) there has not been any amendment of any term of any
outstanding security of Reading or any of its Subsidiaries, and (e) there has
not been any change in any method of accounting or accounting practice by
Reading or any of its Subsidiaries, except for any such change required by
reason of a concurrent change in GAAP or to conform a Subsidiary's accounting
policies and practices to those of Reading.
Section 5.9 Taxes
Except as otherwise disclosed in the Reading SEC Reports filed and publicly
available prior to the date of this Agreement and for matters that would not
have a Reading Material Adverse Effect:
a. Reading and each of its Subsidiaries have timely filed (or have had
timely filed on their behalf) or will file or cause to be timely filed, all
material Tax Returns required by applicable law to be filed by any of them prior
to or as of the Closing Date. All such Tax Returns and amendments thereto are or
will be true, complete and correct in all material respects.
b. Reading and each of its Subsidiaries have paid (or have had paid on
their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all material Taxes due with respect to any period
ending prior to or as of the Closing Date.
c. No Audit by a Tax Authority is pending or threatened with respect to
any Tax Returns filed by, or Taxes due from, Reading or any Subsidiary. No issue
has been raised by any Tax Authority in any Audit of Reading or any of its
Subsidiaries that if raised with respect to any other period not so audited
could be expected to result in a material proposed deficiency for any period not
so audited. No material deficiency or adjustment for any Taxes has been assessed
against Reading or any of its Subsidiaries. There are no liens for Taxes upon
the assets of Reading or any of its Subsidiaries, except liens for current Taxes
not yet delinquent.
d. Except with respect to the tax year ended December 31, 1996, neither
Reading nor any of its Subsidiaries has given or been requested to give any
waiver of statutes of limitations relating to the payment of Taxes or have
executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
e. Prior to the date hereof, Reading and its Subsidiaries have disclosed,
and provided or made available true and complete copies to Parent of, all
material Tax sharing, Tax indemnity, or similar agreements to which Reading or
any of its Subsidiaries are a party to, is bound by, or has any obligation or
liability for Taxes.
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Section 5.10 Litigation
Except as disclosed in the Reading SEC Reports filed and publicly available
prior to the date of this Agreement and for matters that would not have a
Reading Material Adverse Effect, there is no suit, claim, action, proceeding or
investigation pending or, to Reading's knowledge, threatened against or directly
affecting Reading, any Subsidiaries of Reading or any of the directors or
officers of Reading or any of its Subsidiaries in their capacity as such, nor is
there any reasonable basis therefor that could reasonably be expected to have a
Reading Material Adverse Effect, if adversely determined. Neither Reading nor
any of its Subsidiaries, nor any officer, director or employee of Reading or any
of its Subsidiaries, has been permanently or temporarily enjoined by any order,
judgment or decree of any court or any other Governmental Authority from
engaging in or continuing any conduct or practice in connection with the
business, assets or properties of Reading or such Subsidiary nor, to the
knowledge of Reading, is Reading, any Subsidiary or any officer, director or
employee of Reading or its Subsidiaries under investigation by any Governmental
Authority. Except as disclosed in the Reading SEC Reports filed and publicly
available prior to the date of this Agreement, there is not in existence any
order, judgment or decree of any court or other tribunal or other agency
enjoining or requiring Reading or any of its Subsidiaries to take any action of
any kind with respect to its business, assets or properties. Notwithstanding the
foregoing, no representation or warranty in this Section 5.10 is made with
respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 5.12.
Section 5.11 Employee Benefit Plans; ERISA
a. With respect to each employee benefit, retirement or deferred
compensation plan or arrangement (including but not limited to any plans
described in section 3(3) of ERISA)), sponsored, maintained or contributed to by
Reading or any trade or business, whether or not incorporated, which together
with Reading would be deemed a "single employer" within the meaning of Section
414(b), (c) or (m) of the Code or section 4001(b)(1) of ERISA (a "Reading ERISA
Affiliate") within six years prior to the Effective Time (each a "Reading
Benefit Plan"): (i) if intended to qualify under section 401(a) or 401(k) of the
Code, such plan satisfies the requirements of such sections, has received a
favorable determination letter from the Internal Revenue Service with respect to
its qualification, and its related trust has been determined to be exempt from
tax under section 501(a) of the Code and, to the knowledge of Reading, nothing
has occurred since the date of such letter to adversely affect such
qualification or exemption; (ii) each such plan has been administered in
substantial compliance with its terms and applicable law, except for any
noncompliance with respect to any such plan that could not reasonably be
expected to result in a Reading Material Adverse Effect; (iii) neither Reading
nor any Reading ERISA Affiliate has engaged in, and Reading and each Reading
ERISA Affiliate do not have any knowledge of any Person that has engaged in, any
transaction or acted or failed to act in any manner that would subject Reading
or any Reading ERISA Affiliate to any liability for a breach of fiduciary duty
under ERISA that could reasonably be expected to result in a Reading Material
Adverse Effect; (iv) no disputes are pending or, to the knowledge of Reading or
any Reading ERISA Affiliate, threatened; (v) neither Reading nor any Reading
ERISA Affiliate has engaged in, and Reading and each Reading ERISA Affiliate do
not have any knowledge of any person that has engaged in, any transaction in
violation of Section 406(a) or (b) of ERISA or Section 4975 of the Code for
which no exemption exists under Section 408 of ERISA or Section 4975(c)
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of the Code or Section 4975(d) of the Code that could reasonably be expected to
result in a Reading Material Adverse Effect; (vi) to the knowledge of Reading,
there have been no "reportable events" within the meaning of Section 4043 of
ERISA for which the 30 day notice requirement of ERISA has not been waived by
the PBGC; (vii) all contributions due have been made on a timely basis (within,
where applicable, the time limit established under section 302 of ERISA or Code
section 412); (viii) no notice of intent to terminate such plan has been given
under section 4041 of ERISA and no proceeding has been instituted under section
4042 of ERISA to terminate such plan; and (ix) except for defined benefit plans
(if applicable), such plan may be terminated on a prospective basis without any
continuing liability for benefits other than benefits accrued to the date of
such termination. All contributions made or required to be made under any
Reading Benefit Plan meet the requirements for deductibility under the Code, and
all contributions which are required and which have not been made have been
properly recorded on the books of Reading or a Reading ERISA Affiliate.
b. No Reading Benefit Plan is a "multi-employer plan" (as defined in
section 4001(a)(3) of ERISA) or a "multiple employer plan (within the meaning
of section 413(c) of the Code). No event has occurred with respect to Reading or
a Reading ERISA Affiliate in connection with which Reading could be subject to
any liability, lien or encumbrance with respect to any Reading Benefit Plan or
any employee benefit plan described in section 3(3) of ERISA maintained,
sponsored or contributed to by a Reading ERISA Affiliate under ERISA or the
Code.
c. Except as set forth in the Reading SEC Reports filed and publicly
available prior to the date of this Agreement or except as could not reasonably
be expected to result in a Reading Material Adverse Effect, no employees of
Reading or any of its Subsidiaries are covered by any severance plan or similar
arrangement.
Section 5.12 Environmental Liability
Except as set forth in the Reading SEC Reports filed and publicly available
prior to the date of this Agreement and except for matters that would not have a
Reading Material Adverse Effect:
a. The businesses of Reading and its Subsidiaries have been and are
operated in material compliance with all Environmental Laws.
b. Neither Reading nor any of its Subsidiaries has caused or allowed the
generation, treatment, manufacture, processing, distribution, use, storage,
discharge, release, disposal, transport or handling of any Hazardous Substances
at any of its properties or facilities, except in material compliance with all
Environmental Laws, and, to Reading's knowledge, no generation, manufacture,
processing, distribution, use, treatment, handling, storage, discharge, release,
disposal, transport or handling of any Hazardous Substances has occurred at any
property or facility owned, leased or operated by Reading or any of its
Subsidiaries except in material compliance with all Environmental Laws.
c. Neither Reading nor any of its Subsidiaries has received any written
notice from any Governmental Authority or third party or, to the knowledge of
Reading, any other
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communication alleging or concerning any material violation by Reading or any of
its Subsidiaries of, or responsibility or liability of Reading or any of its
Subsidiaries under, any Environmental Law. There are no pending, or to the
knowledge of Reading, threatened, claims, suits, actions, proceedings or
investigations with respect to the businesses or operations of Reading or any of
its Subsidiaries alleging or concerning any material violation of or
responsibility or liability under any Environmental Law that, if adversely
determined, could reasonably be expected to have a Reading Material Adverse
Effect, nor does Reading have any knowledge of any fact or condition that could
give rise to such a claim, suit, action, proceeding or investigation.
d. Reading and its Subsidiaries are in possession of all material
approvals, permits, licenses, registrations and similar type authorizations from
all Governmental Authorities under all Environmental Laws with respect to the
operation of the businesses of Reading and its Subsidiaries; there are no
pending or, to the knowledge of Reading, threatened, actions, proceedings or
investigations seeking to modify, revoke or deny renewal of any of such
approvals, permits, licenses, registrations and authorizations; and Reading does
not have knowledge of any fact or condition that is reasonably likely to give
rise to any action, proceeding or investigation to modify, revoke or deny
renewal of any of such approvals, permits, licenses, registrations and
authorizations.
e. There has been no discharge, release or disposal by Reading or its
Subsidiaries or, to Reading's knowledge, any predecessor in interest at any of
the properties owned or operated by Reading, its Subsidiaries or a predecessor
in interest, or to the knowledge of Reading, at any disposal or treatment
facility which received Hazardous Substances generated by Reading, its
Subsidiaries, or any predecessor in interest which could reasonably be expected
to have a Reading Material Adverse Effect.
f. To Reading's knowledge, no pending claims have been asserted or
threatened to be asserted against Reading or its Subsidiaries for any personal
injury (including wrongful death) or property damage (real or personal) arising
out of exposure to Hazardous Substances used, handled, generated, transported or
disposed by Reading or its Subsidiaries at property owned or operated by Reading
or its Subsidiaries, except as could not reasonably be expected to have a
Reading Material Adverse Effect.
Section 5.13 Compliance with Applicable Laws
Reading and each of its Subsidiaries hold all material approvals, licenses,
permits, registrations and similar type authorizations necessary for the lawful
conduct of their respective businesses, as now conducted, and such businesses
are not being, and neither Reading nor any of its Subsidiaries has received any
notice from any Governmental Authority or person that any such business has been
or is being conducted in violation of any law, ordinance or regulation,
including without limitation any law, ordinance or regulation relating to
occupational health and safety, except for possible violations which either
individually or in the aggregate have not resulted and would not result in a
Reading Material Adverse Effect; provided, however, notwithstanding the
foregoing, no representation or warranty in this Section 5.13 is made with
respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 5.12.
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Section 5.14 Insurance
Reading and its Subsidiaries currently have in place all policies of
insurance which are required in connection with the operation of the businesses
of Reading and its Subsidiaries as currently conducted in accordance with
applicable laws and all agreements relating to Reading and its Subsidiaries.
Reading has made available to Parent a true, complete and correct copy of each
such policy or the binder therefor. None of Reading, any of its Subsidiaries or
any other party to such insurance policy is in breach or default thereunder
(including with respect to the payment of premiums or the giving of notices),
and Reading does not know of any occurrence or any event which (with notice or
the lapse of time or both) would constitute such a breach or default or permit
termination, modification or acceleration under the policy, except for such
breaches or defaults which, individually or in the aggregate, would not have a
Reading Material Adverse Effect.
Section 5.15 Labor Matters; Employees
a. Except as set forth in the Reading SEC Reports filed and publicly
available prior to the date of this Agreement and except for such matters that
alone or in conjunction with other similar or related matters would not have a
Reading Adverse Effect, (i) there is no labor strike, dispute, slowdown, work
stoppage or lockout actually pending or, to the knowledge of Reading, threatened
against or affecting Reading or any of its Subsidiaries and, during the past
five years, there has not been any such action, (ii) none of Reading or any of
its Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to with
any labor organization or employee association applicable to employees of
Reading or any of its Subsidiaries, (iii) none of the employees of Reading or
any of its Subsidiaries are represented by any labor organization and none of
Reading or any of its Subsidiaries have any knowledge of any current union
organizing activities among the employees of Reading or any of its Subsidiaries
nor does any question concerning representation exist concerning such employees,
(iv) Reading and its Subsidiaries have each at all times been in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation, (v) there is no unfair labor practice charge or
complaint against any of Reading or any of its Subsidiaries pending or, to the
knowledge of Reading, threatened before the National Labor Relations Board or
any similar state or foreign agency, (vi) there is no grievance or arbitration
proceeding arising out of any collective bargaining agreement or other grievance
procedure relating to Reading or any of its Subsidiaries, (vii) neither the
Occupational Safety and Health Administration nor any corresponding state agency
has threatened to file any citation, and there are no pending citations,
relating to Reading or any of its Subsidiaries, and (viii) there is no employee
or governmental claim or investigation, including any charges to the Equal
Employment Opportunity Commission or state employment practice agency,
investigations regarding Fair Labor Standards Act compliance, audits by the
Office of Federal Contractor Compliance Programs, sexual harassment complaints
or demand letters or threatened claims.
b. Since the enactment of the WARN Act, none of Reading or any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN Act)
affecting any site of
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employment or one or more facilities or operating units within any site of
employment or facility of any of Reading or any of its Subsidiaries, or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of Reading or any of its Subsidiaries, nor has Reading or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law, in each case that could reasonably be expected to
have a Reading Material Adverse Effect.
Section 5.16 Permits
Immediately prior to the Effective Time and except for Customary Post-
Closing Consents, Reading and its Subsidiaries hold all of the Permits required
or necessary to construct, own, operate, use and/or maintain its properties and
conduct its operations as presently conducted, except for such Permits, the lack
of which, individually or in the aggregate, would not have a Reading Material
Adverse Effect; provided, however, that notwithstanding the foregoing, no
representation or warranty in this Section 5.16 is made with respect to Permits
issued pursuant to Environmental Laws, which are covered exclusively by the
provisions set forth in Section 5.12.
Section 5.17 Material Contracts
a. Reading has filed as exhibits to the Reading SEC Reports filed and
publicly available prior to the date of this Agreement a list of each contract,
lease, indenture, agreement, arrangement or understanding to which Reading or
any of its Subsidiaries is subject that is of a type that would be required to
be included as an exhibit to a Form S-1 Registration Statement pursuant to the
rules and regulations of the SEC if such a registration statement was filed by
Reading, exclusive of any contracts that would be required to be filed with the
SEC due to Reading's ownership of securities of Xxxxx or Parent (collectively,
the "Reading Material Contracts").
b. Except as set forth in the Reading SEC Reports filed and publicly
available prior to the date of this Agreement, (i) all Reading Material
Contracts are in full force and effect and are the valid and legally binding
obligations of the parties thereto and are enforceable in accordance with their
respective terms; (ii) Reading is not in material breach or default with respect
to, and to the knowledge of Reading, no other party to any Reading Material
Contract is in material breach or default with respect to, its obligations
thereunder, including with respect to payments or otherwise; and (iii) no party
to any Reading Material Contract has given notice of any action to terminate,
cancel, rescind or procure a judicial reformation thereof.
c. Except as set forth in the Reading SEC Reports filed and publicly
available prior to the date of this Agreement, as of the date of this Agreement
with respect to authorizations for expenditures executed on or after June 30,
2001, there are no material outstanding calls for payments that are due or that
Reading or its Subsidiaries are committed to make that have not been made.
Section 5.18 Required Stockholder Vote or Consent
The only vote of the holders of any class or series of capital stock of
Reading that will be necessary to consummate the Reading Merger and the other
transactions contemplated by this
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Agreement is the approval of this Agreement by the holders of a majority of the
voting power of the outstanding shares of Reading Common Stock, Reading Series A
Stock and Reading Series B Stock, on the record date, voting together as a
single class ("Reading Stockholders' Approval").
Section 5.19 Proxy Statement/Prospectus; Registration Statement
None of the information to be supplied by Reading or its Subsidiaries for
inclusion in (a) the Proxy Statement/Prospectus, to be filed by the Companies
and Parent with the SEC, and any amendments or supplements thereto, or (b) the
Registration Statement to be filed by Parent with the SEC in connection with the
Mergers, and any amendments or supplements thereto, will, at the respective
times such documents are filed, and, in the case of the Proxy Statement/
Prospectus, at the time the Proxy Statement/Prospectus or any amendment or
supplement thereto is first mailed to stockholders of Parent and the Companies,
at the time such stockholders vote on approval of this Agreement and at the
Effective Time, and, in the case of the Registration Statement, when it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be made therein or necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
Section 5.20 Intellectual Property
Reading or its Subsidiaries own, or are licensed or otherwise have the
right to use, all Intellectual Property currently used in the conduct of the
business of Reading and its Subsidiaries, except where the failure to so own or
otherwise have the right to use such intellectual property would not,
individually or in the aggregate, have a Reading Material Adverse Effect. No
person has notified either Reading or any of its Subsidiaries that their use of
the Intellectual Property infringes on the rights of any person, subject to such
claims and infringements as do not, individually or in the aggregate, give rise
to any liability on the part of Reading and its Subsidiaries that could have a
Reading Material Adverse Effect, and, to Reading's knowledge, no person is
infringing on any right of Reading or any of its Subsidiaries with respect to
any such Intellectual Property. No claims are pending or, to Reading's
knowledge, threatened that Reading or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property other than claims which, if adversely determined, would
not be likely to have a Reading Material Adverse Effect.
Section 5.21 Brokers
No broker, finder or investment banker (other than Xxxxxxxx & Xxxxxxx,
Incorporated, the fees and expenses of which shall be paid in equal shares by
Parent, Xxxxx and Reading) is entitled to any brokerage, finder's fee or other
fee or commission payable by Reading or any of its Subsidiaries in connection
with the transactions contemplated by this Agreement based upon arrangements
made by and on behalf of Reading or any of its Subsidiaries.
Section 5.22 Fairness Opinion
The Board of Directors of Reading has received the Joint Fairness Opinion
to the effect that, as of the date of such opinion, the Reading Common Stock
Exchange Ratio, Reading
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Series A Stock Exchange Ratio and Reading Series B Stock Exchange Ratio are fair
from a financial point of view to the public holders of the Reading Common
Stock. True and complete copies of the Joint Fairness Opinion have been given to
Parent and Xxxxx.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent, Xxxxx Merger Sub and Reading Merger Sub jointly and severally
represent and warrant to the Companies as follows except as disclosed in a
disclosure letter delivered by Parent to Xxxxx and Reading as of the date hereof
(the "Parent Disclosure Letter"):
Section 6.1 Organization and Qualification
a. Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the character of Parent's properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure to
be so qualified would not result in a Parent Material Adverse Effect (as defined
below). Parent has all requisite corporate or other power and authority to own,
use or lease its properties and to carry on its business as it is now being
conducted. Parent has made available to the Companies a complete and correct
copy of its articles of incorporation and bylaws, each as amended to date, and
Parent's articles of incorporation and bylaws as so delivered are in full force
and effect. Parent is not in default in any respect in the performance,
observation or fulfillment of any provision of its articles of incorporation or
bylaws.
b. Each of Parent's Subsidiaries that is a corporation has been duly
organized, is validly existing and in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of such Subsidiary's properties or the nature of its business makes such
qualification necessary, except in jurisdictions, if any, where the failure to
be so qualified would not result in a Parent Material Adverse Effect. Each of
Parent's Subsidiaries that is not a corporation has been duly organized, is
validly existing and in good standing under the laws of its jurisdiction of
organization, is duly qualified to do business as a foreign entity and is in
good standing in each jurisdiction in which the character of such Subsidiary's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Parent Material Adverse Effect. Each of Parent's Subsidiaries has
all requisite corporate or other power and authority to own, use or lease its
properties and to carry on its business as it is now being conducted and as it
is now proposed to be conducted. No Subsidiary of Parent is in default in any
respect in the performance, observation or fulfillment of any provision of its
articles of incorporation or bylaws (or similar organizational documents).
c. For purposes of this Agreement, a "Parent Material Adverse Effect"
shall mean any event, circumstance, condition, development or occurrence
causing, resulting in or having (or with the passage of time likely to cause,
result in or have) a material adverse effect on the financial condition,
business, assets, properties or results of operations of Parent and its
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Subsidiaries, taken as a whole; provided, that such term shall not include
effects that are (a) not applicable primarily to Parent resulting from market
conditions generally in the real estate, motion picture theater or off-Broadway
industries or (b) from any matter or facts previously disclosed in the Parent
SEC Reports (as defined in Section 6.5 below), in this Agreement and/or in the
Parent Disclosure Letter.
x. Xxxxx Merger Sub and Reading Merger Sub are direct, wholly-owned
subsidiaries of Parent, were formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and have not engaged in any business
activities or conducted any operations of any kind, entered into any agreement
or arrangement with any Person or entity, or incurred, directly or indirectly,
any material liabilities or obligations, in each case except in connection with
their incorporation, the negotiation of this Agreement, the Mergers and the
transactions contemplated hereby.
Section 6.2 Capitalization
The authorized capital stock of Parent consists of 100,000,000 shares of
Parent Class A Stock, 20,000,000 shares of Parent Class B Stock, and 20,000,000
shares of Preferred Stock, par value of $0.01 per share ("Parent Preferred
Stock" and together with Parent Class A Stock and Parent Class B Stock, the
"Parent Capital Stock"). As of the date of this Agreement, Parent has (a)
7,958,379 shares of Parent Class A Stock issued and outstanding, (b) 1,989,585
shares of Parent Class B Stock issued and outstanding, (c) no shares of Parent
Preferred Stock issued and outstanding and (d) outstanding stock options to
acquire 155,900 shares of Parent Class A Stock and no shares of Parent Class B
Stock under all stock option plans and agreements of Parent. The authorized
capital stock of Xxxxx Merger Sub consists of 1,000 shares of Xxxxx Merger Sub
Common Stock. As of the date of this Agreement, Xxxxx Merger Sub has 100 shares
of Xxxxx Merger Sub Common Stock outstanding. The authorized capital stock of
Reading Merger Sub consists of 1,000 shares of Reading Merger Sub Common Stock.
As of the date of this Agreement, Reading Merger Sub has 100 shares of Reading
Merger Sub Common Stock outstanding. All outstanding shares of Parent Capital,
Xxxxx Merger Sub Common Stock and Reading Merger Sub Common Stock are validly
issued, fully paid and nonassessable, and free of preemptive rights. Except as
set forth above, and other than this Agreement, there are no outstanding
subscriptions, options, rights, warrants, convertible securities, stock
appreciation rights, phantom equity, or other agreements or commitments
obligating Parent, Xxxxx Merger Sub or Reading Merger Sub to issue, transfer,
sell, redeem, repurchase or otherwise acquire any shares of its respective
capital stock of any class.
Section 6.3 Authority
Each of Parent, Xxxxx Merger Sub and Reading Merger Sub has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which each of Parent, Xxxxx Merger Sub and Reading Merger Sub is
or will be a party and, subject to Parent obtaining the Parent Stockholders'
Approval as contemplated by Section 8.11, to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of
this Agreement and the Ancillary Agreements to which each of Parent, Xxxxx
Merger Sub and Reading Merger Sub is or will be a party and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors of Parent,
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Xxxxx Merger Sub and Reading Merger Sub, and no other corporate proceedings on
the part of Parent, Xxxxx Merger Sub or Reading Merger Sub are necessary to
authorize this Agreement or the Ancillary Agreements to which any of them are or
will be a party or to consummate the transactions contemplated hereby or
thereby, other than obtaining the Parent Stockholders' Approval as contemplated
by Section 8.11 hereof. This Agreement has been, and the Ancillary Agreements to
which Parent, Xxxxx Merger Sub or Reading Merger Sub is or will be a party are,
or upon execution will be, duly and validly executed and delivered by Parent,
Xxxxx Merger Sub or Reading Merger Sub, as applicable, and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, constitutes or upon execution will constitute, valid and
binding obligations of Parent enforceable against Parent, Xxxxx Merger Sub or
Reading Merger Sub, as applicable, in accordance with their respective terms,
except for the Enforceability Exception.
Section 6.4 Consents and Approvals; No Violation
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the performance by Parent, Xxxxx Merger Sub
or Reading Merger Sub of their respective obligations hereunder will not:
a. conflict with any provision of the articles of incorporation or bylaws
of Parent, Xxxxx Merger Sub or Reading Merger Sub or the articles of
incorporation or bylaws (or other similar organizational documents) of any of
their Subsidiaries;
b. subject to obtaining Parent Stockholders' Approval as contemplated by
Section 8.11 hereof, require any consent, waiver, approval, order, authorization
or permit of, or registration, filing with or notification to, (i) any
Governmental Authority, except for applicable requirements of the Securities
Act, the Exchange Act, state securities or blue sky laws and Customary Post-
Closing Consents or (ii) any third party other than a Governmental Authority,
other than such non-Governmental Authority third party consents, waivers,
approvals, orders, authorizations and permits that would not (x) result in a
Parent Material Adverse Effect, (y) materially impair the ability of Parent or
any of its Subsidiaries to perform its obligations under this Agreement or any
Ancillary Agreement or (z) prevent the consummation of any of the transactions
contemplated by this Agreement;
c. result in any violation of or the breach of or constitute a default
(with notice or lapse of time or both) under, or give rise to any right of
termination, cancellation or acceleration or guaranteed payments or a loss of a
material benefit under, any of the terms, conditions or provisions of any note,
lease, mortgage, license, agreement or other instrument or obligation to which
Parent or any of its Subsidiaries is a party or by which Parent or any of its
Subsidiaries or any of their respective properties or assets may be bound,
except for such violations, breaches, defaults, or rights of termination,
cancellation or acceleration, or losses as to which requisite waivers or
consents have been obtained or which, individually or in the aggregate, would
not (i) result in a Parent Material Adverse Effect, (ii) materially impair the
ability of Parent or any of its Subsidiaries to perform its obligations under
this Agreement or any Ancillary Agreement or (iii) prevent the consummation of
any of the transactions contemplated by this Agreement;
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d. violate the provisions of any order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to Parent or any of its
Subsidiaries;
e. result in the creation of any Lien upon any material properties or
assets or on any shares of capital stock of Parent or its Subsidiaries under any
agreement or instrument to which Parent or any of its Subsidiaries is a party or
by which Parent or any of its Subsidiaries or any of their properties or assets
is bound; or
f. result in any holder of any securities of Parent being entitled to
appraisal, dissenters' or similar rights.
Section 6.5 Parent SEC Reports
Parent has filed with the SEC, and has heretofore made available to the
Companies true and complete copies of, each form, registration statement,
report, schedule, proxy or information statement and other document (including
exhibits and amendments thereto), including without limitation its annual
reports to stockholders, to be filed with the SEC since January 1, 1996 under
the Securities Act or the Exchange Act (collectively, the "Parent SEC Reports").
As of the respective dates such Parent SEC Reports were filed or, if any such
Parent SEC Reports were amended, as of the date such amendment was filed, each
of the Parent SEC Reports, including without limitation any financial statements
or schedules included therein, (a) complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, as the case
may be, and the applicable rules and regulations promulgated thereunder, and (b)
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 therein, in light of the circumstances under which they were made,
not misleading.
Section 6.6 Parent Financial Statements
Each of the consolidated financial statements of Parent contained in the
Parent SEC Reports (including any related notes and schedules) ("Parent
Financial Statements") has been prepared from, and is in accordance with, the
books and records of Parent and its consolidated Subsidiaries, complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, has been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto and subject, in the case of quarterly financial statements,
to normal and recurring year end adjustments) and fairly presents, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Parent and its Subsidiaries as
of the date thereof and the consolidated results of operations and cash flows
(and changes in financial position, if any) of Parent and its Subsidiaries for
the periods presented therein (subject to normal year end adjustments and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
Section 6.7 Absence of Undisclosed Liabilities
Except as reflected in the Parent Financial Statements or in the Parent SEC
Reports filed and publicly available prior to the date of this Agreement,
neither Parent nor any of its
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Subsidiaries has incurred any liabilities or obligations of any nature
(contingent or otherwise) that would have a Parent Material Adverse Effect.
Section 6.8 Absence of Certain Changes
Except as contemplated by this Agreement, or disclosed in the Parent SEC
Reports filed and publicly available prior to the date of this Agreement, since
June 30, 2001 (a) Parent and its Subsidiaries have conducted their business in
all material respects in the ordinary course consistent with past practices, (b)
there has not been any change or development, or combination of changes or
developments that, individually or in the aggregate, would have a Parent
Material Adverse Effect, (c) there has not been any declaration, setting aside
or payment of any dividend or other distribution with respect to any shares of
capital stock of Parent or any repurchase, redemption or other acquisition by
Parent or any of its Subsidiaries of any outstanding shares of capital stock or
other securities of, or other ownership interests in, Parent or any of its
Subsidiaries, (d) there has not been any amendment of any term of any
outstanding security of Parent, and (e) there has not been any change in any
method of accounting or accounting practice by Parent, except for any such
change required by reason of a concurrent change in GAAP or to conform a
Subsidiary's accounting policies and practices to those of Parent.
Section 6.9 Taxes
Except as otherwise disclosed in the Parent SEC Reports filed and publicly
available prior to the date of this Agreement and for matters that would not
have a Parent Material Adverse Effect:
a. Parent and each of its Subsidiaries have timely filed (or have had
timely filed on their behalf) or will file or cause to be timely filed, all
material Tax Returns required by applicable law to be filed by any of them prior
to or as of the Closing Date. All such Tax Returns and amendments thereto are
or will be true, complete and correct in all material respects.
b. Parent and each of its Subsidiaries have paid (or have had paid on
their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all material Taxes due with respect to any period
ending prior to or as of the Closing Date.
c. No Audit by a Tax Authority is pending or threatened with respect to
any Tax Returns filed by, or Taxes due from, Parent or any Subsidiary. No issue
has been raised by any Tax Authority in any Audit of Parent or any of its
Subsidiaries that if raised with respect to any other period not so audited
could be expected to result in a material proposed deficiency for any period not
so audited. No material deficiency or adjustment for any Taxes has been
threatened, proposed, asserted or assessed against Parent or any of its
Subsidiaries. There are no liens for Taxes upon the assets of Parent or any of
its Subsidiaries, except liens for current Taxes not yet delinquent.
d. Neither Parent nor any of its Subsidiaries has given or been requested
to give any waiver of statutes of limitations relating to the payment of Taxes
or have executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
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e. Prior to the date hereof, Parent and its Subsidiaries have disclosed,
and provided or made available true and complete copies to the Companies of, all
material Tax sharing, Tax indemnity, or similar agreements to which Parent or
any of its Subsidiaries is a party to, is bound by, or has any obligation or
liability for Taxes.
Section 6.10 Litigation
Except as disclosed in the Parent SEC Reports filed and publicly available
prior to the date of this Agreement and for matters that would not have a Parent
Material Adverse Effect, there is no suit, claim, action, proceeding or
investigation pending or, to Parent's knowledge, threatened against or directly
affecting Parent, any Subsidiaries of Parent or any of the directors or officers
of Parent or any of its Subsidiaries in their capacity as such, nor is there any
reasonable basis therefor that could reasonably be expected to have a Parent
Material Adverse Effect, if adversely determined. Neither Parent nor any of its
Subsidiaries, nor any officer, director or employee of Parent or any of its
Subsidiaries, has been permanently or temporarily enjoined by any order,
judgment or decree of any court or any other Governmental Authority from
engaging in or continuing any conduct or practice in connection with the
business, assets or properties of Parent or such Subsidiary, nor, to the
knowledge of Parent, is Parent, any Subsidiary or any officer, director or
employee of Parent or its Subsidiaries under investigation by any Governmental
Authority. Except as disclosed in the Parent SEC Reports filed and publicly
available prior to the date of this Agreement, there is not in existence any
order, judgment or decree of any court or other tribunal or other agency
enjoining or requiring Parent or any of its Subsidiaries to take any action of
any kind with respect to its business, assets or properties. Notwithstanding the
foregoing, no representation or warranty in this Section 6.10 is made with
respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 6.12.
Section 6.11 Employee Benefit Plans; ERISA
a. With respect to each employee benefit, retirement or deferred
compensation plan or arrangement, if any, (including but not limited to any
plans described in section 3(3) of ERISA), sponsored, maintained or contributed
to by Parent or any trade or business, whether or not incorporated, which
together with Parent would be deemed a "single employer" within the meaning of
Section 414(b), (c) or (m) of the Code or section 4001(b)(1) of ERISA (a "Parent
ERISA Affiliate") within six years prior to the Effective Time (each a "Parent
Benefit Plan"): (i) if intended to qualify under section 401(a) or 401(k) of
the Code, such plan satisfies the requirements of such sections, has received a
favorable determination letter from the Internal Revenue Service with respect to
its qualification, and its related trust has been determined to be exempt from
tax under section 501(a) of the Code and, to the knowledge of Parent, nothing
has occurred since the date of such letter to adversely affect such
qualification or exemption; (ii) each such plan has been administered in
substantial compliance with its terms and applicable law, except for any
noncompliance with respect to any such plan that could not reasonably be
expected to result in a Parent Material Adverse Effect; (iii) neither Parent nor
any Parent ERISA Affiliate has engaged in, and Parent and each Parent ERISA
Affiliate do not have any knowledge of any Person that has engaged in, any
transaction or acted or failed to act in any manner that would subject Parent or
any Parent ERISA Affiliate to any liability for a breach of fiduciary duty under
ERISA that could reasonably be expected to result in a Parent Material Adverse
Effect;
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(iv) no disputes are pending, or, to the knowledge of Parent or any Parent ERISA
Affiliate, threatened; (v) neither Parent nor any Parent ERISA Affiliate has
engaged in, and Parent and each Parent ERISA Affiliate do not have any knowledge
of any person that has engaged in, any transaction in violation of Section
406(a) or (b) of ERISA or Section 4975 of the Code for which no exemption exists
under Section 408 of ERISA or Section 4975(c) of the Code or Section 4975(d) of
the Code that could reasonably be expected to result in a Parent Material
Adverse Effect; (vi) to the knowledge of Parent, there have been no ?reportable
events? within the meaning of Section 4043 of ERISA for which the 30 day notice
requirement of ERISA has not been waived by the PBGC; (vii) all contributions
due have been made on a timely basis (within, where applicable, the time limit
established under section 302 of ERISA or Code section 412); (viii) no notice of
intent to terminate such plan has been given under Section 4041 of ERISA and no
proceeding has been instituted under section 4042 of ERISA to terminate such
plan; and (ix) except for defined benefit plans (if applicable), such plan may
be terminated on a prospective basis without any continuing liability for
benefits other than benefits accrued to the date of such termination. All
contributions made or required to be made under any Parent Benefit Plan meet the
requirements for deductibility under the Code, and all contributions which are
required and which have not been made have been properly recorded on the books
of Parent or a Parent ERISA Affiliate.
b. No Parent Benefit Plan is a "multi-employer plan" (as defined in
section 4001(a)(3) of ERISA) or a "multiple employer plan" (within the meaning
of section 413(c) of the Code). No event has occurred with respect to Parent or
a Parent ERISA Affiliate in connection with which Parent could be subject to any
liability, lien or encumbrance with respect to any Parent Benefit Plan or any
employee benefit plan described in Section 3(3) of ERISA maintained, sponsored
or contributed to by a Parent ERISA Affiliate under ERISA or the Code.
c. Except as set forth in the Parent SEC Reports filed and publicly
available prior to the date of this Agreement or except as could not reasonably
be expected to result in a Parent Material Adverse Effect, no employees of
Parent or any of its Subsidiaries are covered by any severance plan or similar
arrangement.
Section 6.12 Environmental Liability
Except as set forth in the Parent SEC Reports filed and publicly available
prior to the date of this Agreement and except for matters that would not have a
Parent Material Adverse Effect:
a. The businesses of Parent and its Subsidiaries have been and are
operated in material compliance with all Environmental Laws.
b. Neither Parent nor any of its Subsidiaries has caused or allowed the
generation, treatment, manufacture, processing, distribution, use, storage,
discharge, release, disposal, transport or handling of any Hazardous Substances
at any of its properties or facilities except in material compliance with all
Environmental Laws, and, to Parent's knowledge, no generation, manufacture,
processing, distribution, use, treatment, handling, storage, discharge, release,
disposal, transport or handling of any Hazardous Substances has occurred at any
property or facility owned, leased or operated by Parent or any of its
Subsidiaries except in material compliance with all Environmental Laws.
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c. Neither Parent nor any of its Subsidiaries has received any written
notice from any Governmental Authority or third party or, to the knowledge of
Parent, any other communication alleging or concerning any material violation by
Parent or any of its Subsidiaries of, or responsibility or liability of Parent
or any of its Subsidiaries under, any Environmental Law. There are no pending,
or to the knowledge of Parent, threatened, claims, suits, actions, proceedings
or investigations with respect to the businesses or operations of Parent or any
of its Subsidiaries alleging or concerning any material violation of or
responsibility or liability under any Environmental Law that, if adversely
determined, could reasonably be expected to have a Parent Material Adverse
Effect, nor does Parent have any knowledge of any fact or condition that could
give rise to such a claim, suit, action, proceeding or investigation.
d. Parent and its Subsidiaries are in possession of all material
approvals, permits, licenses, registrations and similar type authorizations from
all Governmental Authorities under all Environmental Laws with respect to the
operation of the businesses of Parent and its Subsidiaries; there are no pending
or, to the knowledge of Parent, threatened, actions, proceedings or
investigations seeking to modify, revoke or deny renewal of any of such
approvals, permits, licenses registrations and authorizations; and Parent does
not have knowledge of any fact or condition that is reasonably likely to give
rise to any action, proceeding or investigation to modify, revoke or deny
renewal of any of such approvals, permits, licenses, registrations and
authorizations.
e. There has been no discharge, release or disposal by Parent or its
Subsidiaries or, to Parent's knowledge, any predecessor in interest at any of
the properties owned or operated by Parent, its Subsidiaries, or a predecessor
in interest, or to the knowledge of Parent, at any disposal or treatment
facility which received Hazardous Substances generated by Parent, its
Subsidiaries, or any predecessor in interest which could reasonably be expected
to have a Parent Material Adverse Effect.
f. To Parent's knowledge, no pending claims have been asserted or
threatened to be asserted against Parent or its Subsidiaries for any personal
injury (including wrongful death) or property damage (real or personal) arising
out of exposure to Hazardous Substances used, handled, generated, transported or
disposed by Parent or its Subsidiaries at property owned or operated by Parent
or its Subsidiaries, except as could not reasonably be expected to have a Parent
Material Adverse Effect.
Section 6.13 Compliance with Applicable Laws
Parent and each of its Subsidiaries hold all material approvals, licenses,
permits, registrations and similar type authorizations necessary for the lawful
conduct of their respective businesses, as now conducted, and such businesses
are not being, and neither Parent nor any of its Subsidiaries has received any
notice from any Governmental Authority or person that any such business has been
or is being, conducted in violation of any law, ordinance or regulation,
including without limitation any law, ordinance or regulation relating to
occupational health and safety, except for possible violations which either
individually or in the aggregate have not resulted and would not result in a
Parent Material Adverse Effect; provided, however, notwithstanding the
foregoing, no representation or warranty in this Section 6.13 is made with
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respect to Environmental Laws, which are covered exclusively by the provisions
set forth in Section 6.12.
Section 6.14 Insurance
Parent and its Subsidiaries currently have in place all policies which are
required in connection with the operation of the businesses of Parent and its
Subsidiaries as currently conducted in accordance with applicable laws and all
agreements relating to Parent and its Subsidiaries. Parent has made available to
the Companies a true, complete and correct copy of each such policy or the
binder therefor. None of Parent, any of its Subsidiaries or any other party to
the policy is in breach or default thereunder (including with respect to the
payment of premiums or the giving of notices), and Parent does not know of any
occurrence or any event which (with notice or the lapse of time or both) would
constitute such a breach or default or permit termination, modification or
acceleration under the policy, except for such breaches or defaults which,
individually or in the aggregate, would not have a Parent Material Adverse
Effect.
Section 6.15 Labor Matters; Employees
a. Except as set forth in the Parent SEC Reports filed and publicly
available prior to the date of this Agreement and except for such matters that
alone or in conjunction with other similar or related matters would not have a
Parent Material Adverse Effect, (i) there is no labor strike, dispute, slowdown,
work stoppage or lockout actually pending or, to the knowledge of Parent,
threatened against or affecting Parent or any of its Subsidiaries and, during
the past five years, there has not been any such action, (ii) none of Parent or
any of its Subsidiaries is a party to or bound by any collective bargaining or
similar agreement with any labor organization, or work rules or practices agreed
to with any labor organization or employee association applicable to employees
of Parent or any of its Subsidiaries, (iii) none of the employees of Parent or
any of its Subsidiaries are represented by any labor organization and none of
Parent or any of its Subsidiaries have any knowledge of any current union
organizing activities among the employees of Parent or any of its Subsidiaries
nor does any question concerning representation exist concerning such employees,
(iv) Parent and its Subsidiaries have each at all times been in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation, (v) there is no unfair labor practice charge or
complaint against any of Parent or any of its Subsidiaries pending or, to the
knowledge of Parent, threatened before the National Labor Relations Board or any
similar state or foreign agency, (vi) there is no grievance or arbitration
proceeding arising out of any collective bargaining agreement or other grievance
procedure relating to Parent or any of its Subsidiaries, (vii) neither the
Occupational Safety and Health Administration nor any corresponding state agency
has threatened to file any citation, and there are no pending citations,
relating to Parent or any of its Subsidiaries, and (viii) there is no employee
or governmental claim or investigation, including any charges to the Equal
Employment Opportunity Commission or state employment practice agency,
investigations regarding Fair Labor Standards Act compliance, audits by the
Office of Federal Contractor Compliance Programs, sexual harassment complaints
or demand letters or threatened claims.
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b. Since the enactment of the WARN Act, none of Parent or any of its
Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of any of Parent or any of its
Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act) affecting any
site of employment or facility of Parent or any of its Subsidiaries, nor has
Parent or any of its Subsidiaries been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger application
of any similar state or local law, in each case that could reasonably be
expected to have a Parent Material Adverse Effect.
Section 6.16 Permits
Immediately prior to the Effective Time and except for Customary Post-
Closing Consents, Parent or its Subsidiaries will hold all of the Permits
required or necessary to construct, run, operate, use and/or maintain their
properties and conduct their operations as presently conducted, except for such
Permits, the lack of which, individually or in the aggregate, would not have a
Parent Material Adverse Effect; provided, however, that notwithstanding the
foregoing, no representation or warranty in this Section 6.16 is made with
respect to Permits issued pursuant to Environmental Laws, which are covered
exclusively by the provisions set forth in Section 6.12.
Section 6.17 Material Contracts
a. Parent has filed as exhibits to the Parent SEC Reports filed and
publicly available prior to the date of this Agreement a list of each contract,
lease, indenture, agreement, arrangement or understanding to which Parent or any
of its Subsidiaries is subject that is of a type that would be required to be
included as an exhibit to a Form S-1 Registration Statement pursuant to the
rules and regulations of the SEC if such a registration statement was filed by
Parent, exclusive of any contracts that would be required to be filed with the
SEC due to Parent's ownership of securities of Xxxxx or Reading (the "Parent
Material Contracts").
b. Except as set forth in the Parent SEC Reports, (i) all Parent Material
Contracts are in full force and effect and are the valid and legally binding
obligations of the parties thereto and are enforceable in accordance with their
respective terms; (ii) the Parent is not in material breach or default with
respect to, and to the knowledge of the Parent, no other party to any Parent
Material Contract is in material breach or default with respect to, its
obligations thereunder, including with respect to payments or otherwise; and
(iii) no party to any Parent Material Contract has given notice of any action to
terminate, cancel, rescind or procure a judicial reformation thereof.
c. As of the date of this Agreement, except as set forth in the Parent
SEC Reports filed and publicly available prior to the date of this Agreement,
with respect to authorizations for expenditure executed on or after June 30,
2001, there are no material outstanding calls for payments that are due or which
Parent or its Subsidiaries are committed to make that have not been made.
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Section 6.18 Required Stockholder Vote or Consent
The only vote of the holders of any class or series of capital stock of
Parent that will be necessary to consummate the Mergers and the other
transactions contemplated by this Agreement is the approval of (a)(i) the
issuance of Parent Class A Stock under this Agreement, (ii) the amendment of
Parent's 1999 Stock Option Plan (the "Parent Stock Option Plan") to increase the
number of shares reserved for issuance under the plan, and (iii) the issuance of
shares of Parent Class A Stock and Parent Class B Stock in respect of the Xxxxx
and Reading Stock Options to be assumed pursuant to Section 3.3, by a majority
of the votes cast by holders of Parent Class B Stock represented in person or by
proxy at the Parent Annual Meeting, and (b) the amendment to the Parent's
articles of incorporation to change the name of Parent by a majority of the
voting power of Parent's shares (collectively, the "Parent Stockholders'
Approval").
Section 6.19 Proxy Statement/Prospectus; Registration Statement
None of the information to be supplied by Parent or its Subsidiaries for
inclusion in (a) the Proxy Statement/Prospectus to be filed by the Companies and
Parent with the SEC, and any amendments or supplements thereto, or (b) the
Registration Statement to be filed by Parent with the SEC in connection with the
Mergers, and any amendments or supplements thereto, will, at the respective
times such documents are filed, and, in the case of the Proxy Statement/
Prospectus, at the time the Proxy Statement/Prospectus or any amendment or
supplement thereto is first mailed to stockholders of the Companies and Parent,
at the time such stockholders vote on approval of this Agreement and the
issuance, and reservation for issuance, of the shares of Parent Class A Stock
and Parent Class B Stock and at the Effective Time, and, in the case of the
Registration Statement, when it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be made therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
Section 6.20 Intellectual Property
Parent or its Subsidiaries own, or are licensed or otherwise have the right
to use, all Intellectual Property currently used in the conduct of the business
of Parent and its Subsidiaries, except where the failure to so own or otherwise
have the right to use such intellectual property would not, individually or in
the aggregate, have a Parent Material Adverse Effect. No person has notified
either Parent or any of its Subsidiaries that their use of the Intellectual
Property infringes on the rights of any person, subject to such claims and
infringements as do not, individually or in the aggregate, give rise to any
liability on the part of Parent and its Subsidiaries that could have a Parent
Material Adverse Effect, and, to Parent's knowledge, no person is infringing on
any right of Parent or any of its Subsidiaries with respect to any such
Intellectual Property. No claims are pending or, to Parent's knowledge,
threatened that Parent or any of its Subsidiaries is infringing or otherwise
adversely affecting the rights of any person with regard to any Intellectual
Property other than claims which, if adversely determined, would not be likely
to have a Parent Adverse Effect.
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Section 6.21 Brokers
No broker, finder or investment banker is entitled to any brokerage,
finder's fee or other fee or commission payable by Parent or any of its
Subsidiaries in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of Parent or any of its
Subsidiaries.
Section 6.22 Fairness Opinion
The Board of Directors of Parent has received the Joint Fairness Opinion to
the effect that, as of the date of such opinion, the Xxxxx and Reading Stock
Exchange Ratios are fair to the public holders of Parent Class A Stock and
Parent Class B Stock from a financial point of view. A true and complete copy
of the Joint Fairness Opinion has been given to the Companies.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 7.1 Conduct of Business by the Parent and the Companies Pending the
Mergers
From the date hereof until the Effective Time, unless Parent, Xxxxx and
Reading shall otherwise agree in writing, or as otherwise contemplated by this
Agreement, Parent, Xxxxx and Reading and their respective Subsidiaries shall
conduct their business in the ordinary course consistent with past practice and
shall use all reasonable efforts to preserve intact their business organizations
and relationships with third parties, subject to the terms of this Agreement.
Except as otherwise provided in this Agreement, and without limiting the
generality of the foregoing, from the date hereof until the Effective Time,
without the written consent of Parent, Xxxxx and Reading, which consent shall
not be unreasonably withheld:
a. Neither Parent, Xxxxx or Reading will adopt or propose any change to
their articles of incorporation or bylaws;
b. Except for the dividend payments in the aggregate amount of
approximately $114,000 payable quarterly with respect to the Reading Series A
Stock, neither Parent, Xxxxx or Reading will (i) declare, set aside or pay any
dividend or other distribution with respect to any shares of capital stock of
the respective Parent, Xxxxx and Reading, or (ii) repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other securities
of, or other ownership interests in, the respective company;
c. Neither Parent, Xxxxx or Reading will, nor permit any of its
Subsidiaries to, merge or consolidate with any other person or acquire assets of
any other person except in the ordinary course of business or pursuant to
transactions among wholly-owned subsidiaries of the respective company;
d. Neither Parent, Xxxxx and Reading will, nor permit any of its
Subsidiaries to, sell, lease, license or otherwise surrender, relinquish or
dispose of any material assets or properties (other than among Xxxxx and its
direct and indirect wholly owned Subsidiaries or among Reading
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and its direct and indirect wholly owned Subsidiaries or among Parent and its
direct and indirect wholly owned Subsidiaries) except in the ordinary course of
business;
e. Neither Parent, Xxxxx or Reading will or permit any of its
Subsidiaries to (i) issue any securities (whether through the issuance or
granting of options, warrants, rights or otherwise and except pursuant to
existing obligations disclosed in the following, as applicable: Xxxxx SEC
Reports, Reading SEC Reports or Parent SEC Reports filed and publicly available
as of the date of this Agreement), (ii) enter into any amendment of any term of
any outstanding security of such company or of any of its Subsidiaries, (iii)
incur any material indebtedness, except trade debt in the ordinary course of
business and debt pursuant to existing or previously disclosed contemplated
credit facilities or arrangements, (iv) fail to make any required contribution
to any Xxxxx Benefit Plan, Reading Benefit Plan, or Parent Benefit Plan, as
applicable, (v) increase in any material respect compensation, bonus or other
benefits payable to, or modify or amend any employment agreements or severance
agreements with, any executive officer except, in the case of executives other
than the chief executive officer of such company, with the approval of the
Chairman of the Board of Parent, Xxxxx or Reading, as the case may be, or (vi)
enter into any settlement or consent with respect to any pending litigation,
other than settlements in the ordinary course of business or on terms which are
not otherwise materially adverse to Parent, Xxxxx and Reading, as the case may
be, and its Subsidiaries taken as a whole;
f. Parent, Xxxxx and Reading will not change any method of accounting or
accounting practice by Parent, Xxxxx and Reading or any of their Subsidiaries,
except for any such change required by GAAP;
g. Parent, Xxxxx and Reading will not take any action or permit any of
their respective Subsidiaries to take any action that would give rise to a claim
under the WARN Act or any similar state law or regulation because of a "plant
closing" or "mass layoff" (each as defined in the WARN Act);
h. Neither Parent, Xxxxx or Reading, nor any of its Subsidiaries will
become bound or obligated to participate in any operation, or consent to
participate in any operation that will individually cost in excess of $5.0
million, unless the operation is a currently existing obligation of the
respective company or any of its Subsidiaries.
i. Neither Parent, Xxxxx or Reading will, nor permit any of its
Subsidiaries to, (i) take, or agree or commit to take, any action that would
make any representation and warranty of the respective company hereunder
inaccurate in any material respect at, or as of any time prior to, the Effective
Time or (ii) omit, or agree or commit to omit, to take any action necessary to
prevent any such representation or warranty from being inaccurate in any
material respect at any such time;
j. Neither Parent, Xxxxx or Reading nor any of its Subsidiaries shall (i)
adopt, amend (other than amendments that reduce the amounts payable by the
respective company or any Subsidiary, or amendments required by law to preserve
the qualified status of the Xxxxx Benefit Plan, Reading Benefit Plan or Parent
Benefit Plan, as applicable) or assume an obligation to contribute to any
employee benefit plan or arrangement of any type or collective bargaining
agreement or enter into any employment, severance or similar contract with any
person
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(including, without limitation, contracts with management of the respective
company or any Subsidiary that might require that payments be made upon the
consummation of the transactions contemplated hereby) or, except as provided in
Section 7.1(e)(v), amend any such existing contracts to increase any amounts
payable thereunder or benefits provided thereunder, (ii) engage in any
transaction (either acting alone or in conjunction with any Xxxxx Benefit Plan,
Reading Benefit Plan, or Parent Benefit Plan, as applicable, or trust created
thereunder) in connection with which the respective company or any Subsidiary
could be subjected (directly or indirectly) to either a civil penalty assessed
pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code, (iii) terminate any Xxxxx
Benefit Plan, Reading Benefit Plan, or Parent Benefit Plan, as applicable, in a
manner, or take any other action with respect to any Xxxxx Benefit Plan, Reading
Benefit Plan, or Parent Benefit Plan, as applicable, that could result in the
liability of the respective company or any Subsidiary to any person, (iv) take
any action that could adversely affect the qualification of any Xxxxx Benefit
Plan, Reading Benefit Plan, or Parent Benefit Plan, as applicable, or its
compliance with the applicable requirements of ERISA, (v) fail to make full
payment when due of all amounts which, under the provisions of any Xxxxx Benefit
Plan, Reading Benefit Plan, or Parent Benefit Plan, as applicable, any agreement
relating thereto or applicable law, the respective company or any Subsidiary are
required to pay as contributions thereto or (vi) fail to file, on a timely
basis, all reports and forms required by federal regulations with respect to any
Xxxxx Benefit Plan, Reading Benefit Plan, or Parent Benefit Plan, as applicable;
k. Parent, Xxxxx and Reading will not make any election under any of
their stock option plans to pay cash in exchange for terminating awards under
such plans; and
l. Neither Parent, Xxxxx or Reading will, nor permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Access and Information
The parties shall each afford to the other and to the other's financial
advisors, legal counsel, accountants, consultants, financing sources, and other
authorized representatives access during normal business hours throughout the
period prior to the Effective Time to all of its books, records, properties,
contracts, leases, plants and personnel and, during such period, each shall
furnish promptly to the other (a) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of federal or
state securities laws, and (b) all other information as such other party
reasonably may request. Each party shall hold in confidence all nonpublic
information until such time as such information is otherwise publicly available
and, if this Agreement is terminated, each party will deliver to the other all
documents, work papers and other materials (including copies) obtained by such
party or on its behalf from the other party as a result of this Agreement or in
connection herewith, whether so obtained before or after the execution hereof.
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Section 8.2 Directors' and Officers' Indemnification
Upon the effectiveness of the Mergers, Parent shall assume the obligations
of Xxxxx and Reading, whether arising prior to or after such effectiveness,
under any then existing indemnification agreements between such directors and
executive officers and Xxxxx and/or Reading, as the case may be, so long as such
indemnification agreements are materially in the form previously or hereafter
approved by Parent for the purpose of providing indemnification benefits to
Parent's officers and directors.
Section 8.3 Further Assurances
Each party hereto agrees to use all reasonable efforts to obtain all
consents and approvals and to do all other things necessary for the consummation
of the transactions contemplated by this Agreement. The parties agree to take
such further action to deliver or cause to be delivered to each other at the
Closing and at such other times thereafter as shall be reasonably agreed by such
additional agreements or instruments as any of them may reasonably request for
the purpose of carrying out this Agreement and agreements and transactions
contemplated hereby and thereby. The parties shall afford each other access to
all information, documents, records and personnel who may be necessary for any
party to comply with laws or regulations (including without limitation the
filing and payment of taxes and handling tax audits), to fulfill its obligations
with respect to indemnification hereunder or to defend itself against suits or
claims of others. Each of Parent and the Companies shall duly preserve all
files, records or any similar items of Parent or the Companies received or
obtained as a result of the Mergers with the same care and for the same period
of time as each would preserve its own similar assets.
Section 8.4 Expenses
a. All Expenses (as defined below) incurred by the parties hereto shall
be borne solely and entirely by the party that has incurred such Expenses;
provided, however, that the Expenses (including fees and expenses of legal
counsel, accountants, investment bankers, experts and consultants) related to
preparing, printing, filing and mailing the Registration Statement, the Proxy
Statement/Prospectus and all SEC and other regulatory filing fees incurred in
connection with the Registration Statement, Proxy Statement/Prospectus and
governmental regulatory matters, shall be allocated as separately agreed between
the Parties.
b. "Expenses" as used in this Agreement shall include all reasonable out-
of-pocket expenses (including, without limitation, all reasonable fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Registration Statement, the Proxy Statement/Prospectus, the
solicitation of stockholder approvals, requisite governmental approvals and all
other matters related to the consummation of the transactions contemplated
hereby.
Section 8.5 Cooperation
Subject to compliance with applicable law, from the date hereof until the
Effective Time, each of the parties hereto shall confer on a regular and
frequent basis with one or more
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representatives of the other parties to report operational matters of
materiality and the general status of ongoing operations and shall promptly
provide the other parties or their counsel with copies of all filings made by
such party with any Governmental Authority in connection with this Agreement and
the transactions contemplated hereby.
Section 8.6 Publicity
Neither the Companies, Parent nor any of their respective affiliates shall
issue or cause the publication of any press release or other announcement with
respect to the Mergers, this Agreement or the other transactions contemplated
hereby without the prior consultation of the other parties, except as may be
required by law or by any listing agreement with a national securities exchange
and will use reasonable efforts to provide copies of such release or other
announcement to the other parties hereto, and give due consideration to such
comments as such other parties may have, prior to such release.
Section 8.7 Additional Actions
Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations, or to remove any injunctions or other
impediments or delays, to consummate and make effective the Mergers and the
other transactions contemplated by this Agreement, subject, however, to the
appropriate vote of stockholders of Xxxxx, Reading and Parent required so to
vote.
Section 8.8 Filings
Each party hereto shall make all filings required to be made by such party
in connection herewith or desirable to achieve the purposes contemplated hereby,
and shall cooperate as needed with respect to any such filing by any other party
hereto.
Section 8.9 Consents
Each of Parent, Xxxxx and Reading shall use all reasonable efforts to
obtain all consents necessary or advisable in connection with its obligations
hereunder.
Section 8.10 Employee Matters; Benefit Plans
Parent, Xxxxx and Reading will evaluate their personnel needs and consider
continuing the employment of certain employees of Parent, Xxxxx and Reading and
their Subsidiaries on a case-by-case basis. After the Effective Time, Parent
will initially provide to any employees of Parent, Xxxxx and Reading and their
Subsidiaries who are to be employed by Parent, Xxxxx or Reading immediately
after the Effective Time (the "Retained Employees") substantially the same base
salary or wages provided to such employees prior to the Effective Time, subject
to such changes in base salary or wages as shall be determined by Parent after
the Effective Time. Parent shall take all reasonable actions necessary or
appropriate to permit the Retained Employees to continue to participate from and
after the Effective Time in the employee benefit plans or arrangements in which
such Retained Employees were participating immediately prior to the Effective
Time. Notwithstanding the foregoing, Parent may permit any such employee
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benefit plan or arrangement to be terminated or discontinued on or after the
Effective Time, provided that Parent shall (a) take all reasonable actions
necessary or appropriate to permit the Retained Employees participating in such
employee benefit plan or arrangement to immediately thereafter participate in
employee benefit plans or arrangements comparable to those maintained with
respect to the remainder of the Retained Employees (the "Replacement Plans"),
(b) with respect to a Replacement Plan that is a group health plan (i) credit
such Retained Employees, for the year during which participation in the
Replacement Plan begins, with any deductibles and co-payments already incurred
during such year under the terminated or discontinued group health plan and (ii)
waive any preexisting condition limitations applicable to the Retained Employees
(and their eligible dependents) under the Replacement Plan to the extent that a
Retained Employee's (or dependent's) condition would not have operated as a
preexisting condition under the terminated or discontinued group health plan,
and (c)(i) cause each Replacement Plan that is an employee pension benefit plan
(as such term is defined in Section 3(2) of ERISA) intended to be qualified
under Section 401 of the Code to be amended to provide that the Retained
Employees shall receive credit for participation and vesting purposes under such
plan for their period of employment with the respective Company, its
Subsidiaries and their predecessors to the extent such predecessor employment
was recognized by the respective Company and its Subsidiaries and (ii) credit
the Retained Employees under each other Replacement Plan that is not described
in the preceding clause for their period of employment with the respective
Company, its Subsidiaries and their predecessors to the extent such predecessor
employment was recognized by the respective Company or its Subsidiaries. At the
Effective Time, Parent shall assume the obligations of the respective Companies
and their Subsidiaries under the Xxxxx Benefit Plan, the Reading Benefit Plan
and any employment contracts or severance agreements. The terms of each such
Xxxxx Benefit Plan and Reading Benefit Plan shall continue to apply in
accordance with their terms.
b. Prior to the Closing, the respective board of directors of Parent,
Xxxxx and Reading, as applicable, shall, by resolution duly adopted by such
board of directors or a duly authorized committee thereof, approve and adopt,
for purposes of exemption from "short-swing" profit liability under Section
16(b) of the Exchange Act, (i) the disposition and the conversion at the
Effective Time of the shares of Xxxxx and Reading Common Stock held by officers,
directors and affiliates of the respective Companies into shares of Parent A
Common Stock as a result of the conversion of shares in the Merger, (ii) the
assumption by Parent of the Xxxxx and Reading Stock Options of the officers,
directors and affiliates of the respective Companies, and (iii) the deemed grant
of options to purchase Parent A Common Stock or Parent B Common Stock under the
Xxxxx and Reading Stock Options (as converted pursuant to Section 3.3) for
purposes of Section 16(b) of the Exchange Act. Such resolution shall set forth
the name of applicable "insiders" for purposes of Section 16 of the Exchange Act
and, for each "insider," the number of shares of Xxxxx and Reading Common Stock
to be converted into shares of Parent A Common Stock at the Effective Time, the
number and material terms of the Xxxxx and Reading Stock Options to be assumed
by Parent at the Effective Time, and that the approval is being granted to
exempt the transaction under Rule 16b-3 under the Exchange Act.
Section 8.11 Stockholders Meetings
x. Xxxxx and Reading each shall, as promptly as reasonably practicable
after the date hereof, (i) take all steps reasonably necessary to call, give
notice of, convene and hold a special
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meeting of its stockholders (individually, the "Xxxxx Special Meeting" and the
"Reading Special Meeting") for the purpose of securing the Xxxxx Stockholders'
Approval or Reading Stockholders' Approval as applicable, (ii) distribute to its
stockholders the Proxy Statement/Prospectus in accordance with applicable
federal and state law and with its respective articles of incorporation and
bylaws, which Proxy Statement/Prospectus shall contain the recommendation of the
board of directors of the respective Company that its stockholders approve this
Agreement and the transactions contemplated hereby, (iii) use all reasonable
efforts to solicit from its stockholders proxies in favor of the approval of
this Agreement and the transactions contemplated hereby and to secure the Xxxxx
Stockholders' Approval or Reading Stockholders' Approval as applicable, and (iv)
cooperate and consult with Parent with respect to each of the foregoing matters.
b. Parent shall, as promptly as reasonably practicable after the date
hereof, (i) take all steps reasonably necessary to call, give notice of, convene
and hold the annual meeting of its stockholders (the "Parent Annual Meeting")
for the purpose of, among other things, securing the Parent Stockholders'
Approval, (ii) distribute to its stockholders the Proxy Statement/Prospectus in
accordance with applicable federal and state law and its articles of
incorporation and bylaws, which Proxy Statement/Prospectus shall contain the
recommendation of the Parent board of directors that its stockholders approve
this Agreement and (iii) use all reasonable efforts to solicit from its
stockholders proxies in favor of approval of this Agreement and to secure the
Parent Stockholders' Approval, and (iv) cooperate and consult with the Companies
with respect to each of the foregoing matters.
c. The Parent Annual Meeting, Xxxxx Special Meeting and Reading Special
Meeting shall be held on the same day unless otherwise agreed by Parent and the
Companies.
Section 8.12 Preparation of the Proxy Statement/Prospectus and Registration
Statement
a. Parent, Xxxxx and Reading shall promptly prepare and file with the SEC
a preliminary version of the Proxy Statement/Prospectus and will use all
reasonable efforts to respond to the comments of the SEC in connection therewith
and to furnish all information required to prepare the definitive Proxy
Statement/Prospectus. At any time from (and including) the initial filing with
the SEC of the Proxy Statement/Prospectus, Parent shall file with the SEC the
Registration Statement containing the Proxy Statement/Prospectus so long as
Parent shall have provided to the Companies a copy of the Registration Statement
containing the Proxy Statement/Prospectus at least five days prior to any filing
thereof and any supplement or amendment at least two days prior to any filing
thereof. Subject to the foregoing sentence, the date that the Registration
Statement is filed with the SEC shall be determined jointly by Parent, Xxxxx and
Reading. Each of Parent, Xxxxx and Reading shall use all reasonable efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or filing a general consent to service of process in any
jurisdiction) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Class A Stock in the Mergers and Xxxxx
and Reading shall furnish all information concerning Xxxxx and Reading and the
holders of shares of Craig's and Reading's capital stock as may be reasonably
requested in connection with any such action. Promptly after the effectiveness
of the Registration Statement, each of Parent, Xxxxx and Reading shall cause the
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Proxy Statement/Prospectus to be mailed to its respective stockholders, and if
necessary, after the definitive Proxy Statement/Prospectus shall have been
mailed, promptly circulate amended, supplemented or supplemental proxy materials
and, if required in connection therewith, re-solicit proxies. Parent shall
advise Xxxxx and Reading and Xxxxx and Reading shall advise Parent, as
applicable, promptly after they receive notice thereof, of the time when the
Registration Statement shall become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Parent Class A Stock for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement/Prospectus or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
b. Following receipt by Deloitte & Touche LLP, Parent's independent
auditors, of an appropriate request from either Company pursuant to SAS No. 72,
Parent shall use all reasonable efforts to cause to be delivered to each of the
respective Companies a letter of Deloitte & Touche LLP, dated a date within two
business days before the effective date of the Registration Statement, and
addressed to the Companies, in form and substance reasonably satisfactory to the
Company making the request and customary in scope and substance for "cold
comfort" letters delivered by independent public accountants in connection with
registration statements and proxy statements similar to the Proxy
Statement/Prospectus.
c. Following receipt by Deloitte & Touche LLP, the independent auditors
of Xxxxx and Reading, of an appropriate request from Parent pursuant to SAS No.
72, the respective Company shall use all reasonable efforts to cause to be
delivered to Parent a letter of Deloitte & Touche LLP, as applicable, dated a
date within two business days before the effective date of the Registration
Statement, and addressed to Parent, in form and substance satisfactory to Parent
and customary in scope and substance for "cold comfort" letters delivered by
independent public accountants in connection with registration statements and
proxy statements similar to the Proxy Statement/Prospectus.
Section 8.13 Stock Exchange Listing
Parent shall use all reasonable efforts to cause the Parent Class A Stock
to be issued in the Mergers and the Parent Class A Stock and/or Class B Stock
issuable under the Xxxxx and Reading Stock Options to be assumed pursuant to the
Mergers, to be approved for listing on the American Stock Exchange (the "AMEX")
prior to the Effective Time, in each case, subject to official notice of
issuance.
Section 8.14 Notice of Certain Events
Each party to this Agreement shall promptly as reasonably practicable
notify the other parties hereto of:
a. any notice or other communication from any Person alleging that the
consent of such Person (or other Person) is or may be required in connection
with the transactions contemplated by this Agreement;
b. any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement;
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c. any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge, threatened against, relating to or involving
or otherwise affecting it or any of its Subsidiaries which, if pending on the
date of this Agreement, would have been required to have been disclosed pursuant
to Section 4.10 or 4.12, 5.10 or 5.12, or 6.10 or 6.12 or which relate to the
consummation of the transactions contemplated by this Agreement;
d. any notice of, or other communication relating to, a default or event
that, with notice or lapse of time or both, would become a default, received by
it or any of its Subsidiaries subsequent to the date of this Agreement, under
any material agreement; and
e. any Xxxxx Material Adverse Effect, Reading Material Adverse Effect or
Parent Material Adverse Effect or the occurrence of any event which is
reasonably likely to result in a Xxxxx Material Adverse Effect, Reading Material
Adverse Effect or a Parent Material Adverse Effect, as the case may be.
Section 8.15 Affiliate Agreements
Each Company shall identify in a letter to Parent all persons who are, on
the date hereof, "affiliates" of the Company, as such term is used in Rule 145
under the Securities Act. Each Company shall use all reasonable efforts to cause
its respective affiliates to deliver to Parent not later than ten days prior to
the date of the Xxxxx Special Meeting or Reading Special Meeting as applicable,
a written agreement substantially in the form attached hereto as Exhibit 8.15
(an "Affiliate Agreement"), and shall use all reasonable efforts to cause
persons who become "affiliates" after such date but prior to the Closing Date to
execute and deliver an Affiliate Agreement at least five days prior to the
Closing Date.
Section 8.16 Stockholder Litigation
Each of Parent and the Companies shall give the other the reasonable
opportunity to participate in the defense of any litigation against Parent or
the Companies, as applicable, and its directors relating to the transactions
contemplated by this Agreement.
Section 8.17 Voting Covenant
Until the termination of this Agreement in accordance with the terms
hereof, Parent, Xxxxx and Reading, and Xxxxx X. Xxxxxx, each hereby agrees that,
at the Parent Annual Meeting, the Xxxxx Special Meeting and the Reading Special
Meeting, as the case may be, or any other meeting of the stockholders of Parent,
Xxxxx or Reading, however called, and in any action by written consent of the
stockholders of Parent, Xxxxx or Reading, Parent, Xxxxx and Reading, and Xxxxx
X. Xxxxxx, each will vote all of its or his respective shares of voting stock of
Parent, Xxxxx and Reading beneficially owned or controlled by each of them (a)
in favor of adoption of the Merger Agreement and approval of the Merger, (b) in
favor of issuance of the Parent Class A Stock in respect of the Mergers, in
favor of the amendments to Parent's articles of incorporation to change the name
of Parent, in favor of the amendment to the Parent Stock Option Plan to increase
the number of shares reserved for issuance, in favor of the authorization of the
number of shares of Parent Class A Stock and Parent Class B Stock reserved for
issuance under the Xxxxx and Reading Stock Options to be assumed pursuant to
Section 3.3 and in favor of the form of indemnification agreement by the
officers and directors of Parent, and (c) in favor of the other
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transactions contemplated by the Merger Agreement, and in favor of any other
matter necessary to the consummation of the transactions contemplated by the
Merger Agreement and considered and voted upon by the stockholders of Parent,
Xxxxx and/or Reading (or any class thereof). In addition, Parent, Xxxxx and
Reading, and Xxxxx X. Xxxxxx, each agree that it or he will, upon request by
Parent, furnish written confirmation, in form and substance reasonably
acceptable to Parent, of such stockholder's vote in favor of the Parent Class A
Stock issuance, the Merger Agreement, the Merger and/or other related matters.
Section 8.18 Repurchase Obligation
Any right of Parent to require that Reading repurchase certain shares of
Reading Series A Stock shall be tolled by mutual agreement of Parent and Reading
and shall not be exercised until the later to occur of 90 days after (i) October
15, 2001 or (ii) the termination of this Agreement.
ARTICLE IX
CONDITIONS TO CONSUMMATION OF THE MERGERS
Section 9.1 Conditions to the Obligation of Each Party
The respective obligations of each party to effect the Mergers shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
a. The Xxxxx Stockholders' Approval, Reading Stockholders' Approval
and the Parent Stockholders' Approval shall have been obtained.
b. No action, suit or proceeding instituted by any Governmental
Authority shall be pending and no statute, rule or regulation and no injunction,
order, decree or judgment of any court or Governmental Authority of competent
jurisdiction shall be in effect, in each case which would prohibit, restrain,
enjoin or restrict the consummation of the Mergers.
c. The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceeding for such purpose shall be pending before or threatened by the
SEC.
d. Each Company and Parent shall have obtained such permits,
authorizations, consents, or approvals required to consummate the transactions
contemplated hereby.
e. The shares of Parent Class A Stock to be issued in the Mergers
shall have been approved for listing on the AMEX, subject to official notice of
issuance.
x. Xxxxxxxx & Xxxxxxx, Incorporated shall not have withdrawn or
modified in any material way its Joint Fairness Opinion.
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Section 9.2 Conditions to the Obligations of Parent
The obligation of Parent to effect the Mergers is subject to the
satisfaction at or prior to the Effective Time of the following conditions:
a. Each Company shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of the respective
Company contained in this Agreement, to the extent qualified with respect to
materiality shall be true and correct in all respects, and to the extent not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and at and as of the Effective Time as if made at and
as of such time, except as expressly contemplated by this Agreement and except
that the accuracy of representations and warranties that by their terms speak as
of the date of this Agreement or some other date will be determined as of such
date, and Parent shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of each Company as to the satisfaction of
this condition.
b. All proceedings to be taken by each Company in connection with the
transactions contemplated by this Agreement and all documents, instruments and
certificates to be delivered by each Company in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to Parent and its counsel.
c. From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business,
operations or prospects of each Company and its Subsidiaries, taken as a whole,
that would constitute a Xxxxx Material Adverse Effect or Reading Material
Adverse Effect as applicable, other than any such change that affects both
Parent and the respective Company in a substantially similar manner.
Section 9.3 Conditions to the Obligations of Xxxxx
The obligation of Xxxxx to effect the Xxxxx Merger is subject to the
satisfaction at or prior to the Effective Time of the following conditions:
a. Parent and Reading each shall have performed in all material respects
its obligations under this Agreement required to be performed by it at or prior
to the Effective Time and the representations and warranties of Parent and
Reading, as the case may be, contained in this Agreement, to the extent
qualified with respect to materiality shall be true and correct in all respects,
and to the extent not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and at and as of the
Effective Time as if made at and as of such time, except as expressly
contemplated by this Agreement and except that the accuracy of representations
and warranties that by their terms speak as of the date of this Agreement or
some other date will be determined as of such date, and Xxxxx shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of Parent and Reading, as the case may be, as to the satisfaction of
this condition.
b. All proceedings to be taken by Parent and Reading, as the case may be,
in connection with the transactions contemplated by this Agreement and all
documents, instruments and certificates to be delivered by Parent and Reading,
as the case may be, in connection with the
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transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to Xxxxx and its counsel.
c. From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business,
operations or prospects of Parent or Reading or their respective Subsidiaries,
taken as a whole, that would constitute a Parent Material Adverse Effect or a
Reading Material Adverse Effect, other than any such change that affects each of
Parent, Reading and Xxxxx in a substantially similar manner.
Section 9.4 Conditions to the Obligations of Reading
The obligation of Reading to effect the Reading Merger is subject to the
satisfaction at or prior to the Effective Time of the following conditions:
a. Parent and Xxxxx each shall have performed in all material respects
its obligations under this Agreement required to be performed by it at or prior
to the Effective Time and the representations and warranties of Parent and
Xxxxx, as the case may be, contained in this Agreement, to the extent qualified
with respect to materiality shall be true and correct in all respects, and to
the extent not so qualified shall be true and correct in all material respects,
in each case as of the date of this Agreement and at and as of the Effective
Time as if made at and as of such time, except as expressly contemplated by this
Agreement and except that the accuracy of representations and warranties that by
their terms speak as of the date of this Agreement or some other date will be
determined as of such date, and Reading shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of Parent and Xxxxx, as the
case may be, as to the satisfaction of this condition.
b. All proceedings to be taken by Parent and Xxxxx, as the case may be,
in connection with the transactions contemplated by this Agreement and all
documents, instruments and certificates to be delivered by Parent and Xxxxx, as
the case may be, in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to Reading and
its counsel.
c. From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business,
operations or prospects of Parent or Xxxxx or their respective Subsidiaries,
taken as a whole, that would constitute a Parent Material Adverse Effect or a
Xxxxx Material Adverse Effect, other than any such change that affects each of
Parent, Xxxxx and Reading in a substantially similar manner.
ARTICLE X
SURVIVAL
Section 10.1 Survival of Representations and Warranties
The representations and warranties of the parties contained in this
Agreement shall not survive the Effective Time.
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Section 10.2 Survival of Covenants and Agreements
The covenants and agreements of the parties to be performed after the
Effective Time contained in this Agreement shall survive the Effective Time.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 Termination
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval by the stockholders of Xxxxx, Reading or
Parent:
a. by the mutual written consent of Parent, Xxxxx and Reading;
b. by Parent, Xxxxx or Reading if the Effective Time shall not have
occurred on or before January 30, 2002 (the "Termination Date"); provided that
the party seeking to terminate this Agreement pursuant to this Section 11.1(b)
shall not have breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the failure
to consummate the Mergers on or before the Termination Date;
c. by Xxxxx, Reading or Parent if there has been a material breach by one
of the other parties of any representation, warranty, covenant or agreement set
forth in this Agreement which breach (if susceptible to cure) has not been cured
in all material respects within 20 business days following receipt by each party
of notice of such breach;
d. by Xxxxx, Reading or Parent, if there shall be any applicable law,
rule or regulation that makes consummation of the Mergers illegal or if any
judgment, injunction, order or decree of a court or other Governmental Authority
of competent jurisdiction shall restrain or prohibit the consummation of the
Mergers, and such judgment, injunction, order or decree shall become final and
nonappealable; provided, that the party seeking to terminate this Agreement
pursuant to this Section 11.1(d) shall have used its best efforts to remove or
lift such restraint or prohibition; or
e. by Xxxxx, Reading or Parent, if the requisite stockholder approvals
referred to in Section 8.11 have not been obtained upon a vote at a duly held
meeting of stockholders or at any adjournment or postponement thereof.
Section 11.2 Effect of Termination
In the event of termination of the Agreement and the abandonment of any one
or more of the Mergers pursuant to this Article XI, all obligations of the
parties shall terminate, except the obligations of the parties pursuant to this
Section 11.2 and except for the provisions of Sections 8.1, 8.4, 8.6 and 12.8,
provided that nothing herein shall relieve any party from liability for any
breaches hereof.
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ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices
All notices or communications hereunder shall be in writing (including
facsimile or similar writing) addressed as follows:
To Citadel, Xxxxx Merger Sub S. Xxxxx Xxxxxxxx
or Reading Merger Sub: Vice Chairman of the Board of
Directors
Citadel Holding Corporation
000 X. Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxxx
Seventh Floor
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No: (000) 000-0000
and Xxxxxxx Xxxxx
Citadel Conflicts Committee
Chairman
c/o Citadel Holding Corporation
000 X. Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No: (000) 000-0000
To Xxxxx: S. Xxxxx Xxxxxxxx
President
Xxxxx Corporation
000 X. Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No: (000) 000-0000
with a copy to: Xxxx & Xxxxx
16th Floor
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No: (000) 000-0000
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and Xxxxxxx Xxxxx
Xxxxx Conflicts Committee Chairman
c/o Xxxx & Xxxxx
16th Floor
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No: (000) 000-0000
To Reading: S. Xxxxx Xxxxxxxx
Vice Chairman of the Board of
Directors Reading Entertainment,
Inc.
000 X. Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No: (000) 000-0000
with a copy to: Xxxxx Xxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile No: (000) 000-0000
and Xxxxxxx XxXxxxxxx
Reading Conflicts Committee
Chairman
c/o Reading Entertainment, Inc.
000 X. Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No: (000) 000-0000
Any such notice or communication shall be deemed given (i) when made, if made by
hand delivery, and upon confirmation of receipt, if made by facsimile, (ii) one
business day after being deposited with a next-day courier, postage prepaid, or
(iii) three business days after being sent certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as above (or to such
other address as such party may designate in writing from time to time).
Section 12.2 Separability
If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof which shall remain in full force and
effect.
Section 12.3 Assignment
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, successors,
and assigns; provided, however, that neither this Agreement nor any rights
hereunder shall be assignable or otherwise subject to hypothecation and any
assignment in violation hereof shall be null and void.
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Section 12.4 Interpretation
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
Section 12.5 Counterparts
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same Agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to each party.
Section 12.6 Entire Agreement
This Agreement and the Confidentiality Agreement represent the entire
Agreement of the parties with respect to the subject matter hereof and shall
supersede any and all previous contracts, arrangements or understandings between
the parties hereto with respect to the subject matter hereof.
Section 12.7 Governing Law
This Agreement shall be construed, interpreted, and governed in accordance
with the laws of Nevada, without reference to rules relating to conflicts of
law.
Section 12.8 Attorneys' Fees
If any action at law or equity, including an action for declaratory relief,
is brought to enforce or interpret any provision of this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
expenses from the other party, which fees and expenses shall be in addition to
any other relief which may be awarded.
Section 12.9 No Third Party Beneficiaries
Except as provided in Section 8.2 or Section 8.10, no person or entity
other than the parties hereto is an intended beneficiary of this Agreement or
any portion hereof.
Section 12.10 Amendments and Supplements
At any time before or after approval of the matters presented in connection
with the Mergers by the respective stockholders of Parent and the Companies and
prior to the Effective Time, this Agreement may be amended or supplemented in
writing by Parent and the Companies with respect to any of the terms contained
in this Agreement, except as otherwise provided by law.
Section 12.11 Extensions, Waivers, Etc.
At any time prior to the Effective Time, either party may:
a. extend the time for the performance of any of the obligations or acts
of the other party;
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b. waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto; or
c. waive compliance with any of the agreements or conditions of the other
party contained herein.
Notwithstanding the foregoing, no failure or delay by Parent or the
Companies in exercising any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
[End of page]
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In Witness Whereof, the parties hereto have duly executed this Agreement as
of the day and year first above written.
Citadel Holding Corporation
By: /s/ Xxxxxxx Xxxxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxxxx
----------------------------
Title: Chief Financial Officer
----------------------------
Xxxxx Merger Sub, Inc.
By: /s/ Xxxxxxx Xxxxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxxxx
----------------------------
Title: Chief Financial Officer
----------------------------
Reading Merger Sub, Inc.
By: /s/ Xxxxxxx Xxxxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxxxx
----------------------------
Title: Chief Financial Officer
----------------------------
Xxxxx Corporation
By: /s/ S. Xxxxx Xxxxxxxx
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Name: S. Xxxxx Xxxxxxxx
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Title: President
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Reading Entertainment, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Chairman
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For purposes only of Section 8.17:
/s/ Xxxxx X. Xxxxxx
___________________________________
Xxxxx X. Xxxxxx
-60-
Exhibit 8.15
Form of Affiliate Agreement
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Citadel Holding Corporation
000 X. Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Gentlemen:
Reference is made to the Agreement and Plan of Merger (the "Merger
Agreement") dated as of _____________, 2001, among Citadel Holding Corporation,
a Nevada corporation ("Parent"), Xxxxx Merger Sub, Inc., a Nevada corporation
("Xxxxx Merger Sub"), Reading Merger Sub, a Nevada corporation ("Reading Merger
Sub"), Xxxxx Corporation, a Nevada corporation ("Xxxxx") and Reading
Entertainment, Inc., a Nevada corporation ("Reading"), pursuant to which Xxxxx
Merger Sub will be merged with and into Xxxxx, and Reading Merger Sub will be
merged with and into Reading. Pursuant to the terms and conditions of the Merger
Agreement, upon consummation of the transactions contemplated thereby, each
share of (a)(i) common stock, par value $0.25 per share, of Xxxxx and/or (ii)
Class A common preference stock, par value $0.01 per share, of Xxxxx owned by
the undersigned as of the Effective Time (as defined in the Merger Agreement)
will be converted into and exchangeable for 1.17 shares of Class A non-voting
common stock, par value $0.01 per share, of Parent ("Parent A Common Stock");
and/or (b) common stock, par value $0.001 per share, of Reading owned by the
undersigned as of the Effective Time will be converted into 1.25 shares of
Parent A Common Stock.
The undersigned understands that he may be deemed to be an "affiliate" of
Xxxxx or Reading for purposes of Rule 145 promulgated under the Securities Act
of 1933, as amended (the "Act"). The undersigned is delivering this letter of
undertaking and commitment pursuant to Section 8.15 of the Merger Agreement.
With respect to such shares of Parent Class A Non-voting Common Stock, par
value $0.01 per share, as may be received by the undersigned pursuant to the
Merger Agreement (the "Shares"), the undersigned represents to and agrees with
Parent that:
A. The undersigned will not make any offer to sell or any sale or other
disposition of all or any part of the Shares in violation of the Act
or the rules and regulations thereunder, including without limitation
Rule 145, and will hold all the Shares subject to all applicable
provisions of the Act and the rules and regulations thereunder.
B. The undersigned has been advised that the offering, sale and delivery
of the Shares to the undersigned pursuant to the Merger Agreement will
be registered under the Act on a Registration Statement on Form S-4.
The undersigned has also been advised, however, that, since the
undersigned may be deemed an "affiliate" of Xxxxx or Reading, any
public reoffering or resale by the undersigned of any of the Shares
will, under current law, require either (i) the further registration
under
the Act of the Shares to be sold, (ii) compliance with Rule 145
promulgated under the Act (permitting limited sales under certain
circumstances) or (iii) the availability of another exemption from
registration under the Act.
C. The undersign also understands that if Parent should deem it necessary
to comply with the requirements of the Act, stop transfer instructions
will be given to its transfer agents with respect to the Shares and
that there will be placed on the certificates for the Shares, or any
substitutions therefor, a legend stating in substance:
"The securities represented b this certificate were issued
in a transaction under Rule 145 promulgated under the
Securities Act of 1933, as amended (the "Act"), and may be
sold, transferred or otherwise disposed of only upon
receipt by the Corporation of an opinion of counsel
acceptable to it that the securities are being sold in
compliance with the limitations of Rule 145 or that some
other exemption from registration under the Act is available,
or pursuant to a registration statement under the Act."
Execution of this letter shall not be considered an admission on the part
of the undersigned that the undersigned is an "affiliate" of Xxxxx or Reading
for purposes of Rule 145 under the Act or as a waiver of any rights the
undersigned may have to any claim that the undersigned is not such an affiliate
on or after the date of this letter.
Very truly yours,
__________________________________________
Signature
__________________________________________
Name
__________________________________________
Date
-2-
