EXHIBIT 10
AGREEMENT IN PRINCIPLE
This Agreement in Principle ("Agreement") is entered into as of this 18th day of
July, 2001, by and among ▇▇▇▇▇ Corporation, a Nevada corporation ("▇▇▇▇▇"),
Citadel Holding Corporation, a Nevada corporation ("Citadel") and Reading
Entertainment, Inc., a Nevada corporation ("Reading"), with reference to the
following facts:
WHEREAS, ▇▇▇▇▇, Citadel and Reading currently operate as an interrelated family
of companies, with substantially overlapping management and ownership;
WHEREAS, the respective Boards of Directors of the three companies have
determined that it would be in the best interests of their respective companies
and their respective stockholders if the three companies were to be consolidated
into a single publicly traded entity; and
WHEREAS the three companies wish to set forth the general terms under which they
would be willing, subject to the approval of their respective stockholders, and
certain other conditions to consummate such a consolidation;
THE PARTIES HERETO, based upon the above stated premises, hereby enter into the
following agreement in principle:
1. Good Faith Best Efforts: Subject to the conditions set forth in this
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Agreement, each of the three companies agrees to exercise its good faith best
efforts to do all things reasonably necessary to bring about the consummation of
the consolidation of ▇▇▇▇▇, Citadel and Reading, as contemplated by this
Agreement.
2. Merger: The consolidation transaction will be structured as a merger
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of ▇▇▇▇▇ (the "▇▇▇▇▇ Merger") with a newly formed first tier subsidiary of
Citadel (referred to herein as "NewCraigCo") followed immediately by a merger of
Reading (the "Reading Merger") with another newly formed first tier subsidiary
of Citadel (referred to herein as "NewReadingCo").
3. Merger Consideration: Upon the effective date of the ▇▇▇▇▇ Merger,
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every share of the Common Stock, par value $0.25, of ▇▇▇▇▇ and every share of
the Class A Common Preference Stock, par value $0.01, of ▇▇▇▇▇ will be
automatically converted into 1.17 shares of Citadel Class A Nonvoting Common
Stock, par value $0.01 (the "Citadel Class A Stock"). Upon the effective date
of the Reading Merger, every share of the Common Stock, par value $0.001, of
Reading will be automatically converted into 1.25 shares of Citadel Class A
Stock. All holders of options to acquire equity securities of ▇▇▇▇▇ or Reading
will have the option to receive, upon the effective date of the merger,
replacement options to acquire either Citadel Class A Common Stock or Citadel
Class B Voting Common Stock, as the holders of such options may elect. The
number of shares subject to such options will be adjusted to reflect the
exchange ratio applicable to the securities subject to such
options as set forth above, and the per share exercise price will be adjusted by
dividing the total exercise price of such the options to acquire ▇▇▇▇▇ or
Reading securities, as the case may be, by the number of shares subject to such
options as so adjusted.
4. Fractional Shares: Fractional shares otherwise issuable in the ▇▇▇▇▇
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Merger or the reading Merger instead will be converted into cash, based upon the
average closing price of the Citadel Class A Common Stock over the five trading
days immediately preceding the effective date of the consolidation.
5. Listing: The Citadel Class A Stock will, as a condition to closing, be
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listed for trading, effective upon issuance, on the American Stock Exchange.
6. Certain Conditions; It is acknowledged and agreed that, except for the
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obligations set forth in this paragraph 6, the duties and obligations of the
three companies to consummate the ▇▇▇▇▇ Merger and the Reading Merger are
subject to the following conditions:
6.1. Definitive Triparty Agreement: The negotiation, execution and
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delivery of a definitive triparty merger agreement, on terms consistent
with this Agreement and containing usual and customary representations,
warranties, covenants and conditions to closing;
6.2. Stockholder Approval: The approval of the stockholders of
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▇▇▇▇▇ of the ▇▇▇▇▇ Merger, of the stockholders of Reading of the Reading
Merger, and of the stockholders of Citadel of the issuance of the Citadel
Class A Stock in respect of the ▇▇▇▇▇ Merger and the Reading Merger (the
"Citadel Share Issuance"). It is the intent of the parties that the
consummation of the ▇▇▇▇▇ Merger and the Reading Merger be interrelated,
and, accordingly, this condition to the Consolidation will only be
satisfied if ▇▇▇▇▇, Reading and Citadel each obtains the stockholder
applicable approval described immediately above;
6.3. Receipt of any Regulatory Approvals: The receipt of any and all
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regulatory or other approvals as may be legally required to consummate the
consolidation transaction, if any;
6.4. No Material Adverse Change: The absence of any material adverse
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change in the business, assets or prospects of ▇▇▇▇▇, Reading and Citadel,
in each case considered as a whole with its wholly owned subsidiaries;
6.4. Fairness Opinion: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ having issued its oral
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fairness opinion to the effect that Consolidation is fair, from a financial
point of view, to the respective stockholders of ▇▇▇▇▇, Reading and
Citadel, the issuance of a final written opinion confirming that oral
opinion, and the non-withdrawal or material adverse modification of that
fairness opinion prior to the closing.
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7. Voting Agreements: Subject only to the negotiation, execution and
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delivery of a definitive triparty merger agreement by and among, and subject to
the conditions to closing therein set forth (such as, by way of example, the
conditions that there have been no material adverse change or no withdrawal or
material adverse modification to the ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ opinion as to fairness,
▇▇▇▇▇, Citadel and Reading:
7.1. Voting by ▇▇▇▇▇: ▇▇▇▇▇ agrees to vote its Citadel Class B
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Voting Common Stock (the "Citadel Class B Common Stock") in favor of the
Citadel Share Issuance and to vote its Reading Common Stock and its Reading
Series B Preferred Stock in favor of the Reading Merger.
7.2. Voting by Reading: Reading agrees to vote its Citadel Class B
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Voting Common Stock in favor of the Citadel Share Issuance.
7.3. Voting by Citadel: Citadel agrees to vote its Reading Series A
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Preferred Stock in favor of the Reading Merger.
7.4. Voting by ▇▇▇▇▇▇: As a matter of separate agreement, ▇▇. ▇▇▇▇▇
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▇. ▇▇▇▇▇▇ agrees to vote all shares of ▇▇▇▇▇ Common Stock and ▇▇▇▇▇ Common
Preference Stock, which he owns or over which he has voting power, in favor
of the ▇▇▇▇▇ Merger, and to vote all shares of Citadel Class B Common Stock
which he owns or over which he has voting power, in favor of the Citadel
Share Issuance.
8. Costs and Expenses: Each of the three companies will be responsible
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for their own costs and expenses; provided, however, the preparation of the
definitive triparty merger agreement and the combination proxy/registration
statement will be borne jointly by the three companies in a fair and equitable
manner, to be set forth in the definitive triparty merger agreement. In the
event that the three companies fail to enter into a definitive triparty merger
agreement, the costs of the drafting of the definitive merger agreement and the
proxy/registration statement by the law firms assigned primary responsibility
for such task will be allocated 50% to the party being represented by such firm
and 25% each to the other two parties to this Agreement.
9. Termination: This Agreement shall continue in effect until the
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earliest of (a) the date on which all parties hereto agree to a termination of
this Agreement, (b) the execution and delivery by all parties of the definitive
triparty merger agreement, and (c) January 30, 2002.
10. Enforceability: The parties agree that their obligations under this
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Agreement are subject to the negotiation, execution and delivery of definitive
documentation; provided however, that
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this Section 10 and Sections 1, 6, 7, 8, 9 and 11 shall be immediately binding
upon the parties.
11. General Provisions:
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11.1. Choice of Law: This Agreement will be interpreted in
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accordance with the laws of the State of Nevada, as such laws are
applicable to contracts entered into and to be performed entirely within
the State of Nevada.
11.2. Attorney's Fees: In the event of any dispute or action to
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enforce any rights or obligations under this Agreement, the prevailing
party shall be entitled to its reasonable attorney's fees and
disbursements.
11.3. Third Party Beneficiaries. There are no third party
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beneficiaries to this Agreement.
11.4. Publicity. Concurrently with the execution and delivery of
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this Agreement, the three companies shall issue a joint press release, in
form and content satisfactory to each of the companies, announcing this
Agreement. Except as provided in this Section 11.4, or as required by law,
none of the companies shall make or publish any public announcement
regarding this Agreement or the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first set forth above.
▇▇▇▇▇ Corporation, a Nevada corporation
By /s/ S. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its Vice Chairman
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Citadel Holding Corporation, a Nevada corporation
By /s/ S. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its Vice Chairman
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Reading Entertainment, Inc., a Nevada corporation
By /s/ S. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its Vice Chairman
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With respect to Section 7.4, only,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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