EXHIBIT 10.53
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES A VOTING CUMULATIVE CONVERTIBLE PREFERRED STOCK
AND
SERIES B VOTING CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
READING ENTERTAINMENT, INC.
Reading Entertainment, Inc., a Delaware corporation (the
"Corporation"), hereby certifies that, pursuant to the authority contained in
Article FOURTH of its Certificate of Incorporation, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Corporation's Board of Directors has duly adopted the following
resolution creating two series of its Preferred Stock, $.001 par value per
share, designated as Series A Voting Cumulative Convertible Preferred Stock and
Series B Voting Cumulative Convertible Preferred Stock:
RESOLVED, that two series of the class of the authorized Preferred
Stock of the Corporation be created hereby, and that the designations and
amounts thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of each such series, and the
qualifications, limitations or restrictions thereof, are as follows:
1. Designations and Numbers of Shares. Seventy thousand (70,000)
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shares of the Preferred Stock of the Corporation are hereby constituted as a
series of Preferred Stock, $.001 par value per share, and designated as "Series
A Voting Cumulative Convertible Preferred Stock" (hereinafter called the "Series
A Stock") and five hundred fifty thousand (550,000) shares of the Preferred
Stock of the Corporation are hereby constituted as a series of Preferred Stock,
$.001 par value per share, and designated as "Series B Voting Cumulative
Convertible Preferred Stock" (hereinafter called the "Series B Stock"; the
Series A Stock and the Series B Stock are hereinafter collectively called the
"Convertible Preferred Stock").
2. Liquidation. Upon any voluntary or involuntary dissolution,
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liquidation or winding up of the Corporation (a "Liquidation"), the holder of
each share of each series of Convertible Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, before any distribution of assets shall be
made to the holders of Common Stock of the Corporation or to the holders of
other stock of the Corporation that ranks junior to such series of the
Convertible Preferred Stock in respect to distributions upon a Liquidation of
the Corporation ("Junior Stock"), an amount equal to $100 per share (the "Stated
Value"), plus an amount equal to all dividends (whether or not declared or due)
accrued and unpaid on such share on the date fixed for distribution of assets of
the Corporation to the holders of the Convertible Preferred Stock. The Series B
Stock shall rank junior to the Series A Stock in right to distributions on
Liquidation and shall be "Junior Stock" with respect to the Series A Stock.
Neither a consolidation or merger of the Corporation with or into any other
entity, nor a merger of any other entity with or into the Corporation, nor a
sale or transfer of all or any part of the Corporation's assets for cash or
securities or any other property, shall be
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considered a Liquidation. Written notice of any Liquidation shall be given to
the holders of the Convertible Preferred Stock not less than thirty days prior
to any payment date stated therein.
3. Dividends.
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3.1 The holders of Convertible Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, but only
out of surplus and capital legally available for the payment of dividends,
cumulative dividends at the annual rate of $6.50 per each share of Series A
Stock, and at the annual rate of $6.50 per each share of Series B Stock
("Regular Dividends"), in each case before any dividends or other distributions
(other than dividends in Common Stock or any other stock which ranks junior in
respect to such series of the Convertible Preferred Stock in respect to
dividends) are paid to the holders of the Common Stock or any other stock which
is Junior Stock with respect to such series. The Series B Stock shall rank
junior to the Series A Stock in right to dividends and shall be "Junior Stock"
with respect to the Series A Stock. Such dividends shall accumulate on each
share of Convertible Preferred Stock from the date of its original issuance and
from day to day and shall be payable (subject to declaration by the Board of
Directors and the existence of surplus and capital legally available for the
payment of such dividends) in equal quarterly installments on the last day of
March, June, September and December of each year (except that, if such date is
not a business day, the dividend shall be payable on the first immediately
succeeding business day); provided, however, that the initial quarterly dividend
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payment payable on any share of Convertible Preferred Stock shall be an amount
equal to the product determined by multiplying the Regular Dividend for a
quarter by a fraction, the numerator of which is the number of days from (but
not including) the date of issuance of such share to the end of the dividend
quarter during which such share of Convertible Preferred Stock is issued and the
denominator of which is the total number of days in such dividend quarter.
3.2 Dividends at the rate specified in Section 3.1 hereof shall
accumulate whether or not they have been declared and whether or not there is
surplus and capital legally available for the payment of dividends.
3.3 To the extent any dividends on the Convertible Preferred
Stock accumulate and are in arrears, such dividend shall not bear interest.
4. Conversion Rights.
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4.1(a) Shares of Series A Stock may be converted, at the option
of the holder thereof, in whole or in part, upon delivery of a certificate
representing such shares to the Corporation, together with a notice specifying
the number of shares to be converted (the date of such delivery, or of delivery
of shares of Series B Stock on conversion thereof as hereinafter provided, is
hereinafter referred to as the "Conversion Date"), (i) at any time after the
date which is 18 months after the first issuance of the Convertible Preferred
Stock (the date of such first issuance being the "Original Issue Date") or (ii)
at any time prior to the later of (A) the 90th day after the earliest event
constituting a Change in Control (as hereinafter defined) and (B) the 30th day
after the consummation of the transaction the announcement of which constituted
such Change in Control (the period from the date of such Change in Control to
the later of such 90th or 30th day being the "Change in Control Period"). A
"Change in Control" shall mean the occurrence of either of the following events:
(x) any person, entity or "group" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, and the rules thereunder) other
than Craig Corporation and its successors and affiliates (collectively,
"Craig"), shall publicly announce or disclose having entered into a transaction
as a result of which such person, entity or group would acquire beneficial
ownership of 50% or more of the outstanding Common Stock or securities entitling
such person, entity or group to cast 50% or more of the votes entitled to be
cast at any regular election of directors of the Corporation (where "affiliate"
of a person means a person directly or indirectly controlling, controlled by or
under common control with such person and "control" means the power to direct
the affairs of such person by reason of ownership of voting securities, contract
or otherwise) or (y) the directors of the Corporation as of the Original Issue
Date (the "Current Directors") and any future directors (the
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"Continuing Directors") elected or nominated by a majority of the Current
Directors or Continuing Directors cease to constitute a majority of the Board of
Directors of the Corporation.
(b) Shares of Series B Stock may be converted, at the option of the
holder thereof, in whole or in part, upon delivery of a certificate representing
such shares to the Corporation, together with a notice specifying the number of
shares to be converted, at any time after the date which is 18 months after the
Original Issuance Date.
(c) Notwithstanding the foregoing, a holder of shares of
Convertible Preferred Stock may not convert any shares of Convertible Preferred
Stock that have been called for redemption after 5:00 p.m. Eastern Time on the
date for such redemption.
4.2 Each share of Series A Stock shall be convertible into
shares of the Corporation's Common Stock at a conversion price of $11.50 per
share (as adjusted, the "Series A Conversion Price"), subject to certain
adjustments as described below; and each share of Series B Stock shall be
convertible into shares of the Corporation's Common Stock at a conversion price
of $12.25 per share (as adjusted, the "Series B Conversion Price"; the Series A
Conversion Price and the Series B Conversion Price are each hereinafter referred
to as a "Conversion Price"), subject to certain adjustments as described below.
The number of shares of Common Stock to be delivered on conversion of any shares
of Convertible Preferred Stock shall equal the aggregate Stated Value thereof
divided by the applicable Conversion Price then in effect, calculated to the
nearest 1/100th of a share, subject to Section 4.5. Except as provided in
Section 4.7, the Corporation shall make no payment or adjustment on the account
of any unpaid cumulative dividends on the shares of Convertible Preferred Stock
surrendered for conversion or on account of any dividends on the Common Stock.
4.3 If the Corporation shall (a) pay a dividend or make a
distribution on its outstanding shares of Common Stock in shares of its Common
Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its
outstanding shares of Common Stock into a smaller number of shares, then each
Conversion Price in effect immediately prior to such action shall be adjusted so
that the holder of any shares of Convertible Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
capital stock of the Corporation which he would have owned immediately following
such action had such shares of Convertible Preferred Stock been converted
immediately prior thereto. An adjustment made pursuant to this Section 4.3
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
The Corporation shall give notice to the holders of the Convertible Preferred
Stock of any adjustment pursuant to this Section 4.3 (stating the adjusted
Conversion Prices and the reasons therefor) not less than 10 days prior to the
record date for such dividend, distribution, subdivision, combination or
reclassification.
4.4 If the Corporation shall consolidate or merge into or with
another corporation, or if the Corporation shall sell or convey to any other
person or persons all or substantially all of the assets of the Corporation, or
shall issue by reclassification of its shares of Common Stock any shares of
capital stock of the Corporation, each holder of Convertible Preferred Stock
then outstanding shall have the right thereafter to convert each share of
Convertible Preferred Stock held by him into the kind and amount of shares of
stock, other securities, cash and property receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
into which such share might have been converted immediately prior to such
consolidation, merger, sale or conveyance, and shall have no other conversion
rights. In any such event, effective provision shall be made, in the
certificate of incorporation of the resulting or surviving corporation or
otherwise or in any contracts of sale and conveyance so that, so far as
appropriate and as nearly as reasonably may be, the provisions set forth herein
for the protection of the conversion rights of the shares of the Convertible
Preferred Stock shall thereafter be made applicable.
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4.5 In connection with the conversion of any shares of the
Convertible Preferred Stock hereunder, no fractions of shares of Common Stock
shall be issued, but the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to a like fraction of an amount
equal to the closing sales price (the "Closing Price") of a share of the
Corporation's Common Stock on the National Association of Securities Dealers
Automated Quotation National Market System (or, if that shall not be the
principal market on which the Common Stock shall be trading or quoted, then on
such principal market) on the business day next preceding the Conversion Date.
4.6 The Corporation shall at all times reserve and keep available
out of its authorized Common Stock the full number of shares of Common Stock of
the Corporation issuable upon the conversion of that number of shares of the
Convertible Preferred Stock permitted to be converted into Common Stock
hereunder.
4.7 (a) In the event that the average of the Closing Prices of the
Common Stock, over any 180 consecutive trading day period ending within 15 days
of the date of the notice provided for in Section 4.7(b) (each such Closing
Price having been adjusted in proportion to any adjustment in the Conversion
Prices made after the date of such Closing Price), exceeds 135% of the Series A
Conversion Price then in effect, the Corporation may, at its option, require the
holders of all, but not less than all, of the issued and outstanding shares of
Series A Stock to convert such shares into Common Stock of the Corporation at
the Series A Conversion Price.
(b) Not less than ten nor more than sixty days prior to the
date fixed for mandatory conversion of the Series A Stock pursuant to Section
4.7(a) ("Mandatory Conversion"), notice by mail, postage prepaid, shall be given
to each holder of shares of Convertible Preferred Stock required to be
converted. On or after the date fixed for Mandatory Conversion, as stated in
such notice, each holder of the shares required to be converted shall surrender
his certificate(s) evidencing such shares to the Corporation at the place
designated in such notice and shall thereupon be entitled to receive the shares
of Common Stock deliverable upon conversion plus any accrued and any unpaid
dividends on such shares of Convertible Preferred Stock. If such notice of
Mandatory Conversion shall have been duly given, and if, on the date fixed for
Mandatory Conversion, funds necessary for the payment of dividends, if any,
shall be available therefor, then, notwithstanding that the certificates
evidencing any shares required to be converted shall not have been surrendered,
from and after the date fixed for Mandatory Conversion, dividends with respect
to the shares so converted shall cease to accrue, the shares shall no longer be
deemed outstanding, the holders thereof shall cease to be holders of the shares
of Convertible Preferred Stock, all rights whatsoever with respect to the shares
so converted shall forthwith terminate except only the right of the holders to
receive the previously accrued dividends without interest thereon and the shares
of Common Stock deliverable on conversion, upon surrender of their certificates
therefor, and such holders shall for all purposes be deemed holders of such
shares of Common Stock.
4.8 The issuance of certificates for shares of Common Stock upon
the conversion of shares of Convertible Preferred Stock shall be made without
charge to the holders of shares of Convertible Preferred Stock for any issue or
stamp tax in respect of the issuance of such certificates, and such certificates
shall be issued in the respective names of, or in such names as may be directed
by, the holders of shares of Convertible Preferred Stock converted; provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of transfer involved in the issuance and delivery of any such
certificate in a name other than that of the holder of shares of Convertible
Preferred Stock converted, and the Corporation shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Corporation the amount of such tax or
shall have established to the satisfaction of the Corporation that such tax has
been paid. If less than all of the shares of Convertible Preferred Stock
represented by a certificate surrendered for conversion are converted, the
Corporation shall deliver to the holder of such shares a new certificate for the
shares not so converted.
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4.9 The Corporation from time to time may reduce either Conversion
Price by any amount for any period of time in the discretion of the Board of
Directors.
4.10 No adjustment in either Conversion Price shall be required
unless such adjustment would result in an increase or decrease of at least 1% in
such Conversion Price as then in effect; provided, however, that any adjustments
that by reason of this Section 4.10 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
5. Redemption.
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5.1(a) The shares of Series A Stock may be redeemed at the
option of the Corporation, in whole or in part, upon prior written notice of
such redemption given by the Corporation in accordance with Section 5.2 hereof
at any time prior to the later of (i) the 120th day after the earliest event
constituting a Change in Control and (ii) the 60th day after the consummation of
the transaction the announcement of which constituted such Change in Control, at
the Change in Control Redemption Price (as hereinafter defined); provided, that
the Corporation may not, pursuant to this sentence, redeem shares of Series A
Preferred Stock held by Citadel Holding Corporation ("Citadel") or any of its
affiliates unless, prior to or simultaneously with such redemption, Craig
assumes certain obligations of the Corporation as provided in Section 4.1 of the
Asset Put and Registration Rights Agreement, dated the Original Issue Date,
among the Corporation, Craig, Citadel, and Citadel Acquisition Corp., Inc. (the
"Put Agreement"), and provided further that the Corporation may not redeem any
shares of Series A Stock pursuant to this sentence after the fifth anniversary
of the Original Issue Date. In addition, any or all of the shares of Series A
Stock may be redeemed at the option of the Corporation, upon prior written
notice of such redemption given by the Corporation in accordance with Section
5.2 hereof, at any time after the fifth anniversary of the Original Issue Date,
at the Standard Redemption Price (as hereinafter defined). The "Change in
Control Redemption Price" of each share of Series A Stock at any date shall mean
an amount equal to the sum of (x) the Stated Value thereof, (y) an accrual on
the Stated Value, from the date of issuance of such share to the date of
redemption, at a percentage per annum (not compounded) equal to 8% if such
redemption is on or before the fourth anniversary of the Original Issue Date or
7% if thereafter, and (z) all accrued and unpaid dividends thereon to the date
fixed for redemption; and the "Standard Redemption Price" of each share of
Convertible Preferred Stock at any date shall mean an amount equal to the
percentage for such date, as set forth below, of the Stated Value thereof, plus
an amount equal to all accrued and unpaid dividends thereon to the date fixed
for redemption:
Anniversary of Original Issue Date Percentage
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On or after the fifth anniversary and until the
sixth anniversary 108%
On or after the sixth anniversary and until the
seventh anniversary 106%
On or after the seventh anniversary and until
the eighth anniversary 104%
On or after the eighth anniversary and until the
ninth anniversary 102%
On or after the ninth anniversary 100%
(b)(i) Subject to the provisions hereof, the holders of
a majority of the outstanding shares of Series A Stock (the "Requesting
Holders") may require that the Corporation purchase all, but (except as
otherwise provided in this Section 5.1(b)) not less than all, of the outstanding
shares of Series A Stock held by the Requesting Holders and those other holders
(the "Nonrequesting Holders") who so request as provided below, by notice (the
"Holders' Notice") given by the Requesting Holders to the Corporation at any
time (A) after 18 months after the Original Issue Date, if at the time of giving
such notice the quarterly dividends payable on the Series A Stock as provided in
Section 3 hereof are in arrears in an aggregate amount equal to at least four
full quarterly dividends (which need
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not be consecutive), or (B) within the 90-day period beginning on the fifth
anniversary of the Original Issue Date (but not, in the case of this clause (B),
after the exercise by Citadel of the Asset Put (as defined in the Put
Agreement)), in either case at a redemption price equal to the Stated Value
thereof plus all accrued and unpaid dividends thereon to the date fixed for
redemption. As promptly as practicable, and in any case within ten days, after
receipt of a Holders' Notice, the Corporation shall give a notice to each
Nonrequesting Holder, offering to redeem the shares of Series A Stock held by
such Nonrequesting Holder on the same terms, and subject to the same
limitations, as the shares held by the Requesting Holders, provided such
Nonrequesting Holder, within 10 days of the Corporation's notice (the "Response
Period"), gives notice to the Corporation stating that such Nonrequesting Holder
desires to have his shares redeemed. The Nonrequesting Holders who do not elect
to have their shares redeemed shall have no subsequent right to require
redemption pursuant to this Section 5.1(b)(i).
(ii) Citadel may require that the Corporation purchase
all, but (except as otherwise provided in this Section 5.1(b)) not less than
all, of the outstanding shares of Series A Stock owned by it and its affiliates,
by notice given by it to the Corporation at any time during the Change in
Control Period (but not after the fifth anniversary of the Original Issue Date)
at the Change in Control Redemption Price.
(iii) As promptly as practicable, and in any case
within ten days, after the expiration of the Response Period, in the case of a
redemption pursuant to Section 5.1(b)(i), or the notice given by Citadel, in the
case of a redemption pursuant to Section 5.1(b)(ii), the Corporation shall give
a notice of redemption pursuant to Section 5.2 and thereafter proceed to
effectuate such redemption as promptly as practicable.
(iv) Notwithstanding the foregoing, if, at the time
the Corporation is required to redeem shares of the Series A Stock, the funds of
the Corporation legally available for such redemption are insufficient to redeem
in full the shares of the Series A Stock required to be redeemed, (A) the
Corporation shall utilize the funds legally available to redeem the maximum
number of such shares which can be legally redeemed and (B) the remaining such
shares shall remain outstanding and not be redeemed.
(c) The shares of Series B Stock may be redeemed at
the option of the Corporation, in whole or in part, at any time after the fifth
anniversary of the Original Issue Date, upon prior written notice of such
redemption by the Corporation in accordance with Section 5.2, at a per share
redemption price equal to the Standard Redemption Price thereof.
(d) Notwithstanding the foregoing, the Corporation
may not, pursuant to Section 5.1(a) or (c), redeem less than all of the
outstanding shares of a series of Convertible Preferred Stock while any
additional dividends are accumulated and unpaid on such series pursuant to
Section 3 hereof without first declaring and paying all such additional
dividends on such series.
(e) If fewer than all of the outstanding shares of a
series of Convertible Preferred Stock are to be redeemed pursuant to this
Section 5.1 (other than pursuant to Section 5.1(b)(ii)), such shares shall be
redeemed pro rata from each holder of such series of Convertible Preferred Stock
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(with adjustments to avoid redemptions of fractional shares).
5.2 (a) Not less than thirty nor more than sixty days
prior to the date fixed for redemption, notice by mail, postage prepaid, shall
be given to each holder of shares of the Convertible Preferred Stock to be
redeemed. The redemption notice shall specify the date of redemption, the
certificates to be redeemed, and the applicable redemption price (the
"Redemption Price"); but failure to mail such notice or any defect therein or in
the mailing thereof shall not affect the validity of the proceeding for the
redemption of any shares so to be redeemed. On or after the date fixed for
redemption,
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as stated in the notice, each holder of the shares called for redemption shall
surrender his certificate(s) evidencing such shares to the Corporation at the
place designated in such notice and shall thereupon be entitled to receive
payment of the Redemption Price thereof. In case less than all of the shares of
Convertible Preferred Stock represented by any such surrendered certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares.
(b) Anything herein to the contrary notwithstanding,
if notice of redemption shall be given as provided in Section 5.2(a) above and
if, on or at any time prior to the date fixed for redemption therein, an amount
equal to the Redemption Price times the number of shares of Convertible
Preferred Stock called for redemption shall be deposited in trust for the
benefit of the holders of the shares of Convertible Preferred Stock called for
redemption with a bank or trust company having a combined capital and surplus of
at least $50 million according to its last published statement of condition,
then, notwithstanding that any certificates for shares of Convertible Preferred
Stock so called for redemption shall not have been surrendered for redemption,
such shares shall be deemed to be redeemed upon the date fixed for redemption
and shall cease to be outstanding for any purpose, the right to receive
dividends thereon shall cease to accrue from and after the date fixed for
redemption and all rights of the holders of the shares of Convertible Preferred
Stock called for redemption shall forthwith on the date fixed for redemption
cease and terminate except for the right of the holders thereof, upon
presentation and surrender of their respective certificates representing such
shares, to receive from such bank or trust company on or after the date fixed
for redemption the amount payable upon the redemption thereof, but without
interest. The Corporation shall be entitled to any interest payable on the funds
so deposited. Any funds so deposited and otherwise unclaimed at the end of three
years shall be repaid to the Corporation, after which holders of the redeemed
stock shall look only to the Corporation for payment of the amount payable upon
redemption thereof, but without interest thereon.
6. Voting Rights.
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6.1 The holders of the shares of Convertible Preferred Stock
shall initially be entitled to cast 9.64 votes per share held on all matters
submitted to a vote of the Corporation's stockholders. The number of votes
entitled to be cast per share of Convertible Preferred Stock shall be adjusted
in inverse proportion to any adjustment in the Conversion Prices.
6.2 Except as otherwise provided herein or by law, the
holders of Convertible Preferred Stock and the holders of Common Stock shall
vote together as one class on all matters submitted to a vote of the
Corporation's stockholders.
6.3 (a) In the event that the quarterly dividends payable
on a series of the Convertible Preferred Stock as provided in Section 3 hereof
are in arrears in an aggregate amount equal to at least six full quarterly
dividends (which need not be consecutive), the number of directors constituting
the Board of Directors of the Corporation shall be increased by one for each
such series so in default and the holders of each series of the Convertible
Preferred Stock as to which dividends are so in default shall have, in addition
to the rights set forth in Sections 6.1, 6.2 and 6.4 hereof, the special right,
voting separately as a single class, to elect one director of the Corporation to
fill such newly created directorship at the next succeeding annual meeting of
stockholders thereafter or at a special meeting of the holders of such series of
the Convertible Preferred Stock called as hereinafter provided, until such right
shall terminate as hereinafter provided.
(b) At any time when the special voting rights provided in
Section 6.3(a) shall have so vested in the holders of a series of the
Convertible Preferred Stock, the Secretary of the Corporation may, and upon the
written request of the holders of 25% or more of the number of shares of such
series of Convertible Preferred Stock then outstanding shall, call a special
meeting of the holders of such series of the Convertible Preferred Stock for the
election of the directors, to be held at the place and upon the notice provided
by law and in the Bylaws for the holding of meetings of stockholders; except
that the Secretary shall not be required to call such a special meeting in the
case of any such request received less than 90 days before the date fixed for
the next annual or other special meeting of stockholders. No such
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special meeting and no adjournment thereof shall be held on a date less than 30
days before the annual meeting of the stockholders (or a special meeting held in
place thereof) next succeeding the time when the holders of such series of the
Convertible Preferred Stock become entitled to elect directors as provided in
Section 6.3(a). The Corporation shall include, in any notice of such meeting,
any nominee for director who has been proposed by the holders of twenty-five
percent or more of the shares of such series of Convertible Preferred Stock then
outstanding. The directors so elected shall serve until the next annual meeting
or until their respective successors shall be elected and qualify.
(c) At each meeting of stockholders at which the holders of
a series of the Convertible Preferred Stock shall have the right to vote as a
class, as provided in this Section 6.3, the presence in person or by proxy of
the holders of a majority of the total number of shares of such series of the
Convertible Preferred Stock then outstanding shall be necessary and sufficient
to constitute a quorum of such class for such election by such stockholders as a
class. At any such meeting or adjournment thereof:
(i) the absence of a quorum of the holders of a
series of the Convertible Preferred Stock shall not prevent the election of
directors other than those to be elected by the holders of such series of the
Convertible Preferred Stock and the absence of a quorum of the holders of any
other class of stock for the election of such other directors shall not prevent
the election of the directors to be elected by the holders of a series of the
Convertible Preferred Stock; and
(ii) in the absence of either or both such quorums,
the holders of a majority of the shares present in person or by proxy of the
respective class or classes which lack a quorum shall have the power to adjourn
the meeting for the election of directors which they are entitled to elect from
time to time for a period of up to 30 days without notice, other than
announcement at the meeting, until a quorum shall be present.
(d) Each director elected by the holders of a series of the
Convertible Preferred Stock as provided in this Section 6.3 shall hold office
until the annual meeting of stockholders next succeeding his election or until
his successor, if any, is elected by such holders and qualified.
(e) If any vacancy shall occur among the directors elected
by the holders of a series of the Convertible Preferred Stock as provided in
this Section 6.3, such vacancy shall be filled for the unexpired portion of the
term by the vote of the stockholders of such series given at a special meeting
of such stockholders called for that purpose.
(f) Whenever all dividends accrued and unpaid on a series of
the Convertible Preferred Stock shall have been paid, the special right of the
holders of such series of the Convertible Preferred Stock to elect directors as
provided in this Section 6.3 shall terminate, but subject always to the same
provisions for the vesting of such special right of the holders of such series
of the Convertible Preferred Stock to elect directors in the case of future
unpaid dividends as hereinabove provided.
(g) Any director elected by the holders of a series of
Convertible Preferred Stock may be removed by, and shall not be removed
otherwise than by, the vote of the holders of a majority of the outstanding
shares of such series.
(h) Upon any termination of the right of the holders of a
series of the Convertible Preferred Stock to vote for directors as herein
provided, the term of office of all directors then in office elected by holders
of such series shall terminate immediately.
6.4 The consent of the holders of at least a majority of the
outstanding shares of a series of the Convertible Preferred Stock, voting
separately as a single class, in person or by proxy, either
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in writing without a meeting or at a special or annual meeting of stockholders
called for the purpose, shall be necessary to (i) create or issue any shares of
a class of capital stock ranking, either as to payment of dividends or
distribution of assets, on a parity with or senior to such series of the
Convertible Preferred Stock, (ii) alter or change the preferences, rights,
designations or powers of the shares of such series of Convertible Preferred
Stock as a class, or the provisions of Article FOURTH of the Corporation's
Certificate of Incorporation, in either case so as to affect such holders
adversely, or (iii) increase the total number of authorized shares of
Convertible Preferred Stock.
7. Holders; Notices. The term "holder" or "holders" wherever used
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herein with respect to a holder or holders of shares of Convertible Preferred
Stock shall mean the holder or holders of record of such shares as set forth on
the stock transfer records of the Corporation. Whenever any notice is required
to be given under this Certificate of Designation, such notice may be given
personally or by mail. Any notice given to a holder of any share of Convertible
Preferred Stock shall be sufficient if given to the holder of record of such
share at the last address set forth for such holder on the stock transfer
records of the Corporation. Any notice given by mail shall be deemed to have
been given when deposited in the United States mail with postage thereon
prepaid.
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IN WITNESS WHEREOF, said Reading Entertainment, Inc. has caused this
Certificate of Designation, Preferences and Rights of Series A Voting Cumulative
Convertible Preferred Stock and Series B Voting Cumulative Convertible Preferred
Stock to be executed by its duly authorized officers this twelfth day of
September, 1996.
READING ENTERTAINMENT, INC.
Attest:
By: /s/ James A. Wunderle By: /s/ S. Craig Tompkins
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Name: James A. Wunderle Name: S. Craig Tompkins
Title: Chief Operating Officer Title: President
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