As filed with the Securities and Exchange Commission on August 24, 2001.
                                                        Registration No. 333-
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                ______________

                                    FORM S-4
                             REGISTRATION STATEMENT
                                     Under
                           THE SECURITIES ACT OF 1933

                                ______________

                          CITADEL HOLDING CORPORATION
            (Exact name of registrant as specified in its charter)

                                                                 
            NEVADA                                6513                     95-3885184
  (State or other jurisdiction        (Primary Standard Industrial      (I.R.S. Employer
of incorporation or organization)      Classification Code Number)     Identification No.)

                       550 South Hope Street, Suite 1825
                         Los Angeles, California 90071
                                (213) 239-0540
                  (Address, including zip code, and telephone
                 number, including area code, of registrant's
                         principal executive offices)

                               S. CRAIG TOMPKINS
                                 VICE CHAIRMAN
                          CITADEL HOLDING CORPORATION
                       550 South Hope Street, Suite 1825
                        Los Angeles, California  90071
                                (213) 239-0540
                    (Name, address, including zip code, and
         telephone  number, including area code, of agent for service)

                                  Copies to:

                                                                  
     Michael J. Bonner, Esq.              Craig H. Norville, Esq.               Dale E. Short, Esq.
Kummer Kaempfer Bonner & Renshaw                Jones Vargas                        Troy & Gould
   3800 Howard Hughes Parkway,           3773 Howard Hughes Parkway           Professional Corporation
           7/th/ Floor                       Third Floor South          1801 Century Park East, 16/th/ Floor
     Las Vegas, Nevada 89109              Las Vegas, Nevada 89109          Los Angeles, California 90067
         (702) 792-7000                        (702) 734-2220                      (310) 553-4441

     Approximate date of commencement of proposed sale of the securities to the
public:  As soon as practicable after this Registration Statement becomes
effective and all other conditions to the proposed consolidations described
herein have been satisfied or waived.

     If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. [_]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

     If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

                        CALCULATION OF REGISTRATION FEE

- ----------------------------------------------------------------------------------------------------------
                                                                   Proposed maximum
                                                 Amount to        aggregate offering         Amount of
Title of securities to be registered          be registered (1)        price (2)         registration fee
- ---------------------------------------------------------------------------------------------------------
                                                                               
Class A Non-voting Common Stock,
par value $ 0.01 per share.................    15,094,433        $33,925,270             $8,482
- ---------------------------------------------------------------------------------------------------------

     (1)  Based upon an estimate of the maximum number of shares, net of
treasury shares, to be issued to stockholders of Craig Corporation and Reading
Entertainment, Inc. in connection with the transactions described herein.
     (2)  Pursuant to Rule 457(f)(1) and (c) under the Securities Act of 1933,
as amended, the registration fee has been calculated based on the average of the
high and low sale prices of Craig common stock and Craig common preference stock
as reported on the New York Stock Exchange on August 13, 2001, the most recent
date on which Craig common stock traded, and on August 16, 2001, the most recent
date Craig common preference stock traded, and the average of the high and low
sale prices of Reading common stock as reported on the NASDAQ Stock Market on
August 20 2001 as follows:
     (a)  Craig common stock, 3,402,808 shares, multiplied by average price,
$2.00; plus
     (b)  Craig common preference stock, 7,058,408 shares, multiplied by average
price, $1.80; plus
     (c)  Reading common stock, 7,449,364 shares, multiplied by average price,
$1.935.

                                ______________

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

================================================================================

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not
permitted.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED ________________, 2001

PROPOSED CONSOLIDATION - YOUR VOTE IS IMPORTANT

     Citadel Holding Corporation, or Citadel, Craig Corporation, or Craig, and
Reading Entertainment, Inc., or Reading, have entered into a consolidation
agreement under which we have agreed to combine our three companies by merging
Craig and Reading with subsidiaries of Citadel.  Before we can complete the
consolidation, we must obtain the approval of the companies' voting common
stockholders.  We are sending you this joint proxy statement/prospectus to ask
you to vote in favor of the consolidation transaction and related matters.

     In the consolidation, Craig common stockholders and common preference
stockholders will receive 1.17 shares of Citadel nonvoting common stock for each
Craig share they own, and Reading common stockholders will receive 1.25 shares
of Citadel nonvoting common stock for each Reading share they own.  Each
outstanding option to purchase Craig common stock and common preference stock
and each outstanding option to purchase Reading common stock will become an
option to purchase an equivalent number (based on the foregoing conversion
ratios) of either Citadel voting common stock or nonvoting common stock, at each
option holder's election.  The shares of Citadel voting common stock and
nonvoting common stock outstanding at the time of effectiveness of the
consolidation will remain outstanding and not be affected by the consolidation.

     On August 21, 2001, the closing price of Citadel nonvoting common stock as
reported on the American Stock Exchange was $1.65 per share, the closing prices
of Craig common stock and common preference stock as reported on the New York
Stock Exchange were $2.00 per share and $1.80 per share and the closing price of
Reading common stock as reported on The Nasdaq Stock Market was $1.87 per share.
We encourage you to obtain more recent quotations.  Following the consolidation,
Citadel will change its name to "Reading International, Inc.," and Citadel
nonvoting common stock and voting common stock will be listed for trading on the
American Stock Exchange under the symbols "_____" and "_____."  Craig common
stock and common preference stock and Reading common stock will be delisted if
the  consolidation is completed.

     We will hold the annual meeting of Citadel jointly with special meetings of
Craig stockholders and Reading stockholders to consider and vote on the
consolidation.  At Citadel's annual meeting, Citadel will ask its stockholders
to consider and vote on:

          .    The issuance of Citadel shares in the consolidation, including
               Citadel voting shares and nonvoting shares issuable upon the
               exercise of Craig and Reading stock options to be assumed by
               Citadel in the consolidation.

          .    A related amendment to increase the number of shares of Citadel
               common stock reserved for issuance under Citadel's 1999 stock
               option plan upon completion of the consolidation.

          .    A related amendment to Citadel's articles of incorporation to
               change the name of Citadel to "Reading International, Inc." upon
               completion of the consolidation.

          .    A separate proposal to ratify and approve the form of Citadel
               indemnification agreement.

          .    The election of directors of Citadel.

     At Craig's special meeting, Craig will ask its stockholders to consider and
vote on the approval of the consolidation agreement and the Craig merger.

     At Reading's special meeting, Reading will ask its stockholders to consider
and vote on the approval of the consolidation agreement and the Reading merger.

     Approval of the proposals relating to the consolidation is a prerequisite
to completion of the consolidation.  The holders of a majority of the voting
power of both Craig and Reading and approximately 49% of the voting power of
Citadel are obligated to vote in favor of the consolidation and related matters.
We anticipate, therefore, that each of the proposals will be approved at the
joint meetings of stockholders.

     None of these proposals, other than the proposals to elect directors of
Citadel and to ratify and approve the form of Citadel indemnification agreement,
will become effective unless the consolidation is approved and completed.  None
of the stockholders of Citadel, Craig or Reading are entitled to dissenters' or
appraisal rights in connection with the consolidation.  TO CAST YOUR VOTE AT
YOUR ANNUAL OR SPECIAL MEETING, PLEASE COMPLETE, SIGN AND DATE YOUR PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE.

     The date, time and place of our joint stockholders' meetings are as
follows:

                                October 24, 2001
                            10:00 a.m., Pacific time

                              ____________________
                              ____________________
                              ________, California

     This document is a prospectus of Citadel relating to the issuance of
Citadel nonvoting common stock in the consolidation and a proxy statement for
each of Citadel, Craig and Reading for soliciting proxies for use at the joint
annual meeting of stockholders of Citadel and special meetings of stockholders
of Craig and Reading.  This document contains answers to frequently asked
questions and a summary description of the consolidation (beginning on page
___), followed by a more detailed discussion of the consolidation and related
matters.  YOU SHOULD ALSO CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS"
COMMENCING ON  PAGE ___ OF THIS DOCUMENT.  WE URGE YOU TO CAREFULLY REVIEW THIS
ENTIRE DOCUMENT.

                                                  S. Craig Tompkins
                                                  CORPORATE SECRETARY
                                                  CITADEL HOLDING CORPORATION
                                                  CRAIG CORPORATION
                                                  READING ENTERTAINMENT, INC.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN THE
CONSOLIDATION OR DETERMINED IF THIS JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This joint proxy statement/prospectus is dated ____________________, 2001 and is
first being mailed to stockholders on or about _________________________, 2001.

                                       2

         DOCUMENTS INCLUDED WITH THE JOINT PROXY STATEMENT/PROSPECTUS

     Copies of the following documents are being furnished with this joint proxy
statement/prospectus:

          .    Citadel annual report on Form 10-K for the year ended December
               31, 2000

          .    Citadel quarterly report on Form 10-Q for the quarter ended June
               30, 2001

          .    Craig annual report on Form 10-K for the year ended December 31,
               2000

          .    Craig quarterly report on Form 10-Q for the quarter ended June
               30, 2001

          .    Reading annual report on Form 10-K for the year ended December
               31, 2000

          .    Reading quarterly report on Form 10-Q for the quarter ended June
               30, 2001

     As permitted by Securities and Exchange Commission rules, business and
financial information about Citadel, Craig and Reading is contained in these
documents.  You should read this joint proxy statement/prospectus in conjunction
with these documents.  See "INFORMATION REGARDING CITADEL, CRAIG AND READING,"
which begins on page __.

                      WHERE YOU CAN FIND MORE INFORMATION

     This joint proxy statement/prospectus also incorporates business and
financial information about Citadel, Craig and Reading from documents that are
not being delivered with this joint proxy statement/prospectus. We will provide
to you a copy of such other documents, without charge, upon your written or oral
request. YOU SHOULD MAKE ANY REQUEST FOR DOCUMENTS BY ______________, 2001 TO
ENSURE TIMELY DELIVERY OF ANY SUCH DOCUMENTS.

                All requests for documents relating to Citadel,
                    Craig or Reading should be directed to:

                          Citadel Holding Corporation
                        550 S. Hope Street, Suite 1875
                        Los Angeles, California  90071
                                (213) 239-0540
                        Attention: Andrzej Matyczynski

     See "DOCUMENTS INCORPORATED BY REFERENCE," which begins on page ______.

     REFERENCES IN THIS JOINT PROXY STATEMENT/PROSPECTUS TO "WE," "US," "OUR,"
AND "OURS" REFER TO CITADEL, CRAIG, READING AND THEIR CONSOLIDATED
SUBSIDIARIES FOLLOWING THE CONSOLIDATION.

                                       i

 NOTICE OF JOINT ANNUAL MEETING OF CITADEL STOCKHOLDERS AND SPECIAL MEETINGS OF
                  CRAIG STOCKHOLDERS AND READING STOCKHOLDERS
                   TO BE HELD OCTOBER 24, 2001 AT 10:00 a.m.

To Our Stockholders:

     You are invited to attend the annual meeting of stockholders of the Citadel
Holding Corporation, or Citadel, and special meetings of stockholders of Craig
Corporation, or Craig, and Reading Entertainment, Inc., or Reading.  The
meetings will be held jointly at _______________________ located at
________________________, _______________, California, on October 24, 2001 at
10:00 a.m., Pacific time.  At the joint meetings, Citadel stockholders will be
asked to consider and vote upon:

          .    A proposal to approve the issuance of up to 16,936,252 shares of
               Citadel common stock, including 1,841,820 shares of Citadel
               nonvoting common stock or voting common stock issuable upon the
               exercise of Craig and Reading stock options to be assumed by
               Citadel, pursuant to the consolidation agreement among Citadel,
               Craig and Reading, dated as of August 17, 2001, under which Craig
               and Reading will each merge with a subsidiary of Citadel and
               become a wholly subsidiary of Citadel.

          .    A related proposal to amend Citadel's 1999 stock option plan to
               increase the number of shares of Citadel common stock reserved
               for issuance under the plan from 666,000 to 1,600,000 upon
               completion of the consolidation.

          .    A related proposal to adopt an amendment to Citadel's articles of
               incorporation to change the name of the company from Citadel
               Holding Corporation to "Reading International, Inc." upon
               completion of the consolidation.

          .    A separate proposal to ratify and approve the form of
               indemnification agreement between Citadel and its directors and
               officers.

          .    The election of five individuals to serve on the Citadel board of
               directors until the next annual meeting of stockholders.

          .    Any other business that properly comes before the annual meeting.

     Craig stockholders will be asked to separately consider and vote upon a
proposal to approve the consolidation agreement and the related Craig merger, in
which Craig will merge with a subsidiary of Citadel and each share of Craig
common stock and Craig common preference stock will be automatically converted
into the right to receive 1.17 shares of Citadel nonvoting common stock.

     Reading stockholders will be asked to separately consider and vote upon a
proposal to approve the consolidation agreement and the related Reading merger,
in which Reading will merge with a subsidiary of Citadel and each share of
Reading common stock will automatically be converted into the right to receive
1.25 shares of Citadel nonvoting common stock.

     After careful consideration, the boards of directors of Citadel, Craig and
Reading have approved the consolidation agreement and determined that the
consolidation is in the best interests of their respective stockholders. THE
BOARDS OF DIRECTORS OF CITADEL, CRAIG AND READING UNANIMOUSLY RECOMMEND THAT
THEIR RESPECTIVE STOCKHOLDERS VOTE FOR THE PROPOSALS TO APPROVE THE
CONSOLIDATION AGREEMENT AND RELATED MATTERS DESCRIBED ABOVE.

     Only holders of record of Citadel voting common stock, Craig common stock
and common preference stock and Reading common stock and preferred stock at the
close of business on September 21, 2001, the record date, are entitled to notice
of, and to vote at, the joint meetings and any adjournments or postponements of
any of the meetings.  None of the stockholders of Citadel, Craig or Reading are
entitled to dissenters' or appraisal rights in connection with the
consolidation.

                                    By Orders of the Boards of Directors of
                                    CITADEL HOLDING CORPORATION
                                    CRAIG CORPORATION
                                    READING ENTERTAINMENT, INC.

                                    _________________________________________
                                    S. Craig Tompkins
                                    CORPORATE SECRETARY

Los Angeles, California
September ___, 2001

     TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE JOINT MEETINGS, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE POSTAGE-
PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETINGS.  YOU CAN
REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED.  RETURNING THE PROXY DOES NOT
PREVENT YOU FROM ATTENDING THE MEETINGS AND VOTING YOUR SHARES IN PERSON.  IF
YOUR SHARES ARE HELD IN AN ACCOUNT AT A BROKERAGE FIRM OR A BANK, YOU MUST
INSTRUCT THEM HOW TO VOTE YOUR SHARES.

     IF YOU DO NOT VOTE OR DO NOT INSTRUCT YOUR BROKER OR BANK HOW TO VOTE, IT
MAY HAVE THE SAME EFFECT AS VOTING AGAINST APPROVAL OF THE MATTERS TO BE VOTED
ON AT THE JOINT MEETINGS.

                                      2

                               TABLE OF CONTENTS

                                                                                    Page
                                                                                    ----
                                                                                 
Documents Included with the Joint Proxy Statement/Prospectus........................
Where You Can Find More Information.................................................
Summary of the Joint Proxy Statement/Prospectus.....................................
Forward-Looking Statements..........................................................
Selected Historical and Selected Unaudited Pro Forma Combined Condensed
   Financial Data...................................................................
Comparative Historical and Unaudited Pro Forma Per Share Data.......................
Risk Factors........................................................................
The Citadel Annual Meeting..........................................................
The Craig Special Meeting...........................................................
The Reading Special Meeting.........................................................
The Consolidation...................................................................
The Consolidation Agreement.........................................................
Agreements Related to the Consolidation.............................................
Proposal to Amend Citadel's 1999 Stock Option Plan..................................
Proposal to Amend Citadel's Articles of Incorporation...............................
Proposal to Ratify and Approve the Form of Citadel Indemnification Agreement........
Election of Citadel Directors.......................................................
Market Price and Dividend Information...............................................
Unaudited Pro Forma Consolidation Condensed Combined Financial Statements...........
Comparison of Rights of Holders of Citadel Nonvoting Common Stock, Craig Common
   Stock and Common Preference Stock and Reading Common Stock.......................
Information Regarding Citadel, Craig and Reading....................................
Management of Citadel...............................................................
Independent Public Accountants......................................................
Annual Report to Citadel Stockholders...............................................
Citadel Stockholder Proposals.......................................................
Description of Citadel Capital Stock................................................
Legal Opinion.......................................................................
Experts.............................................................................
Documents Incorporated by Reference.................................................
ANNEX A - Agreement and Plan of Merger..............................................
ANNEX B - Opinion of Marshall & Stevens Incorporated................................
ANNEX C - First Amendment to Citadel 1999 Stock Option Plan.........................
ANNEX D - Certificate of Amendment of Articles of Incorporation of Citadel..........
ANNEX E - Form of Citadel Indemnification Agreement.................................
ANNEX F - Citadel Audit Committee Charter...........................................

                                      (i)

                SUMMARY OF THE JOINT PROXY STATEMENT/PROSPECTUS

     This summary highlights, in a question and answer format, selected
information that is more fully discussed elsewhere in this joint proxy
statement/prospectus.  This summary may not contain all of the information that
is important to you.  You should carefully read this entire joint proxy
statement/prospectus and the other documents furnished with or referenced in
this joint proxy statement/prospectus for a more complete understanding of the
consolidation.  In particular, you should read the documents attached to this
joint proxy statement/prospectus, including the consolidation agreement, which
is attached as ANNEX A, and the opinion of Marshall & Stevens Incorporated,
which is attached as ANNEX B.

                                       1

                                 The Companies
Citadel Holding Corporation

     Citadel Holding Corporation is a corporation organized under the laws of
Nevada.  The principal businesses of Citadel are the ownership and operation in
the United States of cinemas, live theaters and commercial real estate.
Citadel's principal executive offices are located at 550 S. Hope Street, Suite
1825, Los Angeles, California 90071.  Its telephone number is (213) 239-0555.

     Citadel's nonvoting common stock and voting common stock are listed for
trading on the American Stock Exchange under the symbols "CDL.A" and "CDL.B."

Craig Corporation

     Craig Corporation is a corporation organized under the laws of Nevada.  The
principal business of Craig is the ownership and management of its investments
in Citadel and Reading.  Craig's principal executive offices are located at 550
S. Hope Street, Suite 1825, Los Angeles, California 90071.  Its telephone number
is (213) 239-0555.

     Craig's common stock and common preference stock are listed for trading on
the New York Stock Exchange under the symbols "CRG" and "CRGpf."

Reading Entertainment, Inc.

     Reading Entertainment, Inc. is a corporation organized under the laws of
Nevada.  The principal businesses of Reading are the ownership and operation of
cinemas in Australia, New Zealand and Puerto Rico, and the ownership and
development of commercial real estate in Australia and New Zealand.  Reading's
principal executive offices are located at 550 S. Hope Street, Suite 1825, Los
Angeles, California 90071.  Its telephone number is (213) 239-0555.

     Reading's common stock is quoted on The Nasdaq Stock Market under the
symbol "RDGE."

                       We Are Proposing A Consolidation
                         Of Citadel, Craig And Reading

Q:   WHAT IS THE CONSOLIDATION?  (See page ___)

     A:   The proposed consolidation will combine Citadel, Craig and Reading.
Upon completion of the consolidation, Craig and Reading will become wholly owned
subsidiaries of Citadel, and Citadel, under the new name "Reading International,
Inc.," will continue to conduct its business and will carry on the businesses
currently being conducted by Craig and Reading.

Q:   WHAT WILL I RECEIVE IN THE CONSOLIDATION?  (See pages ___ and ___)

     A:   In the consolidation:

          .  Each outstanding share of Craig common stock and common preference
stock will automatically be converted into the right to receive 1.17 shares of
Citadel nonvoting common stock.

          .  Each outstanding share of Reading common stock will automatically
be converted into the right to receive 1.25 shares of Citadel nonvoting common
stock.

                                       2

     No fractional shares of Citadel nonvoting common stock will be issued in
the consolidation.  Instead of fractional shares, the former Craig stockholders
and Reading stockholders will receive cash in an amount to be determined by
multiplying the fraction of a share of Citadel nonvoting common stock to which
they otherwise would be entitled by the average closing price for Citadel
nonvoting common stock as reported on the American Stock Exchange for the five
trading days immediately preceding the effective date of the consolidation.

Q:   WILL THE CONVERSION RATIOS CHANGE?  (See page ____)

     A:   There is no provision in the consolidation agreement for changing the
conversion ratios of 1.17 shares of Citadel nonvoting common stock for each
share of Craig common stock and common preference stock and 1.25 shares of
Citadel nonvoting common stock for each share of Reading common stock. If
Citadel, Craig and Reading agree to change the conversion ratios in light of
developments at the companies prior to the joint meetings at which the
consolidation will be considered, this joint proxy statement/prospectus will be
supplemented accordingly and your vote will be resolicited, if necessary.

Q:   WHAT PERCENTAGE OF CITADEL WILL BE RECEIVED BY CRAIG STOCKHOLDERS AND
     READING STOCKHOLDERS IN THE CONSOLIDATION? (See page ___)

     A:   The answer to this question is complicated by the fact that some of
the stockholders of Craig and Reading are also stockholders of Citadel.  For
example, James J. Cotter is the beneficial owner of approximately 52.2% of the
outstanding Craig common stock and approximately 28.6% of the outstanding Craig
common preference stock and owns approximately 16.5% of the Citadel common
stock.  Generally speaking, stockholders of Craig and Reading indirectly own,
through the Citadel common stock held by Craig and Reading, approximately 32.4%
of the outstanding common stock of Citadel.  Based on the number of shares of
stock of Citadel, Craig and Reading outstanding on July 31, 2001, and treating
Mr. Cotter and all other stockholders who own both Craig stock and Citadel
stock, or who own both Reading stock and Citadel stock, as former Craig
stockholders and former Reading stockholders only to the extent of their current
beneficial holdings in Craig and Reading, the former Craig stockholders and
former Reading stockholders will have the following aggregate stock ownership
interests in Citadel immediately following the consolidation:

                                                                          Percent of Citadel
                                     Number of Outstanding Shares            Common Stock
                                       of Citadel Common Stock               Outstanding
                                   --------------------------------  ----------------------------
                                      Nonvoting       Voting            Nonvoting       Voting
                                      ---------       ------            ---------       ------
                                                                            
Craig stockholders...............    12,239,622         --                 60%            0%
Reading stockholders.............     2,854,810         --                 14%            0%

Q:   WHAT PERCENTAGE OF CITADEL WILL BE OWNED BY THE EXISTING CITADEL
     STOCKHOLDERS FOLLOWING THE CONSOLIDATION?  (See page ____)

     A:   The answer to this question also is complicated by the overlapping
ownership of the three companies.  Based on the number of shares of stock of
Citadel, Craig and Reading outstanding on July 31, 2001, and treating those
stockholders who own both Craig stock and Citadel stock, or who own both Reading
stock and Citadel stock, as former Citadel stockholders only to the extent of
their current holdings of Citadel common stock, the existing Citadel
stockholders will have the following aggregate ownership interests in Citadel
immediately following the consolidation:

                                       3

                                                                                  Percent of Citadel
                                      Number of Outstanding Shares                   Common Stock
                                        of Citadel Common Stock                       Outstanding
                                   ---------------------------------     -----------------------------------
                                     Nonvoting        Voting                   Nonvoting        Voting
                                     ---------        ------                   ---------        ------
                                                                                  
Citadel stockholders.............    5,390,556        1,336,331                   26%             100%

Q:   DO THESE PERCENTAGES GIVE EFFECT TO STOCK OPTIONS?  (See page ____)

     A:   No. The percentages shown above do not give effect to outstanding
stock options of Citadel, Craig and Reading. Citadel currently has outstanding
options to purchase 155,000 shares of nonvoting common stock at the weighted-
average exercise price of $2.76 per share. Craig currently has outstanding
options to purchase 664,940 shares of Craig common stock at the weighted-average
exercise price of $6.04 per share and 65,000 shares of Craig common preference
stock at the weighted-average exercise price of $6.65 per share. Reading
currently has outstanding options to purchase 790,232 shares of Reading common
stock at the weighted-average exercise price of $12.79 per share. Accordingly,
all of the currently outstanding stock options of the three companines have
exercise prices materially above the current market prices of the underlying
shares.

     The percentages shown above also do not give effect to outstanding
convertible preferred stock of Reading, since Citadel will own all of the
Reading preferred shares after the consolidation.

Q:   HOW WILL THE CONSOLIDATION AFFECT STOCK OPTIONS?  (See page ____)

     A:   In the consolidation:

          .  Each option to purchase Craig common stock and common preference
stock that is outstanding immediately prior to the consolidation will
automatically become an option to purchase either Citadel voting common stock or
nonvoting common stock, at each option holder's election. The number of shares
of Citadel voting common stock or nonvoting common stock purchasable under the
option will be determined by multiplying 1.17 by the number of shares of Craig
common stock or common preference stock that were purchasable under the option
before the consolidation. The exercise price per share of each option to
purchase Citadel shares will be the pre-consolidation exercise price divided by
1.17, so the aggregate exercise prices of the outstanding Craig options will not
be affected by the consolidation.

          .  Each option to purchase Reading common stock that is outstanding
immediately prior to the consolidation also will automatically become an option
to purchase either Citadel voting common stock or nonvoting common stock, at
each option holder's election.  The number of shares of Citadel voting common
stock or nonvoting common stock purchasable will be determined by multiplying
1.25 by the number of shares of Reading common stock that were purchasable under
the option before the consolidation.  The exercise price per share of each
option to purchase Citadel shares will be the pre-consolidation exercise price
divided by 1.25, so the aggregate exercise prices of the outstanding Reading
options will not be affected by the consolidation.

Q:   WHAT PERCENTAGE OF CITADEL WILL BE OWNED BY FORMER CRAIG AND READING
     STOCKHOLDERS AND OPTION HOLDERS AND EXISTING CITADEL STOCKHOLDERS AND
     OPTION HOLDERS ASSUMING THE EXERCISE OF STOCK OPTIONS?  (See page ___)

     A:   Based on the number of stock options of Craig and Reading outstanding
on July 31, 2001, and assuming that each holder of Craig stock options and
Reading stock options elects to convert Craig and Reading options into options
to purchase Citadel voting common stock in the consolidation, Citadel will have
outstanding immediately following the consolidation options to purchase
1,841,820 Citadel voting shares at exercise prices ranging from approximately
$4.49 to $11.20 per share, representing a weighted-average exercise price of
$7.90 per share. These options will be in addition to currently outstanding
options to

                                       4

purchase 155,000 shares of Citadel nonvoting common stock at the weighted-
average exercise price of $2.76 per share. Assuming these options were exercised
in full, immediately following the consolidation the former Craig stockholders
and option holders, former Reading stockholders and option holders and existing
Citadel stockholders and option holders will have the following fully-diluted
aggregate ownership interests in Citadel:

                                                                   Percentage of Citadel
                                            Number of              Common Stock Assuming
                                        Shares of Citadel       Exercise of All Outstanding
                                           Common Stock                    Options
                                  ---------------------------  ------------------------------
                                     Nonvoting       Voting        Nonvoting        Voting
                                     ---------       ------        ---------        ------
                                                                        
Craig stockholders
  and option holders............     12,239,622      854,030           59.3%           26.9%
Reading stockholders
  and option holders............      2,854,810      987,790           13.8%           31.1%
Citadel stockholders
  and option holders............      5,545,556    1,336,330           26.9%           42.0%

     For purposes of this table, we have treated option holders as former Craig,
Reading or Citadel option holders according to whether their options were
initially granted by Craig, Reading or Citadel.

     You should note that, of the options to purchase Citadel voting common
stock to be received in the consolidation by former Craig and Reading option
holders, James J. Cotter will hold options to purchase 1,490,120 Citadel voting
shares. Mr. Cotter is currently the controlling stockholder of Citadel.
Directly, through his ownership of approximately 16.5% of the currently
outstanding Citadel voting common stock, and indirectly through his control of
Craig and Reading, Mr. Cotter has voting control over approximately 49% of the
currently outstanding Citadel voting common stock. Furthermore, given the
weighted average exercise price of Mr. Cotter's options to purchase Citadel
common stock immediately following the consolidation ($8.03 per share), the
exercise of his options and the issuance of his option shares would be
antidilutive both from a market price and a book value point of view.
Accordingly, we believe that the assumption by Citadel of the Craig and Reading
stock options held by Mr. Cotter will have no practical effect upon the control
of Citadel.

Q:   WHO WILL BE THE DIRECTORS OF CITADEL? (See page ____)

     A:   Following the consolidation, the board of directors of Citadel will
consist of five members to be elected at the annual Citadel meeting as described
in this joint proxy statement/prospectus.  Each nominee for director is an
incumbent director of Citadel.

Q.   WHO WILL BE THE EXECUTIVE OFFICERS OF CITADEL? (See page ___)

     A:   Following the consolidation, the executive officers of Citadel are
expected to include:

          .  James J. Cotter, as Chairman of the Board and Chief Executive
Officer. Mr. Cotter currently holds the same positions at Citadel, Craig and
Reading.

          .  S. Craig Tompkins, as Vice Chairman and Corporate Secretary. Mr.
Tompkins currently holds the same positions at Citadel and Reading and currently
is the President and a director at Craig.

          .  Andrzej Matyczynski, as Chief Financial Officer. Mr. Matyczynski
currently holds the same position at Citadel, Craig and Reading.

          .  Brett Marsh, as Vice President - Real Estate. Mr. Marsh currently
holds the same position at Citadel, Craig and Reading

          .  Ellen M. Cotter, as Vice President - Business Affairs. Ms. Cotter,
the daughter of James J. Cotter, currently holds the same position at Craig and
Reading.

Q:   ARE THERE RISKS INVOLVED IN THE CONSOLIDATION? (See page ___)

     A:   Yes.  In evaluating the consolidation, you should carefully consider
the factors discussed in the section entitled "RISK FACTORS" beginning on page
____.

                                       5

Q:   WHAT STOCKHOLDER APPROVALS ARE NEEDED TO COMPLETE THE CONSOLIDATION?
     (See pages ____ and ____)

     A:   For Citadel, the affirmative vote of a majority of the outstanding
shares of Citadel voting common stock present and voted at the Citadel annual
meeting is required to approve the issuance of Citadel shares in connection with
the consolidation and the related amendment to Citadel's 1999 stock option plan.
The approval of the related amendment to Citadel's articles of incorporation to
change the name of Citadel will require the affirmative vote of a majority of
the outstanding shares of Citadel voting common stock.

          For Craig, the affirmative vote of the holders of a majority of the
outstanding voting power of Craig common stock and common preference stock,
voting as a single class, is required to approve the consolidation agreement and
the Craig merger.

          For Reading, the affirmative vote of a majority of the voting power of
the outstanding shares of Reading common stock and preferred stock, voting as a
single class, is required to approve the consolidation agreement and the Reading
merger.

Q:   ARE STOCKHOLDERS BEING ASKED TO APPROVE ANY OTHER MATTERS?  (See pages
     __ and __)

     A:   Yes.  In addition to the issuance of Citadel shares in connection with
the consolidation and the related amendments to Citadel's stock option plan and
articles of incorporation, Citadel stockholders are being asked to approve:

          .  A proposal to ratify and approve the form of indemnification
agreement between Citadel and its directors and officers.

          .  The election of five individuals to serve on the Citadel board of
directors for the ensuing year.

Q:   HAVE ANY STOCKHOLDERS ALREADY COMMITTED TO VOTING IN FAVOR OF THE
     CONSOLIDATION? (See page _____)

     A:   Yes.  James J. Cotter, Craig and Reading, who together hold
approximately 49% of the outstanding shares of Citadel voting common stock, are
obligated under the consolidation agreement to vote in favor of the issuance of
Citadel shares in connection with the consolidation and related matters.  Mr.
Cotter, who owns or has the right to vote a majority of the outstanding voting
power of Craig common stock and common preference stock, also is obligated under
the consolidation agreement to vote in favor of the consolidation agreement and
the Craig merger.  Craig, which holds a majority of the voting power of the
outstanding shares of Reading common stock and preferred stock, likewise is
obligated to vote in favor of the consolidation agreement and the Reading
merger.  As a result, we expect that all matters relating to the consolidation
will be approved at the joint meetings of stockholders of the three companies.

Q:   WHEN DO YOU EXPECT THE CONSOLIDATION TO BE COMPLETED?  (See page ___)

     A.   We expect to complete the consolidation promptly following the joint
meetings of stockholders of Citadel, Craig and Reading.

Q.   WHOM SHOULD I CALL WITH QUESTIONS ABOUT THE CONSOLIDATION?  (See page
     ___)

     A:   Stockholders should call Andrzej Matyczynski, our Chief Financial
Officer, at (213) 239-0540.

                                       6

Q.   WHERE WILL THE STOCK OF THE COMPANIES BE LISTED FOLLOWING THE
     CONSOLIDATION? (See page ___)

     A.   Craig common stock and common preference stock and Reading common
stock will be delisted following the consolidation. Citadel nonvoting common
stock and voting common stock will be listed for trading on the American Stock
Exchange under the new trading symbols "___" and "___," respectively.

Q:   WHERE CAN I GET ADDITIONAL INFORMATION ABOUT CITADEL, CRAIG AND READING?
     (See pages i and ________)

     A:   Copies of the latest annual reports on Form 10-K and quarterly reports
on Form 10-Q of Citadel, Craig and Reading are being furnished with this joint
proxy statement/prospectus.  These reports contain important business and
financial information about the companies.  This joint proxy
statement/prospectus also incorporates by reference additional information about
the companies from documents that are not being delivered with this joint proxy
statement/prospectus.  You may obtain any of these other documents incorporated
by reference, without charge, by following the instructions in the section
entitled "DOCUMENTS INCORPORATED BY REFERENCE" on page ______.

                  Our Reasons For Proposing The Consolidation
                       Of Craig And Reading With Citadel

Q:   WHY ARE CITADEL, CRAIG AND READING EACH PROPOSING THE CONSOLIDATION? (See
     page ___)

     A:   Citadel, Craig and Reading have substantially overlapping ownership
and management, and each of the companies is engaged, directly or indirectly, in
the cinema exhibition, live theater and real estate businesses.  The purpose of
the consolidation is to eliminate the overlapping ownership and management and
combine the businesses of the companies, which we believe will achieve the
following benefits to stockholders of the companies:

          .  Eliminate Duplicative Costs - Once the businesses and operations of
the three companies are fully consolidated, we will save at least $1 million
annually of duplication of SEC reporting costs, audit expenses, directors' fees
and other administrative expenses. It will also free up for more productive uses
management and staff time which is currently consumed dealing with the related-
party transactions and potential conflict-of-interest issues that are inherent
in our overlapping ownership and management.

          .  Simplify Our Capital Structure and Increase Market Understanding -
The consolidation will substantially simplify our capital structure. This should
lead to a better understanding and appreciation of the consolidated company's
value by investors and others.

          .  Facilitate Better Use of Assets and Liquidity - The consolidation
will allow us to take advantage of Citadel's U.S. asset base and liquidity to
provide needed capital to advance opportunities in Australia and New Zealand at
what we believe to be very favorable currency exchange rates. At the present
time, the U.S. Dollar is near a ten-year high compared to the Australian Dollar
and the New Zealand Dollar, and we believe that there are favorable
opportunities in these countries to invest the consolidated company's capital
resources in real estate-related assets.

          .  Enhance Stockholder Liquidity - The current stockholders of Craig
and Reading, as the holders of Citadel nonvoting common stock, should enjoy
greater liquidity in their investment than they currently enjoy as the holders
of Craig common stock or common preference stock or Reading common stock. The
current holders of Citadel nonvoting common stock also should enjoy the greater
liquidity that will result from the issuance of nonvoting common stock to the
current holders of Craig common stock and common preference stock and Reading
common stock in the consolidation.

                                       7

          .  Increase in Book Value of Net Assets - Citadel will account for the
consolidation of Craig and Reading using the purchase method of accounting.
Under purchase accounting, Citadel will record the fair value of the
consideration given for Craig common stock and common preference stock and
Reading common stock , plus the amount of direct transaction costs, as the cost
of acquiring Craig and Reading. Citadel will allocate these costs to the Craig
and Reading assets and liabilities acquired based on their respective fair
values, which we believe exceed these costs. As a result, we expect the net
assets of the consolidated company for financial reporting purposes to exceed
the sum of the current net assets of Citadel, Craig and Reading.

Q:   DO THE BOARDS OF DIRECTORS OF CITADEL, CRAIG AND READING EACH RECOMMEND
     VOTING IN FAVOR OF THE CONSOLIDATION? (See pages ___ and ___)

     A:   Yes.

          .  The conflicts committee of the Citadel board of directors, which
consists entirely of independent directors, unanimously recommended that the
board approve the consolidation. After careful consideration, the Citadel board
of directors unanimously approved the consolidation agreement and recommends
that Citadel stockholders vote in favor of approval of the issuance of Citadel
shares and other matters in connection with the consolidation.

          .  The conflicts committee of the Craig board of directors, which
consists entirely of independent directors, unanimously recommended that the
board approve the consolidation. After careful consideration, the Craig board of
directors unanimously approved the consolidation agreement and recommends that
Craig stockholders approve the consolidation agreement and the Craig merger.

          .  The conflicts committee of the Reading board of directors, which
consists of an independent director, recommended that the board approve the
conversion ratio of 1.25 shares of Citadel nonvoting common stock for each share
of Reading common stock provided for in the consolidation agreement. After
careful consideration, the Reading board of directors unanimously approved the
consolidation agreement and recommends that Reading stockholders approve the
consolidation agreement and the Reading merger.

Q:   HAVE THE COMPANIES RECEIVED A FAVORABLE OPINION FROM THEIR FINANCIAL
     ADVISOR CONCERNING THE CONSOLIDATION? (See page ___)

     A:   Yes.  In deciding to approve the consolidation, the boards of
directors of Citadel, Craig and Reading considered the opinion of their joint
financial advisor, Marshall & Stevens Incorporated, or Marshall & Stevens, to
the effect that the consolidation, and the consideration to be received in the
consolidation are fair, from a financial point of view, to the public
stockholders of each of the companies.

          The full text of Marshall & Stevens' written opinion is attached to
this joint proxy statement/prospectus as ANNEX B.  You should read this opinion
carefully and completely for a description of the assumptions made, matters
considered and the limitations of the review by Marshall & Stevens.  The opinion
of Marshall & Stevens is directed to the boards of directors and the conflicts
committees of the boards of the three companies.  The opinion does not address
the prices at which Citadel's nonvoting common stock will trade after the
consolidation and is not a recommendation as to how to vote on any matter
relating to the consolidation.

                                       8

Q:   DO PERSONS INVOLVED IN THE CONSOLIDATION HAVE INTERESTS THAT DIFFER FROM
     MINE? (See pages _____ and _____)

     A:   Yes.  These interests include the following:

          .  Interests of Controlling Stockholder - James J. Cotter owns or
controls, directly or indirectly, a majority of the voting power of both Craig
and Reading and approximately 49% of the voting power of Citadel. As such, he is
the principal controlling stockholder of Craig, Reading and Citadel. Mr. Cotter
has advised the directors of the three companies that he favors a consolidation
of the companies, but would not support a transaction which, in his view, would
materially and adversely affect his control position with respect to the three
companies. This advice was influential in the determination to issue Citadel
nonvoting common stock, as opposed to Citadel voting common stock, in the
consolidation.

             Mr. Cotter receives significant benefits from the three companies
not shared by other stockholders. Mr. Cotter is paid approximately $545,000
annually by the three companies in director's fees and consulting fees and
serves as the Chairman and Chief Executive Officer of each of the three
companies. Two of Mr. Cotter's children - Ellen Cotter and Margaret Cotter -
serve as officers or directors of one or more of the three companies, and
Margaret Cotter provides certain theater management services to an affiliate of
Citadel on an independent contractor basis. Over the twelve months ended July
31, 2001, the aggregate payments to Ellen Cotter and Margaret Cotter (and her
affiliates) totaled approximately $163,800 and $257,000, respectively.

             Mr. Cotter is a significant creditor of Citadel.  He:

               -  Holds a $2.25 million Citadel promissory note, which bears
                  interest at the current rate of 8.125% per annum and matures
                  in July 2002.

               -  Is a 50% member in Sutton Hill Capital, LLC, which is the
                  landlord to Citadel with respect to its Manhattan-based
                  cinemas (other than the Angelika) and to which Citadel has
                  granted a $28 million line of credit, available for draw by
                  Sutton Hill Capital beginning in July 2007.

             One of the effects of the consolidation will be to increase
Citadel's equity, which may enhance its ability to repay these obligations.

             Mr. Cotter has advised the directors of the three companies that he
considers his investment in the companies to be long-term in nature, and that he
intends to pass his investment on to his estate for the benefit of his children,
including Ellen Cotter and Margaret Cotter.  Mr. Cotter has further advised the
directors of the three companies that he believes that the three companies
should be operated on a combined basis, and that, in his view, the best
opportunity for the three companies is to use the companies' assets to advance
the opportunities in Australia and New Zealand which he believes are reasonably
available to Reading.  Given the overlapping nature of Mr. Cotter's existing
ownership interests in Citadel, Craig and Reading, he has, in effect, already
assumed the risks of an investment in the combined companies.  Accordingly, he
may view the attractiveness of the consolidation differently than stockholders
who only have an investment in one or two of the three companies.  Also, given
his level of personal involvement in the direction of Reading's activities in
Australia and New Zealand, he may view the opportunities there as more
attractive than would Citadel or Craig stockholders, who might prefer a domestic
focus to their investments.

          .  Stock Options - As of July 31, 2001, executive officers and
directors of Craig held options to purchase a total of 664,940 shares of Craig
common stock at the weighted-average exercise price of $6.04 per share and total
of 65,000 shares of Craig common preference stock at the weighted-average
exercise price of $6.65 per share. A total of 22,500 shares under these options
were unvested. As of July 31, 2001, current and former executive officers and
directors of Reading held options to purchase a total of 790,232 shares of
Reading common stock at the weighted-average exercise price of $12.79 per share.
A total of 30,500 shares under these

                                       9

options were unvested. Pursuant to the consolidation agreement, these options
will be assumed by Citadel and become options to purchase an equivalent number
(based on the conversion ratios used in the consolidation for Craig common stock
and common preference stock and for Reading common stock) of shares of either
Citadel voting common stock or nonvoting common stock, at each option holder's
election.

             Mr. Cotter currently holds options to acquire 635,232 shares of
Reading common stock at the weighted-average exercise price of $13.30 per share
and 594,940 shares of Craig common stock at the weighted-average exercise price
of $5.92 per share.  If Mr. Cotter elects to convert his Reading stock options
and Craig stock options into options to purchase Citadel voting common stock in
the consolidation, he would, immediately following the consolidation, hold
options to purchase 1,490,120 shares of Citadel voting common stock, or 52.7% of
the outstanding Citadel voting common stock assuming his options were exercised
in full, at the weighted-average exercise price of $8.03 per share. Taking into
account his current Citadel stock holdings, as well, this would give Mr. Cotter
total beneficial ownership of 64.3% of the voting power of Citadel after taking
into effect the exercise of his Citadel stock options.

          .  Indemnity Arrangements - Under the consolidation agreement, Citadel
has agreed to assume Craig's and Reading's obligations under the indemnification
agreements between Craig and Reading and their respective directors and
officers, which are identical to indemnification agreements currently in place
between Citadel and its directors and officers. For more information on the
Citadel indemnification agreement, see the discussion under "PROPOSAL TO RATIFY
AND APPROVE FORM OF CITADEL INDEMNIFICATION AGREEMENT" on page ____.

          .  Compensation Arrangements - In addition to Mr. Cotter, some other
executive officers of Craig and Reading will benefit from the consolidation in
that their employment agreements with Craig and Reading and the benefits
packages Craig and Reading provide to them will be assumed by the consolidated
company in the consolidation.

Q.   WHY ARE CRAIG AND READING STOCK OPTION HOLDERS BEING GIVEN AN ELECTION TO
     HAVE THEIR OPTIONS CONVERTED INTO OPTIONS TO PURCHASE EITHER CITADEL VOTING
     SHARES OR NONVOTING SHARES. (See page ___)

     A.   The election to give Craig and Reading stock option holders the right
to elect in the consolidation to have the options converted into options to
acquire either Citadel voting common stock or Citadel nonvoting common stock was
made:

          .  To mitigate to some extent the loss of voting power to be realized
by James J. Cotter as a consequence of the consolidation.

          .  Giving weight to the fact that some of the Craig and Reading
executives had received options to purchase voting Craig and Reading stock
as a part of the original compensation arrangements with Craig or Reading.

          .  With the expectation that most of the Craig and Reading stock
option holders (other than, perhaps, Mr. Cotter) would elect to have their
options converted into options to acquire Citadel nonvoting common stock given
the limited practical value of the voting rights attached to the Citadel voting
common stock as compared to the value represented by the anticipated greater
liquidity that should be enjoyed by the holders of Citadel nonvoting common
stock.

     The conversion ratio is the same (1.17 shares of Citadel stock for each
share of Craig stock and 1.25 shares of Citadel stock for each share of Reading
stock), whether an option holder elects to receive options to acquire Citadel
voting shares or nonvoting shares.

                                      10

                             Steps For You To Take

Q:   WHEN AND WHERE WILL THE VOTES TAKE PLACE? (See pages _____and _____)

     A:   We will hold a joint annual meeting of Citadel stockholders and
special meetings of Craig stockholders and Reading stockholders at
______________________, ____________________, California, on October 24, 2001,
starting at 10:00 a.m., Pacific time.

Q:   WHAT DO I NEED TO DO NOW? (See pages _______ and ______)

     A:   After carefully reading and considering the information contained in
this joint proxy statement/prospectus and the accompanying annual reports and
quarterly reports of Citadel, Craig and Reading, please mail your signed
Citadel, Craig or Reading proxy card in the enclosed return envelope as soon as
possible so that your shares may be represented at the joint meetings.
Alternatively, you may attend the joint meetings and vote in person.  Even if
you plan to attend the joint meetings, we ask that you return your signed proxy
in order to ensure that your shares are voted.

Q:   SHOULD I SEND IN MY STOCK CERTIFICATES NOW? (See pages _____ and _____)

     A:   No.  After the consolidation is completed, Citadel will send you
written instructions for exchanging your Craig and Reading stock certificates
for Citadel stock certificates.

Q:   IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
     SHARES FOR ME? (See pages _____ and _____)

     A:   Your broker will not be able to vote your shares without instructions
from you.  You should instruct your broker as to how to vote you shares by
following the procedures provided by your broker.

Q:   WHAT IF I WANT TO CHANGE MY VOTE? (See pages _____ and _____)

     A:   You can change your vote at any time before your proxy is voted at the
joint meetings. There are three ways for you to do this:

          .  Send notice to the secretary of Citadel, Craig or Reading (as
appropriate) that you wish to revoke your proxy.

          .  Send notice to the secretary of Citadel, Craig or Reading (as
appropriate) that you wish to change your proxy.

          .  Attend the joint meetings and vote in person.

     If your shares are held in an account at a brokerage firm or bank, however,
you must contact the brokerage firm or bank if you wish to change your vote.

Q:   WHAT IF I DON'T VOTE? (See pages _____ and _____)

     A:   Your failure to vote your Citadel shares will not affect the outcome
of the voting by the Citadel stockholders on the issuance of Citadel shares in
connection with the consolidation and related matters, except for the amendment
to Citadel's articles of incorporation.  If you are a Craig stockholder or a
Reading stockholder and fail to vote, it will have the same effect as a vote
against the consolidation; however, stockholders who have the right to vote a
majority of the outstanding voting power of Craig common stock and common
preference stock and of Reading common stock and preferred stock have agreed in
the consolidation agreement to vote in favor of the consolidation agreement and
related Craig merger and Reading merger, so these matters are expected to be
approved by Craig stockholders and Reading stockholders at the joint meetings
regardless of the vote of other stockholders.

                                      11

     If you return your proxy and do not indicate how you want to vote, your
proxy will be counted as a vote FOR approval of the matters at the joint
meetings.

Q:   AM I ENTITLED TO DISSENTERS' OR APPRAISAL RIGHTS? (See page _____)

     A:   No.  Under Nevada law, there are no dissenters' or appraisal rights
relating to the consolidation.

                           Other Matters To Consider

Q:   HOW DO THE MARKET PRICES OF CITADEL, CRAIG AND READING COMMON STOCK
     COMPARE? (See page _____)

     A:   Citadel nonvoting common stock and voting common stock are listed on
the American Stock Exchange under the symbols "CDL.A." and "CDL.B."  Craig's
common stock and common preference stock are traded on the New York Stock
Exchange under the symbols "CRG" and "CRGpf."  Reading common stock is traded on
The Nasdaq Stock Market under the symbol "RDGE."  On July 18, 2001, the last
full trading day prior to the public announcement of the agreement in principle
to accomplish the consolidation, the last reported sale prices of Citadel voting
common stock and nonvoting common stock, Craig common stock and common
preference stock and Reading stock were:

          .  $1.50 per share of Citadel voting common stock.

          .  $1.31 per share of Citadel nonvoting common stock.

          .  $2.05 per share of Craig common stock.

          .  $1.50 per share of Craig common preference stock.

          .  $1.90 per share of Reading common stock.

     On September __, 2001, the last reported sale prices of shares of Citadel
voting common stock and nonvoting common stock, Craig common stock and common
preference stock and Reading common stock were:

          .  $__________ per share of Citadel voting common stock.

          .  $__________ per share of Citadel nonvoting common stock.

          .  $__________ per share of Craig common stock.

          .  $__________ per share of Craig common preference stock.

          .  $__________ per share of Reading common stock.

     We urge you to obtain current market quotations.

Q:   WERE TRADING PRICES CONSIDERED IN ESTABLISHING THE CONVERSION RATIOS? (See
     page ____)

     A:   Yes.  In establishing the conversion ratios, we took into account,
among other things, the trading prices of the Citadel nonvoting common stock,
Craig common stock and common preference stock and Reading common stock at the
time we signed the agreement in principle to accomplish the consolidation and
the average trading prices over a period of approximately six months preceding
the signing.  The average trading prices for this period were as follows:

                                      12

          .  $1.92 per share for Citadel nonvoting common stock.

          .  $2.14 per share for Craig common stock.

          .  $1.80 per share for Craig common preference stock.

          .  $2.22 per share for Reading common stock.

Q:   WILL I RECOGNIZE INCOME TAX GAIN OR LOSS ON THE CONSOLIDATION? (See page
     __)

     A:   For both Craig stockholders and Reading stockholders, gain or loss
will be recognized for United States federal income tax purposes in connection
with the consolidation to the extent that the value of the Citadel nonvoting
common stock (plus any cash received for fractional shares) exceeds your tax
basis in your Craig and Reading shares.  Stockholders are urged to consult their
own tax advisors to determine their particular tax consequences.

Q:   WHAT IS THE INTENDED ACCOUNTING TREATMENT OF THE CONSOLIDATION? (See page
     _____)

     A:   Citadel will account for the consolidation as a purchase of Craig and
Reading by Citadel, using the purchase method of accounting.

Q:   WHAT IS THE LEGAL STRUCTURE OF THE CONSOLIDATION?  (See page _____)

     A:   The consolidation will be accomplished by two separate mergers that
will happen simultaneously. A new, wholly owned subsidiary of Citadel will merge
with and into Craig, resulting in Craig becoming a wholly owned subsidiary of
Citadel.  Simultaneously, another new, wholly owned subsidiary of Citadel will
merge with and into Reading, resulting in Reading becoming a wholly owned
subsidiary of Citadel.  Thus, when we refer to the consolidation throughout this
joint proxy statement/prospectus, we are speaking of the simultaneous Craig
merger and Reading merger.

          The consolidation agreement is attached to this joint proxy
statement/prospectus as ANNEX A.  You are encouraged to read the consolidation
agreement carefully.

Q:   ARE THERE CONTRACTUAL CONDITIONS TO COMPLETION OF THE CONSOLIDATION? (See
     page ____)

     A:   Yes.  The respective obligations of Citadel, Craig and Reading to
complete the consolidation are subject to the satisfaction or waiver of closing
conditions.  The conditions that must be satisfied or waived before the
completion of the consolidation include the following, subject to exceptions and
qualifications:

          .  The Citadel stockholders must approve the issuance of Citadel
shares in connection with the consolidation and the related amendments to
Citadel's 1999 stock option plan and articles of incorporation.

          .  The consolidation agreement must be approved by both the Craig
stockholders and the Reading stockholders.

          .  No injunction or order preventing the completion of the
consolidation may be in effect.

          .  The shares of Citadel nonvoting common stock to be issued in the
consolidation must have been approved for listing on the American Stock
Exchange.

          .  The parties' respective representations and warranties in the
consolidation agreement must be true and correct, unless the failure to be true
and correct would not have a material adverse effect.

                                      13

          .  The parties must have complied in all material respects with the
agreements and covenants that each has made in the consolidation agreement.

          .  There must have been no material adverse change in the business,
assets or financial condition of any of the companies.

          .  Marshall & Stevens must not have withdrawn its fairness opinion, or
modified it in any materially adverse way.

     If any of the companies waives any condition to completion of the
consolidation, they will each consider the facts and circumstances at that time
and make a determination whether a resolicitation of proxies from their
stockholders is appropriate.

Q:   DOES THE CONSOLIDATION AGREEMENT PERMIT TERMINATION OF THE CONSOLIDATION?
     (See page __).

     A:   Yes.  The consolidation agreement may be terminated prior to the
effectiveness of the consolidation under the following conditions:

          .  By our mutual written consent.

          .  By any of us in certain circumstances if the effective time has not
occurred on or before January 30, 2002.

          .  By any of us if there has been a breach of any representation,
warranty, covenant or agreement on the part of the other parties set forth in
the consolidation agreement, which has not have been cured within 20 business
days after notice of such breach.

          .  By any of us if any applicable law, rule or regulation makes the
consummation of the consolidation illegal or if any judgment, injunction, order
or decree of any court or other governmental authority restrains or otherwise
prohibits the consummation of the consolidation and such governmental order
becomes final and nonappealable, provided that the party seeking to terminate
the consolidation agreement has used its reasonable best efforts to remove or
lift such restrain or prohibition.

          .  By any of us if the requisite stockholder approval is not obtained
upon a vote at a duly held meeting of stockholders or at any adjournment or
postponement thereof.

Q:   COULD PAYMENT OF TERMINATION FEES BE REQUIRED? (See page __)

     A:   No.  There are no termination or breakup fees payable in connection
with a termination of the consolidation; however, Citadel, Craig and Reading
have agreed in the consolidation agreement to share the fees and expenses of
preparing this joint proxy statement/prospectus and filing the registration
statement of which this joint proxy statement/prospectus is a part in the event
the consolidation is not completed for any reason.  Also, none of the companies
has waived any rights it may have against a company that breaches the
consolidation agreement.

Q:   MAY CITADEL, CRAIG OR READING NEGOTIATE WITH OTHER PARTIES? (See page __)

     A:   The consolidation agreement does not prohibit negotiations with other
parties; however, we are not proposing to sell Citadel, Craig or Reading, or
effect a change of control of any of the companies.  Further, any such
transaction would likely require the approval of the stockholders of one or more
of the companies.  Since stockholders representing 49% of the voting power of
Citadel and a majority of the voting power of both Craig and Reading are
contractually bound to vote in favor of the consolidation and related matters,
it is unlikely that any third party will come forward with any alternative
transaction.

                                      14

                          FORWARD-LOOKING STATEMENTS

     This joint proxy statement/prospectus contains forward-looking statements
within the safe harbor provisions of the Private Securities Litigation Reform
Act.  These statements include statements with respect to the financial
condition, results of operations and businesses of Citadel, Craig and Reading
and the expected impact of the consolidation on Citadel's consolidated financial
condition and performance.  Words such as anticipates, expects, intends, plans,
believes, seeks, estimates and similar expressions identify forward-looking
statements.

     These forward-looking statements are not guarantees of future performance
and are subject to risks and uncertainties that could cause actual results to
differ materially from the results contemplated by the forward-looking
statements.  In evaluating the consolidation, you should carefully consider the
discussion of these and other factors in the section entitled "RISK FACTORS"
beginning on page __.

                                      15

                  SELECTED HISTORICAL AND SELECTED UNAUDITED
                  PRO FORMA COMBINED CONDENSED FINANCIAL DATA

     The following tables present selected historical financial data of Citadel,
selected historical consolidated financial data of Craig, selected historical
financial data of Reading and selected unaudited pro forma condensed combined
financial data of Citadel, which reflect the consolidation.

                                      16

                  Citadel Selected Historical Financial Data
                   (In Thousands, Except Per Share Amounts)

     The selected historical financial data of Citadel have been derived from
the audited historical financial statements and related notes of Citadel for
each of the years in the five-year period ended December 31, 2000 and from
shareited historical financial statements as of June 30, 2001 and for the six
months ended June 30, 2000 and 2001.  The selected historical financial data for
the six months ended June 30, 2001 and 2000 are unaudited and are derived from
the consolidated financial information included in Citadel's quarterly report on
Form 10-Q for the quarter ended June 30, 2001; however, in the opinion of
Citadel's management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation have been made.  The historical
data are only a summary, and you should read them in conjunction with the
historical consolidated financial statements and related notes contained in the
annual and quarterly reports of Citadel that have been furnished with this joint
proxy statement/prospectus.

                                                                        December 31
                                           -----------------------------------------------------------------------
                                               2000          1999           1998           1997           1996
                                           ------------  ------------   ------------   ------------   ------------
                                                                                        
Operating data:
- --------------
     Revenue                                $ 7,384(1)    $ 3,952(6)      $ 5,985         $ 5,436        $ 5,776
     Operating (loss) income                 (1,055)(2)     1,101           1,995           1,530          6,268
     Net (loss) income applicable to
     common stockholders                     (3,542)(3)     9,487(7)        5,687           1,530          6,268

Common stock data:
- ------------------
     Basic (loss) income per share           ($0.47)      $  1.42         $  0.85         $  0.24        $  1.04
     Diluted (loss) income per share         ($0.47)      $  1.42         $  0.85         $  0.24        $  0.80

Balance sheet data:
- ------------------
     Total assets                           $63,922(4)    $47,206(6)      $35,045         $28,860        $30,292
     Long-term obligations                   16,025(5)     11,313           9,224           9,797         10,543
     Stockholders' equity                    39,128        33,483          23,741          18,054         17,724

Other data:
- ----------
     Preferred stock dividend               $     0       $     0         $     0         $     0        $   158

_________________________
(1)  Reflects six months of revenue from the City Cinemas and Liberty Theaters.
(2)  Reflects the revenue in (1) above and the rental payments associated with
     the City Cinemas cinema chain.
(3)  Reflects (1) and (2) above as well as a full reserve for all outstanding
     advances to the agricultural partnerships.
(4)  Includes fixed assets and goodwill from the purchase of Liberty Theaters.
(5)  Includes the notes payable to James J. Cotter and Michael Forman for the
     purchase of an 1/6/th/ interest in Angelika Film Center LLC, or AFC.
(6)  Reflects the sale of the Arizona rental property, one of two rental
     properties owned by Citadel.
(7)  Reflects the gain on the sale of the Arizona rental property.

                                              Six Months Ended June 30,
                                           -------------------------------
                                               2001               2000
                                           ------------       ------------
                                                        
Operating data:
- --------------
     Revenue                               $10,752(8)          $ 1,207(11)
     Operating income                       (1,217)(9)             265
     Net (loss) income applicable to
     common stockholders                    (1,301)               (455)(12)

Common stock data:
- -----------------
     Basic and diluted (loss) per share     ($0.13)             ($0.07)

                                      17

                                                         
Balance sheet data:
- ------------------
     Total assets                          $64,551             $46,150
     Long-term obligations                  18,951(10)          11,258
     Stockholders' equity                   37,917              32,730

_____________________
(8)  Reflects six months of City Cinemas and Liberty Theaters and three months
     of revenue from the four domestic cinemas purchased from Reading.
(9)  Reflects (8) above and the effects of the general and administrative
     expense sharing agreement with Reading and Craig.
(10) Reflects the notes payable to James J. Cotter and Michael Forman for the
     purchase of an 1/6/th/ interest in AFC and the note payable to Reading for
     the purchase of the four cinemas.
(11) Reflects the revenue from one rental property in California.
(12) Reflects the reserve for advances to the agricultural partnerships.

                                      18

             Craig Selected Historical Consolidated Financial Data
                    (In Thousands, Except Per Share Amounts)

     The selected historical consolidated financial data of Craig have been
derived from the audited historical consolidated financial statements and
related notes of Craig for each of the years in the five-year period ended
December 31, 2000 and the unaudited consolidated financial statements for the
six months ended June 30, 2000 and 2001.  The selected historical financial data
for the six months ended June 30, 2001 and 2000 are unaudited and are derived
from the consolidated financial information included in the Craig's quarterly
report on Form 10-Q for the quarter ended June 30, 2001, and, in the opinion of
Craig's management, contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation.  The historical consolidated
data are only a summary, and you should read them in conjunction with the
historical consolidated financial statements and related notes contained in the
annual and quarterly reports of Craig that have been furnished with this joint
proxy statement/prospectus.  Since October 1996, Craig has reported its
financial information on a consolidated basis with Reading.

                                                                            December 31
                                             ------------------------------------------------------------------------
                                                 2000            1999           1998           1997          1996
                                             ------------    ------------   ------------   ------------   -----------
                                                                                           
Operating data:
- --------------
     Revenue                                 $ 42,237(1)     $ 38,488         $ 33,929      $ 28,136        $ 21,887
     Operating (loss) income                  (26,285)(1)     (27,799)(3)       (6,725)       (6,634)         (3,956)
     Net (loss) income applicable to
     common stockholders                      (12,124)(1)     (15,808)(3)         (854)        2,851(4)       42,552(5)

Common stock data:
- ------------------
     Basic (loss) income per share             ($1.16)         ($1.49)          ($0.08)     $   0.26        $   3.78
     Diluted (loss) income per share           ($1.16)         ($1.49)          ($0.08)     $   0.26        $   3.76

Balance sheet data:
- ------------------
     Total assets                            $123,531        $148,006         $164,591      $167,125        $165,968
     Long-term obligations                     28,335(2)       15,320           13,894        13,712          11,196
     Stockholders' equity                      53,811          80,603           95,342        98,239          99,825

Other data:
- ----------
     Dividends paid on redeemable
     preferred stock                         $    455        $    455         $    455      $    455        $     95

_________________________
(1)  2000 revenue and operating loss reflect the sale by Reading of 50% of AFC
     to National Auto Credit Inc., while 2000 operating loss and net loss
     application to common stockholders include pre-tax charges for impairment
     of development assets in Australia, and a pre-tax write down to market
     value of four domestic cinemas made available for sale and ultimately sold
     to Citadel.
(2)  2000 long term obligations include borrowing by Reading under bank lines of
     credit in Australia and New Zealand to be used for completing certain real
     estate and cinema development projects
(3)  1999 operating loss and net loss applicable to common stockholders include
     a pre-tax charge for impairment of the assets used by Reading to carry on
     Puerto Rico operations, net of write downs taken previously against Reading
     Entertainment assets, and net of minority interest in Reading.
(4)  1997 net earnings applicable to common stockholders include dividend income
     loss from State Bros. preferred shares.
(5)  1996 net earnings applicable to common stockholders include dividend income
     loss from State Bros. preferred shares.

                                                 Six Months Ended June 30,
                                             -------------------------------
                                                 2001              2000
                                             ------------      -------------
                                                         
Operating data:
- ---------------
     Revenue                                 $ 19,343(6)         $ 22,182
     Operating (loss)                          (2,865)(6)          (6,170)
     Net (loss) applicable to
     common stockholders                       (2,863)(6)          (3,152)

Common stock data:
- ------------------
     Basic and diluted (loss) per share        ($0.27)             ($0.30)

                                      19

                                                           
Balance sheet data (as of June 30):
- -----------------------------------
     Total assets                            $111,265            $141,485
     Long-term obligations                     27,834              15,863
     Stockholders' equity                      45,544              70,072

Other data:
- -----------
     Dividends paid on                       $    227            $    228
     redeemable preferred stock

_________________________
(6)  2001 revenue, operating loss, and net earnings applicable to common
     stockholders reflect the sale in March of four cinemas operations by
     Reading to Citadel.

                                      20

                   Reading Selected Historical Financial Data
                     (In Thousands, Except Per Share Data)

     The selected historical financial data of Reading have been derived from
the audited historical financial statements and related notes of Reading for
each of the years in the five-year period ended December 31, 2000 and the
unaudited historical financial statements for the six months ended June 30, 2000
and 2001.  The selected historical financial information for the six months
ended June 30, 2001 and 2000 is unaudited and derived from the consolidated
financial information included in Reading's quarterly report on Form 10-Q for
the quarter ended June 30, 2001, and, in the opinion of Reading's management,
contain all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation.  The historical financial data are only a
summary, and you should read them in conjunction with the historical financial
statements and related notes contained in the annual and quarterly reports of
Reading that have been furnished with this joint proxy statement/prospectus.

                                                                               December 31
                                                -------------------------------------------------------------------------
                                                    2000            1999            1998           1997           1996
                                                ------------    ------------    ------------   ------------   -----------
                                                                                               
Operating data:
- ---------------
     Revenue                                    $ 42,237(1)     $ 38,488          $ 33,929       $ 27,164       $ 18,779
     Operating (loss) income                     (25,709)(1)     (44,648)(3)        (6,024)        (6,735)        (4,572)
     Net (loss) income applicable to
     common stockholders                         (19,854)(1)     (45,517)(3)        (6,728)        (1,354)         6,092

Common stock data:
- ------------------
     Basic (loss) income per share                ($2.67)         ($6.11)           ($0.90)        ($0.18)      $   1.11
     Diluted (loss) income per share              ($2.67)         ($6.11)           ($0.90)        ($0.18)      $   1.02

Balance sheet data:
- -------------------
     Total assets                               $116,672        $138,496          $172,287       $178,012       $181,754
     Long-term obligations                        19,967(2)        6,953             5,526          5,344          3,595
     Stockholders' equity                         73,289         102,683           142,372        150,485        155,954

Other data:
- -----------
     Preferred stock dividends and
     amortization of asset put option           $  4,030        $  4,335          $  4,322       $  4,309       $    911

_______________________
(1)  2000 revenue and operating loss reflect the sale by Reading of 50% of AFC
     to National Auto Credit Inc., while 2000 operating loss and net loss
     applicable to common stockholders include pre-tax charges for impairment of
     development assets in Australia, and a pre-tax write down to market value
     of four domestic cinemas made available for sale and ultimately sold to
     Citadel.
(2)  Includes borrowings under bank lines of credit in Australia and New Zealand
     to be used for completing certain real estate and cinema development
     projects.
(3)  1999 operating loss and net loss applicable to common stockholders include
     a pre-tax charge for impairment of the assets used to carry on Puerto Rico
     operations.

                                                 Six Months Ended June 30,
                                              ------------------------------
                                                  2001              2000
                                              -------------     ------------
                                                          
Operating data:
- ---------------
     Revenue                                   $ 19,343(4)        $ 22,182
     Operating (loss)                            (2,422)(4)         (5,407)
     Net (loss) applicable to
     common stockholders                         (5,304)(4)         (5,020)

Common stock data:
- ------------------
     Basic and diluted (loss) per share          ($0.71)            ($0.67)

Balance sheet data:
- -------------------
     Total assets                              $104,825           $133,391
     Long-term obligations                       19,466              7,495
     Stockholders' equity                        64,369             92,540

                                      21

                                                            
Other data:
- ------------
     Preferred stock dividends and             $  2,015           $  2,120
     amortization of asset put option

___________________________
(4)  2001 revenue, operating loss, and net loss applicable to common
     stockholders reflect the sale in March of four domestic cinemas.

                                      22

        Selected Unaudited Pro Forma Condensed Combined Financial Data
                   (In Thousands, Except Per Share Amounts)

     The selected unaudited pro forma condensed combined financial data of
Citadel are derived from the unaudited pro forma condensed combined financial
statements, which give effect to the consolidation using the purchase method of
accounting, and should be read in conjunction with the unaudited pro forma
condensed combined financial statements and related notes included elsewhere in
this joint proxy statement/prospectus.

     The unaudited pro forma condensed combined financial information for
Citadel gives effect to the consolidation, based on a preliminary allocation of
the total purchase cost.  The historical financial information has been derived
from the respective historical financial statements of Citadel, Craig and
Reading, and should be read in conjunction with these financial statements and
the related notes contained in the annual and quarterly reports of Citadel,
Craig and Reading that have been furnished with this joint proxy statement/
prospectus.

     Citadel will account for the consolidation as a purchase of Craig and
Reading using the purchase method of accounting.  Citadel will record the fair
value of the consideration given for Craig and Reading stock and for options to
purchase Craig and Reading stock assumed by Citadel, plus the amount of direct
transaction costs, as the cost of acquiring Craig and Reading.

     The total estimated purchase cost of the consolidation has been allocated
on a preliminary basis to Craig's and Reading's assets and liabilities based on
management's best estimates of their fair value.  We do not expect that any
significant amount of goodwill will result from our accounting for the
consolidation.  This allocation is subject to change pending a final analysis of
the total purchase cost and the fair value of the assets acquired and
liabilities assumed.  The impact of such changes could be material.

     The unaudited pro forma condensed combined financial data is presented for
illustrative purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred if the consolidation had
been consummated at the times indicated, nor is it necessarily indicative of
future operating results or financial condition of Citadel.

                                                           Six Months           Year Ended
                                                              Ended             December 31,
                                                          June 30, 2001            2000
                                                          -------------         ------------
                                                                          
Pro Forma Operating Data:
- ------------------------
 Revenue                                                   $ 33,482             $ 54,439
 Operating (loss) applicable to                              (4,734)             (19,270)
 common stockholders

Pro Forma Common Stock Data:
- ---------------------------
Basic and diluted (loss) per share                         $  (0.22)            $  (0.88)

Pro Forma Balance Sheet Data:
- ----------------------------
 Total assets                                              $165,472
 Long-term obligations                                       47,891
 Stockholders' equity                                        88,818

                                      23

         COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

          The following table sets forth:

 .    Historical book value per share and historical net loss per share data of
     Citadel, Craig and Reading.

 .    Unaudited pro forma condensed combined book value per share and unaudited
     pro forma condensed combined net loss per share data of Citadel after
     giving effect to the consolidation.

 .    Unaudited pro forma equivalent condensed combined book value per share and
     unaudited pro forma equivalent condensed combined net loss per share data
     of Craig and Reading based on the conversion ratios of 1.17 shares of
     Citadel nonvoting common stock for each share of Craig common stock and
     common preference stock and 1.25 shares of Citadel nonvoting common stock
     for each share of Reading common stock.

          The information in the table should be read in conjunction with the
historical financial statements of Citadel, Craig and Reading and the related
notes contained in the annual and quarterly reports of Citadel, Craig and
Reading that have been furnished with this joint proxy statement/prospectus and
the unaudited pro forma condensed combined financial statements and related
notes included elsewhere in this joint proxy statement/prospectus.  The
unaudited pro forma condensed combined financial data is not necessarily
indicative of the net loss per share or book value per share that would have
been achieved had the consolidation been consummated as of the beginning of the
periods presented and should not be construed as representative of these amounts
for any future dates or periods.

          The information in the table is only a summary and you should read it
in conjunction with the "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS" beginning on page ____ and the audited and unaudited historical
financial statements of Citadel, Craig and Reading, including the notes thereto,
contained in the annual and quarterly reports that have been furnished with this
joint proxy statement/prospectus.

                                      24

     The Craig pro forma equivalent per share amounts are calculated by
multiplying the Citadel pro forma amounts per nonvoting common share by the
fixed conversion ratio of 1.17 Citadel nonvoting shares for each share of Craig
common stock and common preference stock.

     The Reading pro forma equivalent per share amounts are calculated by
multiplying the Citadel pro forma amounts per nonvoting common share by the
fixed conversion ratio of 1.25 Citadel nonvoting shares for each share of
Reading common stock.

                                                                         At or for the Year         At or for the Six
                                                                         Ended December 31,         Months Ended June
                                                                               2000                     30, 2001
                                                                         ------------------         -----------------
                                                                                              
Per share of Craig common stock and common
preference stock:
 Book value:
  Historical (1).....................................................          $ 5.14                    $ 4.31
  Pro forma equivalent (2)...........................................          $ 4.00                    $ 3.81
 Net income (loss):
  Historical.........................................................          $(1.16)                   $(0.27)
  Pro forma equivalent (2)...........................................          $(1.04)                   $(0.25)

Per share of Reading common stock:
 Book Value:
  Historical (1)(3)..................................................          $ 1.46                    $ 0.04
  Pro forma equivalent (4)...........................................          $ 4.28                    $ 4.08
 Net (loss):
  Historical.........................................................          $(2.67)                   $(0.71)
  Pro forma equivalent (4)...........................................          $(1.11)                   $(0.26)

Per pro forma share of Citadel common stock:
 Book value (5)
   Historical (1)....................................................          $ 2.76                    $ 2.68
   Pro forma.........................................................          $ 3.42                    $ 3.26
 Net (loss)
   Historical (1)....................................................          $(0.47)                   $(0.13)
   Pro forma.........................................................          $(0.89)                   $(0.21)

_______________________
(1)  Historical book value per share is computed by dividing stockholders'
     equity, less goodwill and other intangible assets, by the number of shares
     of Craig common stock and common preference stock or Reading common stock,
     as the case may be, outstanding at December 31, 2000 and June 30, 2001.

(2)  The Craig pro forma equivalent per share amounts are calculated by
     multiplying the Citadel pro forma book value and net loss per share amounts
     by the conversion ratio of 1.17 shares of Citadel nonvoting common stock
     for each share of Craig common stock for each share of common stock and
     common preference stock.

(3)  Net of the stated value of outstanding preferred stock of Reading, plus
     accrued dividends.

(4)  The Reading pro forma equivalent per share amounts are calculated by
     multiplying Citadel pro forma book value and net loss per share amounts by
     the conversion ratio of 1.25 shares of Citadel nonvoting common stock for
     each share of Reading common stock.

                                      25

(5)  The pro forma book value per share is computed by dividing pro forma
     stockholders' equity, less goodwill and other intangible assets, including
     the effect of pro forma adjustments, by the pro forma number of shares of
     Citadel nonvoting common stock and voting common stock which would have
     been outstanding had the consolidation been completed as of December 31,
     2000 or June 30, 2001.

                                      26

                                 RISK FACTORS

     The consolidation involves a high degree of risk. By voting in favor or the
issuance of Citadel shares and the related consolidation proposals, Citadel
stockholders will, upon completion of the consolidation, be changing the overall
mix of Citadel's assets and liabilities which may involve a high degree of risk.
By voting in favor of the consolidation agreement, Craig and Reading
stockholders will be choosing to invest in Citadel nonvoting common stock.  An
investment in Citadel nonvoting common stock involves a high degree of risk.  In
addition to the other information contained in this joint proxy
statement/prospectus or the accompanying documents, you should carefully
consider the following risk factors in deciding whether to vote in favor of the
consolidation.

                      Risks Relating to the Consolidation

The consolidation will expose the current stockholders of Citadel, Craig and
Reading to the risks and liabilities of the other companies.

     The consolidation will, in effect, merge all of the assets and all of the
liabilities, including the potential contingent liabilities, of Citadel, Craig
and Reading.  Accordingly, after the consolidation, your investment will be
subject to all of the various business risks of such current and contingent
liabilities.  These include tax, litigation, currency and environmental risks,
as discussed in the annual and quarterly reports of Citadel, Craig and Reading
being furnished with this joint proxy statement/prospectus.

The market value of Citadel nonvoting common stock after the consolidation could
be less than the market values of Citadel, Craig or Reading before the
consolidation.

     Based on recent trading prices, shares of Craig common stock and common
preference stock and shares of Reading common stock have a greater market value
than the shares of Citadel nonvoting common stock to be received by Craig
stockholders and Reading stockholders in the consolidation.

You will receive a fixed number of shares of Citadel nonvoting common stock
despite any changes in the market values of Craig common stock and common
preference stock, Reading common stock or Citadel nonvoting common stock.

     Upon completion of the consolidation, each share of Craig common stock and
common preference stock will be automatically converted into the right to
receive 1.17 shares of Citadel nonvoting common stock, and each share of Reading
common stock will be automatically converted into the right to receive 1.25
shares of Citadel nonvoting common stock.  The boards of directors of the
companies have no discretion to unilaterally adjust these conversion ratios due
to changes in the market prices of Craig common stock or common preference
stock, Reading common stock or Citadel nonvoting common stock, or for other
reasons.  In addition, neither Craig, Reading nor Citadel may terminate the
consolidation agreement, or "walk away" from the consolidation, solely because
of changes in the market price of the stock of one or more of the companies.
The market prices of Craig common stock and common preference stock, Reading
common stock and Citadel nonvoting common stock are by nature subject to the
general price fluctuations in the market for publicly traded equity securities,
and you should obtain recent market quotations.  We cannot predict or give any
assurances as to the market price of Citadel nonvoting common stock before or
after the completion of the consolidation.

The consolidation could adversely affect combined financial results.

     Citadel, Craig and Reading expect to incur direct transaction costs of
approximately $600,000 in connection with the consolidation. If the benefits of
the consolidation do not exceed the costs associated with the consolidation,
including any dilution to Citadel stockholders resulting from the issuance of
shares of nonvoting common stock in the consolidation, the consolidated
company's financial results, including earnings per share, could be adversely
affected.

                                      27

             Risks Relating to the Consolidated Company's Business

The consolidated company has only limited experience in the cinema, live theatre
and real estate development business.  Furthermore, its real estate activities
will be largely developmental in nature.

     Although the consolidated company's executives will include a number of
individuals with extensive experience in the cinema exhibition, live theater and
real estate businesses, the consolidated company, itself, will be a relatively
new entrant into these businesses. Reading has been in the cinema exhibition
business only since 1994, and has only been involved in Australia and New
Zealand since 1995 and 1997, respectively. Citadel has only been involved in the
cinema exhibition and live theater businesses since 2000. Craig and Citadel have
no experience in real estate development, and while Reading has in its past
developed commercial properties, it did not begin construction of its first
entertainment center until 1999. The consolidated company will face
competition in these markets from competitors with significantly greater
experience and financial and management resources.

Investments in the cinema exhibition, live theater and real estate businesses
each involve special risks.

     In the cinema exhibition business, the principal risks include the
availability and popularity of film product, the ability to obtain such film
product on reasonable terms and potentially ruinous competition from the
overbuilding of cinema markets.  In recent years, the cinema exhibition industry
has suffered greatly from increased costs of film and the overbuilding of
markets.  In the live theater business, the principal risks include the
availability and popularity of plays, the rising costs of production and
competition from other entertainment sources.  Both the cinema and live theater
industries are exposed to uncertainty as to the ultimate impact of government
regulation, such as the Americans with Disabilities Act, on their businesses.
In the real estate business, the risks include leasing risk and market risks
related to the general demand for space in the markets in which the consolidated
company will own assets.

     Furthermore, a significant portion of initial assets of the consolidated
company will be invested in undeveloped land in Australia.  This land was
originally purchased by Reading as possible entertainment center locations and
does not currently provided any meaningful cash flow.  Accordingly, the
consolidated company will be exposed to the risks inherent in the ownership and
development of raw land.  These risks include the risks of obtaining necessary
permits and entitlements, the risks of construction and, thereafter, the risks
of sale or lease-up and operation.  Given the anticipated liquidity of the
consolidated company, it may be necessary for the consolidated company to incur
additional indebtedness, bring on partners or sell assets in order to develop
these properties.  Alternatively, the consolidated company may find it necessary
to either defer development of one or more of these properties or to sell these
non-cash flowing assets.

The consolidated company is likely to experience fluctuations in operating
results.

     Citadel, Craig and Reading have historically experienced substantial
fluctuations in operating results, on a quarterly and an annual basis.  These
fluctuations will likely continue for the consolidated company in the future.
Operating results for the consolidated company will be affected by a number of
factors, including, but not limited to:

 .    Delays in entering into leases or obtaining permits for new multiplex
     cinemas.

 .    Delays and other risks in the construction of the new cinemas.

 .    The time and availability of new film releases and level of acceptance by
     movie goers.

 .    The timing of sales of properties.

 .    The timing of investments.

 .    Delays in connection with the development and leasing of its commercial
     real estate.

                                      28

 .    The opening of competing cinemas.

 .    The availability of plays for our theaters and level of acceptance by
     theater goers.

          The consolidated company's operating results also will be affected by
seasonal trends and by general conditions in the film exhibition and real estate
markets.  The third and fourth quarters generally have higher net sales levels
due to new film releases during the holiday season.  Because both Citadel's and
Reading's businesses and operating results have depended to a significant extent
on the general conditions in the film exhibition market, any adverse change in
that market could have a material adverse effect on the consolidated company's
business, financial condition and results of operations.  Citadel also has
experienced, and the consolidated company may experience, some degree of
seasonality due to fluctuations in the market for fruit produced by the
agriculture partnerships in which Citadel has an interest.

          We believe that quarter-to-quarter comparisons of the historical
financial results of Citadel, Craig and Reading are not necessarily meaningful
indicators of the consolidated company's future operating results, and you
should not rely on them as an indication of the consolidated company's future
performance. If the consolidated company's quarterly operating results fail to
meet the expectations of equity research analysts, the market prices of the
Citadel nonvoting common stock and voting common stock could be adversely
affected.

Fluctuations in the value of foreign currencies could result in currency
conversion losses.

          The bulk of our consolidated operations and assets will, immediately
after the consolidation, be located in Australia and New Zealand. Our business
plan for the consolidated company will be, at least initially, to use the
resources of the consolidated company principally to advance opportunities in
Australia and New Zealand. Accordingly, while the consolidated company's
operating results will be denominated in U.S. Dollars and while a significant
portion of the consolidated company's general and administrative expense and
cost of borrowing will be U.S.-based and paid in U.S. Dollars, the consolidated
company's operating revenues are likely to be denominated principally in
Australian Dollars and New Zealand Dollars. This means that the consolidated
company will be exposed to a considerable amount of currency risk, in the event
that the Australian Dollar and the New Zealand Dollar should continue their
slide against the U.S. Dollar. No assurances can be given as to the future
relative strength of the Australian Dollar, the New Zealand Dollar and the U.S.
Dollar. We do not currently contemplate using any hedging programs to protect
against risks associated with foreign currency fluctuations.

The anticipated focus of the consolidated company on foreign operations poses
special risks.

          Most of the consolidated operations of Craig and Reading are located
abroad.  There are special risks attendant to doing business in foreign
countries.  For example, the acquisition of real property in Australia by
Reading is subject to the review and approval of that country's Foreign
Investment Review Board, which may impose restrictions or conditions on the
acquisition of real property by foreign corporations.  Also, the distance and
time differences between Los Angeles, the location of the executive offices of
each of the three companies, and Reading's operations in Australia and New
Zealand impose special challenges.

          Furthermore, Reading is, and the consolidated company will be, a
relatively new competitor in the Australian and New Zealand markets for cinema
exhibition and real estate development. In these markets, Reading is, and the
consolidated company will be, faced with substantial competition from more
established companies owned and operated in those local markets, which have
significantly greater financial assets than Reading and the consolidated
company.

                                      29

The consolidated company will have concentrated ownership and control.

     At the present time, James J. Cotter beneficially owns a majority of the
outstanding voting power of Craig. Craig, in turn, holds a majority of the
voting power of Reading. Mr. Cotter, together with Craig and Reading, owns
approximately 49% of the voting power of Citadel. Although immediately following
the consolidation Mr. Cotter will control only slightly less than 25% of the
voting power of Citadel, his long-time partner, Mr. Michael Forman, also will
own slightly less than 25% of Citadel's voting power. Accordingly, these two
individuals, assuming they were to act in concert regarding the consolidated
company's matters, will effectively be in control of the consolidated company.
Also, since there will only be approximately 1,330,000 shares of Citadel voting
common stock outstanding immediately after the consolidation, Mr. Cotter and Mr.
Forman may be able, at a relatively modest cost, to increase their holdings to a
position of majority voting control. Furthermore, Mr. Cotter currently holds
options to purchase up to 635,232 shares of Reading common stock at the
weighted-average exercise price of $13.30 per share and up to 594,940 shares of
Craig common stock at the weighted-average exercise price of $5.92 per share. If
Mr. Cotter elects to have his Reading stock options and Craig stock options
converted into options to purchase Citadel voting common stock in the
consolidation, he would hold options to purchase up to 1,490,120 shares of
Citadel voting common stock, or 52.7% of the outstanding shares of Citadel
voting common stock assuming his stock options were exercised in full, at the
weighted-average exercise price of $8.03 per share. Taking into account his
current stock holdings, after voting into effect the exercise of his Citadel
stock options as well, this would give Mr. Cotter total beneficial
ownership of 64.3% of the voting power of Citadel.

     Mr. Cotter is also the Chairman and Chief Executive Officer of each of
Citadel, Craig and Reading, and it is currently anticipated that he will be the
Chairman and Chief Executive Officer of the consolidated company.  Mr. Cotter
has advised us that he views his equity interest in each of the three companies
as a long-term family investment, and his daughters, Margaret Cotter and Ellen
Cotter, currently are actively involved as directors and officers or consultants
of the three companies and their affiliates.  It is anticipated that these
relationships will continue after the consolidation.  The interests of Mr.
Cotter and his family may differ from the interests of public stockholders.

The nonvoting common stock will likely be subject to price and volume
fluctuations which may prevent stockholders from reselling their shares at or
above the price at which they purchased their shares.

     Fluctuations in the price and trading volume of Citadel's nonvoting common
stock may prevent stockholders from reselling their shares above the price at
which they purchased their shares. Stock prices and trading volumes for many
companies fluctuate widely for a number of reasons, including some reasons which
may be unrelated to their businesses or results of operations. This market
volatility, as well as general domestic or international economic, market and
political conditions, could materially adversely affect the market price of
Citadel's nonvoting common stock without regard to operating performance. In
addition, operating results may be below the expectations of public market
analysts and investors. If this were to occur, the market price of Citadel's
nonvoting common stock would likely significantly decrease.

                                      30

                          The Citadel Annual Meeting

     This joint proxy statement/prospectus is being furnished to you in
connection with the solicitation of Citadel proxies by Citadel's board of
directors for use at the annual meeting of stockholders of Citadel and at any
adjournment or postponement thereof.

Date, Time and Place of Citadel's Annual Meeting

     The Citadel annual meeting will be held jointly with special meetings of
the Craig stockholders and the Reading stockholders.  The date, time and place
of the joint meetings are as follows:

                                October 24, 2001
                            10:00 a.m., Pacific time

                              ___________________
                              ___________________
                              _________, California

Purpose of the Annual Meeting

     The annual meeting of stockholders of Citadel is being held for the
following purposes:

          .    To consider and vote upon the proposal to approve the issuance of
               up to 16,936,252 shares of Citadel common stock, including up to
               1,841,820 shares of Citadel nonvoting common stock or voting
               common stock issuable upon the exercise of Craig and Reading
               stock options to be assumed by Citadel, pursuant to the
               consolidation agreement among Citadel, Craig and Reading, dated
               as of August 17, 2001, under which Craig and Reading will each
               merge with a separate subsidiary of Citadel and become a wholly
               owned subsidiary of Citadel.

          .    To consider and vote upon a related proposal to amend Citadel's
               stock option plan to increase the related number of shares of
               Citadel common stock reserved for issuance under the plan from
               666,000 to 1,600,000 upon completion of the consolidation.

          .    To consider and vote upon a related proposal to adopt an
               amendment to the articles of incorporation of Citadel to change
               the name of the company from Citadel Holding Corporation to
               "Reading International, Inc." upon completion of the
               consolidation.

          .    To consider and vote upon a separate proposal to ratify and
               approve the form of indemnification agreement between Citadel and
               its directors and officers.

          .    To elect five individuals to serve on Citadel's board of
               directors until the next annual meeting of stockholders.

          .    To conduct such other business as may properly come before the
               annual meeting.

     The Citadel board does not expect any other business to come before the
annual meeting.

     The consolidation agreement is included as ANNEX A to this joint proxy
statement/prospectus.  The amendment to Citadel's stock option plan is attached
as ANNEX C to this joint proxy statement/prospectus and the amendment to
Citadel's articles of incorporation is attached as ANNEX D to this joint proxy
statement/prospectus.  The form of Citadel indemnification agreement is attached
as ANNEX E to this joint proxy statement/prospectus.

                                      31

Record Date and Outstanding Shares

     Citadel's board of directors has fixed the close of business on September
21, 2001, as the record date for the annual meeting. Only holders of record of
Citadel voting common stock at the close of business on the record date are
entitled to notice of and to vote at the meeting. As of the close of business on
September 21, 2001, there were ______________ shares of Citadel voting common
stock outstanding and entitled to vote, held of record by approximately ____
stockholders, although Citadel has been informed that there are in excess of
_______ beneficial owners.

Vote and Quorum Required

     Holders of Citadel voting common stock are entitled to one vote for each
share held as of the record date. Approval of the proposals to approve the
issuance of Citadel shares in connection with the consolidation and the related
amendment to Citadel's stock option plan and the separate proposal to ratify and
approve the form of Citadel indemnification agreement, each requires the
affirmative vote of a majority of the outstanding Citadel voting common stock
represented and voted at the Citadel annual meeting. The adoption of the
amendment to Citadel's articles of incorporation to change the name of Citadel
requires the affirmative vote of the holders of a majority of the outstanding
shares of Citadel voting common stock. In the election of directors, the
directors receiving a plurality of the votes cast at the annual meeting will be
elected. Attendance at the meeting in person or by proxy of a majority of the
outstanding shares of Citadel voting common stock is required for a quorum.

     James J. Cotter, the Chairman and Chief Executive Officer of Citadel,
together with Craig and Reading, owns approximately 49% of the outstanding
shares of Citadel voting common stock. Under the consolidation agreement, Mr.
Cotter, Craig and Reading are obligated under the consolidation agreement to
vote their shares in favor of the issuance of Citadel shares in connection with
the consolidation and related matters. As a result, they are expected to
determine the outcome of the vote on these matters at the annual meeting.

Abstentions; Broker Non-Votes

     Abstentions will be included in determining the number of shares present at
the annual meeting for the purpose of determining the presence of a quorum for
the transaction of business, but will have no effect on the outcome of voting on
the proposals other than the proposal to adopt the amendment to Citadel's
articles of incorporation.

     If a broker, bank, custodian, nominee or other record holder of Citadel
voting common stock indicates on a proxy that it does not have discretionary
authority to vote certain shares on a particular matter, which is called a
broker non-vote, those shares will not be considered for purposes of determining
the number of shares entitled to vote with respect to a particular proposal on
which the broker has expressly not voted. These shares will be counted for
purposes of determining the presence of a quorum, but will have no effect on the
outcome of voting on the proposals other than the proposal to adopt the
amendment to Citadel's articles of incorporation. As to the proposal to adopt
the amendment to Citadel's articles of incorporation, these broker non-votes
will have the same effect as a vote against adoption of the proposal.

Expenses of Proxy Solicitation

     Citadel, Craig and Reading will share the expenses of soliciting proxies
from the stockholders of all three companies to be voted at the joint meetings
of Citadel, Craig and Reading. Following the original mailing of the proxies and
other soliciting materials, Citadel and its agents also may solicit proxies by
mail, telephone, facsimile or in person. Following the original mailing of the
proxies and other soliciting materials, Citadel will request brokers,
custodians, nominees and other record holders of Citadel voting common stock to
forward copies of the proxy and other soliciting materials to persons for whom
they hold shares of Citadel

                                      32

voting common stock and to request authority for the exercise of proxies. In
such cases, upon the request of the record holders, Citadel will reimburse such
holders for their reasonable expenses.

Proxies

     The Citadel proxy accompanying this joint proxy statement/prospectus is
solicited on behalf of the Citadel board of directors for use at the annual
meeting and any adjournment or postponement thereof. Please complete, date and
sign the accompanying Citadel proxy and promptly return it in the enclosed
envelope or otherwise mail it to Citadel. All properly signed Citadel proxies
that Citadel receives prior to the vote at the annual meeting and that are not
revoked will be voted at the meeting according to the instructions indicated on
the proxies or, if no direction is indicated, will be voted FOR approval of each
of the matters to be voted on as described in this joint proxy
statement/prospectus, including the election as directors of the director-
nominees named in this joint proxy statement/prospectus. You may revoke your
Citadel proxy at any time before it is exercised at the annual meeting by taking
any of the following actions:

          .    Delivering a written notice to the secretary of Citadel by any
means, including facsimile, bearing a date later than the date of the proxy,
stating that the proxy is revoked.

          .    Signing and delivering a proxy relating to the same shares and
bearing a later date prior to the vote at the meeting.

          .    Attending the meeting and voting in person, although attendance
at the meeting will not, by itself, revoke a proxy. Please note, however, that
if your shares are held of record by a broker, bank or other nominee and you
wish to vote at the annual meeting, you must bring to the meeting a letter from
the broker, bank or other nominee confirming your beneficial ownership of the
shares.

     Citadel's board of directors does not know of any matter that is not
referred to in this joint proxy statement/prospectus to be presented for action
at the annual meeting. If any other matters are properly brought before the
meeting, the persons named in the proxies will have discretion to vote on such
matters in accordance with their best judgment.

No Dissenters' or Appraisal Rights

     Under Nevada law, Citadel stockholders have no dissenters' or appraisal
rights in connection with the issuance of Citadel nonvoting common stock
pursuant to the consolidation agreement.

Recommendation of the Board of Directors as to the Consolidation

     The conflicts committee of the Citadel board of directors, consisting
entirely of independent directors, unanimously recommended that the board
authorize and approve the issuance of Citadel nonvoting common stock in the
consolidation. After careful consideration, the board of directors of Citadel
unanimously approved the issuance and determined that the terms of the
consolidation agreement and the consolidation are fair to and in the best
interests of Citadel and the stockholders of Citadel. Accordingly, the Citadel
board of directors recommends that Citadel stockholders vote FOR the proposal to
approve the issuance of Citadel nonvoting common stock in the consolidation.

TO ASSURE THAT YOUR CITADEL SHARES ARE REPRESENTED AT THE JOINT MEETINGS, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED CITADEL PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE JOINT
MEETINGS. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED. RETURNING
YOUR PROXY DOES NOT PREVENT YOU FROM ATTENDING THE JOINT MEETINGS AND VOTING
YOUR CITADEL SHARES IN PERSON. IF YOUR SHARES ARE HELD IN AN ACCOUNT AT A
BROKERAGE FIRM OR BANK, YOU MUST INSTRUCT THEM HOW TO VOTE YOUR SHARES.

                                      33

                           THE CRAIG SPECIAL MEETING

     This joint proxy statement/prospectus is being furnished to you in
connection with the solicitation of Craig proxies by Craig's board of directors
for use at the special meeting of Craig stockholders called in connection with
the proposed consolidation of Craig and Reading with Citadel, and at any
adjournment or postponement thereof.

Date, Time and Place of Craig's Special Meeting

     The Craig special meeting will be held jointly with the annual meeting of
stockholders of Citadel and special meeting of stockholders of Reading. The
date, time and place of the joint meetings are as follows:

                                October 24, 2001
                            10:00 a.m., Pacific time

                            ________________________
                            ________________________
                            ____________, California

Purpose of the Special Meeting

     The special meeting of Craig stockholders is being held for the sole
purpose of considering and voting upon the proposal to approve the consolidation
agreement, dated as of August 17, 2001, among Craig, Citadel and Reading, and to
approve Craig's merger with a wholly owned subsidiary of Citadel. Under Craig's
bylaws, no matter that is not referred to in this joint proxy
statement/prospectus can be presented for action at the special meeting.

     The consolidation agreement is included as ANNEX A to this joint proxy
statement/prospectus. If the consolidation agreement is approved, among other
things, upon completion of the consolidation each outstanding share of Craig
common stock and common preference stock will be automatically converted into
the right to receive 1.17 shares of Citadel nonvoting common stock.

Record Date and Outstanding Shares

     Craig's board of directors has fixed the close of business on September 21,
2001, as the record date for the special meeting. Only holders of record of
Craig common stock and common preference stock at the close of business on the
record date are entitled to notice of and to vote at the meeting. As of the
close of business on September 21, 2001, there were ______________ shares of
Craig common stock and ________ shares of common preference stock outstanding
and entitled to vote, held of record by approximately ____ stockholders and ____
stockholders, respectively.

Vote and Quorum Required

     Holders of Craig's common stock are entitled to 30 votes and holders of
Craig common preference stock are entitled to one vote for each share held as of
the record date. Approval of the proposal to approve the consolidation agreement
and the Craig merger requires the affirmative vote of the holders of a majority
of the total voting power of the outstanding common stock and common preference
stock of Craig, voting as a single class. Attendance at the meeting in person or
by proxy of a majority of the outstanding voting power of Craig is required for
a quorum.

     James J. Cotter, the Chairman of Craig, owns or is entitled to vote shares
of Craig common stock and common preference stock representing a majority of the
total voting power of the outstanding common stock and common preference stock
of Craig. Under the consolidation agreement, Mr. Cotter is obligated to vote
these shares in favor of the consolidation agreement and the Craig merger, so
this proposal is expected to be approved at the special meeting without regard
to the vote of the other stockholders. As discussed elsewhere

                                      34

in this joint proxy statement/prospectus, the stockholders of Citadel and of
Reading also are expected to approve the consolidation agreement and related
proposals at the joint meetings.

Abstentions; Broker Non-Votes

     Abstentions will be included in determining the number of shares present
and voting at the meeting for the purpose of determining the presence of a
quorum for the transaction of business and will have the same effect as votes
against the proposal to approve the consolidation agreement and the Craig
merger. If a broker, bank, custodian, nominee or other record holder of Craig
common stock or common preference stock indicates on a proxy that it does not
have discretionary authority to vote certain shares on a particular matter,
which is called a broker non-vote, those shares also will be counted for
purposes of determining the presence of a quorum and will have the same effect
as a vote against the proposal to approve the consolidation agreement and the
Craig merger.

Expenses of Proxy Solicitation

     Craig, Citadel and Reading will share the expenses of soliciting proxies
from the stockholders of all three companies to be voted at the joint meetings
of Citadel, Craig and Reading. Following the original mailing of the proxies and
other soliciting materials, Craig and its agents also may solicit proxies by
mail, telephone, facsimile or in person. Following the original mailing of the
proxies and other soliciting materials, Craig will request brokers, custodians,
nominees and other record holders of Craig common stock and common preference
stock to forward copies of the proxy and other soliciting materials to persons
for whom they hold shares of Craig common stock or common preference stock and
to request authority for the exercise of proxies. In such cases, upon the
request of the record holders, Craig will reimburse such holders for their
reasonable expenses.

Proxies

     The Craig proxy accompanying this joint proxy statement/prospectus is
solicited on behalf of the Craig board of directors for use at the special
meeting and any postponement or adjournment thereof. Please complete, date and
sign the accompanying Craig proxy and promptly return it in the enclosed
envelope or otherwise mail it to Craig. All properly signed Craig proxies that
Craig receives prior to the vote at the meeting and that are not revoked will be
voted at the meeting according to the instructions indicated on the proxies or,
if no direction is indicated, will be voted FOR approval of the consolidation
agreement and the Craig merger. You may revoke your proxy at any time before it
is exercised at the meeting by taking any of the following actions:

          .    Delivering a written notice to the secretary of Craig by any
means, including facsimile, bearing a date later than the date of the proxy,
stating that the proxy is revoked.

          .    Signing and delivering a proxy relating to the same shares and
bearing a later date prior to the vote at the meeting.

          .    Attending the meeting and voting in person, although attendance
at the meeting will not, by itself, revoke a proxy. Please note, however, that
if your shares are held of record by a broker, bank or other nominee and you
wish to vote at the meeting, you must bring to the meeting a letter from the
broker, bank or other nominee confirming your beneficial ownership of the
shares.

                                      35

You should not send in any stock certificates with your Craig proxy. A
transmittal form with instructions for the surrender of stock certificates for
shares of Citadel will be mailed to you as soon as practicable after completion
of the consolidation.

No Dissenters' Rights

     Under Nevada law, there are no dissenters' or appraisal rights in
connection with the consolidation or the Craig merger.

Recommendation of the Board of Directors

     The conflicts committee of the Craig board of directors, consisting
entirely of independent directors, unanimously recommended that the board
authorize and approve the consolidation.  The board of directors of Craig
unanimously determined that the terms of the consolidation agreement and the
consolidation are fair to and in the best interests of Craig and the
stockholders of Craig.  Accordingly, the Craig board of directors recommends
that Craig stockholders vote FOR the proposal to approve the consolidation
agreement and the Craig merger.

TO ASSURE THAT YOUR CRAIG SHARES ARE REPRESENTED AT THE JOINT MEETINGS, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED CRAIG PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE JOINT
MEETINGS. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED. RETURNING
YOUR PROXY DOES NOT PREVENT YOU FROM ATTENDING THE JOINT MEETINGS AND VOTING
YOUR CRAIG SHARES IN PERSON. IF YOUR SHARES ARE HELD IN AN ACCOUNT AT A
BROKERAGE FIRM OR BANK, YOU MUST INSTRUCT THEM HOW TO VOTE YOUR SHARES.

IF YOU DO NOT VOTE OR DO NOT INSTRUCT YOUR BROKER OR BANK HOW TO VOTE, IT WILL
HAVE THE SAME EFFECT AS VOTING AGAINST APPROVAL OF THE CONSOLIDATION.

                                      36

                          THE READING SPECIAL MEETING

     This joint proxy statement/prospectus is being furnished to you in
connection with the solicitation of proxies by Reading's board of directors for
use at the special meeting of Reading stockholders called in connection with the
proposed consolidation of Reading and Craig with Citadel, and at any
postponement or adjournment thereof.

Date, Time and Place of Reading's Special Meeting

     The Reading special meeting will be held jointly with the annual meeting of
stockholders of Citadel and special meeting of stockholders of Craig. The date,
time and place of the joint meetings are as follows:

                                October 24, 2001
                            10:00 a.m., Pacific time

                             _______________________
                             _______________________
                             ___________, California

Purpose of the Special Meeting

     The special meeting of Reading stockholders is being held for the sole
purpose of considering and voting upon the proposal to approve the consolidation
agreement, dated as of August 17, 2001, among Reading, Citadel and Craig, and to
approve Reading's merger with a wholly owned subsidiary of Citadel. Under
Reading's bylaws, no matter that is not referred to in this joint proxy
statement/prospectus can be presented for action at the special meeting.

     The consolidation agreement is included as ANNEX A to this joint proxy
statement/prospectus. If the consolidation agreement is approved, among other
things, upon completion of the consolidation each outstanding share of Reading
common stock will be automatically converted into the right to receive 1.25
shares of Citadel nonvoting common stock. By approving the consolidation
agreement, Reading common stockholders also will be deemed to have approved a
change in Reading's name to "Reading Holdings, Inc."

Record Date and Outstanding Shares

     Reading's board of directors has fixed the close of business on September
21, 2001, as the record date for the special meeting. Only holders of record of
Reading common stock and preferred stock at the close of business on the record
date are entitled to notice of and to vote at the meeting. As of the close of
business on September 21, 2001, there were ______________ shares of Reading
common stock outstanding and entitled to vote, held of record by approximately
____ stockholders, although Reading has been informed that there are in excess
of _____ beneficial owners. As of the close of business on September 21, 2001,
there were 70,000 shares of Series A Preferred Stock and 550,000 shares of
Series B Preferred Stock outstanding, which shares were held by Citadel and
Craig, respectively.

Vote and Quorum Required

     Holders of Reading common stock are entitled to one vote for each share
held as of the record date. Holders of Reading preferred stock are entitled to
9.64 votes per share. Approval of the proposal to approve the consolidation
agreement and the Reading merger requires the affirmative vote of the holders of
a majority of the total voting power of the outstanding common stock and
preferred stock of Reading, voting as a single class. Attendance at the meeting
in person or by proxy of a majority of the outstanding voting power of Reading
common stock and preferred stock is required for a quorum.

                                      37

     Craig owns a majority of the total voting power of the outstanding Reading
common stock and preferred stock. Under the consolidation agreement, Craig is
obligated to vote these shares in favor of the consolidation agreement and the
Reading merger, so this proposal is expected to be approved at the special
meeting without regard to the vote of the other stockholders. As discussed
elsewhere in this joint proxy statement/prospectus, the stockholders of Citadel
and of Craig also are expected to approve the consolidation agreement and
related matters at the joint meetings.

Abstentions; Broker Non-Votes

     Abstentions will be included in determining the number of shares present
and voting at the meeting for the purpose of determining the presence of a
quorum for the transaction of business and will have the same effect as votes
against the proposal to approve the consolidation agreement and the Reading
merger. If a broker, bank, custodian, nominee or other record holder of Reading
common stock indicates on a proxy that it does not have discretionary authority
to vote certain shares on a particular matter, which is called a broker non-
vote, those shares also will be counted for purposes of determining the presence
of a quorum and will have the same effect as a vote against the proposal to
approve the consolidation agreement and the Craig merger.

Expenses of Proxy Solicitation

     Reading, Citadel and Craig will share the expenses of soliciting proxies
from the stockholders of all three companies to be voted at the joint meetings
of Citadel, Craig and Reading. Following the original mailing of the proxies and
other soliciting materials, Reading and its agents also may solicit proxies by
mail, telephone, facsimile or in person. Following the original mailing of the
proxies and other soliciting materials, Reading will request brokers,
custodians, nominees and other record holders of Reading common stock to forward
copies of the proxy and other soliciting materials to persons for whom they hold
shares of Reading common stock and to request authority for the exercise of
proxies. In such cases, upon the request of the record holders, Reading will
reimburse such holders for their reasonable expenses.

Proxies

     The Reading proxy accompanying this joint proxy statement/prospectus is
solicited on behalf of the Reading board of directors for use at the special
meeting and at any adjournment or postponement thereof. Please complete, date
and sign the accompanying Reading proxy and promptly return it in the enclosed
envelope or otherwise mail it to Reading. All properly signed Reading proxies
that Reading receives prior to the vote at the meeting and that are not revoked
will be voted at the meeting according to the instructions indicated on the
proxies or, if no direction is indicated, will be voted FOR approval of the
consolidation agreement and the Reading merger. You may revoke your proxy at any
time before it is exercised at the meeting by taking any of the following
actions:

          .    Delivering a written notice to the secretary of Reading by any
means, including facsimile, bearing a date later than the date of the proxy,
stating that the proxy is revoked.

          .    Signing and delivering a proxy relating to the same shares and
bearing a later date prior to the vote at the meeting.

          .    Attending the meeting and voting in person, although attendance
at the meeting will not, by itself, revoke a proxy. Please note, however, that
if your shares are held of record by a broker, bank or other nominee and you
wish to vote at the meeting, you must bring to the meeting a letter from the
broker, bank or other nominee confirming your beneficial ownership of the
shares.

                                      38

You should not send in any stock certificates with your Reading proxy. A
transmittal form with instructions for the surrender of stock certificates for
shares of Citadel will be mailed to you as soon as practicable after completion
of the consolidation.

No Dissenters' Rights

     Under Nevada law, there are no dissenters' or appraisal rights in
connection with the consolidation or the Reading merger.

Recommendation of the Board of Directors

     The conflicts committee of the Reading board of directors, consisting of an
independent director, recommended that the board approve the conversion ratio of
1.25 shares of Citadel nonvoting common stock for each share of Reading common
stock provided for in the consolidation agreement. The board of directors of
Reading unanimously determined that the conversion ratio and other terms of the
consolidation are fair to and in the best interests of Reading and the
stockholders of Reading. Accordingly, the Reading board of directors recommends
that Reading stockholders vote FOR the proposal to approve the consolidation
agreement and the Reading merger.

TO ASSURE THAT YOUR READING SHARES ARE REPRESENTED AT THE JOINT MEETINGS, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED READING PROXY AND MAIL IT PROMPTLY IN THE
POSTAGE-PAID ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE JOINT
MEETINGS. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED. RETURNING
YOUR PROXY DOES NOT PREVENT YOU FROM ATTENDING THE JOINT MEETINGS AND VOTING
YOUR READING SHARES IN PERSON. IF YOUR SHARES ARE HELD IN AN ACCOUNT AT A
BROKERAGE FIRM OR BANK, YOU MUST INSTRUCT THEM HOW TO VOTE YOUR READING SHARES.

IF YOU DO NOT VOTE OR DO NOT INSTRUCT YOUR BROKER OR BANK HOW TO VOTE, IT WILL
HAVE THE SAME EFFECT AS VOTING AGAINST APPROVAL OF THE CONSOLIDATION.

                                      39

                               THE CONSOLIDATION

     This section of the joint proxy statement/prospectus describes the proposed
consolidation. While we believe that the description covers the material terms
of the consolidation and related transactions, this summary may not contain all
of the information that is important to you. You should carefully read this
entire joint proxy statement/prospectus and the other documents we refer to for
a more complete understanding of the consolidation.

     Important business and financial information about Citadel, Craig and
Reading is contained in the annual reports and quarterly reports of Citadel,
Craig and Reading being furnished with this joint proxy statement/prospectus or
in other documents incorporated in this joint proxy statement/prospectus by
reference. You may obtain any documents incorporated by reference in this joint
proxy statement/prospectus that are not being delivered with this joint proxy
statement/prospectus, without charge, by following the instructions in the
section entitled "DOCUMENTS INCORPORATED BY REFERENCE" that begins on page ___
of this joint proxy statement/prospectus.

Background of the Consolidation

     Citadel, Craig and Reading have substantially overlapping management and
ownership. While the three companies operate essentially as a group of related
companies, they are separate and distinct companies and, as such, have separate
SEC reporting obligations, file separate tax returns with the IRS, and have
their own boards of directors, including one or more independent directors. We
have attempted to operate efficiently given this three-company structure, by
among other things, consolidating the general and administrative functions of
the three companies at the Craig level and in common offices located in Los
Angeles. However, the three-company structure necessarily results in certain
inefficiencies and increased costs. In our view, among the detriments of the
current structure are the following:

          .    The need for and cost of three separate outside audits.

          .    The need for and cost of filing separate SEC reports and separate
tax returns for each of the three companies.

          .    The need for and cost of maintaining three separate boards of
directors, each with at least one or more separate independent directors, and of
holding separate board meetings and annual stockholder meetings for each of the
three companies.

          .    Inefficiencies resulting from the need to maintain separate books
and records for three public companies, and to institute and maintain procedural
safeguards to protect the interests of the separate minority interests in each
of the three companies.

          .    The relative illiquidity of the common equity of the three
companies, when compared to the liquidity that would be offered if all of the
common equity of the three companies were traded as a single common security.

          .    Difficulties in explaining to the capital markets the companies'
business plan and story on a company-by-company basis, as opposed to a
consolidated basis, and the interrelations between the ownership, businesses and
management of the three companies.

          .    The difficulties of matching the available assets with the
available opportunities of the three companies on a company-by-company basis, as
opposed to a consolidated basis.

                                      40

     No doubt recognizing these difficulties in operating in a three-company
structure, our stockholders increasingly have expressed the view that it would
be in the best interests of the three companies and their respective
stockholders to combine the companies into a single public company. Also, as the
stock prices of the Craig common stock, Craig common preference stock and
Reading common stock began to decline, there was a substantial risk that one or
more of the companies' securities would be delisted from trading on the stock
exchanges on which they trade.

     Beginning last year, we began a comprehensive consideration of various
means to combine the assets and operations of two or more of the three companies
into one publicly traded company. We considered a variety of transaction
structures, but focused primarily on the following:

          .    A merger of equals consolidation, in which all of the current
holders of the common equity of the three companies would end up owning common
stock of a single publicly traded parent company.

          .    A merger of equals transaction limited to only two of the three
companies and which would result in two, rather than the current three, public
companies.

          .    The purchase of the minority interests in one or more of the
companies for cash, for notes, for preferred stock, and/or for some combination
of cash, notes and/or preferred stock.

          .    The merger or combination of one or more of the companies with
another public company - National Auto Credit, Inc.

          .    In developing the proposed consolidation, we considered, among
other things:

          .    The benefits and detriments to public stockholders of the various
possible transactions.

          .    The expressed interest of our controlling stockholder, Mr. James
J. Cotter, that he and his family retain a significant control interest in the
combined company.

          .    The capital needs and capital resources of the three companies,
both on an individual and on a combined basis.

          .    The respective business opportunities available to the three
companies, both on an individual and on a combined basis.

          .    The tax attributes and tax assets of the three companies, both on
an individual and on a consolidated basis.

          .    The respective transaction costs of the various alternatives.

     In refining this analysis, we determined that we should focus on developing
a transaction which satisfied each of the following guidelines:

          .    No stockholder should be involuntarily cashed out.

          .    Given the capital and liquidity needs of the three companies, no
leverage, either in the form of debt or preferred stock, should be taken on to
bring about the transaction.

          .    All three companies should be combined under a single public
company.

          .    The current control position of Mr. Cotter should not be
adversely affected, without his approval.

                                      41

          .    All stockholders should, to the extent possible, receive the same
consideration in the transaction.

          .    The existing tax attributes and tax benefits of the three
companies should, to the extent possible, be preserved.

     At the meetings of the boards of directors of Citadel, Craig and Reading
held on March 15, 2001, we presented to the boards a proposal for a merger of
equals consolidation transaction, in which Craig and Reading would be merged
with subsidiaries of Citadel and in which all of the holders of the common
equity of Craig and Reading would receive the same form of consideration -
Citadel nonvoting common stock - in exchange for their Craig common stock, Craig
common preference stock and Reading common stock. We noted, among other things,
that such a consolidation would:

          .    Simplify the day-to-day administration of the three companies,
thereby reducing general and administrative expense.

          .    Remove, from the point of view of the public stockholders of the
combined company, the potential for conflicts-of-interest as between the three
companies and the need for board involvement in transactions which would, but
for the conflict-of-interest element, be immaterial or otherwise in the ordinary
course of business of the three companies.

          .    Result in a single combined company that should be easier to
understand from the point of view of outside investors.

          .    Result in a publicly held security with a greater public float
and, hopefully, greater liquidity than the various public securities of the
individual companies.

     We estimated that the fully phased-in annual cost savings will be at least
$1 million. We also discussed with the directors the benefits that could
potentially be achieved by bringing together the combined capital resources and
the combined opportunities of the three companies together under a single public
entity.

     Following discussion of the proposed transaction, the board of directors of
each of Citadel, Craig and Reading determined that such a merger of equals
transaction would be in the best interests of their respective companies and
stockholders, so long as the allocation of ownership of the combined company
among the stockholders of the three companies was fair. In light of the
overlapping management and membership of the boards of directors of the three
companies, each of the boards of directors delegated the proposal to their
respective conflicts committees for further review and action. The board of
directors of Citadel and Craig each unanimously resolved that our proposal for
the consolidation of Citadel, Craig and Reading be delegated to their respective
conflicts committees to review and take such action as their respective
conflicts committees determined to be appropriate with respect to the
consolidation proposal and to make a recommendation to the full board of
directors as to an appropriate structure for and conversion ratio for the
transaction, and that their respective conflicts committees be authorized to
retain such professional advisors as they may, in their respective discretion,
require to carry out such delegated authority, including, without limitation,
the retention of attorneys, appraisers and financial advisors. The board of
directors of Reading unanimously resolved that our proposal for the
consolidation of Citadel, Craig and Reading be delegated to its conflicts
committee to review and take such action as it determined to be appropriate with
respect to the consolidation proposal and to make a recommendation to the full
board of directors as to an appropriate conversion ratio for the transaction,
and that the conflicts committee be authorized to retain such professional
advisors as it may, in its discretion, require to carry out such delegated
authority, including attorneys, appraisers and financial advisors.

     We did not propose, and accordingly no consideration was given by the
directors of the three companies, to the possible sale of any one or more of the
companies, or a sale of all or substantially all of the assets of any one or
more of the companies, or of any other type transaction which would involve a
change of control of any of the companies. The consolidation transaction
proposed by us, and delegated to the conflicts

                                      42

committees for further review and consideration, was as a merger of equals in
which all common stockholders of Citadel, Craig and Reading would continue as
stockholders of the consolidated company and share in the benefits and synergies
and risks of such a consolidation.

     On March 20, 2001, the three companies filed a joint press release
disclosing the action of their respective boards of directors with respect to
our consolidation proposal. At the time of the delegation, the conflicts
committees were comprised of the following independent directors: Craig, Messrs.
William Gould (Chairman) and Gerard Laheney; Citadel, Messrs. William Soady
(Chairman) and Alfred Villasenor; and Reading, Messrs. Kenneth McCormick
(Chairman) and John Hunter. Mr. Hunter subsequently resigned from the Board of
Directors of Reading and, consequently, from the Reading conflicts committee due
to his decision to accept a consulting position with a competitor of Reading.
Accordingly, the Reading conflict committee proceeded as a committee of one.

     During the week following the delegation, the conflicts committees each
retained separate legal counsel. The Citadel conflicts committee retained Kummer
Kaempfer Bonner & Renshaw, a law firm that has represented the Citadel conflicts
committee in prior matters. The Craig conflicts committee retained Troy & Gould
Professional Corporation, which has represented Craig from time to time in a
variety of matters. The Reading conflicts committee retained Jones Vargas, a law
firm not previously retained by Reading, the Reading conflicts committee, Craig,
Citadel or any of their respective affiliates, but a firm experienced in
representing the boards of directors of companies organized, like Reading, under
the laws of Nevada.

     During this time period, Mr. S. Craig Tompkins worked with the Chairmen of
the conflicts committees and with counsel for the various committees to identify
possible financial advisors to assist the conflicts committees and to develop
the parameters of the work to be done and the advice to be given by any such
financial advisor or advisors. Among the matters discussed with the conflict
committees and their respective counsel were the benefits and detriments of
selecting a single financial advisor to provide expert advice as to the value of
the three companies and to recommend conversion ratios which would be fair to
the public stockholders of the three companies. During these discussions, it was
noted that:

          .    The members of the conflicts committees were already familiar
with the assets and businesses of the three companies, due to the overlapping
ownership of the three companies.

          .    Since the transaction being considered was a merger of equals and
not a sale, the focus should be upon achieving a fair allocation of the
ownership of the consolidated company, rather than on the negotiation of a
possible sale or cash-out price. Accordingly, what the members of the conflicts
committee needed particularly was advice as to the fair allocation of ownership
of the consolidated company among the stockholders of the three companies.

          .    To retain three financial advisors would likely be prohibitably
expensive, given the limited resources of the three companies.

          .    Each conflicts committee would have the right to obtain
additional expert advice from other advisors if a single financial advisor were
retained on a joint basis and if any conflict committee needed or wanted
separate advice.

     Ultimately, it was determined by the members of the conflict committees
that they would engage a single financial advisor to represent the three
conflict committees. Thereafter, requests for proposal were sent to ten firms,
resulting in nine written engagement proposals. Mr. Tompkins interviewed, in
person or by telephone, each of the firms submitting proposals. Mr. Matyczynski
participated in a number of these interviews, but was unable to participate in
all of the interviews due to schedule conflicts. None of the potential advisors
interviewed expressed any material concern about the joint nature of the
engagement, and each advisor indicated during the interviews that it was
comfortable with proceeding on the basis of such a joint representation and was
prepared to proceed on that basis.

                                      43

     On April 23, 2001, the Chairmen of the conflicts committees met with
Messrs. Tompkins and Matyczynski to review the proposals received, and to
discuss again the benefits and detriments of engaging a single financial advisor
to jointly represent the three conflict committees. Messrs. Tompkins and
Matyczynski gave their views as to the strengths and weaknesses of the various
proposals and recommended, from management's point of view, that a single
advisor be retained to represent the committees on a joint basis. Following
discussion, and a review of the various proposals, it was determined that
Marshall & Stevens, Incorporated should be invited to make a personal
presentation to the full membership of the three conflict committees and their
respective counsel, for the position of joint financial advisor to the three
conflict committees.

     On May 3, 2001, the full membership of the three conflicts committees met,
together with their counsel and Messrs. Tompkins and Matyczynski to receive the
Marshall & Stevens presentation. During this presentation, representatives of
Marshall & Stevens discussed their background and experience, the work they
would do in order to be in a position to advise the conflicts committees with
respect to the matters set out in the request for proposals, and the procedures
and methodologies that they would apply, and responded to questions. Marshall &
Stevens specifically advised the members of the conflicts committees that it was
appropriate for Marshall & Stevens to be engaged jointly by the three conflicts
committees, and that this would not affect the work that they would be doing or
the advice that they would be giving. Prior to and following the presentation,
the conflicts committees met both jointly and separately, and following
discussion and consultation with counsel, determined to jointly engage Marshall
& Stevens. For a further discussion of the terms and scope of the engagement,
see "Arrangements with Financial Advisor" below.

     On June 21, 2001, the full membership of the three conflicts committees
met, together with their counsel and Messrs. Tompkins and Matyczynski, to
receive the report and advice of Marshall & Stevens. At this meeting, Marshall &
Stevens reviewed the work they had done and the procedures and methodologies
that they had applied in preparing their advice, responded to questions, and
advised the members of the conflicts committees that, in their preliminary
opinion:

          .  The consolidation transaction was in the best interests of the
three companies and their stockholders.

          .  The holders of Craig and Reading common equity securities should
all receive the same form of consideration in the consolidation transaction.

          .  The holders of Craig common stock and Craig common preference stock
should receive the same per share value in the consolidation transaction.

          .  Conversion ratios of 1.16 shares of Citadel nonvoting common stock
for each share of Craig common stock and Craig common preference stock and 1.27
shares of Citadel nonvoting common stock for each share of Reading common stock
would be fair to the public stockholders of each of the three companies from a
financial point of view.

     Following the presentation, the conflicts committees met with counsel and
directed certain additional requests for information and advice to Marshall &
Stevens and to management, to which Marshall & Stevens and management responded,
and met separately with Marshall & Stevens and members of management. Also, the
Chairmen of the conflicts committees had various discussions among themselves.

     During the week of July 12, 2001, Marshall & Stevens updated their
preliminary analysis to July 11, 2001, and issued a revised report. In this
report, Marshall & Stevens concluded that, updating their information, they now
recommended conversion ratios of 1.17 shares of Citadel nonvoting common stock
for each share of Craig common stock and Craig common preference stock and 1.25
shares of Citadel nonvoting common stock for each share of Reading common stock.

                                      44

     On July 17, 2001, the boards of directors of Craig and Reading each met,
and on July 18, 2001, the board of directors of Citadel met, to consider the
reports of management, their respective conflicts committees and Marshall &
Stevens with respect to the proposed consolidation transaction and to consider a
proposed form of agreement in principle, prepared by Mr. Tompkins in
consultation with counsel for the respective conflict committees. At its meeting
on July 17, beginning at approximately 10:00 a.m., the Craig board of directors
was advised by management that it recommended a merger of equals transaction
structured as mergers of newly-formed subsidiaries of Citadel with Craig and
Reading. Messrs. Tompkins and Matyczynski reviewed the benefits and detriments
of the transaction with the board of directors, and Mr. Tompkins reviewed with
the directors on a section-by-section basis the terms of the proposed agreement
in principle. Mr. Tompkins further advised the directors that there had not
been, insofar as management was aware, any material change in circumstances with
respect to any of the three companies, or their subsidiaries, which had not been
previously communicated to Marshall & Stevens, that management was not proposing
any sale or change of control transaction, and that no offers or expressions of
interest had been solicited or received by management from any third party
concerning any extraordinary transaction (such as a merger, or acquisition of
all or any substantial portion of the assets of any one or more of the
companies). Mr. Tompkins also reviewed with the directors the letter that had
been received from the New York Stock Exchange regarding the failure of Craig to
satisfy the New York Stock Exchange criteria for the continued listing on that
exchange of the Craig common stock and Craig common preference stock, and
updated the directors on his conversations with the New York Stock Exchange on
this issue. Mr. Tompkins told the directors that he had reviewed with the New
York Stock Exchange the proposed consolidation transaction and that he had been
orally advised by representatives of the New York Stock Exchange that the
Exchange would not take action to delist Craig's common stock and common
preference stock while that transaction was pending, assuming that the
transaction moved forward expeditiously.

     Following the presentation by management, the Craig conflicts committee
made its recommendation to the Craig board of directors. Relying on the advice
of Marshall & Stevens, the Craig conflicts committee recommended that the
consolidation transaction be structured as a merger of equals, with Citadel
being the surviving entity, as set forth in the proposed agreement in principle,
that the holders of Craig common stock and common preference stock receive the
same value per share in the consolidation transaction, and that the conversion
ratios be 1.17 shares of Citadel nonvoting common stock for each share of Craig
common stock and Craig common preference stock and 1.25 shares of Citadel
nonvoting common stock for each share of Reading common stock. Following the
recommendation of the Craig conflicts committee, Marshall & Stevens presented
its report to the board of directors. Marshall & Stevens orally advised the
board of directors that, in its opinion, the consolidation transaction, as set
forth in the agreement in principle, and the conversion ratios described by the
conflicts committee were fair to the Craig public stockholders from a financial
point of view.

     Mr. Cotter also advised the directors that he was in favor of the
consolidation transaction as described in the agreement in principle, that he
believed that the consolidation transaction was in the best interests of the
three companies and their respective stockholders and that he was prepared to
execute the agreement in principle and to commit to vote the Craig common stock
and the Craig common preference stock under his control in favor of the
consolidation and to vote the Citadel voting common stock under his control in
favor of the issuance of Citadel nonvoting common stock in connection with the
consolidation.

     There followed a discussion between the directors during which various
questions were asked of management and of Marshall & Stevens. Following this
discussion, the Craig board of directors voted unanimously to enter into the
agreement in principle and authorized management to take all steps reasonably
necessary or convenient to consummate the consolidation as contemplated by the
agreement in principle, provided that Marshall & Stevens confirm in writing
their oral advice to the board regarding the fairness of the consolidation from
a financial point of view and that the execution and delivery of the definitive
merger agreement be subject to the review and approval of the Craig board of
directors.

                                      45

     The Reading board meeting began at approximately 3:00 p.m. on July 17,
2001. Immediately preceding the board meeting, Mr. McCormick and counsel for the
Reading conflicts committee met with Messrs. Cotter and Tompkins to review the
transaction as outlined in the agreement in principle and to gather further
information as to the direction of and the strategic opportunities available to
Reading. Messrs. Cotter and Tompkins advised the Reading conflicts committee
that management was not considering any transaction that would involve a change
of control of Reading and that the only transaction that currently had the
support of management and Mr. Cotter was a consolidation transaction along the
lines set forth in the agreement in principle. Mr. Cotter advised Mr. McCormick
that, as the controlling stockholder of Craig, he would not support a
transaction which would use the limited resources of the group to cash-out
public stockholders or which would be characterized as a "purchase" transaction
as opposed to a "merger of equals transaction." Messrs. Cotter and Tompkins also
reviewed with Mr. McCormick the business reasons which, in their view, supported
such a consolidation of the three companies under a single public entity. These
reasons were essentially the same reasons that we explained to the boards of
directors of the three companies at their March meetings as supporting our
decision to recommend the consolidation of the three companies.

     During the Reading Board Meeting, management, Marshall & Stevens and Mr.
Cotter made essentially the same presentations as they had made to the Craig
directors at the Craig board of directors meeting.  Mr. McCormick delivered the
report of the Reading conflicts committee and, based upon the advice of Marshall
& Stevens and the advice of Mr. Cotter that he would not support a sale
transaction or a transaction which liquidated Reading or cashed out any Reading
stockholders, recommended to the board of directors a conversion ratio of 1.25
shares of Citadel nonvoting common stock for each share of Reading common stock.
Following discussion, during which the directors asked various questions of
management, Mr. Cotter and Marshall & Stevens, the Reading board of directors
voted unanimously to enter into the agreement in principle and authorized
management to take all steps reasonably necessary or convenient to consummate
the consolidation as contemplated by the agreement in principle, provided, that
Marshall & Stevens confirm in writing their oral advice to the board regarding
the fairness of the consolidation from a financial point of view and that the
execution and delivery of the definitive consolidation agreement be subject to
the review and approval of the Reading board of directors.

     The following day, on July 18, 2001, at approximately 2:00 P.M., the
Citadel board of directors met and considered the consolidation transaction. At
this meeting, management, Mr. Cotter and Marshall & Stevens made essentially the
same presentations as they had the previous day to the boards of directors of
Craig and Reading. Mr. William Soady presented the report of the Citadel
conflicts committee and recommended to the full Board of Directors the structure
set forth in the agreement in principle and conversion ratios of 1.17 shares of
Citadel nonvoting common stock for each share of Craig common stock and Craig
common preference stock and 1.25 shares of Citadel nonvoting common stock for
each share of Reading common stock. Following discussion, members of management,
including directors Cotter and Tompkins, were excused from the meeting so that
the remaining directors could ask various questions of Marshall & Stevens and
counsel. Following these additional questions, members of management were asked
to rejoin the meeting. Thereafter during which the directors asked various
questions of management, Mr. Cotter and Marshall & Stevens, the Citadel board of
directors voted unanimously to enter into the agreement in principle and
authorized management to take all steps reasonably necessary or convenient to
consummate the consolidation as contemplated by the agreement in principle,
provided, that Marshall & Stevens confirm in writing their oral advice to the
board regarding the fairness of the consolidation from a financial point of view
and that the execution and delivery of the definitive consolidation agreement be
subject to the review and approval of the Citadel board of directors.

     That day, the agreement in principle was executed and delivered by Citadel,
Craig, Reading and Mr. Cotter. A press release announcing the execution and
delivery of the agreement in principle was released after the close of the
market, for release before the opening of the market on the following day. A
current report on Form 8-K was also filed that day by each of the three
companies.

                                      46

     Following the execution and delivery of the agreement in principle,
management worked with counsel for the conflicts committees of the three
companies to negotiate and prepare a definitive consolidation agreement.
Management also worked with the tax advisors for the three companies to develop
a definitive tax structure for the consolidation and with counsel for the
conflicts committees and Marshall & Stevens to develop a recommendation as to
the conversion ratios to be used in connection with the assumption by Citadel of
the outstanding stock options of Craig and Reading. Ultimately, management
recommended to the boards of directors of the three companies that:

     .  The transactions be structured as transactions in which gain or loss
would be currently recognized by stockholders for federal income tax purposes.

     .  The same conversion ratios adopted for purposes of the conversion of
Craig stock and Reading stock into Citadel nonvoting stock be used for purposes
of the conversion of Craig stock options and Reading stock options into Citadel
stock options.

     .  The same conversion ratios be used regardless of whether the holders of
Craig and Reading stock options elect to have their options converted into
options to acquire Citadel voting common stock or nonvoting common stock in the
consolidation.

     The boards of directors of the three companies met on August 16, 2001 to
consider the definitive consolidation agreement and to consider management's
recommendations with respect to tax structure and the treatment of outstanding
Craig and Reading stock options.

     The Citadel board meeting began at approximately 1:00 P.M. Attending the
meeting were all directors other than Mr. Loeffler. Attending the meeting at the
invitation of the Citadel board were Mr. Matyczynski, a representative of
Marshall & Stevens and representatives of Kummer Kaempfer Bonner & Renshaw,
counsel for the Citadel conflicts committee. During the meeting, Mr. Tompkins
reviewed with the directors the terms and structure of the proposed
consolidation agreement and management's recommendations with respect to the tax
structure and the treatment of outstanding stock options. Marshall & Stevens
advised that its recommendation as to the treatment of outstanding stock options
was the same as that made by management and rendered its opinion that the
consolidation was in the best interests of the companies and their respective
stockholders and that the conversion ratios provided for in the consolidation
agreement were fair to the public stockholders of each of the three companies
from a financial point of view. Kummer Kaempfer Bonner & Renshaw responded to
questions of the directors concerning the proposed consolidation agreement, the
filings that would need to be made and the steps that would have to be taken in
order to consummate the transactions contemplated by the consolidation agreement
and the treatment of the outstanding stock options. Mr. Cotter advised the
directors that he continued to favor the consolidation and that he was prepared
to execute and deliver the consolidation agreement.

     Unlike other beneficial owners of Craig common stock, Craig common
preference stock and Reading common stock, the holders of holding options to
acquire Craig common stock, Craig common preference stock and Reading common
stock, all of whom are directors or officers of one or more of the companies,
will have the right to elect to have their Craig and Reading stock options
converted into options to acquire either Citadel voting or Citadel nonvoting
common stock. The conversion ratio is the same (1.17 shares of Citadel stock for
each share of Craig stock and 1.25 shares of Citadel stock for each share of
Reading stock), whether the holder elects to receive options to acquire Citadel
voting or Citadel nonvoting common stock.

     The decision to give option holders the right to elect to have their
options converted into options to acquire either Citadel voting common stock or
Citadel nonvoting common stock was made:

     .   To mitigate to some extent the loss of voting power to be realized by
Mr. Cotter as a consequence of the consolidation.

                                      47

     .   To reflect the fact that the options to acquire voting stock in Craig
or Reading were granted as a part of the original employment relationships
between Craig or Reading and the option holders.

     .   With the expectation that most of the officers and directors (other
than, perhaps, Mr. Cotter) would elect to convert their options into options to
acquire Citadel nonvoting common stock given the limited practical value of the
voting rights attached to the Citadel voting common stock as compared to the
value represented by the anticipated greater liquidity that should be enjoyed by
the Citadel nonvoting common stock.

     The decision to have the same conversion ratio apply to both the Citadel
voting common stock and the Citadel nonvoting stock was based principally upon
the recommendation of Marshall & Stevens, who advised the boards of directors
that:

     .   After the consolidation, the market prices of the Citadel voting and
nonvoting stock may converge as the practical value of the increased liquidity
of the Citadel nonvoting common stock gains in relative value to the theoretical
value of the voting rights attached to the Citadel voting common stock.

     .   To some extent, this convergence has been reflected in the trading
activity in the Citadel common stock since the announcement of the agreement in
principle relating to the consolidation.

     .   That the current value to the public stockholders of Citadel of a
differential tied to the historic trading prices of the Citadel voting and
nonvoting common stock was not significant, given that the exercise prices of
the Craig and Reading stock options to be assumed will exceed the current market
prices of Citadel voting shares and nonvoting shares.

     The Craig and Reading directors also considered that the use of the same
conversion ratio for both options to acquire Citadel voting and nonvoting common
stock had been approved by the directors of Citadel, including the members of
the Citadel conflicts committee, who hold only options to acquire Citadel
nonvoting common stock and who held no options to acquire either Craig stock or
Reading stock.

     Following discussion, the directors present unanimously approved the
execution and delivery of the consolidation agreement, which included provisions
for the tax structure and the treatment of the outstanding stock options
recommended by management.

     The Reading board meeting began at approximately 2:00 P.M. Attending the
meeting were all directors other than Mr. Loeffler. Attending the meeting at the
invitation of the Reading board were Mr. Matyczynski, a representative of
Marshall & Stevens and a representative of Jones Vargas, counsel for the Reading
conflicts committee. During the meeting, essentially the same events transpired
and essentially the same action was taken as in the case of the meeting of the
Citadel board of directors.

     The Craig board meeting began at approximately 3:00 P.M. Attending the
meeting were all directors other than Mr. Loeffler. Attending the meeting at the
invitation of the Craig board were Mr. Matyczynski, a representative of Marshall
& Stevens and a representative of Troy & Gould Professional Corporation, counsel
for the Craig conflicts committee. During the meeting, essentially the same
events transpired and essentially the same action was taken as in the case of
the prior meetings of the Citadel and Reading boards of directors.

     On Friday, August 17, 2001, the consolidation agreement was executed and
delivered by Craig, Reading, Citadel and the Citadel merger subsidiaries, and by
Mr. Cotter. With respect to Mr. Cotter, the consolidation agreement relates only
to the requirement that he vote all shares of Craig common stock and common
preference stock, Reading common stock and Citadel voting common stock under his
control in favor of the transactions contemplated by the consolidation
agreement. A press release announcing the execution and delivery of the
consolidation agreement was issued that same day, for release before the opening
of the markets on Monday, August 20, 2001. Current reports on Form 8-K, which
included a copy of the consolidation agreement, were filed by the companies with
the Securities and Exchange Commission on August 20, 2001.

                                      48

Citadel's Reason for the Consolidation

     The Citadel board of directors has unanimously determined that the
consolidation and the transactions contemplated by it are advisable and in the
best interests of Citadel and its stockholders. In reaching its decision, the
Citadel board of directors consulted with and relied upon the recommendation of
its conflicts committee, who together with its separate legal counsel, consulted
with and relied upon Marshall & Stevens and Citadel management. The Citadel
board of directors considered a number of material factors, including:

          .   Creates Synergies and Cost Savings. The consolidation is expected
to result in a single public company that will be able to take advantage of
simplified day-to-day administration and operation. The consolidation is
expected to reduce general and administrative expenses, including fully phased-
in annual cost savings across the three companies, of more than $1 million.

          .   Reduce Conflicts of Interest. The consolidation is expected to
reduce the potential for conflict of interest issues arising out of certain
intra-company or related transactions by and between the related public
companies which, but for the conflict of interest element, would be otherwise
ordinary course of business of the three companies. Placing all business
operations of the three companies under a single public company structure should
substantially reduce the administrative and procedural burdens of reviewing such
transactions on a potential conflict of interest basis.

          .   Clarify Business of Company. The consolidation is expected to
create a single public company that operates in the cinema exhibition, live
theater and real estate businesses. The business of the company following
consolidation should be easier to understand from the point of view of outside
investors and the capital markets.

          .   Provide Greater Liquidity for Stockholders. The trading volume and
market capitalization of Citadel prior to the consolidation has been small. The
consolidation is expected to create a greater public float for the Citadel non-
voting common stock, and, hopefully, greater liquidity for Citadel's
stockholders.

The Citadel board of directors also considered the following material factors:

          .   Information reviewed by Marshall & Stevens on the three companies'
financial condition, results of operations, prospects and businesses, including
analyses of the classes of equity outstanding, historic stock trading prices and
trading volumes for the publicly traded securities of the three companies;
valuation analyses based on an adjusted market value analysis, business unit
analysis and real estate analysis for each of the three companies and
recommended ratios for the respective publicly traded securities of the three
companies.

          .   Presentations from, and discussions with, senior management
executives of Citadel, Craig and Reading regarding business plans and due
diligence issues with respect to the three companies, including the
opportunities afforded by bringing the Australia and New Zealand cinema
exhibition and real estate businesses, together with Citadel's domestic
operations, under the single public company structure.

          .   The analysis of Marshall & Stevens and the Citadel board of
directors' receipt of Marshall & Stevens' opinion, dated August 16, 2001 that
the consolidation is fair from a financial point of view.

          .   The views expressed by Mr. James J. Cotter, the principal
controlling stockholder of Citadel, that he favors the consolidation, but would
not favor a transaction that would significantly affect his control interest in
Citadel or other alternative transaction.

                                      49

     The consolidation also includes certain risks and disadvantages. The
material potential risks and disadvantages considered by Citadel's board of
directors and management in considering the consolidation include primarily
those other risks and uncertainties described in this joint proxy
statement/prospectus under the caption "RISK FACTORS" beginning on page ___.

     This discussion of the factors considered by the Citadel board of directors
is not intended to be exhaustive. Because of the wide variety of factors
considered in connection with its evaluation of the consolidation, the Citadel
board of directors did not find it practicable to, and did not, quantify or
otherwise attempt to assign relative significance to the specific factors
considered in reaching its conclusions. In addition, individual directors may
have given different significance to different factors.

Recommendation of Citadel's Board of Directors

     For the reasons discussed above, the Citadel board of directors has
determined that the terms of the consolidation agreement and the transactions
contemplated by it are advisable and in the best interests of Citadel and its
stockholders. Accordingly, the members of the Citadel board of directors have
unanimously approved the consolidation agreement and recommend that Citadel
stockholders vote at the Citadel annual meeting to approve the consolidation
agreement and related proposals.

     In considering the recommendation by Citadel's board of directors, you
should be aware that some directors and officers of Citadel have interests in
the consolidation that are different from, or are in addition to, the interests
of Citadel's stockholders generally. Please see the section entitled "Interests
of Directors, Officers and Affiliates in the Consolidation" on page ___ of this
joint proxy statement/prospectus.

Craig's Reasons for the Consolidation

     The board of directors of Craig has unanimously approved the consolidation
agreements and determined that the consolidation is in the best interests of
Craig and its stockholders. In reaching its determination, the directors
consulted with management of Craig and the Craig conflicts committee, and relied
on the recommendation of the conflicts committee, which was advised by its own
legal counsel, and on the advice of Marshall & Stevens, regarding the
appropriate conversion ratios and the fairness of the consolidation to Craig's
public stockholders. The board considered a number of factors, but did not
assign any specific or relative weight to the factors it considered, and
different factors may have been weighted differently by individual directors.

     Among the most important benefits of the consolidation identified by the
Craig board were:

          .   The consolidation will substantially reduce the potential for
conflicts of interest in the day-to-day business and operations of Craig and the
other companies and free up management time for more productive activities. The
existing overlapping ownership and management of Citadel, Craig and Reading pose
an inherent potential for conflicts of interest in the normal business and
operations of Craig. Management of Craig, and the directors themselves, spend an
inordinate amount of time and energy addressing these potential conflicts of
interest in managing Craig's day-to-day business. These inherent potential
conflicts also make it more difficult for stockholders and the investing public
to understand and appreciate the business of Craig, as well as the businesses of
Citadel and Reading.

          .   Craig's management estimates that the consolidation will save the
consolidated company at least $1 million annually in general and administrative
costs and expenses once the businesses and operations of the three companies are
fully consolidated.

          .   The consolidation will result in substantially more Citadel
nonvoting shares in the hands of public stockholders and should enhance the
liquidity of the Citadel nonvoting shares held by former Craig shareholders
compared to their current investment in Craig shares. The greater liquidity of
Citadel shares also may facilitate future acquisitions and other business
transactions by the combined company. The number of

                                      50

shares of Craig common stock and common preference stock in the hands of public
stockholders is relatively small, and there is little trading volume and no
active market for the common stock and common preference stock.

          .   Craig stockholders, as holders of Citadel nonvoting common stock,
will be able to participate ratably in any growth of the consolidated company,
and in any sale of assets of the consolidated company, after the consolidation.

          .   The consolidation will result in a single publicly traded company
that integrates the cinema exhibition, live theater and real estate operations
currently being conducted separately by Craig, Citadel and Reading. This should
make the combined company's business easier to understand and evaluated from the
standpoint of the investing public.

     In evaluating the consolidation, the Craig board of directors considered
the following, among other information:

          .   The views expressed by James J. Cotter, the principal controlling
stockholder of Craig, that he favors the consolidation, but would not favor a
transaction that would significantly affect his control interest in Craig or
other alternative transaction.

          .   Management's views of Craig's prospects as a separate company
within the controlled group of Craig, Citadel and Reading, and of the
anticipated financial condition and business and operations of the consolidated
company following the consolidation.

          .   Notification from the New York Stock Exchange that Craig common
stock and common preference stock will soon be delisted, and management's views
of Craig's prospects for bringing itself in compliance with the exchange's
ongoing listing criteria.

          .   Recent historical financial information of Craig, Citadel and
Reading.

          .   The taxable nature of the consolidation.

          .   The accounting treatment of the consolidation.

          .   Presentations from management and discussions with legal counsel
regarding the business plans, any due diligence issues and any possible adverse
consequences of the consolidation.

          .   The detailed analyses of Marshall & Stevens regarding the
historical assets and stock prices of the companies and the current fair values
of the companies' assets and the conversion ratios in the consolidation,
including Marshall & Stevens' opinion, dated August 16, 2001, that the
consolidation, and the consideration to be received by Craig stockholders in the
consolidation, are fair, from a financial point of view, to the public
stockholders of Craig.

          .   The interests of the directors, officers and affiliates of Craig
in the consolidation, including the matters discussed below under "Interests of
Directors, Officers and Affiliates in the Consolidation."

     The Craig board of directors also considered risks posed by the
consolidation, including

          .   The fact that, as of July 17, 2001, based on recent trading prices
of Citadel nonvoting common stock and of Craig common stock and common
preference stock and given the conversion ratio of 1.17 shares of Citadel
nonvoting common stock for each share of Craig common stock and common
preference stock provided for in the consolidation agreement, the market value
of the Citadel nonvoting shares to be received by Craig stockholders in their
consolidation was less than the market value of the Craig common stock.

                                      51

          .   The other risks and uncertainties described in this joint proxy
statement/prospectus under the caption "RISK FACTORS" beginning on page ___.

     The foregoing discussion of the information and factors considered by the
Craig board of directors is not intended to be exhaustive, but includes the
material factors considered by the directors. In view of the complexity and wide
variety of information and factors, the Craig board of directors did not find it
practical to quantify, rank or otherwise assign relative or specific weights to
the factors considered. In addition, the Craig board did not reach any specific
conclusion with respect to each of the factors considered, or any aspect of any
particular factor. Instead, the Craig board of directors conducted an overall
analysis of the factors described above, including discussions with Craig's
management and legal and financial advisors.

     After taking into consideration all of the factors set forth above, Craig's
board of directors concluded that the consolidation is fair to, and in the best
interests of, Craig and its stockholders and that Craig should proceed with the
consolidation.

Recommendation of Craig's Board of Directors

     After careful consideration, the Craig board of directors has determined
that the consolidation is fair to and in the best interests of Craig's
stockholders, has approved the consolidation agreement, and recommends that
Craig stockholders vote in favor of approval of the consolidation agreement and
the Craig merger.

     In considering the recommendation by Craig's board of directors, you should
be aware that some directors and officers of Craig have interests in the
consolidation that are different from, or are in addition to, the interests of
Craig's stockholders generally. Please see the section entitled "Interests of
Directors, Officers and Affiliates in the Consolidation" on page ___ of this
joint proxy statement/prospectus.

Reading's Reasons for the Consolidation

     The Reading board of directors approved the proposed consolidation
primarily for the following reasons:

          .   The potential administrative benefits to be derived from the
consolidation of the businesses and management of Reading, Craig and Citadel
into one entity, including possible annual cost savings projected by management
at more than $1 million.

          .   The potential benefits to the common stockholders of Reading of
the shares of Citadel nonvoting common stock to be received in the consolidation
being traded on the American Stock Exchange, including higher trading volume and
greater liquidity than currently exists for Reading shares.

          .   The absence of other available alternatives to maximize Reading
shareholder value, given (1) the view of Mr. Cotter and Reading management that
it would not be desirable to pursue a sale of Reading, either as an entity or by
individual assets followed by liquidation, and (2) the advice of management that
Reading had not received any expressions of third-party interest in acquiring
Reading or any of its significant assets following the public disclosure of the
consolidation proposal in a joint press release on March 21, 2001.

          .   The specific analysis and recommendations contained in the report
of Marshall & Stevens presented on June 21, 2001.

  Additional factors considered by the Reading board of directors in approving
the proposed consolidation include:

          .   The recommendation of the Reading conflicts committee that if the
Reading board elected to effect the proposed consolidation, it would be fair to
the common stockholders of Reading to receive 1.25 shares of Citadel voting
common stock for each share of Reading common stock owned by them.

                                      52

          .   Management's support of the proposed consolidation in light of
their knowledge of the business, prospects and financial condition of Reading.

          .   The opinion of Marshall & Stevens, dated August 16, 2001, that the
proposed consolidation and related conversion ratios are fair to the Reading
public stockholders from a financial point of view.

     In assessing the consolidation, the Reading conflicts committee and board
of directors also considered certain risks associated with the transaction. In
particular, the conflicts committee explored the possibility of strategic
alternatives to the proposed consolidation in detail with management, including
Mr. Cotter, given that the Marshall & Stevens report suggested that Reading
stockholders could possibly receive substantial cash values from a sale or
liquidation as opposed to the proposed consolidation. The conflicts committee
also considered the relative weight given to Reading's stock price in
calculating the exchange ratio, given the comparatively thin public market for
Reading common stock and the values ascribed to the Reading preferred stock for
purposes of that calculation. It analyzed the conversion ratio for Reading
common stock, both giving primary weight to adjusted market values rather than
stock price variables, and also assuming Craig held common as opposed to
preferred stock of Reading, and concluded that neither of these alternative
approaches significantly affected the conversion ratio. Ultimately, the Reading
board of directors determined that the proposed consolidation, taken as a whole,
is in the best interest of Reading and its public stockholders.

     In view of the variety of factors considered in its evaluation of the
proposed consolidation, the Reading board of directors did not find it
practicable to assign relative weights to the factors considered in reaching its
decision. This discussion does not recite every factor that may have been
considered by the Reading board in detail, nor does it represent the degree of
significance given by individual directors to specific factors.

Recommendation of the Reading Board of Directors

     The Reading board of directors has approved the consolidation agreement and
believes that the consolidation is in the best interests of Reading and its
public stockholders. The Reading board of directors unanimously recommends that
Reading stockholders vote FOR approval of the consolidation agreement and the
Reading merger.

     In considering the recommendation by Reading's board of directors, you
should be aware that some directors and officers of Reading have interests in
the consolidation that are different from, or are in addition to, the interests
of Reading's stockholders generally. Please see the section entitled "Interests
of Directors, Officers and Affiliates in the Consolidation" on page ___ of this
joint proxy statement/prospectus.

Opinion of the Companies' Financial Advisor

     The companies asked Marshall & Stevens Incorporated, in its role as joint
financial advisor to the companies, to render an opinion to the boards of
directors of the companies and to the conflicts committees of the boards as to
whether the consolidation and the consideration to be received in the
consolidation are fair to the public stockholders of Craig, Reading and Citadel,
from a financial point of view, pursuant to the terms and subject to the
conditions set forth in the consolidation agreement. Marshall & Stevens was also
asked to give advice with respect to the relative values of the three companies,
fair conversion ratios of Citadel nonvoting common stock for shares of Reading
common stock, Craig common stock and Craig common preference stock, whether the
consolidation is in the best interest of the three companies and whether the
same consideration (i.e., common equity) should be provided to all stockholders.

     On June 21, 2001 Marshall & Stevens delivered to the conflicts committees
of the boards of directors of the companies its preliminary findings with
respect to the relative values of the three companies, fair conversion ratios of
Citadel nonvoting common stock for shares of Reading common stock, Craig common
stock and Craig common preference stock, whether the consolidation is in the
best interest of the three

                                      53

companies and whether common equity should be provided to all stockholders. On
July 17 and 18, 2001, Marshall & Stevens delivered to the boards of directors of
the companies its oral opinion to the effect that, as of those dates, the
consolidation and the consolidation consideration were fair to the public
stockholders of Craig, Reading and Citadel from a financial point of view. This
opinion was subsequently confirmed in the written Marshall & Stevens opinion,
dated August 16, 2001, to the effect that, as of that date, and based on and
subject to the assumptions, limitations and qualifications set forth in such
opinion, the consolidation and the consolidation consideration are fair to the
public stockholders of Craig, Reading and Citadel from a financial point of
view. Marshall & Stevens also advised the boards of directors and the conflicts
committees of the boards:

          .   As to the relative values of the three companies.

          .   As to the fair conversion ratios of Citadel nonvoting common stock
for shares of Reading common stock, Craig common stock and Craig common
preference stock.

          .   That the consolidation is in the best interests of the three
companies.

          .   That the Craig common stock and Craig common preference stock
should be treated as having the same value for purposes of the consolidation.

          .   That the same consideration should be provided to all stockholders
of Craig and Reading.

     The full text of Marshall & Stevens' opinion is attached as ANNEX B to this
joint proxy statement/prospectus. The foregoing summary of Marshall & Stevens'
is qualified in its entirety by reference to the full text of the opinion. You
are urged to read Marshall & Stevens' opinion carefully and in its entirety for
the procedures followed, assumptions made, other matters considered and limits
of the review by Marshall & Stevens in connection with its opinion.

     Marshall & Stevens prepared its opinion for the boards of directors of the
companies and for the conflicts committees of the boards. The opinion addresses
only whether the consolidation and the consolidation consideration are fair to
the public stockholders of Craig, Reading and Citadel from a financial point of
view, pursuant to the terms and subject to the conditions set forth in the
consolidation agreement. Marshall & Stevens expressed no opinion as to the
prices at which the equity securities of Craig, Reading or Citadel would
actually trade at any time. Marshall & Stevens was not requested to address and,
accordingly, Marshall & Stevens' opinion does not address, alternative business
strategies or the decision by the boards of directors to pursue the
consolidation as opposed to some other business strategy. Marshall & Stevens'
opinion does not constitute a recommendation to any stockholder as to how to
vote on the consolidation or any other matter.

     The conflicts committees of the boards of directors of the companies
selected Marshall & Stevens as their financial advisor because, among other
things, of the view of the directors serving on the conflicts committees based
on the various background materials provided by Marshall & Stevens that Marshall
& Stevens is an internationally recognized valuation and financial consulting
firm that has substantial experience providing valuation and financial
consulting services. Marshall & Stevens was not retained as an advisor or agent
to the stockholders of any of the companies or any other person. As part of its
valuation and financial consulting business, Marshall & Stevens is regularly
engaged in the valuation of businesses and securities in connection with
mergers, acquisitions, underwritings, sales and distributions of listed and
unlisted securities, private placements and valuations for corporate, tax, and
other purposes. Marshall & Stevens was not requested to solicit, nor did
Marshall & Stevens solicit, the interest of any other party in acquiring or
engaging in a business combination with any of the companies.

                                      54

     In arriving at its opinion, Marshall & Stevens:

          .    Reviewed the information attached to its opinion as Exhibit A.

          .    Analyzed daily stock prices and trading volumes for Craig common
stock, Craig common preference stock, Reading common stock, Citadel nonvoting
common stock and Citadel voting common stock for the period June 1, 2000 through
July 11, 2001.

          .    Considered the nature of the business and the history of the
companies and their strategic business units, or SBUs; the economic outlooks of
the United States, Puerto Rico, Australia, and New Zealand, in general; the
outlooks for the cinema and theater industries, in particular; the SBUs earnings
before interest and taxes, or EBIT, earnings before interest, taxes,
depreciation and amortization, or EBITDA, revenues, book capital, and total
assets for the past five years (1996-2000) and the three-month interim period
ended March 31, 2001; the outlook for future EBIT, EBITDA and revenues; the net
book value and adjusted market value of the companies; the companies' financial
condition; and the companies' dividend-paying capacity.

          .    Considered the nature of the underlying real estate holdings of
the companies, relevant cost data, the local real estate markets for such
holdings; and the income and cash generating capacity of the holdings.

          .    Analyzed financial statements, prices and other materials
regarding guideline publicly traded companies in the cinema industry; multiples
of EBIT, EBITDA revenues, book capital and total assets of such guideline
publicly traded companies; required rates of return on debt and equity capital;
and such other relevant material as deemed appropriate.

          .    Analyzed the financial terms, operating results, financial
condition and multiples of EBIT, EBITDA, revenues, book capital and total assets
of companies, to the extent publicly available, involved in certain recent
business combinations in the cinema industry.

          .    Compared certain statistical and financial information of the
companies with similar information for certain guideline publicly traded
companies and industry composites in the cinema industry.

          .    Analyzed the terms of certain real estate transactions, to the
extent publicly available, for properties considered comparable to the
underlying real estate holdings of the Companies.

          .    Conducted discount cash flow analyses and capitalization of
income/cash flow on various SBUs and underlying real estate holdings of the
companies.

          .    Visited the companies' headquarters in Los Angeles, California,
and conducted interviews with and relied upon the representations of Chairman
and Chief Executive Officer James J. Cotter; Reading and Citadel Vice Chairman
and Craig President, S. Craig Tompkins; Chief Financial Officer, Andrzej
Matyczynski; and Vice President-Real Estate, Brett Marsh concerning the
operations, financial condition, future prospects, and projected operations and
performance of the companies and their SBUs and underlying real estate holdings.

          .    Visited certain other offices and real estate holdings of the
companies and conducted interviews with other employees of the companies
concerning the SBUs and underlying real estate holdings.

          .    Conducted such other financial studies, analyses and inquiries,
and considered such other matters as deemed necessary and appropriate for their
opinion.

          .    In rendering its opinion, Marshall & Stevens did not
independently verify the accuracy and completeness of the financial information
or other information furnished by the companies orally or in writing, or other
information obtained from publicly available sources.

                                      55

     With respect to the financial projections for the companies referred to
above, Marshall & Stevens reviewed the best currently available estimates and
judgments of management of the companies as to the expected future financial and
operating performance of the companies and their SBUs and underlying real estate
holdings, and did not undertake any obligation independently to verify the
underlying assumptions made in connection with such forecasts, estimates or
judgments.

     Marshall & Stevens' opinion was based on business, economic, market and
other conditions as they existed as of the date of its opinion. Marshall &
Stevens states in its opinion that they have assumed that the factual
circumstances and terms, as they existed at the date of this opinion, will
remain substantially unchanged through the time the consolidation is completed.

Valuation and Financial Analyses Performed by Marshall & Stevens

     The following is a discussion of the financial and valuation analyses
presented by Marshall & Stevens to the conflicts committees of the boards of
directors of the companies on June 21, 2001, and to the full boards of directors
on July 17 and 18, 2001, in connection with the approval of the agreement in
principle, and on August 16, 2001, in connection with the approval of the
consolidation agreement. The information summarized in the tables which follow
should be read in conjunction with the accompanying text.

     The implied relative conversion ratios estimated pursuant to the historical
stock price analysis and the adjusted market value analysis summarized below
were each based on:

          .    3,402,808 shares of Craig common stock outstanding.

          .    7,058,408 shares of Craig common preference stock outstanding.

          .    7,449,364 shares of Reading common stock outstanding.

          .    7,958,379 shares of Citadel nonvoting common stock outstanding.

          .    1,989,585 shares of Citadel voting common stock outstanding.

     Common Stock Trading History

     Marshall & Stevens examined the historical closing prices of the companies'
securities from January 12, 2001 to July 11, 2001. Marshall & Stevens reviewed
the closing prices on July 11, 2001, as well as the six-month average trading
prices and six-month average trading volumes for each security during the
aforementioned period.

     Current And Historical Implied Conversion Ratio Analysis

     Marshall & Stevens reviewed the current and historical conversion ratios
implied by the daily closing prices per share of each security for the period
beginning January 12, 2001 and ending on July 11, 2001. The implied conversion
ratios based upon the July 11, 2001 closing prices and the six-month average
prices were considered most appropriate to the analysis.

     Adjusted Market Value Analysis

     Marshall & Stevens analyzed the underlying SBUs, real estate and other
specific assets of the companies. The estimated market values of such SBUs, real
estate and other specific assets of the companies were substituted for their
book values on each of the respective company's March 31, 2001 balance sheets to
provide an indication of the adjusted market value of each company. The March
31, 2001 financial statements and quarterly reports on Form 10-Q were the latest
available financial information provided by the management of the companies. The
market values were estimated on a "most likely", a "low" and a "high" basis to
provide a range of market values for consideration. Based upon the analysis, the
market values per

                                      56

common share (considering total common shares outstanding) of each company under
each of the above three scenarios were calculated. The implied conversion ratios
were then determined under each of the three scenarios.

     Strategic Business Unit Analysis

     Market Approach--Comparable Publicly Traded Company Analysis

     Marshall & Stevens identified and selected several publicly traded
companies similar in business type and operations to Citadel's and Reading's
cinema operations. Guideline publicly traded companies were identified using
Moody's Company Data on CD-ROM. Data on the selected companies was obtained
using Moody's Company Data on CD-ROM and Compustat's (North American) Company
Database. The comparable publicly traded companies selected are listed below:

           Company Name                   Ticker Symbol
           ------------                   -------------

           AMC Entertainment Inc.             AEN

           Carmike Cinemas Inc.               CKECQ

           Cinema Ride Inc.                   MOVE

           Cinemastar Luxury Thetrs.          LUXYQ

           ITEC Attractions Inc.              ITAT

     Marshall & Stevens calculated the invested capital to the trailing twelve
months revenue and EBITDA for each of the comparable companies. The total
invested capital is defined as the price per share multiplied by the common
equity outstanding, plus debt and preferred stock.

     Market Approach--Comparable Transaction Analysis

     Marshall & Stevens reviewed prior transactions made by Citadel and Reading
and multiples of revenue and EBITDA paid in such transactions as well as
transactions that took place in the market over the past year. Marshall &
Stevens also reviewed an investment banking bulletin for Village Roadshow which
indicated various transaction multiples.

     Market Approach--Summary

     Given the ranges of multiples indicated and the differences between the
comparable companies and the companies involved in the transactions in
comparison to the SBUs of Citadel and Reading, certain multiples were adjusted
to account for such differences before applying them to the SBUs of Citadel and
Reading. In addition, the market approach was not used in instances where the
comparables were insufficient to provide a meaningful indication of value.

     Discounted Cash Flow Analysis

     Marshall & Stevens prepared a discounted cash flow analysis, on a debt-free
basis, for each of the SBUs.  In developing the discounted cash flow analysis,
cash flows for each business unit were forecasted five years into the future
using projections provided by management where available. Where projections were
unavailable, cash flows were forecasted based on discussions with management, a
review of the SBUs' historical financial statements and a review of economic and
industry outlooks.

     Marshall & Stevens discounted the projected cash flows and terminal values
to present value. The discount rate reflects the time value of money and the
risk inherent to receipt of the cash flows. The terminal value was based on the
Gordon growth model, using the discount rate and a long-term growth rate.

                                      57

     Correlation

     The values indicated by the market and income approaches were correlated
into a final conclusion of value for each SBU based upon the applicability of
each approach.

     Real Estate Analysis

     Marshall & Stevens reviewed the appraisals, purchase agreements and other
data furnished by management of the companies on numerous properties.
Discussions were held with Brett Marsh--Vice President of Real Estate of the
companies, regarding the companies' real estate assets.  Further discussions
were held with representatives of Reading regarding the Reading properties. A
visual inspection was made of the fee simple theaters in New York City, as well
as a confirmation of the zoning. Market participants were contacted to obtain
insights into the market place for the real estate being reviewed. Telephonic
inquiries to brokers, appraisers and market participants were made into the
Australian and New Zealand markets to obtain data on the various markets where
the Reading developments were located. The accumulated data have been summarized
in the Marshall & Stevens opinion.

Summary of Conclusions

     Marshall & Stevens, in reaching their conclusions, placed equal (one-third)
weight on the conversion ratios indicated by the current (July 11, 2001) stock
prices, six-month average (January 12, 2001 - July 11, 2001) stock prices and
adjusted market value - most likely scenario, which yielded a conversion ratio
conclusion of 1.17 for both Craig common stock and common preference stock and
1.25 for Reading common stock.

     The summary set forth above does not purport to be a complete description
of the analyses performed by Marshall & Stevens but describes, in summary form,
the material elements of the presentations made by Marshall & Stevens to the
conflicts committees of the boards of directors of the companies on June 21,
2001, and to the full boards of directors on July 17 and 18, 2001, in connection
with the preparation of the Marshall & Stevens' opinion. The preparation of an
opinion involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of these methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Each of the analyses conducted by Marshall &
Stevens was carried out in order to provide a different perspective on the
transaction and to add to the total mix of information available. Marshall &
Stevens did not form a conclusion as to whether any individual analysis,
considered in isolation, supported or failed to support an opinion as to
fairness from a financial point of view. Rather, in reaching its conclusion,
Marshall & Stevens considered the results of the analyses in light of each other
and ultimately reached its opinion based on the results of all analyses taken as
a whole.  Accordingly, notwithstanding the separate factors summarized above,
Marshall & Stevens has indicated to the companies that it believes that its
analyses must be considered as a whole and that selecting portions of its
analyses and the factors considered by it, without considering all analyses and
factors, could create an incomplete view of the evaluation process underlying
its opinion.

Fee Arrangements with Financial Advisor

     Pursuant to an engagement letter dated May 9, 2001, Marshall & Stevens is
entitled to receive a fee of $207,500 in connection with the preparation and
delivery of its fairness opinion, which will be shared equally by Citadel, Craig
and Reading.  Of the fee, $200,000 has been paid to date.  Citadel, Craig and
Reading also agreed to indemnify Marshall & Stevens against certain liabilities,
which may include liabilities under the federal securities laws, relating to or
arising out of Marshall & Stevens' engagement as financial advisor.

     There was no material relationship between any of the three companies and
Marshall & Stevens in the two years prior to Marshall & Stevens' engagement in
connection with the consolidation.  Marshall & Stevens may in the future provide
investment banking or other financial advisory services to the combined company.

                                      58

Interests of Directors, Officers and Affiliates in the Consolidation

     When considering the recommendations of the boards of directors of Citadel,
Craig and Reading, you should be aware that some of the directors and officers
have interests in the consolidation that are different from, or are in addition
to, your interests.  The boards of directors were aware of these differing
interests and considered them in making their recommendations.

     James J. Cotter is the principal controlling stockholder of Craig, Reading
and Citadel.  He owns or controls, directly or indirectly, a majority of the
voting power of both Craig and Reading and approximately 49% of the voting power
of Citadel.  Mr. Cotter has advised the directors of the three companies that
while he favors a consolidation of the companies, he would not support a
transaction which, in his view, would materially and adversely affect his
control position with respect to the three companies.  This advice significantly
influenced the determination to issue Citadel nonvoting common stock, as opposed
to Citadel voting common stock, in the consolidation.

     Mr. Cotter receives significant benefits from the companies not shared by
other stockholders.  Mr. Cotter is paid an aggregate of approximately $545,000
annually by the companies in director fees and consulting fees, and serves as
the Chairman and Chief Executive Officer of each of the companies.  Two of Mr.
Cotter's children - Ellen Cotter and Margaret Cotter - serve as officers or
directors of one or more of the companies, and Margaret Cotter provides certain
theater management services to an affiliate of Citadel on an independent
contractor basis.  Over the twelve months ended July 31, 2001, the aggregate
payments to Ellen Cotter and Margaret Cotter (and her affiliates) totaled
approximately $163,800 and $257,000, respectively.

     Mr. Cotter is a significant creditor of Citadel.  He:

     .    Holds a $2.25 million Citadel promissory note, which bears interest at
          the current rate of 8.125% per annum and matures in July 2002.

     .    Is a 50% member in Sutton Hill Capital, LLC, which is the landlord to
          Citadel Cinemas with respect to its Manhattan-based cinemas (other
          than the Angelika) and to which Citadel has granted a $28 million line
          of credit, available for draw by Sutton Hill Capital beginning in July
          2007.

     One of the effects of the consolidation will be to increase Citadel's
equity, which may enhance its ability to repay these obligations.

     Mr. Cotter has advised the directors of Citadel, Craig and Reading that he
considers his investment in the companies to be long-term in nature, and that he
intends to pass on his investment to his estate for the benefit of his children,
including Ellen Cotter and Margaret Cotter.  Mr. Cotter has further advised the
directors of the three companies that he believes that the three companies
should be operated on a combined basis, and that in his view the best
opportunity for the three companies is to use the assets available to them to
advance the opportunities in Australia and New Zealand which he believes are
reasonably available to Reading.  Given the overlapping nature of his existing
ownership interests in Citadel, Craig and Reading.  Mr. Cotter has, in effect,
already assumed the risks of an investment in the combined companies, and
accordingly may view the attractiveness of the consolidation differently than
stockholders who only have an investment in one or two of the three companies.
Also, given his level of personal involvement in the direction of Reading's
activities in Australia and New Zealand, he may view the opportunities there as
more attractive than would Citadel or Craig stockholders, who might prefer a
domestic focus to their investments.

                                      59

     As of July 31, 2001, Craig's executive officers and directors held options
to purchase a total of 664,940 shares of Craig common stock at the weighted-
average exercise price of $6.04 per share and 65,000 shares of Craig common
preference stock at the weighted-average exercise price of $6.65 per share.  A
total of 22,500 shares under those options were unvested.  Under the terms of
the consolidation agreement, these options will be converted into options to
purchase the equivalent number of shares of either Citadel voting common stock
or nonvoting common stock, at each option holder's election.

     As of July 31, 2001, Reading's executive officers and directors held
options to purchase a total of 790,232 shares of Reading common stock at the
weighted-average exercise of price of $12.79 per share.  A total of 30,500
shares under those options were unvested.  Under the terms of the consolidation
agreement, these options will be converted into options to purchase the
equivalent number of shares of either Citadel voting common stock or nonvoting
common stock, at each option holder's election.

     James J. Cotter currently holds options to purchase 635,232 shares of
Reading common stock at the weighted-average exercise price of $13.30 per share
and 594,940 shares of Craig common stock at the weighted-average exercise
price of $5.92 per share. If Mr. Cotter elects to have his Reading and Craig
stock options converted into options to purchase Citadel voting stock in the
consolidation, he would, immediately following the consolidation, hold options
to purchase 1,490,120 shares of Citadel voting common stock, or 52.7% of the
outstanding Citadel voting common stock assuming we were to exercise his options
in full, at the weighted-average exercise price of $8.03 per share. Taking into
account his current stock holdings, as well, this would give Mr. Cotter total
beneficial ownership of 64.3% of the voting power of Citadel after taking into
effect the exercise of Citadel stock options.

     In addition to Mr. Cotter, some of the executive officers of Citadel, Craig
and Reading and their affiliates are also directors of one or more of the
companies, or were otherwise involved in the development of the consolidation
transaction.  In addition to Mr. Cotter, Mr. Tompkins is a director of each of
the three companies.  Mr. Smerling, the President of Reading and of Citadel
Cinemas, is also a director of Reading.  Mr. Matyczynski, while employed by
Craig, is the Chief Financial Officer of each of the three companies.  Messrs.
Tompkins, Smerling and Matyczynski received compensation aggregating $410,400,
$219,900 and $180,000 with respect to the year ended December 31, 2000 for their
services to the three companies and their affiliates.  Messrs. Tompkins,
Smerling and Matyczynski will benefit from the consolidation in that their
employment benefits, and severance arrangements with Craig (in the case of
Messrs. Tompkins and Matyczynski) and with Reading (in the case of Messrs.
Tompkins and Smerling) will be assumed by Citadel in the consolidation.

     Under the consolidation agreement, Citadel has agreed to honor Craig's and
Reading's obligations under the indemnification agreements between Craig and
Reading and their respective directors and officers.  The Craig indemnification
agreements are identical to indemnification agreements currently in effect
between Citadel and its directors and officers.  For more information on the
Citadel indemnification agreement, see the discussion under "PROPOSAL TO RATIFY
AND APPROVE THE FORM OF CITADEL INDEMNIFICATION AGREEMENT" beginning on page
____.

     As a result of the foregoing interests, the directors and officers of
Citadel, Craig and Reading could be more likely to vote to approve the
consolidation agreement and related matters than if they did not hold these
interests.  You should consider whether these interests may have influenced
these directors and officers to support or recommend the consolidation.

Completion and Effectiveness of the Consolidation

     The consolidation will be completed when all of the conditions to its
completion are satisfied or waived, including approval and adoption of the
consolidation agreement and the Craig merger by the stockholders of Craig and
the approval and adoption of the consolidation agreement and the Reading merger
 by the stockholders of Reading.  The consolidation will become effective upon
the filing of articles of merger with the State of Nevada.  We expect to
complete the consolidation promptly following the joint meetings of stockholders
of Citadel, Craig and Reading.

                                      60

Structure of the Consolidation and Conversion of Stock and Options

     Citadel has formed two wholly owned subsidiaries, Craig Merger Sub, Inc.
and Reading Merger Sub, Inc.  As provided in the consolidation agreement, Craig
Merger Sub, Inc. will merge with and into Craig, and Reading Merger Sub, Inc.
will merge with and into Reading.  These two mergers are referred to in this
joint proxy statement/prospectus as the Craig merger and the Reading merger.
The completion of the Craig merger and the Reading merger are conditioned on
completion of the other, so neither merger will occur unless both occur.

     On the effectiveness of the Craig merger and the Reading merger, Craig and
Reading will become wholly owned subsidiaries of Citadel, and Craig stockholders
and Reading stockholders will become stockholders of Citadel as described in the
following paragraphs.  In connection with and as part of the Reading merger,
Reading's name will be changed to "Reading Holdings, Inc."

     Craig Common Stock

     Upon effectiveness of the consolidation, each outstanding share of Craig
common stock and common preference stock will be automatically converted into
the right to receive 1.17 shares of Citadel nonvoting common stock.

     Craig Options

     Upon completion of the consolidation, each outstanding stock option of
Craig will be assumed by Citadel and become an option to purchase either Citadel
voting common stock or nonvoting common stock, at each option holder's election.
Each option will be exercisable for a number of whole shares of either Citadel
voting common stock or nonvoting common stock, at each option holder's election,
determined by multiplying 1.17 by the number of shares of Craig common stock or
common preference stock that were purchasable under the option immediately prior
to the consolidation.  The number of shares of Citadel common stock purchasable
under the option will be rounded down to the nearest whole share, without
payment of any cash for fractional shares.  The exercise price per share of each
option to purchase Citadel voting shares or nonvoting shares will be the pre-
consolidation exercise price divided by 1.17, so the aggregate exercise prices
of the outstanding Craig options will not be affected by the consolidation.  In
each case, the exercise price will be rounded up to the nearest whole cent.

     Reading Common Stock

     Upon completion of the consolidation, each outstanding share of Reading
common stock will be automatically converted into 1.25 shares of Citadel
nonvoting common stock.

     Reading Options

     Upon completion of the consolidation, each outstanding stock option of
Reading will be assumed by Citadel and become an option to purchase either
Citadel voting common stock or nonvoting common stock, at each option holder's
election.  Each option will be exercisable for a number of whole shares of
either Citadel voting common stock or nonvoting common stock, at each option
holder's election, determined by multiplying 1.25 by the number of shares of
Reading common stock that would have been purchasable under the option
immediately prior to the consolidation.  The number of shares of Citadel common
stock purchasable under the option will be rounded down to the nearest whole
share, without payment of any cash for fractional shares.  The exercise price
per share of each option to purchase Citadel voting shares or nonvoting shares
will be the pre-consolidation exercise price divided by 1.25, so the aggregate
exercise prices of the outstanding Reading options will not be affected by the
consolidation.  In each case, the exercise price will be rounded up to the
nearest whole cent.

                                      61

     The total number of Citadel shares to be issued in the consolidation
includes up to 1,841,820 shares of Citadel voting common stock or nonvoting
common stock issuable upon the exercise of currently outstanding Craig and
Reading stock options to be assumed by Citadel in the consolidation. The
currently outstanding Craig and Reading stock options to be assumed by Citadel
in the consolidation consist of:

          .    Options to purchase 135,000 shares granted under Craig's stock
option plans.

          .    Options to purchase 594,940 shares under individual Craig option
agreements with Citadel's controlling stockholder, James J. Cotter.

          .    Options to purchase 420,232 shares granted under Reading's stock
option plans.

          .    Options to purchase 370,000 shares under individual Reading
option agreements with Mr. Cotter.

     As a result, there will be up to 1,841,820 shares of Citadel common stock
reserved for issuance pursuant to the replacement Citadel stock options that
will be issued in the consolidation. These shares will be either voting shares
or nonvoting shares, or a combination of voting and nonvoting shares, depending
on the election made by each option holder.

     The Citadel stock option plan is described below under "TO AMEND CITADEL
1999 STOCK OPTION PLAN" proposal. The material terms of the stock options to be
assumed and reissued in favor of Mr. Cotter are summarized below:

     Under the stock option agreement between Mr. Cotter and Craig, the options
granted under the agreement vested as of the date of the agreement.  The options
granted to Mr. Cotter may be exercised only by Mr. Cotter or by (1) any
partnership, corporation or limited liability company for the benefit of or
owned directly or indirectly by Mr. Cotter and/or his children or heirs, or (2)
any trust, foundation or not-for-profit corporation established by Mr. Cotter.
These options expire on June 11, 2005.

     In 1997, Mr. Cotter and Reading entered into a non-qualified option plan
entitling Mr. Cotter to purchase up to 370,000 shares of common stock.  These
options are divided into three components, which became exercisable in four
equal installments over a similar vesting schedule.  The exercise price of the
options exceeded the market price of the Reading common stock at the time the
options were granted.  Mr. Cotter's options under the agreement are transferable
only (1) by will or by the laws of descent and distribution or (2) by Mr. Cotter
during his lifetime to any immediate family member or certain entities owned or
controlled by, or for the benefit of, Mr. Cotter and his immediate family
members.  Mr. Cotter's option will terminate within 30 days after the date of
termination for cause or 120 days after the date of termination for any reason
other than for cause, death or retirement or disability of Mr. Cotter's
association with Reading.  Upon retirement or disability, Mr. Cotter may for a
period of three years (or longer if determined by the Reading compensation
committee) exercise any option which were exercisable prior to such retirement
or disability.  Upon Mr. Cotter's death, all vesting provisions which would be
satisfied solely by the passage of time will be accelerated and deemed
satisfied.

     No Fractional Shares of Citadel Nonvoting Common Stock

     No fractional shares of Citadel nonvoting common stock will be issued in
the consolidation.  Instead of fractional shares, former Craig stockholders and
Reading stockholders will be entitled to receive cash in an amount to be
determined by multiplying their fractional share amount, after aggregating all
fractional shares for a former holder of Craig common stock and common
preference stock and Reading common stock, by the average closing price of
Citadel nonvoting common stock as reported on the American Stock Exchange for
the five trading days immediately prior to the effectiveness of the
consolidation.

                                      62

Exchange of Craig and Reading Stock Certificates for Citadel Stock Certificates

     When the consolidation is completed, Citadel's exchange agent will mail to
former Craig and Reading stockholders a letter of transmittal and instructions
for use in surrendering Craig and Reading stock certificates in exchange for
Citadel stock certificates.  When you deliver your Craig or Reading stock
certificates to the exchange agent along with an executed letter of transmittal
and any other required documents, your Craig or Reading stock certificates will
be canceled and you will receive Citadel stock certificates representing the
number of full shares of Citadel common stock to which you are entitled under
the consolidation agreement. You will receive payment in cash, without interest,
instead of any fractional share of Citadel nonvoting common stock which would
have otherwise been issuable to you in the consolidation.

     Citadel will only issue to former Craig and Reading stockholders a Citadel
stock certificate or a check in lieu of a fractional share in the name in which
the surrendered Craig or Reading stock certificate is registered.  If Craig and
Reading stockholders wish to have their stock certificates issued in another
name, they must present the exchange agent with all documents required to show
and effect the unrecorded transfer of ownership and show that they paid any
applicable stock transfer taxes.

Craig and Reading stockholders should not submit their Craig and Reading stock
certificates for exchange until they receive the transmittal instructions and a
form of letter of transmittal from the exchange agent.

No Dividends

     Craig and Reading stockholders are not entitled to receive any dividends or
other distributions on Citadel nonvoting common stock until the consolidation is
completed and they have surrendered their Craig and Reading stock certificates
in conversion for Citadel stock certificates.

     Subject to the effect of applicable laws, promptly following surrender of
Craig and Reading stock certificates and the issuance of the corresponding
Citadel certificates, former Craig and Reading stockholders will be paid the
amount of dividends or other distributions, if any, without interest, with a
record date after the completion of the consolidation which were previously paid
with respect to their whole shares of Citadel nonvoting common stock.  At the
appropriate payment date, former Craig and Reading stockholders will also
receive the amount of dividends or other distributions, without interest, with a
record date after the completion of the consolidation (but prior to the
surrender of Craig and Reading share certificates) and a payment date after they
surrender their Craig and Reading stock certificates for Citadel stock
certificates.

Material United States Federal Income Tax Consequences of the Consolidation

     The following discussion summarizes the material federal income tax
consequences of the consolidation that are generally applicable to holders of
Craig common stock and common preference stock and Reading common stock.  This
discussion is based on existing authorities.  These authorities may change, or
the Internal Revenue Service might interpret the existing authorities
differently.  In either case, the tax consequences of the consolidation to the
holders of Craig common stock and common preference stock and Reading common
stock could differ from those described below. This discussion is for general
information only and does not provide a complete analysis of all potential tax
considerations that may be relevant to particular stockholders because of their
specific circumstances, or because they are subject to special rules.  This
discussion does not describe the federal income tax consequences of transactions
other than the consolidation or the tax consequences of consolidation under
foreign, state or local law.  This discussion also does not address the federal
income tax consequences of the consolidation to holders of Craig stock options
or Reading stock options.

                                      63

     Each holder of Craig common stock and common preference stock and each
holder of Reading common stock will recognize gain or loss measured by the
difference between the sum of the fair market value of the shares of Citadel
nonvoting common stock received in the consolidation, plus the amount of cash
received by the holder in lieu of a fractional share, and the holder's tax basis
in the Craig or Reading stock.

     Stockholders are urged to consult their own tax advisors as to the specific
tax consequences of the consolidation, including the applicable federal, state,
local and foreign tax consequences to them of the consolidation in their
particular circumstances.

Accounting Treatment of the Consolidation

     Citadel intends to account for the consolidation as a purchase of Craig and
Reading by Citadel for financial reporting and accounting purposes, in
accordance with generally accepted accounting principles.

Regulatory Filings and Approvals Required to Complete the Consolidation

     None of the companies is aware of any material governmental or regulatory
approval required for completion of the consolidation, other than the
effectiveness of the registration statement of which this joint proxy
statement/prospectus is a part, and compliance with applicable corporation laws
of Nevada.

Restrictions on Sales of Shares by Affiliates

     The shares of Citadel nonvoting common stock to be issued in the
consolidation will be registered under the Securities Act. These shares will be
freely transferable under the Securities Act, except for shares issued to any
person who is an affiliate of any of Craig or Reading (or of Citadel).  Persons
who may be deemed to be affiliates include individuals or entities that control,
are controlled by, or are under common control of Craig or Reading (or of
Citadel) and may include some of their respective officers and directors, as
well as their respective principal stockholders. Affiliates may not sell their
shares of Citadel nonvoting common stock acquired in the consolidation except
pursuant to:

          .    An effective registration statement under the Securities Act
               covering the resale of those shares.

          .    An exemption under paragraph (d) of Rule 145 under the Securities
               Act.

          .    Any other applicable exemption under the Securities Act.

No Dissenters' or Appraisal Rights

     Under Nevada Law, there are no dissenters' or appraisal rights available to
Citadel, Craig or Reading stockholders in connection with the consolidation.

Listing on the American Stock Exchange of Citadel Nonvoting Common Stock to be
Issued in the Consolidation

     Citadel nonvoting common stock currently is listed on the American Stock
Exchange under the symbol "CDL.A."  Citadel will apply to list the shares of
Citadel nonvoting common stock to be issued in the consolidation on the American
Stock Exchange under the new symbol "___________" to reflect the proposed change
in the name of the consolidated company to "Reading International, Inc."
American Stock Exchange approval is subject to official notice of issuance prior
to the effectiveness of the consolidation.

                                      64

Delisting and Deregistration of Craig and Reading Common Stock After the
Consolidation

     If the consolidation is completed, Craig common stock and common preference
stock will be delisted from the New York Stock Exchange and Reading common stock
will no longer be quoted on The Nasdaq Stock Market, and the Craig common stock
and common preference stock and Reading common stock will be deregistered under
the Securities Exchange Act of 1934.

     Craig stockholders also should bear in mind that, if the consolidation is
not completed, Craig common stock and common preferred stock is likely to be
delisted from the New York Stock Exchange as discussed under "THE CONSOLIDATION
- -  Background of the Consolidation" on page _____.

                                      65

                          THE CONSOLIDATION AGREEMENT

     The following is a brief summary of the material provisions of the
consolidation agreement among Citadel, Craig and Reading, dated as of August 17,
2001, a copy of which is attached as ANNEX A to this joint proxy
statement/prospectus.  This summary is qualified in its entirety by reference to
the consolidation agreement.  Stockholders of Citadel, Craig and Reading are
urged to read the consolidation agreement in its entirety because it, and not
this joint proxy statement/prospectus, is the legal document that governs the
consolidation.

Effective Time of the Consolidation

     If the consolidation agreement is approved by the stockholders of Citadel,
Craig and Reading, and all the terms and conditions are satisfied, the
consolidation will become effective upon the filing of properly executed
articles of merger relating to the Craig merger and the Reading merger with the
Nevada Secretary of State, or at a later time as the parties will agree and set
forth in the articles of merger.

     The consolidation agreement provides that, subject to the terms and
conditions of the consolidation agreement, Craig Merger Sub, Inc. will merge
with and into Craig and the separate existence of Craig Merger Sub, Inc. will
cease to exist, and Craig will be the surviving corporation, and Reading Merger
Sub, Inc. concurrently will merge with and into Reading and the separate
existence of Reading Merger Sub, Inc. will cease to exist, and Reading will be
the surviving corporation.  The Craig merger and the Reading merger will not
occur unless both occur.

Manner and Basis of Converting Shares

     As of the effective time, by virtue of the consolidation and without any
action of the part of the holders of any capital stock:

          .   Each share of common stock, par value $0.25 per share, of Craig
issued and outstanding immediately prior to the effective time will be converted
into the right to receive 1.17 shares of Class A nonvoting common stock, par
value $0.01 per share, of Citadel. All Craig common stock, when so converted,
will no longer be outstanding and will be automatically canceled and retired and
will cease to exist. The holder of a certificate of Craig common stock that,
immediately prior to the effective time, represented outstanding shares of Craig
common stock will no longer have any rights with respect to such Craig common
stock except the right to receive Citadel nonvoting common stock, without
interest, upon surrender of such Craig common stock certificate.

          .   Each share of Class A common preference stock, par value $0.01 per
share, of Craig issued and outstanding immediately before the effective time
will be converted into the right to receive 1.17 shares of the nonvoting common
stock of Citadel. All Craig common preference stock, when so converted, will no
longer be outstanding, will be automatically cancelled and retired and cease to
exist. The holder of such certificate of Craig common preference stock that,
immediately before the effective time, represented outstanding shares of Craig
common preference stock will cease having any rights with respect to such shares
of Craig common preference stock except the right to receive Citadel nonvoting
common stock, without interest, upon the surrender of such Craig common
preference stock certificate.

          .   Each share of common stock, par value $0.001 per share, of Reading
issued and outstanding immediately prior to the effective time will be converted
into the right to receive 1.25 shares of the Citadel nonvoting common stock. All
such Reading common stock, when so converted, will no longer be outstanding and
will be automatically canceled and retired and will cease to exist. The holder
of a certificate of Reading common stock that, immediately prior to the
effective time, represented outstanding shares of Reading common stock will
cease having any rights with respect to such Reading common stock except the
right to receive Citadel nonvoting common stock, without interest, upon
surrender of such Reading common stock certificate.

                                      66

          .   Each share of the Series A convertible redeemable preferred stock,
par value $0.001 per share, of Reading issued and outstanding immediately before
the effective time will remain outstanding and will not be affected by the
consolidation.

          .   Each share of Series B convertible preferred stock, par value
$0.001 per share, of Reading issued and outstanding immediately before the
effective time will remain outstanding and will not be affected by the
consolidation.

          .   Each share of Citadel nonvoting common stock and each share of
Citadel Class B voting common stock, par value $0.01 per share, issued and
outstanding immediately before the effective time will remain outstanding and
will not be affected by the consolidation.

          .   All shares of common stock, par value $0.01 per share, of Craig
Merger Sub, Inc. issued and outstanding will be automatically converted into one
share of Craig common stock and will be the only Craig common stock issued and
outstanding after the consolidation.

          .   All shares of common stock, par value $0.01 per share, of Reading
Merger Sub, Inc. issued and outstanding will be automatically converted into one
share of Reading common stock and will be the only Reading common stock issued
and outstanding after the consolidation.

     No fractional shares of Citadel nonvoting common stock will be issued in
the consolidation, and fractional interests will not entitle the owner of such
fractional interests to vote or to any rights of a stockholder of Citadel. All
former holders of Craig common stock and common preferred stock and of Reading
common stock who would otherwise be entitled to receive fractional shares will
instead receive a payment determined by multiplying the fraction of a share of
Citadel nonvoting common stock to which the holder otherwise would be entitled
by the average closing price of Citadel nonvoting common stock as reported by
American Stock Exchange for the five trading days immediately prior to the
effective time of the consolidation.

     All shares of Citadel nonvoting common stock issued upon the surrender of
certificates in accordance with the terms of the consolidation agreement will be
deemed to have been issued in full satisfaction of all rights pertaining to
those certificates and the Craig and Reading stock represented thereby.

Conversion Procedures

     Promptly following the effective time of the consolidation, an exchange
agent will send a letter of transmittal to each holder of record of Craig and
Reading stock certificates along with instructions for effecting the surrender
of such Craig and Reading stock certificates in exchange for certificates
representing shares of Citadel stock (plus cash in lieu of fractional shares as
provided above).  Upon the surrender of a Craig or Reading stock certificate for
cancellation, together with a duly executed and properly completed letter of
transmittal, the holder of the stock certificate will be entitled to receive
that number of whole shares of Citadel stock, and if applicable, cash pursuant
to the consolidation agreement.  CRAIG AND READING STOCKHOLDERS SHOULD NOT SEND
IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL.

     If your Craig or Reading stock certificate has been lost, stolen or
destroyed, you may make an affidavit of that fact, and if required by Citadel,
post a bond in such reasonable amount as Citadel may direct as indemnity against
any claim that may be made against it with respect to such Craig or Reading
stock certificate.  Upon the receipt of the affidavit and bond, if any, the
exchange agent will issue in exchange for such lost, stolen or destroyed Craig
or Reading stock certificate, the requisite number of Citadel nonvoting common
stock, as set forth in the consolidation agreement, and if applicable, cash in
lieu of any fractional share.

                                      67

Treatment of Stock Options

     At the effective time of the consolidation, automatically and without any
action on the part of the holder of a Craig or Reading stock option, each
outstanding stock option of Craig and Reading outstanding at the effective time
of the consolidation will be assumed by Citadel and become an option to purchase
shares of either Citadel nonvoting common stock or Citadel voting common stock,
as specified in a written election by the holder of such option.  If no election
is made, a Craig option holder or Reading option holder will receive options to
purchase Citadel nonvoting common stock.  The number of shares of Citadel
nonvoting common stock or voting common stock purchasable under the options will
be determined by multiplying the number of shares of Craig or Reading stock, as
applicable, issuable upon the exercise of such option by the applicable
conversion ratio for Craig stock or Reading stock in the consolidation.  The
number of shares of Citadel common stock purchasable under the options will be
rounded down to the nearest whole share, without payment of cash for any
fractional shares.  The options will be exercisable at an exercise price per
share equal to the per share exercise price of such Craig or Reading option
divided by the applicable conversion ratio for such stock in the consolidation,
and otherwise upon the same terms and conditions as such outstanding options to
purchase the Craig and Reading options.  In each case, the exercise price will
be rounded up to the nearest whole cent.

     Following the consolidation, Citadel will file a registration statement
with the Securities and Exchange Commission covering the shares of Citadel
common stock issuable with respect to the options assumed in the consolidation.

Representations and Warranties

     The consolidation agreement contains certain representations and warranties
made by Craig, Reading and Citadel.  The following are reciprocal
representations and warranties made by each party:

          .    Each party is a corporation duly organized, validly existing and
in good standing under Nevada law.

          .    Each of the subsidiaries are corporations duly organized, validly
existing and in good standing under the law of its jurisdiction.

          .    Each party and its subsidiaries are not in default in any
observation, performance or fulfillment of any provision of their articles of
incorporation or bylaws.

          .    Each party has the authorized capital stock, as set forth in the
consolidation agreement.

          .    Each party has full corporate power and authority to execute and
deliver the consolidation agreement.

          .    Each party's performance under the consolidation agreement,
subject to the appropriate statutory and regulatory approvals, will not result
in the violation of any other obligations.

          .    Each party has filed the appropriate documents with the
Securities and Exchange Commission.

          .    Each party has disclosed complete and accurate financial
statements.

          .    Except as disclosed in Securities and Exchange Commission reports
filed prior to the date of the consolidation agreement, no party or any of their
subsidiaries have incurred any liability or obligations that may adversely
affect the respective company.

                                      68

          .    Except as disclosed in Securities and Exchange Commission reports
filed prior to the date of the consolidation agreement, all parties have
conducted their business in the ordinary course consistent with the past and no
developments or changes have occurred that would have an adverse effect on the
respective company.

          .    The parties and their subsidiaries have timely filed all tax
returns, paid all taxes as of the closing date and do not have any audits
pending or threatened.

          .    Except as disclosed in Securities and Exchange Commission reports
filed prior to the date of the consolidation agreement, no parties, their
subsidiaries or any directors and officers thereof have any suits, claims,
actions or proceedings, pending or threatened.

          .    The parties have disclosed all employee benefit plans or similar
arrangements.

          .    The parties have complied with the appropriate federal and state
environmental, health and safety laws, statutes and regulations.

          .    The parties hold all material approvals, licenses, permits,
registrations and other authorizations necessary for the lawful conduct of their
businesses.

          .    The parties currently have in place all policies of insurance
reasonably required in the operation of their businesses.

          .    No party has any labor disputes or complaints and the parties are
otherwise in full compliance with the applicable labor laws and regulations.

          .    The parties have disclosed all contracts, leases, agreements,
arrangements or understandings, and all such contracts, leases, agreements,
arrangements or understandings are in full force and no party is in breach or
default of such contracts, leases, agreements, arrangements or understandings.

          .    Each party will obtain the vote or consent of the stockholders
entitled to vote on the consolidation agreement.

          .    No party has disclosed any untrue statement of material fact or
omitted any material fact in its registration statement, prospectus and proxy
statement, as filed with the Securities and Exchange Commission.

          .    The parties and their subsidiaries own or are licensed to use all
intellectual property currently being used in the conduct of their businesses.

          .    No party has or will pay any finder fees or other commissions to
any broker, finder or investment banker (other than Marshall & Stevens
Incorporated) in connection with the consolidation agreement.

          .    The board of directors of each party has received an opinion to
the effect that the stock conversion ratio is fair from a financial point of
view.

          .    In addition to the representations and warranties set forth
above, Citadel represents and warrants to Craig and Reading the following:

          .    It has the authority to issue the appropriate shares of nonvoting
common stock required to complete the transactions contemplated by the
consolidation agreement.

          .    It will list on the American Stock Exchange the additional
Citadel voting and nonvoting shares issuable in connection with the
consolidation.

                                      69

     All the representations and warranties that the parties have made
in the consolidation agreement will expire at the effective time of the
consolidation.

     The representations and warranties in the consolidation agreement are
complicated and not easily understood.  You are urged to read carefully Articles
IV, V and VI of the consolidation agreement, which set forth the representations
and warranties of each party.

Conduct of Business Prior to the Consolidation

     Citadel, Craig and Reading have agreed that, prior to the completion of the
consolidation, unless contemplated by the consolidation agreement or otherwise
consented to in writing by the other parties, that Citadel, Craig and Reading
will and will cause its subsidiaries to conduct their respective businesses in
the ordinary course consistent with past practice and will use reasonable
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
key employees subject to the terms of the consolidation agreement.

     Citadel, Craig and Reading have agreed that, until the effective time of
the consolidation, subject to certain exceptions and unless consented to in
writing by the other parties, they will not do and will not permit any of their
subsidiaries to do any of the following:

          .    Adopt or propose any changes to their articles of incorporation
of bylaws.

          .    Declare, set aside or pay any dividend or other distribution with
respect to any capital stock of the respective company or repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other securities
of, or other ownership interests in the respective company.

          .    Merge, consolidate with any other person or acquire assets of any
other person except in the ordinary course of business or transactions among
wholly-owned subsidiaries of the respective company.

          .    Sell, lease, license or otherwise surrender, relinquish or
dispose of any material assets or properties or transactions other than among
wholly-owned subsidiaries of the respective company, except in the ordinary
course of business.

          .    Issue any securities or enter into any amendment of any term of
any outstanding security.

          .    Change any method of accounting or accounting practice, except
for any changes required by generally accepted accounting principles.

          .    Take any action that would give rise to a claim under the Worker
Adjustment and Retraining Notification Act or any similar state law or
regulation.

          .    Become bound to any obligation or obligate 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 its subsidiaries.

          .    Take, agree or commit to take any action that would make any
representation and warranty of the respective company hereunder inaccurate in
any material respect prior to the effective time of the consolidation.

          .    Adopt, amend, or assume any obligation to contribute to any
employee benefit plan or severance plan or enter into, amend or modify any
employment, severance or similar contract with any person.

          .    Make any election under any of their stock option plans to pay
cash in conversion for terminating awards under such plans.

                                      70

          .    Agree or commit to do any of the foregoing.

Employee Matters and Benefit Plans

     Citadel, Craig and Reading will evaluate their personnel needs and consider
continuing the employment of certain employees of the companies and their
subsidiaries on a case-by-case basis.  After the effective time of the
consolidation, Citadel will initially provide to any employees of Citadel, Craig
and Reading and their subsidiaries who are employed by Citadel, Craig or Reading
and their respective subsidiaries as of the effective time substantially the
same base salary or wages provided subject to such changes in base salary or
wages as will be determined by Citadel after the effective time.  Citadel will
take all reasonable actions necessary or appropriate to permit such employees to
continue to participate from and after the effective time in the employee
benefit plans or arrangements in which such employees were participating
immediately prior to the effective time.  Notwithstanding the foregoing, Citadel
may permit any such employee benefit plan or arrangement to be terminated or
discontinued on or after the effective time, provided that Citadel will take all
reasonable action necessary to permit such employees to participate in benefit
plans comparable to those maintained with respect to other employees.

     At the effective time, Citadel will assume the obligations of the Craig and
Reading under the Craig benefit plan, the Reading benefit plan and any
employment contracts or severance agreements between Craig and any of its
employees and Reading and any of its employees.  The terms of each such Craig
benefit plan and Reading benefit plan will continue to apply in accordance with
their terms.  Subject to certain restrictions and conditions, at the effective
time, each outstanding award (including restricted stock, phantom stock, stock
equivalents and stock units) under any employee incentive or benefit plans,
programs or arrangements and non-employee director plans presently maintained by
Craig or Reading which provide for grants of equity-based awards shall be
amended or converted into a similar instrument of Citadel, in each case with
such adjustments to the terms of such awards as are appropriate to preserve the
value inherent in such awards with no detrimental effects on the holders
thereof.

Conditions to Consummation of the Consolidations

     Conditions to the Obligations of the Each Party

     Our respective obligations to effect the consolidation are subject to the
fulfillment, at or prior to the effective time, of the following conditions:

          .    Citadel stockholders, Craig stockholders and Reading stockholders
approve the proposed transactions.

          .    No action suit or proceeding instituted by any governmental
authority is pending, and there is no statute, rule, regulation, executive
order, decree, ruling or injunction of any court or governmental authority
prohibiting the consummation of the consolidation or making the consolidation
illegal.

          .    The Securities and Exchange Commission declares the registration
statement effective under the Securities Act, and no stop order or similar
restraining order suspending the effectiveness of the registration statement is
in effect and no proceeding for that purpose is pending before or threatened by
the Securities and Exchange Commission.

          .    We have obtained such permits, authorizations, consents or
approvals required to consummate the transaction contemplated in the
consolidation agreement.

          .    The shares of Citadel nonvoting common stock to be issued in the
consolidation will have been approved for listing on the American Stock
Exchange, subject to official notice of issuance.

          .    Marshall & Stevens has not withdrawn its fairness opinion, or
modified it in any materially adverse way.

                                      71

     Conditions to the Obligations of Citadel

     The obligations of Citadel to effect the consolidation are subject to the
fulfillment, at or prior to the effective time, of the following additional
conditions:

          .    Craig and Reading will have performed in all material respects
their obligations under the consolidation agreement required to be performed by
them at or prior to the effective time and the representations and warranties of
Craig and Reading contained in the consolidation agreement, to the extent
qualified with respect to materiality will be true and correct in all respects,
and to the extent not so qualified will be true and correct in all material
respects, in each case as of the date of the consolidation agreement and at and
as of the effective time as if made at and as of such time unless otherwise
expressly contemplated by the consolidation agreement.

          .    All proceedings to be taken by Craig and Reading in connection
with the transactions contemplated by the consolidation agreement and all
documents, instruments, certificates to be delivered by Craig and Reading in
connection with the transactions contemplated by the consolidation agreement
will be reasonably satisfactory in form and substance to Citadel and its
counsel.

          .    From the date of the consolidation agreement through the
effective time, neither Craig nor Reading nor any of their subsidiaries will
have any change in their financial condition, business operations or prospects.

     Conditions to the Obligations of Craig

     The obligations of Craig to effect the consolidation are subject to the
fulfillment, at or prior to the effective time, of the following additional
conditions:

          .    Citadel and Reading will have performed in all material respects
their obligations under the consolidation agreement required to be performed by
them at or prior to the effective time and the representations and warranties of
Citadel and Reading contained in the consolidation agreement, to the extent
qualified with respect to materiality will be true and correct in all respects,
and to the extent not so qualified will be true and correct in all material
respects, in each case as of the date of the consolidation agreement and at and
as of the effective time as if made at and as of such time unless otherwise
expressly contemplated by the consolidation agreement.

          .    All proceedings to be taken by Citadel and Reading in connection
with the transactions contemplated by the consolidation agreement and all
documents, instruments, certificates to be delivered by Citadel and Reading in
connection with the transactions contemplated by the consolidation agreement
will be reasonably satisfactory in form and substance to Craig and its counsel.

          .    From the date of the consolidation agreement through the
effective time, neither Citadel nor Reading nor any of their subsidiaries will
have any change in their financial condition, business operations or prospects.

     Conditions to the Obligations of Reading

     The obligations of Reading to effect the consolidation are subject to the
fulfillment, at or prior to the effective time, of the following additional
conditions:

          .    Citadel and Craig will have performed in all material respects
their obligations under the consolidation agreement required to be performed by
them at or prior to the effective time and the representations and warranties of
Citadel and Craig contained in the consolidation agreement, to the extent
qualified with respect to materiality will be true and correct in all respects,
and to the extent not so qualified will be true and correct in all material
respects, in each case as of the date of the consolidation agreement and

                                      72

at and as of the effective time as if made at and as of such time unless
otherwise expressly contemplated by the consolidation agreement.

          .    All proceedings to be taken by Citadel and Craig in connection
with the transactions contemplated by the consolidation agreement and all
documents, instruments, certificates to be delivered by Citadel and Craig in
connection with the transactions contemplated by the consolidation agreement
will be reasonably satisfactory in form and substance to Reading and its
counsel.

          .    From the date of the consolidation agreement through the
effective time, neither Citadel nor Craig nor any of their subsidiaries will
have any change in their financial condition, business operations or prospects.

Expenses

     Except as provided in the consolidation agreement, all expenses incurred by
the parties hereto will be borne solely and entirely by the party that has
incurred such expenses.  Such expenses 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 the consolidation agreement, the preparation, printing, filing
and mailing of the Registration Statement, the Proxy Statement/Prospectus, the
solicitation of stockholder approvals, other regulatory filings and all other
matters related to the consummation of the transactions contemplated hereby.

     However, the expenses of Citadel, Craig and Reading for certain specified
expenses (including certain fees and expenses of accountants, experts, and
consultants, but excluding the fees and expenses of legal counsel and investment
bankers) related to preparing, printing, filing and mailing the registration
statement, this joint proxy statement/prospectus and all Securities and Exchange
Commission and other regulatory filing fees incurred in connection with the
registration statement, this joint proxy statement/prospectus and all other
applicable regulatory filings will be allocated among the parties as agreed to
by the parties.

Termination of the Consolidation Agreement

     The consolidation agreement may be terminated at any time and the
consolidation may be abandoned prior to the effective time, whether before or
after approval by the stockholders of Citadel, Craig and Reading:

          .    By our mutual written consent.

          .    By any of us in certain circumstances if the effective time has
not occurred on or before January 30, 2002.

          .    By any of us if there has been a breach of any representation,
warranty, covenant or agreement on the part of the other parties set forth in
the consolidation agreement, which breach would, if uncured, cause certain
closing conditions not to be satisfied and which breach shall not have been
cured within 20 business days after notice of such breach.

          .    By Citadel if there has been a breach of any representation,
warranty, covenant or agreement on the part of Craig or Reading set forth in the
consolidation agreement, which breach would, if uncured, cause certain closing
conditions not to be satisfied and which will not have been cured within 20
business days after notice of such breach.

          .    By any of us if any governmental authority or court of competent
jurisdiction will have enacted, issued, promulgated, enforced or entered any law
or governmental order making the consummation of the consolidation illegal or
otherwise prohibiting the consolidation and such governmental order will have
become final and nonappealable, provided that the party seeking to terminate the
consolidation agreement will have used its reasonable best efforts to remove or
lift such governmental order.

                                      73

          .    By any of us if the requisite stockholder approval is not
obtained upon a vote at a duly held meeting of stockholders or at any
adjournment or postponement thereof.

     In the event of termination of the consolidation agreement and the
abandonment of one or more of the mergers pursuant to the consolidation
agreement, all obligations of the parties will terminate, except the obligations
of the parties pursuant to the termination provision and except for the
provisions regarding expenses, publicity and attorneys' fees, access and
confidential information, provided that no party will be relieved from liability
for any breach of the consolidation agreement.

                    AGREEMENTS RELATED TO THE CONSOLIDATION

     This section of the joint proxy statement/prospectus describes agreements
related to the consolidation agreement.  While we believe that these
descriptions cover the material terms of these agreements, these summaries may
not contain all of the information that is important to you.

Craig Affiliate Agreements

     As a condition to the exchange of their Craig stock certificates for
Citadel nonvoting common stock certificates, the affiliates of Craig have agreed
to execute an affiliate agreement.  Under the affiliate agreement, such
affiliates must agree to not make any offer to sell or sell any of the Citadel
shares of nonvoting common stock that such affiliates have received in the
consolidation in violation of the Securities Act, including Rule 145.  Further,
the affiliates must agree that they have been advised that their shares of
Citadel nonvoting common stock are registered on Form S-4, but that any sale of
such shares by them must be registered or an exemption found thereto.  Further,
the affiliate agreement states that Citadel will be entitled to (1) issue stop
transfer instructions to the transfer agent with respect to the transfer of such
affiliates' shares of Citadel nonvoting common stock and (2) place legends on
the such certificates, which state that such certificates were issued in a Rule
145 transaction and any resale of such stock must be in compliance with Rule 145
or an available exemption from registration under the Securities Act.

Reading Affiliate Agreements

     As a condition to the exchange of their Reading stock certificates for
Citadel nonvoting common stock certificates, the affiliates of Reading have
agreed to execute an affiliate agreement.  Under the affiliate agreement, such
affiliates must agree to not make any offer to sell or sell any of the Citadel
shares of nonvoting common stock that such affiliates have received in the
consolidation in violation of the Securities Act, including Rule 145.  Further,
the affiliates must agree that they have been advised that their shares of
Citadel nonvoting common stock are registered on Form S-4, but that any sale of
such shares by them must be registered or an exemption found thereto.  Further,
the affiliate agreement states that Citadel will be entitled to: (1) issue stop
transfer instructions to the transfer agent with respect to the transfer of such
affiliates' shares of Citadel nonvoting common stock and (2) place legends on
the such certificates, which state that such certificates were issued in a Rule
145 transaction and any resale of such stock must be in compliance with Rule 145
or an available exemption from registration under the Securities Act.

               PROPOSAL TO AMEND CITADEL'S 1999 STOCK OPTION PLAN

     This section of the joint proxy statement/prospectus describes the proposal
to amend Citadel's 1999 stock option plan in connection with the consolidation.
The amendment will increase the number of shares of Citadel common stock
reserved for issuance under the plan from 666,000 to 1,600,000.  The purposes of
the amendment are to allow for Citadel's assumption of currently outstanding
Craig stock options and Reading stock options as provided in the consolidation
agreement and to afford the consolidated company more available options for
grant to participants in its options plan.  The amendment will become effective,
assuming it is approved at the joint meetings, concurrently with the
effectiveness of the consolidation, assuming it is completed.  The text of the
amendment is attached as ANNEX C to this joint proxy statement/prospectus.

                                      74

1999 Stock Option Plan

     Citadel's 1999 stock option plan was adopted by Citadel's board of
directors on November 18, 1999 and approved by the stockholders of Citadel on
September 12, 2000.

     The key terms of Citadel's stock option plan are outlined below:

          .    Currently, the plan provides that options covering no more than
666,000 shares of common stock may be granted under the plan; however, if the
proposed amendment to the plan is approved by Citadel stockholders at the joint
meetings, this limitation will be increased to 1,600,000.

          .    No eligible person may be granted options covering more than
100,000 shares in any twelve-month period.

          .    The stock option plan provides for the grant of options to
officers, directors, employees and consultants of Citadel and its affiliates.

          .    The plan is administered by the Citadel board of directors or a
committee of the board, which has discretion to select the optionees and to
establish the terms and conditions of each option, subject to the provisions of
the plan. If necessary in order to comply with Rule 16b-3 under the Securities
Exchange Act of 1934 and Section 162(m) of the Internal Revenue Code, or the
Code, the committee will, in the board's discretion, be comprised solely of
"non-employee directors" within the meaning of Rule 16b-3 and "outside
directors" within the meaning of Section 162(m) of the Code.

          .    Options granted under the plan may be "incentive stock options"
as defined in Section 422 of the Code, or nonqualified options, as designated in
the relevant stock option agreement.

          .    The exercise price of incentive stock options may not be less
than the fair market value of Citadel's common stock as of the date of grant or
110% of the fair market value if the grant is to an employee who owns more than
10% of the total combined voting power of all classes of capital stock of
Citadel or of any affiliate.

          .    Nonqualified options may be granted under the plan at an exercise
price less than the fair market value of Citadel common stock on the date of
grant. The exercise price of any grant to any person who owns more than 10% of
the total combined voting power of all classes of capital stock of Citadel or of
any affiliate may not be less than 110% of the fair market value of the stock at
the time of the grant.

          .    In general, upon termination of employment of an optionee, all
options granted to such person that are not exercisable on the date of such
termination will immediately terminate, and any options that are exercisable may
be exercised within 90 days of the termination of employment.

          .    Options may not be exercised more than ten years after the grant
date (five years after the grant date if the grant is an incentive stock option
to any person who owns more than 10% of the total combined voting power of all
classes of Citadel capital stock).

          .    Except with the express approval of the administrator with
respect to nonqualified options, options granted under the stock option plan are
not transferable and may be exercised only by the respective grantees during
their lifetime or by their heirs, executors or administrators in the event of
death.

          .    Shares subject to options granted under the option plan which
expire, terminate or are cancelled without being exercised will be reserved for
subsequently granted options. The number and exercise prices of options
outstanding are subject to adjustment in the case of certain transactions such
as stock splits, reverse stock splits, stock dividends, recapitalizations,
combinations or reclassifications, or if Citadel effects a spin-off of a
subsidiary.

                                      75

          .    The plan is effective for ten years, unless sooner terminated or
suspended.

Certain Federal Income Tax Consequences

     If an option is treated as an incentive stock option, the optionee will
recognize no income upon grant or exercise of the option unless the alternative
minimum tax rules apply.  Upon an optionee's sale of the shares (assuming that
the sale occurs at least two years after grant of the option and at least one
year after exercise of the option), any gain will be taxed to the optionee under
beneficial capital gains tax rates.  If the optionee disposes of the shares
prior to the expiration of the above holding periods, then the optionee will
recognize ordinary income in an amount generally measured as the difference
between the exercise price and the lower of the fair market value of the shares
at the exercise date or the sale price of the shares.  Any gain or loss
recognized on such a premature sale of the shares in excess of the amount
treated as ordinary income will be capital gain or loss.  The maximum federal
tax rate applicable to shares held for more than 12 months, but less than 18
months, is 28% and the maximum federal tax rate applicable to shares held for at
least 18 months is 20%.

     All other options granted under Citadel's stock option plan are
nonqualified stock options and will not qualify for any special tax benefits to
the optionee.  An optionee generally will not recognize any taxable income at
the time he or she is granted a nonqualified stock option.  However, upon
exercise of the nonqualified stock option, the optionee will recognize ordinary
income for federal income tax purposes in an amount equal to the excess of the
then fair market value of each share over its exercise price.  Upon an
optionee's resale of such shares, any difference between the sale price and the
fair market value of such shares on the date of exercise will be treated as
capital gain or loss and will generally qualify for beneficial capital gains
rates depending on the length of the holding period.

     Subject to the limits on deductibility of employee remuneration under
Section 162(m) of the Code, Citadel will generally be entitled to a tax
deduction in the amount that an optionee recognizes as ordinary income with
respect to an option.  Options granted to executive officers under the plan are
intended to qualify as performance-based compensation for purposes of Section
162(m) of the Code, and Citadel will generally be entitled to a tax deduction in
the amount recognized by such officers upon exercise of the options.  No tax
authority or court has ruled on the applicability of Section 162(m) to the plan,
and any final determination of the deductibility of amounts realized upon
exercise of an option granted under the plan could ultimately be made by the
Internal Revenue Service or a court having final jurisdiction with respect to
the matter.  Citadel retains the right to grant options under the stock option
plan in accordance with the terms of the plan regardless of any final
determination as to the applicability of Section 162(m) of the Code to these
grants.

Vote Required

     Approval of the proposal to amend Citadel's 1999 stock option plan will
require the affirmative vote of a majority of the outstanding shares of Citadel
voting common stock present and voted at the Citadel annual meeting.  James J.
Cotter, Craig and Reading are obligated under the consolidation agreement to
vote 981,063 shares, representing approximately 49% of the outstanding shares of
Citadel voting common stock, in favor of the proposal.

Recommendation of the Board of Directors as to the Amendment

     The Citadel board of directors unanimously approved the amendment to
Citadel's 1999 stock option plan and recommends that Citadel stockholders vote
FOR the proposal to adopt the amendment to the plan.

                                      76

             PROPOSAL TO AMEND CITADEL'S ARTICLES OF INCORPORATION

     This section of the joint proxy statement/prospectus describes the proposal
to amend Citadel's articles of incorporation in connection with the
consolidation, assuming it is approved at the joint meetings and completed.  The
amendment to Citadel's articles of incorporation is attached as ANNEX D to this
joint proxy statement/prospectus.

     On August 16, 2001, in connection with its approval of the consolidation
agreement, the board of directors of Citadel approved an amendment to the
articles of incorporation of Citadel to change the name of the company from
Citadel Holding Corporation to "Reading International, Inc."  The amendment will
become effective, assuming it is approved at the joint meetings, concurrently
with the effective date of the consolidation, assuming it is completed.

     We believe that the new name will better reflect the consolidated company's
business following completion of the consolidation.

     Following the name change, Citadel's outstanding shares of common stock
will continue to be represented by existing stock certificates unless and until
they are submitted to Citadel's transfer agent in connection with a proposed
share transfer.  YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR CITADEL
PROXY.

Vote Required

     Approval of the proposal to amend Citadel's articles of incorporation will
require the affirmative vote of a majority of the outstanding shares of Citadel
voting common stock.  James J. Cotter, Craig and Reading are obligated under the
consolidation agreement to vote 981,063 shares, representing approximately 49%
of the outstanding shares of Citadel voting common stock, in favor of the
proposal.

Recommendation of Board of Directors as to the Amendment

     The Citadel board of directors unanimously approved the amendment to
Citadel's articles of incorporation and recommends that Citadel stockholders
vote FOR the proposal to adopt the amendment.

                      PROPOSAL TO RATIFY AND APPROVE THE
                   FORM OF CITADEL INDEMNIFICATION AGREEMENT

     This section of the joint proxy statement/prospectus provides a brief
summary of the material provisions of the form of indemnification agreement
between Citadel and its directors and officers.  The form of the Citadel
indemnification agreement is attached as ANNEX E to this joint proxy
statement/prospectus.  This summary is qualified in its entirety by reference to
the form of Citadel indemnification agreement.  The proposal to ratify and
approve the form of Citadel indemnification agreement is unrelated to the
consolidation and related proposals.

Indemnification

          .    The form of indemnification agreement provides that Citadel
agrees to hold harmless and indemnify its directors and officers:

          .    To the fullest extent authorized or permitted by Nevada Revised
Statutes Sections 78.751 and 78.7502, or any successor statute or amendment
thereof, or any other statutory provisions authorizing or permitting such
indemnification that is adopted after the date of the indemnification agreement.

          .    Against any and all expenses, judgment damages, fines, penalties
and amounts paid in settlement actually and reasonably incurred by or for the
officer or director in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative to

                                      77

which the officer or director is made a party as a result of the fact that at
the time of the act or omission, which is the subject matter of such action
covered by the indemnification agreement, the officer or director was an
officer, director, employee or agent of Citadel or serving at the request of
Citadel as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.

          .    To the fullest extent as may be provided under the non-
exclusivity indemnification provisions of the bylaws of Citadel and Nevada
Revised Statutes Sections 78.751 and 78.7502.

          .    The provisions of the form of indemnification agreement are in
addition to, and not in limitation of, the indemnification provisions of
Citadel's bylaws and the statutes mentioned.

Limitations on Indemnification

          .    Under the form of indemnification agreement, no indemnity will be
paid by Citadel to the extent that:

          .    Payment for indemnification is actually made to the officer or
director under a valid and collectible insurance policy or policies, except with
respect to any excess amount due beyond the amount of payment to the officer or
director under such insurance policy or policies. Notwithstanding the
availability of such insurance policy or policies, the officer or director also
may claim indemnification from Citadel pursuant to the indemnification agreement
by assigning to Citadel in writing any claims under such insurance policy or
policies to the extent of the amount paid by Citadel to the officer or director.

          .    The officer or director is indemnified by Citadel, otherwise than
pursuant to the indemnification agreement.

          .    Final judgment is rendered against the officer or director for
the payment of dividends or other distributions to stockholders of Citadel in
violation of the provisions of Subsection 2 of Nevada Revised Statutes Section
78.300, as amended.

          .    Final judgment is rendered against the officer or director for an
accounting of profits made from the purchase or sale by the officer or director
of securities of Citadel pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or other similar provisions of any
federal, state or local statutory law.

          .    The conduct of the officer or director giving rise to the claim
for indemnification is finally adjudged by a court of competent jurisdiction to
have been a breach of fiduciary duty which involved intentional misconduct,
fraud or a knowing violation of the law.

          .    Except as otherwise provided in the indemnification agreement, in
connection with all or any part of a suit or other proceeding which is initiated
or maintained by or on behalf of the officer or director, or any suit or other
proceeding by the officer or director against Citadel or its directors,
officers, employees or other agents, unless (1) such indemnification is
expressly required by Nevada law; (2) the suit or other proceeding was expressly
authorized by an official act of the board of directors of Citadel or (3) such
indemnification is provided by Citadel, in its sole discretion, pursuant to the
powers vested in it under Nevada law.

Advancement of Expenses

     Under the form of indemnification agreement, in the event the officer or
director incurs costs or expenses in connection with the defense of any such
civil, criminal, administrative or investigative action, suit or proceeding,
Citadel agrees to pay such costs or expenses as they are incurred and in advance
of the final disposition of the action, suit or proceeding within 30 calendar
days of submission of bills or vouchers for such costs or expenses, provided
that the officer or director delivers to Citadel prior to such payment a written
undertaking to repay the amount paid if it is ultimately determined by a court
of competent jurisdiction that the officer or director is not entitled to
indemnification.  However, in the case of an action brought against the

                                      78

officer or director by Citadel pursuant to the provisions of Section 16(b) of
the Securities Exchange Act of 1934, as amended, or other similar provisions of
any federal, state or local statutory law for an accounting of profits made from
the purchase or sale by the officer or director of securities of Citadel, the
costs and expenses of the officer or director will not be advanced unless such
advancement is approved by the board of directors of Citadel by a majority vote
of a quorum consisting of directors who are not parties to the action, suit or
proceeding, or, if such a quorum cannot be obtained, by independent legal
counsel in a written opinion that such indemnification is proper in the
circumstances.

Vote Required

     Approval of the proposal to ratify and approve the form of Citadel
indemnification agreement will require the affirmative vote of a majority of the
outstanding shares of Citadel voting common stock present and voted at the
Citadel annual meeting.  James J. Cotter, Craig and Reading are obligated under
the consolidation agreement to vote 981,063 shares, representing approximately
49% of the outstanding shares of Citadel voting common stock, in favor of the
proposal.

Recommendation of the Board of Directors as to the Form of Indemnification
Agreement

     The Citadel board of directors unanimously approved the form of
indemnification agreement between Citadel and its officers and directors and
recommends that Citadel stockholders vote FOR the proposal to ratify and approve
the form of Citadel indemnification agreement.

                      PROPOSAL TO ELECT CITADEL DIRECTORS

     This section of the joint proxy statement/prospectus describes the proposal
to elect directors of Citadel.  At the joint meetings, Citadel voting common
stockholders will be asked to vote on the election of five directors.  The five
nominees receiving the highest number of votes will be elected directors of
Citadel, whether or not the consolidation is completed.  All directors elected
at the Citadel annual meeting will be elected to serve until the 2002 annual
meeting of stockholders and until their respective successors have been duly
elected and qualified.

Nominees For Election

     Set forth below is information concerning the Citadel director-nominees:

                                                                                                   Citadel Director
Name                                 Age                     Current Occupation                          Since
- ----                                ----                     ------------------                          -----
                                                                                          
James J. Cotter (1)                  63          Chairman of the Board and Chief Executive                1986
                                                 Officer of Citadel, Craig and Reading

S. Craig Tompkins(1)                 50          Vice Chairman of the Board of Citadel,                   1993
                                                 President and Director of Craig, Vice
                                                 Chairman of the Board of Reading

Robert M. Loeffler(2)                77          Retired, Director of Public Companies                    2000

William C. Soady(2)(3)               57          Chief Executive Officer of ReelMall.com                  1999

Alfred Villasenor, Jr.               71          President of Unisure Insurance Services,                 1987
(1)(2)(3)(4)                                     Incorporated

_____________________
(1)  Member of the executive committee.
(2)  Member of the compensation committee.
(3)  Member of the conflicts committee.
(4)  Member of the audit committee.

                                      79

     Mr. Cotter was first elected to the Citadel board in 1986, resigned in
1988, and was re-elected to the board in June 1991.  He was elected Chairman of
the Board of Citadel in 1992, and has served as Chief Executive Officer since
August 1, 1999.  Mr. Cotter is the Chairman and a director of Citadel
Agricultural Inc., or CAI, a wholly-owned subsidiary of Citadel; the Chairman
and a member of the management committee of each of the agricultural
partnerships which constitute the principal assets of CAI; and the Chairman and
a member of the management committee of Big 4 Farming, LLC, an 80%-owned
subsidiary of Citadel.  From 1988 through January 1993, Mr. Cotter also served
as the President and a director of Cecelia Packing Corporation, a citrus grower
and packer, that is wholly owned by Mr. Cotter, and is the Managing Director of
Visalia, LLC, which holds a 20% interest in each of the CAI agricultural
partnerships and Big 4 Farming.  Mr. Cotter has been Chairman of the Board of
Craig since 1988 and a Craig director since 1985.  Mr. Cotter has served as a
director of Reading since 1990, and as the Chairman of the board of Reading
since 1991.  On October 16, 2000, Mr. Cotter resigned as the Chief Executive
Officer of Citadel, Craig and Reading in favor of Mr. Scott Braly, but resumed
those positions following the resignation of Mr. Braly on December 27, 2000.
Mr. Cotter is, and has been, for more than the past five years, a director of
The Decurion Corporation, a motion picture exhibition and real estate company.
Mr. Cotter began his association with The Decurion Corporation in 1969.  Mr.
Cotter has been the Chief Executive Officer and a director of Townhouse Cinemas
Corporation motion picture exhibition company, since 1987.  Mr. Cotter is the
General Partner of James J. Cotter, Ltd., a general partner in Hecco Ventures,
which is involved in investment activities and is a shareholder in Craig.  Mr.
Cotter was also a director of Stater Bros., Inc., a retail grocery company
between 1987 and September 1997.

     Mr. Tompkins has been a Citadel director since 1993, was elected Vice
Chairman of the Board in July of 1994, and Secretary/Treasurer and Principal
Accounting Officer in August 1994.  Mr. Tompkins resigned as Principal
Accounting Officer and Treasurer in November 1999, upon the appointment of
Andrzej Matyczynski to serve as Citadel's Chief Financial Officer.  Mr. Tompkins
was a partner in the law firm of Gibson Dunn & Crutcher until March 1993, when
he resigned to become President of Craig and Reading.  Mr. Tompkins has served
as a director of Craig and Reading since February 1993.  In January 1997, Mr.
Tompkins resigned as President of Reading upon the appointment of Robert
Smerling to that position and became the Vice Chairman of Reading.  Mr. Tompkins
was elected to the board of directors of G&L Realty Corporation, a New York
Stock Conversion-listed real estate investment trust in December 1993, and
currently serves as the Chairman of the audit committee of that REIT.  Mr.
Tompkins was elected in April 2000 to the Board of Directors of Fidelity Federal
Bank, FSB, where he serves on the audit and compensation committees.  Mr.
Tompkins is also President and a director of CAI, a member of the management
committee of each of the agricultural partnerships and of Big 4 Farming, and
serves for administrative convenience as an Assistant Secretary of Visalia and
Big 4 Ranch, Inc., a partner with CAI and Visalia in each of the agricultural
partnerships.

     Mr. Loeffler has been a Citadel director since March 27, 2000 and a
director of Craig since February 22, 2000.  Mr. Loeffler had previously served
as a director of PaineWebber Group and Advance Machine Vision Corporation.  Mr.
Loeffler is a retired attorney and was counsel to the California law firm of
Wyman Bautzer Kuchel & Silbert from 1987 to March 1991.  He was Chairman of the
Board, President and Chief Executive Officer of Northview Corporation from
January to December 1987 and a partner in the law firm of Jones, Day, Reavis &
Pogue until December 1986.

     Mr. Soady was elected to the Citadel board of directors on August 24, 1999.
Mr. Soady has been the Chief Executive Officer of ReelMall.com, an on-line movie
memorabilia company since January 1, 2000.  Prior to that, Mr. Soady served as
the President of Distribution, PolyGram Films since 1997.  Mr. Soady has also
served as Director of Showscan Entertainment, Inc. from 1994 to present, the
Foundation of Motion Picture Pioneers, Inc. from 1981 to present, the Will
Rogers Memorial Fund from 1981 to present, and has been a member of the Motion
Picture Academy of Arts & Sciences since 1982.

     Mr. Villasenor is the President and owner of Unisure Insurance Services,
Incorporated, a corporation which has specialized in life, business and group
health insurance for over 35 years.  He is also a general partner in Playa del
Villa, a California real estate commercial center.  Mr. Villasenor is a director
of the John Gogian Family Foundation and a director of Richstone Centers, a non-
profit organization.  In 1987,

                                      80

Mr. Villasenor was elected to the boards of directors of Citadel and Fidelity
and served on the Fidelity board until 1994. Mr. Villasenor also served as a
director of Gateway Investments, Inc., a wholly owned subsidiary of Fidelity,
from June 22, 1993 until February 24, 1995.

Compensation of Directors

     Other than the Chairman of the Board, directors who are not officers or
employees of Citadel receive an annual retainer of $15,000, plus $1,500, if
serving as a board committee Chairman, and $800 for each meeting attended in
person and $300 for each telephonic meeting. Mr. Cotter, the Chairman of the
Board, receives $45,000 annually. In addition, directors who were not officers
or employees of Citadel at the time of their initial election or appointment to
the board have received vested options to purchase 20,000 shares of Citadel
nonvoting common stock at an exercise price defined in Citadel's stock option
plan. In this regard, Messrs. Loeffler, Soady and Villasenor were granted 20,000
shares each of Citadel's nonvoting common stock on April 13, 2000 at an exercise
price of $2.76 per share upon surrendering their shares granted under the now-
expired 1996 stock option plan.

     In November 2000, Messrs, Soady and Villasenor were paid $25,000 each for
their efforts relating to Citadel's acquisition of Off-Broadway Investments,
Inc. and certain rights and interest comprising the City Cinemas chain.

Meetings and Committees of the Board of Directors

     During the fiscal year ended December 31, 2000, there were nine meetings of
the Citadel board of directors.  Each of the directors attended at least 75% of
the board meetings and of the meetings of the board committees held after the
election of such individual to the board or such committee.

     Citadel currently has standing audit, executive, conflicts, compensation
and stock option committees.  The Board of Directors does not have a nominating
committee.

     The members of the audit committee are Alfred Villasenor, Jr., who serves
as Chairman, Robert M. Loeffler and William C. Soady. During 2000, the audit
committee held one meeting. On May 23, 2000 the board adopted a new audit
committee charter, which requires the committee to meet at least four times
annually and at least once separately with the independent auditors and
management. The board of directors included additional provisions in the new
charter to strengthen the audit committee's function of overseeing the quality
and integrity of the accounting, audit, internal control and financial reporting
policies and practices of Citadel. The charter includes professional criteria
for the members of the audit committee and empowers the audit committee to
investigate any matter for which it has oversight authority. The audit
committee, among other things, makes recommendations to the board concerning the
engagement of Citadel's independent auditors; monitors and reviews the
performance of Citadel's independent auditors; reviews with management and the
independent auditor Citadel's financial statements, including the matters
required for discussion under Statement of Auditing Standards No. 61; monitors
the adequacy of Citadel's operating and internal controls; discusses with
management legal matters that may have a material impact on Citadel's financial
statements; and issues an annual report to be included in Citadel's proxy
statement as required by the rules of the Securities and Exchange Commission.

     The members of the executive committee are James J. Cotter, who serves as
Chairman, S. Craig Tompkins and Alfred Villasenor, Jr. The executive committee
exercises the authority of the board of directors in the management of the
business and affairs of the Citadel between meetings of the board of directors.

     The members of the conflicts Committee are William C. Soady, the Chairman,
and Alfred Villasenor, Jr. The conflicts committee was chartered to consider and
make recommendations with respect to all matters as to which one or more
directors may have conflicts of interest.

                                      81

     The compensation committee is currently comprised of William C. Soady, the
Chairman, and Alfred Villasenor, Jr. The compensation committee is responsible
for recommending to the board of directors remuneration for executive officers
of Citadel. It is currently Citadel's policy that directors who are executive
officers and whose compensation is at issue are not involved in the discussion
of, or voting on, such compensation. The compensation committee also currently
administers Citadel's stock option plans.

Vote Required

     The five nominees receiving a plurality of the votes cast, in person or by
proxy, at the Citadel annual meeting will be elected to the Citadel board of
directors. James J. Cotter, Craig and Reading have advised Citadel that they
intend to vote 981,063 shares, representing approximately 49% of the outstanding
shares of Citadel voting common stock, in favor of the election of the board
nominees named.

Recommendation of the Board of Directors as to the Election of Directors

     The board of directors recommends that Citadel stockholders vote FOR each
of the board nominees named above.

                     MARKET PRICE AND DIVIDEND INFORMATION

Historical Market Prices

     Citadel's nonvoting common stock and voting common stock are traded on the
American Stock Exchange under the symbols "CDL.A" and "CDL.B." Craig common
stock and common preference stock are traded on The New York Stock Exchange
under the symbols "CRG" and "CRGpf." Reading common stock is traded on The
Nasdaq Stock Market under the symbol "RDGE." The following table sets forth for
the periods indicated the quarterly high and low sale prices per share of
Citadel nonvoting common stock and voting common stock, Craig common stock and
common preference stock and Reading common stock as reported on these exchanges
or Nasdaq:

                                                                 Citadel
                                   ---------------------------------------------------------------------
                                                 High                                   Low
                                   ------------------------------         ------------------------------
                                    Nonvoting             Voting           Nonvoting             Voting
                                   -----------           --------         -----------           --------
                                                                                    
Calendar Year 1999:
 First Quarter..................      N/A                 $3.6250             N/A                $3.2500
 Second Quarter.................      N/A                  5.4375             N/A                 3.3750
 Third Quarter..................      N/A                  5.0000             N/A                 3.8125
 Fourth Quarter.................      N/A                  4.0625             N/A                 2.6875

Calendar Year 2000:
 First Quarter..................    $3.1250               $3.3125           $2.3125              $2.3750
 Second Quarter.................     3.2500                3.5000            2.6250               2.8750
 Third Quarter..................     3.2500                3.7500            2.5000               2.6250
 Fourth Quarter.................      3.000                3.1250            2.1250               2.2500

Calendar Year 2001:
 First Quarter..................    $2.6875               $3.0000           $1.7200              $2.2700
 Second Quarter.................     2.0500                2.2700            1.3500               1.5000
 Third Quarter (through.........     1.9200                1.8900            1.2600               1.5000
 August 21).....................     1.9200                1.8900            1.2600               1.5000

                                                                82

                                                                  Craig
                                   ------------------------------------------------------------
                                              High                            Low
                                   ----------------------------     ---------------------------
                                                      Common                         Common
                                     Common          Preference      Common          Preference
                                   ---------        -----------     -------        ------------
                                                                       
Calendar Year 1999:
 First Quarter..................    $8.0625             $7.8750      $7.0000         $6.3125
 Second Quarter.................     8.2500              7.6250       6.6250          6.6875
 Third Quarter..................     7.3750              7.2500       6.6250          6.1875
 Fourth Quarter.................     6.7500              6.3125       5.7500          5.1875

Calendar Year 2000:
 First Quarter..................    $6.6250             $6.1250      $4.7500         $3.6667
 Second Quarter.................     5.4375              4.6250       3.6875          3.5000
 Third Quarter..................     4.6875              3.8750       3.0000          3.0000
 Fourth Quarter.................     3.2500              3.0000       2.5000          2.1250

Calendar Year 2001:
 First Quarter..................    $3.2500             $2.6250      $1.9500         $1.7000
 Second Quarter.................     2.4100              1.9000       1.7000          1.3500
 Third Quarter (through.........     2.0500              1.9000       1.7000          1.5000
 August 21).....................     2.0500              1.9000       1.7000          1.5000

                                                Reading Common
                                   --------------------------------------------
                                          High                     Low
                                   -------------------    ---------------------
                                                    
Calendar Year 1999:
 First Quarter..................             $8.1250                $7.0000
 Second Quarter.................              8.3750                 6.6250
 Third Quarter..................              7.5625                 5.7500
 Fourth Quarter.................              6.1250                 5.0000

Calendar Year 2000:
 First Quarter..................             $5.7500                $3.1563
 Second Quarter.................              6.0000                 4.5000
 Third Quarter..................              5.8750                 3.6250
 Fourth Quarter.................              3.5000                 2.1250

Calendar Year 2001:
 First Quarter..................             $2.9375                $1.1250
 Second Quarter.................              2.3800                 1.6600
 Third Quarter (through.........              2.1400                 1.7500
 August 21).....................              2.2300                 1.7600

Recent Share Prices

     The table below presents the per share closing prices of Citadel nonvoting
common stock, Craig common stock and common preference stock and Reading common
stock and the pro forma equivalent market value of Citadel nonvoting common
stock to be issued for Craig common stock and common preference stock and
Reading common stock in the consolidation as of the dates indicated.  The pro
forma equivalent market value is determined by multiplying the market prices of
Craig common stock and common preference stock and Reading common stock by the
fixed number of shares of Citadel nonvoting common stock to be received for each
share of Craig common stock and common preference stock and Reading common stock
in the consolidation.  July 18, 2001 was the last trading date before
announcement of the agreement in principle to

                                      83

accomplish the consolidation. September ___, 2001 was the latest practicable
trading day before the printing of this joint proxy statement/prospectus.

                                                                                    Pro Forma
                                          Pro Forma                             Equivalent Market                   Pro Forma
                                      Equivalent Market                         Value of Citadel                 Equivalent Market
                                      Value of Citadel                              Nonvoting                     Value of Citadel
                            Craig     Nonvoting Common                            Common Stock        Reading    Nonvoting Common
                            Common    Stock Received in      Craig Common       Received in the       Common     Stock Received in
                            Stock     the Consolidation    Preference Stock      Consolidation        Stock      the Consolidation
                            ------    -----------------    ----------------    -----------------     -------     -----------------
                                                                                               
July 18, 2001........       $2.05                                                                    $1.90
September __, 2001...       $                                                                        $

                                      84

     Stockholders are advised to obtain current market quotations. No assurance
can be given as to the market prices of Craig common stock or common preference
stock or of Reading common stock at any time before the consummation of
consolidation, or as to the market price of Citadel nonvoting common stock or
voting common stock at any time after consolidation. The conversion ratios are
fixed in the consolidation agreement, and we do not intend to adjust the
conversion ratios to compensate Craig stockholders simply for any decrease, in
the market price of Reading common stock or Citadel nonvoting common stock which
could occur before the consolidation becomes effective or simply to compensate
Reading stockholders for any decreases in the market prices of Craig common
stock or common preference stock or of Citadel nonvoting common stock which
might occur before the consolidation becomes effective. Similarly, the
conversion ratios will not be adjusted simply to compensate Citadel stockholders
for any decreases in the market prices of Craig common stock or common
preference stock or of Reading common stock which might occur before the
consolidation becomes effective.

Dividends

     None of the companies has ever declared or paid cash dividends on its
common stock.

     Pursuant to the consolidation agreement, each of the companies has agreed
not to pay cash dividends pending the consummation of consolidation. If the
consolidation is not completed, each of the boards of directors of Citadel,
Craig and Reading anticipates that it would continue its prior policy of
retaining all earnings to finance the operation and expansion of its business.
Citadel also expects to retain all earnings for use in the operation and
expansion of its business and does not anticipate paying any cash dividends
after the consolidation.

                                      85

                  UNAUDITED PRO FORMA CONSOLIDATION CONDENSED
                         COMBINED FINANCIAL STATEMENTS

     On August 17, 2001, Citadel, Craig and Reading entered into the
consolidation agreement providing for the consolidation of Craig and Reading
with Citadel. The transaction is to be accounted for as a purchase of Craig and
Reading by Citadel. Under the terms of the consolidation agreement, each issued
and outstanding share of Craig common stock and common preference stock will
automatically be converted into 1.17 shares of Citadel nonvoting common stock
and each issued and outstanding share of Reading common stock will automatically
be converted into 1.25 shares of Citadel nonvoting common stock. Additionally,
stock options to purchase common stock or common preference stock of Craig and
common stock of Reading will automatically be converted into stock options to
purchase an equivalent number of shares of either Citadel voting common stock or
nonvoting common stock, at each option holder's election.

     The unaudited pro forma condensed combined financial statements of Citadel
give effect to the consolidation, based on a preliminary allocation of the total
purchase cost. The historical financial information has been derived from the
respective historical financial statements of Citadel, Craig and Reading, and
should be read in conjunction with these financial statements and the related
notes contained in the companies' annual reports and quarterly reports that have
been furnished with this joint proxy statement/prospectus.

     The unaudited pro forma condensed combined statement of operations combines
Citadel's, Craig's and Reading's historical statements of operations for the
year ended December 31, 2000 and the six months ended June 20, 2001 and gives
effect to the consolidation, including the amortization of goodwill, as if the
consolidation occurred on January 1, 2000. The unaudited pro forma condensed
combined balance sheet assumes the consolidation took place as of June 30, 2001,
and allocates the total purchase consideration to the fair values of the assets
and liabilities of Craig and Reading, based on a preliminary valuation.

     The total estimated purchase consideration of the consolidation has been
allocated on a preliminary basis to assets and liabilities based on management's
estimates of their fair value, with the excess costs over the net assets
acquired allocated to goodwill. This allocation is subject to change pending a
final analysis of the total purchase cost and the fair value of the assets and
liabilities acquired. The impact of these changes could be material.

     The unaudited pro forma condensed combined financial information is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
consolidation had been consummated at the dates indicated, nor is it necessarily
indicative of future operating results or financial position of the combined
company.

                                      86

                   Consolidated Citadel Holding Corporation
               Unaudited Pro Forma Combined Statement Of Income
                         Year Ended December 31, 2000

                                                                                                            -----------------
                                          Citadel            RDGE             CRG            Sub-Total          RDGE
                                     ----------------------------------------------------------------------------------------
                                                                                               
Revenues                                  $ 7,384          $ 42,237         $ 42,237          $ 91,858        $(42,237)   (B)
Operating expenses                          8,439            67,946           68,522           144,907         (67,946)
                                     ----------------------------------------------------------------------------------------
Operating income                          $(1,055)         $(25,709)        $(26,285)         $(53,049)       $ 25,709
                                     ----------------------------------------------------------------------------------------

Non-operating income (expense)             (2,483)           11,040           10,352            18,909         (11,040)

                                     ----------------------------------------------------------------------------------------
Earnings before taxes and minority
 interest                                 $(3,538)         $(14,669)        $(15,933)         $(34,140)       $ 14,669
                                     ----------------------------------------------------------------------------------------

Income taxes                                    -            (1,078)            (660)           (1,738)          1,078
                                     ----------------------------------------------------------------------------------------
Earnings before minority interest         $(3,538)         $(15,747)        $(16,593)         $(35,878)       $ 15,747
                                     ----------------------------------------------------------------------------------------

Minority interest                              (4)              (77)           4,914             4,833          (4,914)
                                     ----------------------------------------------------------------------------------------
Net earnings                              $(3,542)         $(15,824)        $(11,679)         $(31,045)       $ 10,833
                                     ----------------------------------------------------------------------------------------

Less: Preferred stock dividends           $     -          $ (4,030)        $   (455)           (4,485)       $  4,030

                                     ----------------------------------------------------------------------------------------
Net (loss) income appliable to
 common shareholders                      $(3,542)         $(19,854)        $(12,134)         $(35,530)       $ 14,863
                                     ========================================================================================

Basic (loss) per share                     ($0.47)           ($2.67)          ($1.16)
                                     ========================================================================================

Diluted (loss) per share                   ($0.47)           ($2.67)          ($1.16)
                                     ========================================================================================

                                               Consolidating Eliminations & Adjustments                              Proforma
                                     ------------------------------------------------------------------
                                             AFC                    CDL                       CRG                 Consolidated(A)
                                     ----------------------------------------------------------------------------------------------
                                                                                                      
Revenues                                    $4,956   (F)          $(138)    (H)                                        $ 54,439
Operating expenses                           4,160                 (138)    (H)                                          80,983
                                     ----------------------------------------------------------------------------------------------
Operating income                            $  796                $   -                      $    -                    $(26,544)
                                     ----------------------------------------------------------------------------------------------

Non-operating income (expense)                  28                 (455)    (C)               1,401   (D)                 8,447
                                                                   (258)    (E)                 258   (E)
                                                                   (109)    (F)                (265)  (F)
                                                                    (22)    (G)
                                     ----------------------------------------------------------------------------------------------
Earnings before taxes and minority
 interest                                   $  824                $(844)                     $1,900                    $(18,097)
                                     ----------------------------------------------------------------------------------------------

Income taxes                                   (39)                                                                        (699)
                                     ----------------------------------------------------------------------------------------------
Earnings before minority interest           $  785                $(844)                     $1,900                    $(18,796)
                                     ----------------------------------------------------------------------------------------------

Minority interest                             (392)                                                                        (474)
                                     ----------------------------------------------------------------------------------------------
Net earnings                                $  392                $(844)                     $1,900                    $(19,270)
                                     ----------------------------------------------------------------------------------------------

Less: Preferred stock dividends                                                              $  455   (C)

                                     ----------------------------------------------------------------------------------------------
Net (loss) income appliable to
 common shareholders                        $  393                $(844)                     $2,355                    $(19,270)
                                     ==============================================================================================

Basic (loss) per share                                                                                                 $  (0.88) (I)
                                     ==============================================================================================

Diluted (loss) per share                                                                                               $  (0.88)
                                     ==============================================================================================

___________________________________

  (A)  The consolidated pro forma results presented above do not reflect the
       anticipated savings in the general and administrative expenses of
       approximately $1,000,000 per year. By combining the three companies,
       management expect to eliminate duplication of certain general and
       administrative expenses such as SEC filing and reporting costs, audit
       expenses, and directors' fees.
  (B)  Reading is a stand-alone publicly traded company. Craig owns
       approximately 78% of Reading and consolidates the accounts of Reading.
       Reading's income and expenses are eliminated here to avoid double
       counting of its results for the year ended December 31, 2000.
  (C)  Citadel owns all 70,000 shares issued and outstanding of Reading Series A
       convertible preferred stock, and is entitled to receive quarterly
       cumulative dividends at the annual rate of $455,000, or $113,570 per
       quarter. In consolidation, all dividends paid and received on the Series
       A preferred stock are eliminated.
  (D)  Reading and Craig own approximately 48.3% of the outstanding common stock
       of Citadel on a consolidated basis and record 48.3% of Citadel's net
       (loss) income as equity in earnings of unconsolidated subsidiaries. In
       consolidation, the equity pick-up of Citadel's net loss by Craig and
       Reading is eliminated.
  (E)  Citadel, Craig and Reading have related party borrowings at December 31,
       2001. All interest expense and interest income recorded by the companies
       are eliminated in consolidation.
  (F)  The consolidated company will have 50% equity interest in the Angelika
       Film Center LLC, or AFC (with the other 50% equity interest owned by
       National Auto Credit, Inc.), and Citadel Cinemas Inc., a wholly owned
       subsidiary of Citadel, has the management rights to the Angelika Film
       Center & Cafe, the only operating assets of AFC. In the event of a
       deadlock between the members, the deciding vote is cast by the Chairman
       of Reading. Accordingly, the consolidated company will consolidate the
       operations of AFC for financial reporting purposes and eliminate the
       equity income recorded by Citadel and Reading during the year ended
       December 31, 2000. Prior to the sale of 50% interest in AFC on April 5,
       2000, Reading consolidated the results of AFC, since it owned a 5/6th
       interest in the Angelika Film Center. Subsequent to the sale, Reading
       accounted for its remaining 1/6th interest in Angelika Film Center as an
       equity investment for the period from April 6 to December 31, 2000. As a
       result, the AFC adjustment column above represents AFC's operating
       results for the period from April 6 to December 31, 2000.
  (G)  Management expects to incur direct transaction costs of approximately
       $600,000 in connection with the consolidation. Of this amount,
       approximately $200,000 will be capitalized as start-up costs and
       amortized over 20 years. Had the consolidation of the three companies
       taken place as of January 1, 2000, the consolidated company would have
       recorded an additional $22,000 in amortization of such start-up costs.
  (H)  Reading provided consulting service to Citadel during the year ended
       December 31, 2000. All such consulting fee income and expense recorded by
       the companies are eliminated in consolidation.
  (I)  Based on the exchange ratio of 1.17 shares of Citadel's nonvoting common
       stock for each share of Craig common stock and common preference stock
       and 1.25 shares of Citadel's nonvoting common stock for each share of
       Reading common stock, management expects post-consolidation shares
       outstanding of 21,821,318 (net of treasury shares).

                                      87

                   Consolidated Citadel Holding Corporation
               Unaudited Pro Forma Combined Statement Of Income
                        Six Months Ended June 30, 2001

                                                                                                                      ------------
                                                      Citadel          Reading         Craig         Sub-Total        Reading
                                            --------------------------------------------------------------------------------------
                                                                                                      
Revenues                                              $ 10,752         $19,343         $19,343         $49,438       $(19,343)  (B)
Operating expenses                                      11,969          21,765          22,028          55,762        (21,765)
                                            --------------------------------------------------------------------------------------
Operating income                                      $ (1,217)        $(2,422)        $(2,685)        $(6,324)      $  2,422
                                            --------------------------------------------------------------------------------------

Non-operating income (expense)                             121            (282)           (524)           (685)           282

                                            --------------------------------------------------------------------------------------
Earnings before taxes and minority interest           $ (1,096)        $(2,704)        $(3,209)        $(7,009)      $  2,704
                                            --------------------------------------------------------------------------------------

Income taxes                                              (195)           (509)           (429)         (1,133)           509
                                            --------------------------------------------------------------------------------------
Earnings before minority interest                     $ (1,291)        $(3,213)        $(3,638)        $(8,142)      $  3,213
                                            --------------------------------------------------------------------------------------

Minority interest                                          (10)            (76)          1,002             916         (1,002)
                                            --------------------------------------------------------------------------------------
Net earnings                                          $ (1,301)        $(3,289)        $(2,636)        $(7,226)      $  2,211
                                            --------------------------------------------------------------------------------------

Less: Preferred stock dividends                       $      -         $(2,015)        $  (227)         (2,242)      $  2,015

                                            --------------------------------------------------------------------------------------
Net (loss) income applicable to common
 shareholders                                         $ (1,301)        $(5,304)        $(2,863)        $(9,468)      $  4,226
                                            ======================================================================================

Basic (loss) per share                                  ($0.13)         ($0.71)         ($0.27)
                                            ======================================================================================

Diluted (loss) per share                                ($0.13)         ($0.71)         ($0.27)
                                            ======================================================================================

                                                           Consolidating Eliminations & Adjustments                   Proforma
                                                ------------------------------------------------------------
                                                       AFC                Citadel                Craig             Consolidated (A)
                                                ------------------------------------------------------------------------------------

Revenues                                              $3,387   (F)                                                      $33,482
Operating expenses                                     2,548                                                             36,545
                                                ------------------------------------------------------------------------------------
Operating income                                      $  839                                   $   -                    $(3,063)
                                                ------------------------------------------------------------------------------------

Non-operating income (expense)                          (456)             (227)   (C)            519   (D)                 (761)
                                                                           (80)   (E)             80   (E)
                                                                           (61)   (F)           (122)  (F)
                                                                           (11)   (G)
                                                ------------------------------------------------------------------------------------

Earnings before taxes and minority interest           $  383              (379)                $ 477                    $(3,824)
                                                ------------------------------------------------------------------------------------

Income taxes                                             (16)                                                              (640)
                                                ------------------------------------------------------------------------------------
Earnings before minority interest                     $  367              (379)                $ 477                    $(4,464)
                                                ------------------------------------------------------------------------------------

Minority interest                                       (184)                                                              (270)
                                                ------------------------------------------------------------------------------------
Net earnings                                          $  183              (379)                $ 477                    $(4,734)
                                                ------------------------------------------------------------------------------------

Less: Preferred stock dividends                                                                $ 227   (C)                   --

Net (loss) income applicable to common          ------------------------------------------------------------------------------------
 shareholders                                         $  183             $(379)                $ 704                    $(4,734)
                                                ====================================================================================

Basic (loss) per share                                                                                                   ($0.22) (H)
                                                ====================================================================================

Diluted (loss) per share                                                                                                 ($0.22)
                                                ====================================================================================

________________________________

  (A)  The consolidated pro forma results presented above do not reflect the
       anticipated savings in the general and administrative expenses of
       approximately $1,000,000 per year. By combining the three companies,
       management expect to eliminate duplication of certain general and
       administrative expenses such as SEC filing and reporting costs, audit
       expenses and directors' fees.
  (B)  Reading is a stand-alone publicly traded company. Craig owns
       approximately 78% of Reading and consolidates the accounts of Reading.
       Reading's income and expenses are eliminated here to avoid double
       counting of its results for the six months ended June 30, 2001.
  (C)  Citadel owns all 70,000 shares issued and outstanding of Reading's Series
       A convertible preferred stock, and is entitled to receive quarterly
       cumulative dividends at the annual rate of $455,000, or $113,570 per
       quarter. In consolidation, all dividends paid and received on the Series
       A preferred stock are eliminated.
  (D)  Reading and Craig own approximately 48.3% of the outstanding common stock
       of Citadel on a consolidated basis and record 48.3% of Citadel's net
       (loss) income as equity in earnings of unconsolidated subsidiaries. In
       consolidation, the equity pick-up of Citadel's net loss by Craig and
       Reading is eliminated.
  (E)  Citadel, Craig, and Reading have related party borrowings at June 30,
       2001. All interest expense and interest income recorded by the companies
       are eliminated in consolidation.
  (F)  The consolidated company will have 50% equity interest in the AFC (with
       the other 50% equity interest owned by National Auto Credit, Inc.) and
       Citadel Cinemas, Inc., a wholly owned subsidiary of Citadel, has the
       management rights to the Angelika Film Center & Cafe, the only operating
       assets of AFC. In the event of a deadlock between the members, the
       deciding vote is cast by the Chairman of Reading. Accordingly, the
       consolidated company will consolidated the operations of AFC for
       financial reporting purposes and eliminate the equity income recorded by
       Citadel during the six months ended June 30, 2001.
  (G)  Management expects to incur direct transaction costs of approximately
       $600,000 in connection with the consolidation. Of this amount,
       approximately $200,000 will be capitalized as start-up costs and
       amortized over 20 years. Had the consolidation of the three companies
       taken place as of January 1, 2001, the consolidated company would have
       recorded an additional $11,000 in amortization of such start-up costs.
  (H)  Based on the exchange ratio of 1.17 shares of Citadel's nonvoting common
       stock for each share of Craig common stock and common preference stock
       and 1.25 shares of Citadel's nonvoting common stock for each share of
       Reading common stock, management expects post-consolidation shares
       outstanding of 21,821,318 (net of treasury shares)

                                      88

                          Citadel Holding Corporation
                  Unaudited Pro Forma Combined Balance Sheet
                                 June 30, 2001

                                                                                         Elimination                    ---------
                                                       Citadel     Reading      Craig   of Reading [A]      Sub-Total   AFC [B]
                                                ---------------------------------------------------------------------------------
                                                                                                      
ASSETS
- ------
Cash and cash equivalents                              $ 6,745    $  2,605   $  2,951       $  (2,605)      $  9,696     $     2
Receivables                                              2,751       1,552      2,749          (1,552)         5,500         207
Investment in marketable securities                        642           -          -               -            642           -
Prepaid expenses and other current assets                1,567       2,689      2,771          (2,689)         4,338          80
                                                ---------------------------------------------------------------------------------
          Total current assets                          11,705       6,846      8,471          (6,846)        20,176         289
                                                ---------------------------------------------------------------------------------
Rental properties, less accumulated depreciation         8,814           -          -               -          8,814
Property held for development                                -      25,131     25,131         (25,131)        25,131
Property, equipment and improvements                    20,330      50,302     50,846         (50,302)        71,176         572
Note receivable                                              -       7,861      7,861          (7,861)         7,861
Investment in stockholder affiliate                      7,000           -          -               -          7,000
Equity investment in unconsolidated affiliates           3,114      12,573     16,785         (12,573)        19,899
Goodwill                                                10,482           -          -               -         10,482       8,965
Capitalized lease transaction costs                        744           -          -               -            744
Other assets                                             2,362       2,112      2,171          (2,112)         4,533         295

                                                ---------------------------------------------------------------------------------
          Total assets                                 $64,551    $104,825   $111,265       $(104,825)      $175,816     $10,121
                                                =================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities
Current portion of note payable                            152       3,816      5,814          (3,816)         5,966
Other liabilities                                        7,531       9,745     10,358          (9,745)        17,889          88
                                                                                                                   -
                                                ---------------------------------------------------------------------------------
     Total current liabilities                           7,683      13,561     16,172         (13,561)        23,855          88
                                                ---------------------------------------------------------------------------------
Long-term portion of notes payable                      17,447      14,113     14,113         (14,113)        31,560
Other long-term liabilities                              1,440       5,353     13,721          (5,353)        15,161       1,174
Minority interest in consolidated affiliate                 64         429     14,715            (429)        14,779
                                                ---------------------------------------------------------------------------------
          Total liabilities                             26,634      33,456     58,721         (33,456)        85,355       1,262
                                                ---------------------------------------------------------------------------------

 Convertible redeemable Series A Preferred Stock             -       7,000      7,000          (7,000)         7,000

Stockholders' Equity
 Citadel Class A Non-voting Common Stock, par               80           -          -               -             80
  value $.01, 100,000,000 shares authorized,
  5,335,913 issued and outstanding
 Citadel Class B Voting Common Stock, par value             20           -          -               -             20
  $.01, 20,000,000 shares authorized, 1,333,969
  issued and outstanding

Reading Series B Preferred Stock                             -           1          -              (1)             -

Reading Common Stock                                         -           7          -              (7)             -

Craig Class A Common Preference Stock                        -           -         87               -             87
Craig Common Stock                                           -           -      1,361               -          1,361

 Other capital                                          39,815      64,361     65,915         (64,361)       105,730       8,859

 Treasury stock                                              -           -    (21,819)              -        (21,819)
 Note receivable from stockholder                       (1,998)          -          -               -         (1,998)
                                                ---------------------------------------------------------------------------------
 Total stockholders' equity [I]                        $37,917    $ 64,369   $ 45,544       $ (64,369)      $ 83,461     $ 8,859
                                                ---------------------------------------------------------------------------------
Total liabilities and stockholders' equity             $64,551    $104,825   $111,265       $(104,825)      $175,816     $10,121
                                                =================================================================================

                                                                                       Pro Forma
                                                  ----------------------------------------------------------------------------------
                                                   Acquisition Adjustments [B]                      Eliminations &
                                                   ---------------------------
                                                  AFC ELIM [B]       Reading [C]      Craig           Adjustments        Combined
                                                  ----------------------------------------------------------------------------------
                                                                                                          
ASSETS
- ------
Cash and cash equivalents                                                                                                   $  9,698
Receivables                                                                                                                    5,707
Investment in marketable securities                                                                                              642
Prepaid expenses and other current assets                                                                                      4,418
                                                  ----------------------------------------------------------------------------------
          Total current assets                           -                  -                                                 20,465
                                                  ----------------------------------------------------------------------------------
Rental properties, less accumulated depreciation                                                                               8,814
Property held for development                                            (145)             [C]                                24,986
Property, equipment and improvements                                    2,654          37  [C]                                74,439
Note receivable                                                                                        (1,706)  [F]            6,155
Investment in stockholder affiliate                                                                    (7,000)  [F]                -
Equity investment in unconsolidated affiliates      (6,227)             5,423       1,928  [C]        (17,423)  [F]            3,600
Goodwill                                             1,799                                                                    21,246
Capitalized lease transaction costs                                                                                              744
Other assets                                                                                               22                  5,023
                                                                                                          173   [H]
                                                  ----------------------------------------------------------------------------------
          Total assets                             $(4,428)          $  7,932    $  1,965            $(25,934)              $165,472
                                                  ==================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities
Current portion of note payable                                                                        (3,704)  [F]            2,262
Other liabilities                                                       2,500         500  [D]            600   [H]           21,577
                                                                                                                                   -
                                                  ----------------------------------------------------------------------------------
     Total current liabilities                           -              2,500         500              (3,104)                23,839
                                                  ----------------------------------------------------------------------------------
Long-term portion of notes payable                                                                                            31,560
Other long-term liabilities                                                                                (4)                16,331
Minority interest in consolidated affiliate          4,431                        (14,286) [E]                                 4,924
                                                  ----------------------------------------------------------------------------------
          Total liabilities                          4,431              2,500     (13,786)             (3,108)                76,654
                                                  ----------------------------------------------------------------------------------

 Convertible redeemable Series A Preferred Stock                                                       (7,000)  [F]                -

Stockholders' Equity
 Citadel Class A Non-voting Common Stock, par                               -                              18   [G]               98
  value $.01, 100,000,000 shares authorized,
  5,335,913 issued and outstanding
 Citadel Class B Voting Common Stock, par value                             -                                                     20
  $.01, 20,000,000 shares authorized, 1,333,969
  issued and outstanding
                                                                            -
Reading  Series B Preferred Stock                                      25,900      18,829  [C]        (18,829)  [F]                -
                                                                                                      (25,900)  [F]
Reading Common Stock                                                                                                               -

Craig Class A Common Preference Stock                                                                     (87)  [F]                -
Craig Common Stock                                                                                     (1,361)  [F]                -

 Other capital                                      (8,859)           (20,468)     (3,078)              6,943                 88,700
                                                                                                         (427)  [H]
 Treasury stock                                                                                        21,819   [F]                -
 Note receivable from stockholder                                                                       1,998   [F]                -
                                                  ----------------------------------------------------------------------------------
 Total stockholders' equity [I]                    $(8,859)          $  5,432    $ 15,751           $ (15,826)              $ 88,818
Total liabilities and stockholders' equity         $(4,428)          $  7,932    $  1,965           $ (25,934)              $165,472
                                                  ==================================================================================

 [A]  Reading is a stand-alone publicly traded company. Craig owns approximately
      78% of Reading and consolidates the accounts of Reading for financial
      reporting purposes. Accordingly, the accounts of Reading are eliminated as
      its assets and liabilities are already reflected in the consolidated
      balance sheet of Craig.
 [B]  The consolidated company will have 50% equity interest in the AFC (with
      the other 50% equity interest owned by National Auto Credit, Inc.) and
      Citadel Cinemas, Inc., a wholly owned subsidiary of Citadel, has the
      management rights to the Angelika Film Center & Cafe, the only operating
      assets of AFC. In the event of a deadlock between the members, the
      deciding vote is cast by the Chairman of Reading. Accordingly, the
      consolidated company will consolidate AFC for financial reporting
      purposes. The adjustments represent Reading's and Citadel's step-up in
      basis amounting to approximately $1,639,000 and $160,000, respectively.
 [C]  Value estimates for Craig's and Reading's real estate and other investment
      assets have been calculated by Marshall & Stevens. As the consolidation of
      the three companies are recorded under the purchase accounting method, the
      fair value will replace the book value of certain assets.
 [D]  The amount represents additional miscellaneous contingent liabilities.
 [E]  The minority interest or Reading is duplicated on Craig's consolidated
      balance sheet. This is eliminated in consolidation.
 [F]  All cross-ownership of common and preferred stock, note payable/receivable
      transactions between Citadel, Craig and Reading are eliminated in
      consolidation.
 [G]  Record the par value of the estimated 18,696,517 shares of Citadel
      nonvoting common stock that will be issued and outstanding upon
      consolidation of the three companies. The 18,696,517 shares is calculated
      as 21,551,327 shares to be issued, less 2,854,810 treasury shares.
 [H]  Management expects to incur direct transaction costs of approximately
      $600,000 in connection with the consolidation. Of this amount,
      approximately $200,000 will be capitalized as start-up costs and amortized
      over 20 years. Had the consolidation of the three companies taken place as
      of January 1, 2001, the consolidated company would have recorded an
      additional $11,000 in amortization of such start-up costs.
 [I]  The pro forma balance sheet has been prepared to reflect the consolidation
      of Craig and Reading by Citadel for 21,551,327 shares of Citadel nonvoting
      common stock.

                                      89

COMPARISON OF RIGHTS OF HOLDERS OF CITADEL NONVOTING COMMON STOCK, CRAIG COMMON
                       STOCK AND COMMON PREFERENCE STOCK

                           AND READING COMMON STOCK

     This section of the joint proxy statement/prospectus describes material
differences between the rights of holders of Craig common stock and common
preference stock and holders of Reading common stock and the rights of holders
of Citadel nonvoting common stock.  The rights compared are those found in the
respective companies' articles of incorporation and bylaws and provisions of the
corporation laws of Nevada, where each of the companies is incorporated.  While
we believe that these descriptions address the material differences, this
summary may not contain all of the information that is important to the
stockholders of Craig and Reading.  Craig and Reading stockholders should read
carefully this entire joint proxy statement/prospectus and the documents
referred to in this summary for a more complete understanding of the differences
between the rights of Craig stockholders and Reading stockholders, on the one
hand, and the rights of stockholders of Citadel, on the other.

     Craig's articles of incorporation and bylaws currently govern the rights of
stockholders of Craig.  Reading's articles of incorporation and bylaws currently
govern the rights of stockholders of Reading.  After completion of the
consolidation, the stockholders of both Craig and Reading will become
stockholders of Citadel.  As a result, the rights of the former Craig and
Reading stockholders will be governed by Citadel's articles of incorporation and
bylaws.

     As a result of the consolidation, Craig and Reading common stockholders
will become holders of Citadel nonvoting common stock.  The following is a
summary of a comparison among rights of holders of Citadel stock, Craig stock
and Reading stock.  Included in this summary is a comparison of the differences
between the articles and bylaws of each company and Nevada law as set forth in
the Nevada Revised Statutes.  This summary is qualified in its entirety by
reference to the full text of Citadel's articles of incorporation and bylaws,
Craig's articles of incorporation and bylaws and Reading's articles of
incorporation and bylaws.  Furthermore, the description of the Nevada Revised
Statutes is a summary only and is qualified in its entirety by reference to the
Nevada Revised Statutes.

Authorized Common Stock

     Citadel

     The Citadel articles of incorporation authorize 20,000,000 shares of voting
common stock, $0.01 par value, and 100,000,000 shares of nonvoting common stock,
$0.01 par value.  There are currently shares of both classes of common stock
outstanding.

     The Citadel articles authorize 20,000,000 shares of preferred stock, $0.01
par value, in one or more series comprising such number of shares and having
such voting power, or no voting power, and such rights, preferences and
limitations, as the Citadel board of directors may determine.  No preferred
shares have been issued or are outstanding.

     The holders of shares of the Citadel nonvoting common stock have no voting
rights except that the holders of the shares of Citadel nonvoting common stock
are entitled to vote as a separate class on any amendments to Citadel's articles
of incorporation or any merger if either would adversely affect such nonvoting
common stockholders' rights, privileges or preferences, or on any liquidation or
dissolution in which certain nonvoting common stockholders would receive
securities with rights, privileges or preferences less beneficial than those
held by them as holders of nonvoting common stock.

     Except for voting power, the Citadel articles entitle holders of Citadel
nonvoting common stock to the same rights, preferences, and privileges with
respect to dividends, distributions or any liquidation or dissolution as holders
of Citadel voting common stock.

                                      90

     Craig

     Craig's articles of incorporation authorize 7,500,000 shares of Class A
common stock, $0.25 par value, and 20,000,00 shares of Class B common stock,
$0.01 par value.  Currently, only shares of the Class A common stock are issued
and outstanding.  Craig's articles of incorporation also authorize 50,000,000
shares of common preference stock.  There are currently no shares of common
preference stock issued and outstanding.

     Craig articles of incorporation authorize 1,000,000 shares of preferred
stock, $0.01 par value, in one or more series comprising such number of shares
and having such voting power, or no voting power, and such rights, preferences
and limitations, as the Citadel board of directors may determine.  No preferred
shares have been issued or are outstanding.

     Under the Craig's articles of incorporation, holders shares of Craig common
stock are entitled to 30 votes per share of common stock on all matters
submitted to a vote of the Craig stockholders.  Holders of shares of common
preference stock are is entitled to only one vote per share of common preference
stock on all matters submitted to a vote of the Craig stockholders.

     The Craig articles of incorporation provide that holders of Craig common
stock are entitled to share ratably in any dividends declared by the Craig board
of directors, subject to the dividend rights of the holders of Craig common
preference stock and of any holders of preferred stock then outstanding.

     In the event of liquidation or dissolution, the Craig articles of
incorporation provide that all holders of Craig preference common stock will
receive a distribution of the assets in the amount of $5 per share; however,
such holders of Craig common preference stock will not be entitled to a payment
from the distribution of the assets of more than $5 until the holders of every
other class of stock ranking junior to such common preference stock are paid $5
per share.  After such payments have been made, the holders of the common stock
and common preference stock will be entitled to an equal share-for-share
distribution of any remaining assets, as if a single class.

     Reading

     The Reading articles of incorporation authorize 25,000,000 shares of common
stock, par value $0.001.

     The Reading articles of incorporation authorize 10,000,000 shares of
preferred stock.  Reading's certificate of designation creates two classes of
preferred stock: Series A convertible preferred stock, $0.001 par value, of
which 70,000 shares are authorized, issued and outstanding, and Series B
convertible preferred stock, $0.001 par value, of which 550,000 shares are
authorized and issued and outstanding.

     Under Nevada law, each share of Reading common stock is entitled to one
vote on all matters submitted to a vote of Reading stockholders.  Under the
Reading certificate of designation, the holders of convertible preferred stock
are entitled to 9.64 votes for each share of such convertible preferred stock on
all matters submitted to a vote of the Reading stockholders.  The holders of
common stock and convertible preferred stock shall vote together as one class on
all matter submitted to a vote of the Reading's stockholders.

     Under Reading's certificate of designation, each share of convertible
preferred stock is entitled to receive a cumulative dividend, when declared by
the board of directors but only out of the funds legally available for dividend
payments, at an annual rate of $6.50; however, the Series B convertible
preferred stock will rank junior to the Series A convertible preferred stock.
Subject to the preferences of the convertible preferred stock, each share of
Reading common stock shall be entitled to share ratably in any dividends
declared by the board of directors.

     Under Reading's certificate of designation, upon liquidation or dissolution
of Reading, holders of shares of convertible preferred stock will be entitled to
receive before any other distribution of assets is made, a distribution in the
amount of $100 per share plus all dividends accrued and unpaid; however, the
Series B

                                      91

convertible preferred stock will rank junior to the Series A convertible
preferred stock. After such distribution is made, any payments of remaining
assets will be evenly distributed among all of Reading's classes of stock.

Directors

     Number and Term

     The Nevada Revised Statutes require that a corporation have at least one
director and permits the articles of incorporation or bylaws to govern the
number and term of directors.

     The Citadel bylaws provide that the number of directors comprising the
Citadel board of directors be five.  The number of directors may be decreased or
increased, but in no event less than one or greater than ten.  Citadel's
directors are elected at the annual meeting of Citadel stockholders, and each
director so elected will hold the office until his successor is duly elected and
qualified or until his earlier resignation or removal.  The bylaws specifically
state that directors need not also be stockholders.

     The Craig bylaws provide that the number of directors comprising the Craig
board of directors be five.  The number of directors may be decreased or
increased, but in no event less than one or greater than ten. Craig's directors
are elected at the annual meeting of Craig stockholders, and each director so
elected will hold the office until his successor is duly elected and qualified
or until his earlier resignation or removal.  The bylaws specifically state that
directors need not also be stockholders.

     The Reading bylaws provide that the number of directors comprising the
Reading board of directors be six.  The number of directors may be decreased or
increased, but in no event less than one or greater than ten.  Reading's
directors are elected at the annual meeting of Reading stockholders, and each
director so elected will hold the office until his successor is duly elected and
qualified or until his earlier resignation or removal.  The bylaws specifically
state that directors need not also be stockholders.

     The Reading articles of incorporation provide that in the event that the
quarterly dividends payable on a series of the Reading convertible preferred
stock are in arrears in an aggregate amount equal to six full quarterly
dividends (which quarters need not be consecutive), the number of directors
constituting Reading's board of director will be increased by one for each
series so in default.  The holders of such Reading convertible preferred stock,
whose dividends are so in default, will have the special right to vote
separately as a single class, to elect one director of Reading to fill the newly
created directorship, either at the next annual meeting or at a special meeting,
at the request of the holders of 25% or more of shares of such convertible
preferred stock outstanding.  Each director elected by the holders of a series
of convertible preferred stock will 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.  Any director elected by the holders of a
series of Reading convertible preferred stock may be removed only by a vote of
the holders of a majority of the outstanding shares of such series.

     Removal

     The Nevada Revised Statutes provide that any director may be removed by the
vote of stockholders representing not less than two-thirds voting power of
issued and outstanding stock.

     The Citadel, Craig and Reading bylaws each provide that a director may be
removed by the affirmative vote of a two-thirds majority of the voting power of
issued and outstanding stock at any meeting called for such purpose or by
consent filed with the secretary, or in his absence, with any other officer.
Such removal is effective immediately, even if a successor is not simultaneously
elected.

     Vacancies

     Under the Nevada Revised Statutes, all vacancies, including those caused by
an increase in the number of directors, may be filled by a majority of the
remaining directors, even if less than a quorum.

                                      92

     Citadel's, Craig's and Reading's bylaws each provide that vacancies in the
board of directors may be filled by a majority of the remaining directors,
though less than a quorum, or by a sole remaining director, and each directors
so elected will hold office until his successor is elected at an annual or a
special meeting of the stockholders.  A vacancy or vacancies in the board of
directors will be deemed to exist in case of death, resignation or removal of
any directors, or if the authorized number of directors is increased, or if the
stockholders fail, at any annual or special meeting of the stockholders at which
any director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting.

Special Meetings

     The Nevada Revised Statutes do not distinguish between regular and special
meetings of stockholders, but instead provide that notice of all meetings of
stockholders must be in writing and signed by the president or the vice-
president, secretary, assistant secretary or by any such person as the
corporation's bylaws may prescribe, permit or the directors may designate.

     Under the Citadel bylaws, special meetings of the stockholders may be
called by the chairman of the board or president or by the chairman of the board
or president at the written request of stockholders owning outstanding shares
representing a majority of the voting power of Citadel.

     Craig's bylaws provide that special meetings of stockholders may be called
by the chairman of the board, president or secretary at the written request of
the majority of the board of directors or at the written request of stockholders
owning outstanding shares representing a majority of the voting power of Craig.

     Reading's bylaws provide that special meetings of stockholders may be
called by the chairman of the board, vice-chairman of the board, chief executive
officer, president or secretary, or any three or more members of the board by
resolution or at the written request of stockholders owning outstanding shares
representing a majority of the voting power of Reading.

Action by Consent

     The Nevada Revised Statutes provide that unless the articles or bylaws
provide otherwise, any action that may be taken at a properly held meeting of
the stockholders may be taken by written consent of such stockholders.

     Under Citadel's, Craig's and Reading's bylaws, any action which may be
taken by the vote of stockholders at a meeting may be taken without a meeting if
authorized by the written consent of stockholders holding at least a majority of
the voting power, unless the provisions of the Nevada Revised Statutes or of
Citadel's, Craig's and Reading's articles of incorporation, respectively,
require a different proportion of voting power to authorize such action in which
case such proportion of written consents shall be required.

Indemnification

     The Nevada revised statutes provide that a corporation may indemnify any
person who was or is a party to any civil, criminal or administrative action by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation.  Such indemnification may be made by the corporation
if the stockholders, a majority role of disinterested directors, or in certain
circumstances, an opinion issued by counsel, determines that such
indemnification is proper in the circumstances.  Alternatively, the articles of
incorporation, bylaws or agreement made by the corporation may provide for the
payment of expenses of such officers, directors, employees and agents of the
corporation incurred in defending any civil or criminal action.

     Under Citadel's, Craig's and Reading's bylaws, every person who was or is a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person or a person of whom that person is the legal
representative is or was a director, officer, employee or agent of each company
or is or was serving at the request of the Citadel, Craig and Reading,
respectively, or for its benefit as a director, officer, employee or agent of
another

                                      93

corporation, or as its representative in a partnership, joint venture, trust or
other enterprise, shall be indemnified and held harmless to the fullest extent
legally permissible under the Nevada Revised Statutes against all expenses,
liability and loss (including attorneys' fees, judgments, fines and amounts paid
or to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith. The expenses of officers, directors, employee or agents
incurred in defending a civil or criminal action, suit or proceeding must be
paid by the Citadel, Craig and Reading, respectively, as they are incurred and
in advance of the final disposition of the action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director, officer, employee or
agent to repay the amount if it is ultimately determined by a court of competent
jurisdiction that such person is not entitled to be indemnified by Citadel,
Craig and Reading, respectively. Such right of indemnification shall be a
contract right which may be enforced in any manner desired by such person. Such
right of indemnification shall not be exclusive of any other right which such
directors, officers, employees or agents may have or hereafter acquire and,
without limiting the generality of such statement, they shall be entitled to
their respective rights of indemnification under any bylaw, agreement, vote of
stockholders, provision of law or otherwise.

                                      94

               INFORMATION REGARDING CITADEL, CRAIG AND READING

Citadel Holding Corporation

     In the consolidation agreement, Citadel, Craig and Reading have agreed to
combine the three companies by merging Craig and Reading with subsidiaries of
Citadel.  Upon completion of the consolidation, Craig and Reading will become
wholly owned subsidiaries of Citadel, and Citadel will continue to conduct its
business and will carry on the businesses currently being conducted by Craig and
Reading.

     Accompanying this joint proxy statement/prospectus are copies of Citadel's
latest annual report on Form 10-K and quarterly report on Form 10-Q filed with
the Securities and Exchange Commission.  These reports contain important
business and financial information about Citadel, and you are urged to read them
in conjunction with this joint proxy statement prospectus.

     There are no recent material developments at Citadel that are not described
in its quarterly reports on Form 10-Q.

Craig Corporation

     Upon completion of the consolidation, Craig will become a wholly owned
subsidiary of Citadel, and Citadel will carry on the businesses currently being
conducted by Craig.

     Accompanying this joint proxy statement/prospectus are copies of Craig's
latest annual report on Form 10-K and quarterly report on Form 10-Q filed with
the Securities and Exchange Commission.  These reports contain important
business and financial information, about Craig, and you are urged to read them
in conjunction with this joint proxy statement/prospectus.

     There are no recent material developments at Craig that are not described
in its quarterly reports on Form 10-Q.

Reading Entertainment, Inc.

     Upon completion of the consolidation, Reading, which will change its name
to "Reading Holdings, Inc.", will become a wholly owned subsidiary of Citadel,
and Citadel will carry on the businesses currently being conducted by Reading.

     Accompanying this joint proxy statement/prospectus are copies of Reading's
latest annual report on Form 10-K and quarterly report on Form 10-Q filed with
the Securities and Exchange Commission.  These reports contain important
business and financial information about Reading, and you are urged to read them
in conjunction with this joint proxy statement/prospectus.

     There are no recent material developments at Reading that are not described
in its quarterly reports on Form 10-Q.

Security Ownership of Certain Beneficial Owners and Management of Citadel

     The following table sets forth as of  July 31, 2001, information with
respect to the beneficial ownership of the common stock of Citadel as to:

          .  Each person known by Citadel to own beneficially more than 5% of
the outstanding shares of its voting common stock and nonvoting common stock.

          .  Each person who served as Citadel's Chief Executive Officer and
each of Citadel's other three most highly compensated executive officers during
fiscal year 2000.

                                      95

          .  Each of Citadel's directors.

          .  All of Citadel's directors and executive officers as a group.

     Unless otherwise indicated below, each person or entity named below has an
address in care of Citadel's principal executive offices.  Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission.  Shares of voting common stock and nonvoting common stock subject to
options that are presently exercisable or exercisable within 60 days of July 31,
2001 are deemed outstanding for the purpose of computing the percentage
ownership of the person or entity holding the options, but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person or entity.  The numbers reflected in the percentage ownership columns are
based on 7,958,379 shares of Citadel nonvoting common stock and 1,989,585 shares
of Citadel nonvoting common stock outstanding as of July 31, 2001 and the
assumption that 20,484,988 shares of Citadel nonvoting common stock and
1,336,330 shares of Citadel voting common stock will be outstanding after the
consolidation. In addition, the numbers assume that all Craig and Reading stock
option holders will elect to have their Craig and Reading options converted into
options to purchase Citadel voting shares in the consolidation. Unless otherwise
indicated below, the persons and entities named in the table have sole voting
and sole investment power with respect to all shares beneficially owned, subject
to community property laws where applicable. This table includes percentage
ownership data reflecting ownership both before and after consummation of the
consolidation. An asterisk denotes beneficial ownership of less than 1%.

                                                                            Class A Nonvoting Common Stock
                                                           ----------------------------------------------------------------
                                                                 Number of Shares                       Percent
                                                           -----------------------------     ------------------------------
                                                            Before the       After the        Before the       After the
Name and Address of Beneficial Ownership                   consolidation   consolidation     consolidation   consolidation
- ----------------------------------------                   -------------   -------------     -------------   --------------
                                                                                                 
James J. Cotter                                             3,879,056 (1)   2,884,516 (2)            48.74%          14.08%
120 N. Robertson Blvd.
Los Angeles, CA 90048
S. Craig Tompkins                                              16,000 (3)      18,340 (4)              *               *
William C. Soady                                               20,000 (6)      20,000 (5)              *               *
Alfred N. Villasenor, Jr.                                      20,000 (6)      20,000 (6)              *               *
Robert M. Loeffler                                             20,000 (6)      20,000 (8)              *               *
Robert F. Smerling                                                  -               -                  *               *
Andrzej Matyczynski                                            15,000 (14)     15,000 (6)              *               *
Brett Marsh                                                     6,000 (12)      6,000 (12)             *               *
Ellen Cotter                                                        -               -                   --             *
Margaret Cotter                                                     -               -                   --             *

Craig Corporation                                           2,567,823 (14)          - (17)           32.27%             --
550 South Hope Street, Suite 1825
Los Angeles, CA 90071

Reading Entertainment, Inc.                                 1,690,938 (14)          - (19)           21.25%             --

Hecco Ventures (20)                                                 -       1,565,783                   --            7.64%
120 North Robertson Blvd.
Los Angeles, CA 90048

Michael Forman                                              1,311,233       1,311,233                16.48%           6.40%
120 North Robertson Blvd.
Los Angeles, CA 90048

Private Management Group (17)                                 528,000         528,000                 6.63%           2.58%
20 Corporate Park, #400
Irvine, CA 92606

Lawndale Capital Mgt (18)                                           -       1,353,229                   --            6.61%
One Sansome St. Ste. 3800
San Francisco, CA 94104

All directors and executive officers as a                   3,976,056       3,178,706                49.36%          15.30%
 group (10 persons) (19)

                                                                           Class B Voting Common Stock
                                                -------------------------------------------------------------------------------
                                                          Number of Shares                                Percent
                                                -----------------------------------         -----------------------------------
                                                 Before the             After the             Before the            After the
Name and Address of Beneficial Ownership        consolidation         consolidation         consolidation         consolidation
- ----------------------------------------        -------------         -------------         -------------         -------------
                                                                                                      
James J. Cotter                                    981,064 (1)            1,817,928                 49.31%                64.32%
120 N. Robertson Blvd.
Los Angeles, CA 90048
S. Craig Tompkins                                        -                   69,950 (5)                --                  4.62%
William C. Soady                                         -                        -                    --                    --
Alfred N. Villasenor, Jr.                                -                        -                    --                    --
Robert M. Loeffler                                       -                    7,500 (7)                --                    --
Robert F. Smerling                                       -                   43,750 (9)                --                  3.17%
Andrzej Matyczynski                                      -                   17,550 (11)               --                  1.30%
Brett Marsh                                              -                   12,500 (13)               --                    --
Ellen Cotter                                             -                   12,500 (13)               --                    --
Margaret Cotter                                          -                   35,100 (8)                --                  2.56%
                                                                                                       --                    --
Craig Corporation                                  653,256 (16)                   - (17)            32.83%                   --
550 South Hope Street, Suite 1825
Los Angeles, CA 90071

Reading Entertainment, Inc.                        422,735 (18)                   - (19)            21.25%                   --

Hecco Ventures (20)                                      -                        -                    --                    --
120 North Robertson Blvd.
Los Angeles, CA 90048

Michael Forman                                     327,808                  327,808                 16.48%                24.53%
120 North Robertson Blvd.
Los Angeles, CA 90048

Private Management Group (21)                      117,700                  117,700                  5.92%                 8.81%
20 Corporate Park, #400
Irvine, CA 92606

Lawndale Capital Mgt (22)                                -                        -                  0.00%                   --
___ Sansome St. Ste. 3800
San Francisco, CA 94104

All directors and executive officers as a          981,064                2,012,778                 49.31%                65.69%
 group (10 persons) (19)

                                      96

______________________________
(1)  Includes 2,567,823 shares of nonvoting and 653,256 shares of voting common
     stock of Citadel held by Craig.

(2)  Includes 794,040 shares from conversion of Reading stock options, 696,080
     shares from conversion of Craig stock options, and 696,080 shares of Craig
     shares owned by Hecco Ventures, or HV, of which Mr. Cotter is deemed to be
     the beneficial owner.  HV is a California general partnership and Mr.
     Cotter is the general partner of a limited partnership which is the general
     partner of HV.  HV has granted Mr. Cotter the right to vote the shares held
     by it and as a result, Mr. Cotter has sole voting power and shared
     investment power.

(3)  Includes 16,000 nonvoting shares subject to stock options.

(4)  Includes 16,000 nonvoting shares subject to stock options and 2,340
     nonvoting shares obtainable from conversion of shares of Craig common
     stock.

(5)  Includes 65,950 voting shares obtainable from conversion of Craig and
     Reading stock options.

(6)  Includes 20,000 nonvoting shares subject to stock options.

(7)  Includes 7,500 voting shares subject to stock options.

(8)  Includes 35,000 voting shares subject to stock options.

(9)  Includes 43,750 voting shares obtainable from conversion of Reading
     stock options.

(10) Includes 15,000 nonvoting shares subject to stock options.

(11) Includes 17,550 voting shares obtainable from conversion of Craig stock
     options.

(12) Includes 6,000 nonvoting shares subject to stock options.

(13) Includes 12,500 voting shares obtainable from conversion of Reading stock
     options.

(14) Includes 1,690,938 nonvoting shares and 422,734 voting shares owned, of
     record, by Reading.

(15) All Citadel shares of common stock owned by Craig will become treasury
     shares following the consolidation.

(16) Includes 1,565,783 nonvoting shares obtainable from conversion of Craig
     shares owned.

(17) As reported on the 13-G filing dated February 5, 2001.

(18) Based on schedule 13-G filed November 3, 2000 for Reading and based on
     schedule 13-G filed April 11, 2000 for Craig.   Includes 618,469 and
     734,760 nonvoting shares obtainable from conversion of Reading and Craig
     shares owned.

(19) Includes 97,000 nonvoting shares subject to stock options prior to and
     after the consolidation. Includes 1,727,570 voting shares subject to stock
     options after the consolidation.

                                      97

Security Ownership of Certain Beneficial Owners and Management of Craig

     The following table sets forth as of July 31, 2001, information with
respect to the beneficial ownership of the common stock of Craig as to:

          .  Each person known by Craig to own beneficially more than 5% of the
outstanding shares of its common stock or common preference stock.

          .  Each person who served as Craig's Chief Executive Officer and each
of Craig's other three most highly compensated executive officers during fiscal
year 2000.

          .  Each of Craig's directors.

          .  All of Craig's directors and executive officers as a group.

     Unless otherwise indicated below, each person or entity named below has an
address in care of Craig's principal executive offices. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission.  Shares of common stock and common preference stock subject to
options that are presently exercisable or exercisable within 60 days of July 31,
2001. are deemed outstanding for the purpose of computing the percentage
ownership of the person or entity holding the options, but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
person or entity.  The numbers reflected in the percentage ownership columns are
based on 3,402,808 shares of Craig common stock and 7,058,408 shares of Craig
common preference stock outstanding as of July 31, 2001.  Unless otherwise
indicated below, the persons and entities named in the table have sole voting
and sole investment power with respect to all shares beneficially owned, subject
to community property laws where applicable.  An asterisk denotes beneficial
ownership of less than 1%.

                                      98

                                                                           Common Stock                 Common Preference Stock
                                                                    -------------------------          --------------------------
                                                                        Amount                              Amount
                                                                    Beneficially                        Beneficially
Name and Address of Beneficial Owner                                    Owned        Percent                Owned        Percent
- ------------------------------------                                -------------   ---------           -------------   ---------
                                                                                                            
James J. Cotter (1)..........................................           2,385,142      59.66%               2,021,702      28.64%
120 N. Robertson Blvd.
Los Angeles, CA  90048

Hecco Ventures (1)...........................................             617,438      18.14%                 720,838      10.21%
120 N. Robertson Blvd.
Los Angeles, CA  90048

Artisan Partners LTD (2).....................................                  --         --                  702,900       9.96%
Artisan Investment Corporation
1000 North Water Street, #1770
Milwaukee, WI  53202

Dimensional Fund Advisors, Inc (3)...........................             250,300       7.36%                      --         --
1299 Ocean Avenue, 11/th/ Floor
Santa Monica, CA  90401

First Pacific Advisors, Inc. (4).............................                  --         --                  474,300       6.72%
11400 West Olympic Blvd., Suite 1200
Los Angeles, CA  90064

Lawndale Capital Management, Inc (5).........................                  --         --                  700,300       9.90%
One Sansome St., Suite 3900
San Francisco, CA  94101

Scott A. Braly (6)...........................................                  --         --                       --         --

Ellen M. Cotter..............................................               1,000          *                    1,000          *

Margaret Cotter (7)..........................................               9,500         --                    9,500          *

William D. Gould (8).........................................              17,000          *                   18,000          *

Gerald P. Laheney (9)........................................              15,000          *                   15,000          *

Andrzej Matyczynski (10).....................................              15,000          *                       --         --

S. Craig Tompkins (11).......................................                  --         --                   37,000         --

All directors and executive officers as a group..............           2,442,642      60.53%               2,102,202      29.54%
 (7 persons) (12)

_________________________________
(1)  Includes the common stock and common preference stock owned by Hecco
     Ventures (HV), which is a California general partnership. Mr. James J.
     Cotter is the general partner of a limited partnership which is the general
     partner of HV. Also includes 594,940 shares of common stock subject to
     stock options held by Mr. Cotter. Margaret Cotter, a director, and Ellen
     Cotter, Vice President of Business Affairs, of Craig for the Company, are
     the daughters of Mr. Cotter and each are limited partners in the above-
     referenced limited partnership. The other general partners of HV are
     Michael Forman and a subsidiary of the Decurion Corporation, a company
     privately owned by Michael Forman and certain members of his family. HV has
     granted Mr. Cotter the right to vote the shares held by it.
(2)  According to filings with the Securities and Exchange Commission dated
     February 9, 2001, includes 702,900 shares of common stock owned of record
     by Artisan Partners LTD/Artisan Investment Corporation.
(3)  According to filings with the Securities and Exchange Commission dated
     February 2, 2001, Dimensional Fund Advisors Inc. is a registered investment
     manager to certain other investment vehicles, including commingled group
     trusts, and possesses both voting and investment power over the shares of
     common stock shown; however, the shares are owned of record by the
     commingled group trusts, and Dimensional disclaims beneficial ownership of
     all such shares.
(4)  According to filings with the Securities and Exchange Commission dated May
     7, 2001, includes 348,300 shares of shared voting power.
(5)  According to filings with the Securities and Exchange Commission dated
     April 12, 2001, includes shares owned of record by Diamond A Partners,
     L.P., or DAP and by Diamond A Investors L.P., or DAI, over which Lawndale
     Capital Management, Inc., or LAM, and Andrew E. Shapiro have shared voting
     and dispositive power. According to filings with the Securities and
     Exchange Commission, Lawndale Capital Management, Inc., is the investment
     advisor to DAP and DAI, which are investment limited partnerships and Mr.
     Shapiro is the sole manager of LAM.
(6)  Mr. Braly resigned from Craig, effective December 27, 2000.
(7)  Includes 7,500 shares each of common stock and common preference stock
     subject to stock options
(8)  Includes 2,000 shares of common stock and 3,000 shares of common preference
     stock owned by a trust for the benefit of Mr. Gould's children, of which he
     is co-trustee; Mr. Gould disclaims beneficial ownership of the shares held
     in the trust.
(9)  Includes 15,000 shares of common stock and 15,000 shares of common
     preference stock subject to stock options.
(10) Includes 15,000 shares of common stock subject to stock options.
(11) Includes 35,000 shares subject to stock options and 2,000 shares held in
     various retirement accounts for the benefit of Mr. Tompkins and his wife.
(12) Includes 632,440 shares of common stock and 57,500 shares of common
     preference stock subject to stock options.

                                      99

Security Ownership of Certain Beneficial Owners and Management of Reading

     The following table sets forth as of July 31, 2001, information with
respect to the beneficial ownership of the common stock of Reading as to:

          .  Each person known by Reading to own beneficially more than 5% of
the outstanding shares of its common stock.

          .  Each person who served as Reading's Chief Executive Officer and
each of Reading's other five most highly compensated executive officers during
fiscal year 2000.

          .  Each of Reading's directors.

          .  All of Reading's directors and executive officers as a group.

     Unless otherwise indicated below, each person or entity named below has an
address in care of Reading's principal executive offices. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission.  Shares of common stock subject to options that are presently
exercisable or exercisable within 60 days of July 31, 2001 are deemed
outstanding for the purpose of computing the percentage ownership of the person
or entity holding the options, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person or entity.
The numbers reflected in the percentage ownership columns are based on 7,449,364
shares of Reading common stock outstanding as of July 31, 2001.  The calculation
of the percent of voting stock gives effect to the voting rights of Reading's
outstanding shares of Series A convertible preferred stock, all of which are
owned by a subsidiary of Citadel, and Series B convertible preferred stock, all
of which are owned by Craig.  The holders of Reading Series A and Series B
convertible preferred stock are entitled to cast 9.64 votes per share, voting
together with the holders of Reading common stock as a single class, on any
matters presented to shareholders of  Reading, except as required by law.
Unless otherwise indicated below, the persons and entities named in the table
have sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where applicable.  An
asterisk denotes beneficial ownership of less than 1%.

                                      100

                                                                        Amount and Nature of Beneficial Ownership
                                                      ------------------------------------------------------------------------------
                                                           Common Stock                            Preferred Stock
                                                      ----------------------      --------------------------------------------------
                                                                                          Series A                   Series B
                                                                                  ------------------------    ----------------------
                                                         Amount                      Amount                     Amount
                                                      Beneficially                Beneficially                Beneficially
Name and Address of Beneficial Owner                     Owned       Percent          Owned        Percent       Owned      Percent
- ------------------------------------                  ------------   -------      ------------     -------    ------------  --------
                                                                                                          
James J. Cotter (1)(2)(3)..........................      641,232       4.56%               -            -             -          -

Scott A. Braly (4).................................           --          *                -            -             -          -

S. Craig Tompkins (5)..............................       21,400          *                -            -             -          -

Robert M. Loeffler (6)............................         6,000          *                -            -             -          -

Kenneth McCormick (6)..............................        6,000          *                -            -             -          -

Robert Smerling (7)................................       35,000          *                -            -             -          -

Andrzej Matyczynski................................           --          *                -            -             -          -

Brett Marsh (8)....................................        6,000          *                -            -             -          -

Ellen Cotter (9)...................................       10,000          *                -            -             -          -

Craig Corporation (10)(2)..........................   10,467,510      58.43%               -            -       550,000       4.10%
550 South Hope Street, Suite 1825
Los Angeles, CA 90071

Citadel Holding Corporation (2)....................    2,241,349      15.97%          70,000       100.00%            -          -
550 South Hope Street, Suite 1825
Los Angeles, CA 90071

Lawndale Capital Mgt...............................      558,292       4.16%               -            -             -          -

All directors and executive officers as a group
(8 persons) (11)...................................      725,632       5.13%               -            -             -          -

________________________________________
(1)  Does not include amounts held by Craig or Citadel.
(2)  James J. Cotter is Chairman of the Board and the Chief Executive Officer of
     Reading, Craig and Citadel. S. Craig Tompkins is the Vice Chairman of the
     Board of Reading, a director and President of Craig, and the Vice Chairman
     and Corporate Secretary of Citadel. James J. Cotter is also a principal
     stockholder of Craig.
(3)  Includes 6,000 shares held in a profit sharing plan and 635,232 shares
     subject to stock options. Mr. Cotter is the beneficial owner of 2,385,142
     shares of the common stock and 2,021,702 shares of the common preference
     stock of Craig. Mr. Cotter is also the principal controlling stockholder of
     Craig, having the power, directly or through proxies, to vote securities
     representing approximately 51% of the voting power of Craig.
(4)  Mr. Braly resigned from Reading, effective December 27, 2000.
(5)  Includes 15,000 shares subject to stock options. Excludes 200 shares held
     in Mr. Tompkins' wife's retirement plan and 500 shares held in a trust for
     Mr. Tompkins' minor child as to which Mr. Tompkins disclaims beneficial
     ownership.
(6)  Includes 6,000 shares subject to stock options.
(7)  Includes 35,000 shares subject to stock options.
(8)  Includes 6,000 shares subject to stock options.
(9)  Includes 10,000 shares subject to stock options.
(10) Includes shares owned, of record, by Craig Management Inc., a wholly-owned
     subsidiary of Craig.
(11) Includes 713,232 shares subject to stock options.

                                      101

                             MANAGEMENT OF CITADEL

Executive Officers

     The names of the executive officers of Citadel, other than James J. Cotter
and S. Craig Tompkins, who are nominees for director, together with information
regarding such executive officers, is as follows:

            Name                Age                       Title
            ----                ---                       -----

     Andrzej Matyczynski         48        Chief Financial Officer and Treasurer

     Robert F. Smerling          66        President of City Cinemas/
                                              Citadel Cinemas Inc.

     Brett Marsh                 52        Vice President of Real Estate

     Mr. Matyczynski was named Chief Financial Officer and Treasurer of Citadel
and Craig and the Chief Administrative Officer of Reading on November 18, 1999.
Mr. Matyczynski was named the Chief Financial Officer and Treasurer of Reading
effective June 2, 2000.  Prior to joining Citadel, Mr. Matyczynski was
associated with Beckman Coulter and its predecessors for more than the past
twenty years and also served as a director for certain Beckman Coulter
subsidiaries.

     Mr. Smerling was appointed President of Citadel Cinemas Inc. effective
September 1, 2000 following Citadel's acquisition of the City Cinemas.  Mr.
Smerling also serves as the President and a director of Reading.  Mr. Smerling
has served as President of Reading's various domestic and Puerto Rican
exhibition subsidiaries since 1994.  Mr. Smerling served as President of Loews
Theater Management Corporation form May 1990 until November 1993.  Mr. Smerling
also served as President and Chief Executive Officer of City Cinemas
Corporation, a motion picture exhibitor located in New York City, from November
1993 to September 2000.

     Mr. Marsh has been with Citadel since 1993 and is responsible for Citadel's
real estate activities.  Prior to joining Citadel, Mr. Marsh was the Senior Vice
President of Burton Property Trust, Inc., the U.S. real estate subsidiary of The
Burton Group PLC.  In this position, Mr. Marsh was responsible for the real
estate portfolio of that company.

                                      102

Summary Compensation Table

     Effective January 1, 2000, all executive officers and administrative
employees of Citadel became employees of Craig.  At the same time, Craig entered
into management arrangements with Citadel and Reading under which all of the
general and administrative costs of Citadel, Craig and Reading are paid by Craig
and allocated among Craig, Citadel and Reading.  Accordingly, subsequent to
December 31, 1999, Citadel has had no employees who were paid directly by
Citadel or its subsidiaries, except for the President of Citadel Cinemas, Inc.
as disclosed below.  The following table sets forth the compensation expense
allocated to Citadel for the years ended December 31, 2000, and paid for in
1999, and 1998 for each person who served as Chief Executive Officer at any time
during the last completed fiscal  year and each of the four other most highly
compensated executive officers of Citadel:

                                                                                                  Long-Term
                                                                                                 Compensation
                                                                                                  Securities
                                                                              Other               Underlying
          Name and                                                           Annual             Stock Options          All Other
     Principal Position             Year        Salary        Bonus      Compensation(2)           Granted          Compensation (8)
- ----------------------------      --------     --------      -------     --------------         -------------       ----------------
                                                                                                  
James J. Cotter (2)                 2000       $119,000          --          $45,000                  --                   --
 Chairman of the Board,             1999             --          --          $45,000                  --                   --
 President and                      1998             --          --          $45,000                  --                   --
 Chief Executive Officer

Scott A. Braly (3)                  2000       $ 15,946          --               --                  --                   --
 Chief Executive Officer            1999             --          --               --                  --                   --
                                    1998             --          --               --                  --                   --

S. Craig Tompkins (4)               2000       $139,886          --               (1)            $40,000               $1,785
 Corporate Secretary and            1999       $ 40,000          --               (1)                 --                   --
 Vice Chairman of the Board         1998       $ 40,000          --               (1)                 --                   --

Andrzej Matyczynski (5)             2000       $ 61,200      $4,080               (1)             30,000               $1,490
 Chief Financial Officer            1999             --          --               --                  --                   --
 and Treasurer                      1998             --          --               --                  --                   --

Robert F. Smerling (6)              2000       $ 87,500          --               (1)                 --                   --
 President of City Cinemas/         1999             --          --               --                  --                   --
 Citadel Cinemas, Inc.              1998             --          --               --                  --                   --

Brett Marsh (7)                     2000       $ 57,800      $9,520               (1)             15,000               $4,149
 Vice President of                  1999       $162,500          --               (1)                 --                   --
 Real Estate                        1998       $152,500          --               (1)                 --                   --

_________________________
(1)  Excludes perquisites aggregating less than $50,000, or 10% of salary plus
     bonus, whichever is less.
(2)  Mr. Cotter is paid a director's fee of $45,000 for his services as the
     Chairman of the Board.  He receives no compensation for serving as the
     President and Chief Executive Officer.  Mr. Cotter is also paid an annual
     consulting fee of $350,000 from Craig, of which approximately 34%, or
     $119,000, was allocated to Citadel in 2000.
(3)  Mr. Braly was named the Chief Executive Officer of the Citadel, Craig, and
     Reading, effective October 16, 2000, and resigned from all three companies,
     effective December 27, 2000. Mr. Braly's total compensation with respect to
     his employment contract with Craig was approximately $46,900. The salary
     shown reflects an allocation to Citadel of approximately 34% of Mr. Braly's
     total compensation.
(4)  Mr. Tompkins was elected Corporate Secretary in August 1994 and Vice
     Chairman in July 1994. Mr. Tompkins was elected as the President of Craig
     and was elected to the board of directors of Craig on February 6, 1993. Mr.
     Tompkins was granted options to acquire 40,000 shares of Citadel nonvoting
     common stock on April 13, 2000. These shares vest over four years in equal
     amounts except for the 8,000 shares that vested immediately. The salary
     shown above for the years ended December 31, 2000 reflects approximately
     34% of Mr. Tompkins' compensation which was allocated to Citadel. Mr.
     Tompkin's total compensation earned in aggregate totaled approximately
     $410,400 for the year ended December 31, 2000. In 1999 and 1998, Mr.
     Tompkins received $40,000 in director's fees from Citadel.

                                      103

(5)  Mr. Matyczynski was named Chief Financial Officer and Treasurer of Citadel
     and Craig and the Chief Administrative Officer of Reading on November 18,
     1999. Mr. Matyczynski was named the Chief Financial Officer of Reading
     effective June 2, 2000. Mr. Matyczynski was also granted options to acquire
     30,000 shares of Citadel nonvoting common stock on April 13, 2000, of which
     15,000 shares vested on November 18, 2000 and of which 5,000 shares will
     vest on each November 18 thereafter. The salary shown above for the year
     ended December 31, 2000 reflects approximately 34% of Mr. Matyczynski's
     compensation which was allocated to Citadel. Mr. Matyczynski's total
     compensation earned in aggregate totaled approximately $180,000 plus
     $12,000 in bonus. Mr. Matyczynski's aggregate compensation did not exceed
     $100,000 for the year ended December 31, 1999.
(6)  Prior to September 20, 2000, City Cinemas, a third-party affiliate, and
     Reading were parties to an executive-sharing arrangement for which Mr.
     Smerling was paid an annual salary of $175,000. Effective September 1,
     2000, Citadel Cinemas Inc., a wholly-owned subsidiary of Citadel, acquired
     the assets of City Cinemas and appointed Mr. Smerling as its President. Mr.
     Smerling also serves as the President and a director of Reading. Mr.
     Smerling's salary shown above for the year ended December 31, 2000 reflects
     compensation earned from Citadel Cinemas Inc. Citadel was reimbursed for a
     portion of Mr. Smerling's salary by Reading pursuant to a separate
     management agreement. The executive-sharing arrangement has been superceded
     by the general and administrative cost sharing agreement currently in place
     between Craig, Citadel and Reading.
(7)  Mr. Marsh serves as the Vice President of Real Estate of the Citadel, Craig
     and Reading.  On April 13, 2000, Mr. Marsh was granted options to acquire
     15,000 shares of the Citadel nonvoting common stock.  These shares vest
     equally over four years except for 3,000 shares that vested immediately.
     The salary shown above for the year ended December 31, 2000 reflects
     approximately 34% of Mr. Marsh's compensation which was allocated to
     Citadel.  Mr. Marsh's total compensation earned in aggregate totaled
     approximately $182,600 plus $28,000 in bonus.
(8)  All other compensation is primarily comprised of approximately 34% of the
     employer's match under Craig's 401(k) plan.

                                      104

Option/SAR Grants in Last Fiscal Year

     On April 13, 2000, the Citadel board of directors granted options to the
following directors and officers of Citadel:

                                                        % of Total                                     Potential Realizable Value at
                             Number of Securities      Options/SARs                                       Assumed Annual Rates of
                                  Underlying            Granted to      Exercise or                    Stock Price Appreciation for
                                 Options/SARs          Employees in     Base Price                               Option Term
                                                                                                       -----------------------------
                                Granted (#) (1)        Fiscal Year       ($/Share)    Expiration Date        5%              10%
                             --------------------      ------------     -----------   ---------------  -----------------------------
                                                                                                           
S. Craig Tompkins                       40,000 (2)            25.81%         $2.76            4/13/10      $179,800        $286,300
Andrzej Matyczynski                     30,000 (3)            19.35%         $2.76            4/13/10      $134,900        $195,200
Brett Marsh                             15,000 (4)             9.68%         $2.76            4/13/10      $ 67,400        $107,400
Robert M. Loeffler                     20,000                12.90%         $2.76            4/13/10      $ 89,900        $143,200
William C. Soady                        20,000                12.90%         $2.76            4/13/10      $ 89,900        $143,200
Alfred Villasenor, Jr.                  20,000                12.90%         $2.76            4/13/10      $ 89,900        $143,200

________________

     (1) All grants shown were for nonvoting common stock and, unless otherwise
indicated, vested immediately.

     (2) 8,000 shares vested immediately on April 13, 2000.  The remaining
shares will vest ratably over four years at the rate of 8,000 shares per year.

     (3) 15,000 shares vested on November 19, 2000.  The remaining shares will
vest ratably over three years at the rate of 5,000 shares per year.

     (4) 3,000 shares vested immediately on April 13, 2000.  The remaining
shares will vest ratably over four years at the rate of 3,000 shares per year.

                                      105

Aggregated Option/SAR in Last Fiscal Year and Fiscal Year-End Option/SAR Values

                                                             Number of Securities
                                                            Underlying Unexercised                Value of Unexercised
                              Shares Acquired               Options/SARs at FY-End            In-the-Money Options/SARs at
                          -----------------------       -----------------------------
Name                      Nonvoting        Voting         Nonvoting            Voting                 FY-End ($) (1)
- ----------------------    ---------        ------       -------------          ------         ----------------------------
                                                                                                    
Alfred Villasenor, Jr.           --            --            20,000/0              --          $0 / $0                --
S. Craig Tompkins                --            --        8,000/32,000              --          $0 / $0                --
Andrzej Matyczynski              --            --       15,000/15,000              --          $0 / $0                --
Brett Marsh                      --            --        3,000/12,000              --          $0 / $0                --
Robert M. Loeffler               --            --            20,000/0              --          $0 / $0                --
William C. Soady                 --            --            20,000/0              --          $0 / $0                --

_________________________

     (1) Calculated based on closing prices of $2.3750 and $2.5625 for nonvoting
common stock and voting common stock, respectively.

Limitation on Directors' Liability and Indemnification

     The Citadel articles of incorporation limit the liability of directors to
the maximum extent permitted by Nevada law.  Nevada law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for any of the
following acts:

     Nevada law provides that except for certain regulatory exceptions, a
director is not individually liable to the corporation or its stockholders for
any damages as a result of any act or failure to act in his capacity as a
director unless it is proven that:  (i) his act or failure to act constituted a
breach of his fiduciary duties as a director; and (ii) his breach of those
duties involved intentional misconduct, fraud or a knowing violation of the law.
This limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

     The Citadel bylaws provide that Citadel will indemnify its directors and
executive officers and other corporate agents to the fullest extent permitted by
law. We believe that indemnification under the Citadel bylaws covers at least
negligence and gross negligence on the part of indemnified parties. Our bylaws
also permit us to secure insurance on behalf of any officer, director, employee
or other agent for any liability arising out of his or her actions in this
capacity, regardless of whether the bylaws would permit indemnification.

     We have entered into indemnification agreements to indemnify our directors
and executive officers, in addition to the indemnification provided for in our
certificate of incorporation and bylaws.  Stockholders of Citadel are being
asked to notify and approve the form of indemnification agreement as described
above in this joint proxy statement/prospectus.  These agreements, among other
things, provide for indemnification of our directors and executive officers for
many expenses, including attorneys' fees, judgments, fines and settlement
amounts incurred by any such person in any action or proceeding, including any
action by or in the right of Citadel, arising out of such person's services as a
director or executive officer of ours, any subsidiary of ours or any other
company or enterprise to which the person provided services at our request. We
believe that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.

                                      106

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires Citadel's
officers, directors and persons who own more than 10% of Citadel's common stock
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission.  The Securities and Exchange Commission rules also require
reporting persons to furnish Citadel with a copy of all Section 16(a) forms they
file.

     Based solely on a review of the copies of the forms which Citadel received
and written representations from Citadel officers and directors, we believe
that, during the fiscal year ended December 31, 2000, the reporting persons
complied with all applicable reporting requirements, with the exception of a
late report on Form 3 filed by Mr. Michael Foreman with respect to the
securities acquired by him in the merger of OBI described below under "Certain
Relationships and Related-Party Transactions."  We understand that the Form 3
was tardy because Mr. Forman realized only after the Form 3 was due that the
securities he had acquired put him over the 10% threshold for filing a Form 3.

Compensation Committee Report on Executive Compensation

     The report of the Compensation Committee of the Board of Directors of
Citadel with respect to executive compensation shall not be deemed incorporated
by reference by any general statement incorporating by reference this
Proxy/Prospectus into any filing under the Securities Act of 1933, as amended
(the "Securities Act"), or under the Exchange Act, except to the extent that
Citadel specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.

     The Citadel Compensation Committee for the fiscal year ended December 31,
1999 was composed of James J. Cotter and Alfred Villasenor, Jr. In light of the
appointment of Mr. Cotter as the Chief Executive Officer of Citadel, and the
fact that Mr. Cotter's daughter Ellen Cotter had been appointed as the Vice
President of Citadel Cinemas and that it was anticipated that Mr. Cotter's
daughter Margaret Cotter would become the President of Liberty Theatres upon the
acquisition of that company by Citadel, Mr. Cotter resigned as a member of the
Citadel Compensation Committee on July 20, 2000 and was replaced by Mr. William
Soady. Accordingly, the Compensation Committee is now comprised entirely of
independent outside directors and has the same membership as the Citadel
Conflicts Committee.

     Historically, the Citadel Compensation Committee has been principally
responsible for reviewing the performance of, and determining the compensation
for, Citadel's executive officers. In this role, the Citadel Compensation
Committee has followed a philosophy that Citadel should have and maintain an
executive compensation program designed to attract and retain talented
executives and motivate them to achieve the business objectives of Citadel that
the Board of Directors believes will enhance stockholder value. Accordingly, the
Company's current compensation strategy is to pay a base salary sufficient to
attract and retain qualified executives and to supplement such base level
compensation with periodic cash bonuses in recognition of individual
performance, and from time-to- time, grant stock options designed to link the
executives' long-term compensation to appreciation in stockholder value. Citadel
has not, in recent periods, had any fixed bonus or incentive compensation plan.

     Citadel's compensation programs and the role of the Citadel compensation
committee are currently in a state of flux, as Citadel, Craig and Reading
recently have attempted to reduce general and administrative costs by
consolidating most of the general and administrative expense of the three
companies at the Craig level. Mr. Cotter is paid a director's fee of $45,000 for
his services as the Chairman of the Board. He receives no compensation for
serving as the President and Chief Executive Officer. Mr. Cotter is also paid an
annual consulting fee of $350,000 from Craig, of which approximately 34%, or
$119,000 was allocated to Citadel in 2000. In 2000, all of the executive
employees of the three companies became employees of Craig and are paid their
compensation and receive their employee benefits (other than stock options)
exclusively through Craig.. (The only exception to this was Mr. Robert Smerling
who, prior to the acquisition of the City Cinemas cinema chain by Citadel in
September 2000, was an employee of Reading and City Cinemas, and compensated
separately by, Reading and City Cinemas, Inc., and who, after the acquisition by
Citadel of the City Cinemas cinema chain, became an employee of both Reading and
Citadel Cinemas.) The cost of those Citadel executives employed by Craig have,
since January 2000, been allocated among Craig, Citadel and Reading based upon
the relative amount of time spent by each such executive on the business and
affairs of these companies. Initially, this allocation is done by the management
of the three companies (principally, by Mr. Andrzej Matyczynski, the Chief
Financial Officer of each of Citadel, Craig and Reading) and, thereafter, is
periodically reviewed and approved by the conflicts committees of Citadel, Craig
and Reading.

     Under this shared general and administrative structure, the compensation
programs of Citadel are principally overseen by Mr. James J. Cotter, the
Chairman of the Board, Chief Executive Officer and controlling stockholder of
Citadel, Craig and Reading, and the principal function of the committee has been
to serve as a sounding board for and advisor to Mr. Cotter with respect to
executive compensation matters. No discretionary bonuses were paid or awarded to
any of Citadel's executive officers by Citadel or by Craig in or with respect to
fiscal 2000, and no raises were given to any of Citadel's executive officers by
Citadel or by Craig in or with respect to fiscal 2000, other than discretionary
bonuses in the amount of $10,000 and $25,000 paid to Andrzej Matyczynski and
Brett Marsh, respectively, 34% of which was allocated to Citadel. These bonuses
were determined and authorized by Mr. Cotter, acting as the Chief Executive
Officer of Citadel, Craig and Reading. Also, Ms. Ellen Cotter, the daughter of
Mr. James J. Cotter, while an employee of Reading and prior to becoming an
executive of Citadel, did receive a raise, effective April 2000,in the base
salary paid to her by Reading from $147,600 to $150,000, annually. This raise
was authorized by Mr. Robert Smerling, the President of Reading. Ms. Cotter
became an executive officer of Citadel Cinemas in September 2000, and her
current compensation, at the annual rate referenced above, is included within
the general and administrative costs allocated among Citadel, Craig and Reading.
The Citadel Compensation Committee did not meet and has taken no action with
respect to executive compensation for fiscal 2000.

     In April 2000, stock options were granted to certain officers and directors
of Citadel. The grant of these stock options was recommended by Mr. Cotter, and
approved by the full Citadel Board of Directors, with each director receiving
options abstaining with respect to that portion of the approval relating to the
grant of options to such director. No options were granted to Mr. Cotter. Set
forth below is a table setting out the options granted.

     NAME:                   Number of Options   Exercise Price  Expiry Date
     Robert M. Loeffler             20,000          $ 2.76         04/13/10
     William C. Soady               20,000          $ 2.76         04/13/10
     Alfred Villasenor, Jr.         20,000          $ 2.76         04/13/10
     S. Craig Tompkins              40,000          $ 2.76         04/13/10
     Andrzej Matyczynski            30,000          $ 2.76         04/13/10
     Brett Marsh                    15,000          $ 2.76         04/13/10

                                William C. Soady
                             Alfred Villasenor, Jr.

Report of the Audit Committee

     The audit committee of the board of directors of Citadel has adopted a
written charter to govern its operation, a copy of which is attached hereto as
ANNEX F.  The audit committee currently is comprised of Messrs. Loeffler, Soady
and Villasenor, Jr., each of whom is an independent director as defined Section
121(A) of the American Stock Exchange listing standards.

     The audit committee of the Citadel board of directors oversees and monitors
the participation of Citadel's management and independent auditors throughout
the financial reporting process. No member of the Committee is employed by or
has any other material relationship with Citadel.

     In connection with its function to oversee and monitor the financial
reporting process, the audit committee has, among other things: reviewed and
discussed with Citadel's management the audited financial

                                      107

statements for the fiscal year ended December 31, 2000, discussed with Citadel's
independent auditors those matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU 380); received the written
disclosures and letter from Citadel's independent auditors required by
Independence Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees); and discussed
with Citadel's independent auditors their independence in light of the nonaudit
services performed by them for Citadel.

     Based upon the foregoing, the audit committee recommended to the Citadel
board of directors that the audited financial statements be included in
Citadel's annual report on Form 10-K for the fiscal year ended December 31,
2000.

                              Robert M. Loeffler
                               William C. Soady
                            Alfred Villasenor, Jr.

                                  AUDIT FEES

     The following table sets forth the aggregate fees billed to Citadel for the
fiscal year ended December 31, 2000 by Deloitte & Touche LLP, its independent
auditors:

Audit Fees................................................     $34,700
Financial Information Systems Design and
  Implementation Fees.....................................          --
All Other Fees............................................     $14,100

Performance Graph

     The following line graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this joint proxy
statement prospectus into any filing under the Securities Exchange Act of 1934,
except to the extent Citadel specifically incorporates this information by
reference, and shall not otherwise be deemed filed under the Exchange Act.

     The following line graph compares the cumulative total stockholder return
on Citadel common stock from December 31, 1995 through December 31, 2000 against
the cumulative total return of the Center for Research in Securities Prices
("CRSP") Total Return Index for the (I) New York Stock Exchange ("NYSE")/
American Stock Exchange ("AMEX")/ NASDAQ Stock Market Index (U.S. companies) and
(ii) the cumulative total return of the Company's current peer group, the CSRP
Total Return Index for NYSE/AMEX/NASDAQ Companies in the SIC Group Code 6510-
6519 (US Companies) (Real Estate Operators (Except Developers) and Lessors).
Peer group returns have been weighted by the market capitalization of the
individual peers.  The graph assumes a $100 dollar investment on December 31,
1995 and reinvestment of all dividends on a daily basis.

                                    Legend

CRSP Total Returns Index for:                   12/1995   12/1996   12/1997   12/1998   12/1999   12/2000
- -----------------------------                   ---------------------------------------------------------
                                                                                
Citadel Holding Corporation                       100.0    115.8     178.9     165.8      144.7     94.3
NYSE/AMEX/Nasdaq Stock Market (US Companies)      100.0    121.2     158.7     196.0      245.4    217.9
NYSE/AMEX/NASDAQ Stocks (SIC 6510-6519 US Comp)   100.0    115.4     124.9     123.2      116.0    156.9

Notes:
   A. The lines represent monthly index levels derived from compounded daily
      returns that include all dividends.
   B. The indexes are reweighted daily, using the market capitalization on the
      previous trading day.
   c. If the monthly interval, based on the fiacal year-end, is not a trading
      day, the preceding trading day to used.
   d. The index level for all series was set to $100.0 on 12/29/1995.

                                      108

Compensation Committee Interlocks and Insider Participation

     Messrs. Soady and Villasenor, Jr. serve on Citadel's Compensation
Committee.  Mr. Cotter is the Chairman of the Board of Citadel, Craig and
Reading.  In addition, Mr. Cotter also served as the Chief Executive Officer of
the Citadel, Craig and Reading prior to October 16, 2000 and returned to such
positions following Mr. Braly's departure on December 27, 2000.  Mr. Cotter is
the controlling stockholder of Citadel.

Certain Relationships and Related-Party Transactions

     General

     Craig, Citadel and Reading operate as part of a group of commonly
controlled companies.  In part due to this overlapping ownership and control,
the companies have engaged in a significant number of related-party
transactions.

     We proposed the consolidation, in part, to address these related-party
transactions.  In the consolidation, the holders of outstanding common stock of
Craig and Reading, including Mr. Cotter, would receive shares of Citadel
nonvoting common stock.  As a result, Mr. Cotter's voting power will be reduced
from approximately 49% of Citadel currently to slightly under 25%.  This is due
to the fact that all of the Citadel voting common stock currently held by Craig
and Reading will become, in effect, treasury shares of Citadel after the
consolidation.

     However, in the consolidation, Citadel has agreed to assume the obligations
of Craig and Reading under their currently outstanding options, and has agreed
to allow the holders of such options an election to convert them into options to
acquire either Citadel voting or nonvoting common stock.  If Mr. Cotter elects
to receive options to acquire Citadel voting common stock then, in addition to
his beneficial ownership of slightly less than 25% of the outstanding shares of
Citadel voting common stock, he would hold options to acquire an additional
1,490,120 shares of Citadel voting common stock at the weighted-average exercise
price of $8.03 per share. If Mr. Cotter were to exercise these options in full,
the shares issued would increase Mr. Cotter's voting power to 64.3% of the total
voting power of Citadel after taking into account the effect of the issuance of
his option shares.

     Overlapping Management

     Prior to 2000, Citadel, Craig and Reading shared some common overhead and
administrative functions and provided various management services to one another
pursuant to various cost-sharing and consulting arrangements.  During 2000,
Reading moved its executive offices from Philadelphia to Los Angeles, and the
companies reorganized and consolidated their general and administrative staffs
at the Craig level.  Consequently, substantially all of the general and
administrative employees of Citadel and Reading are now employed directly by
Craig, and receive all of their health, medical, retirement and other benefits
from Craig.  The general and administrative expenses of Craig, Citadel and
Reading are periodically allocated, subject to the review and approval of the
conflicts committees of the boards of directors of Craig, Citadel and Reading,
in accordance with the amount of time spent by these employees providing
services for the respective companies.

     Entertainment Property Transactions

     In 1999, Reading determined that, in view of its limited capital resources
and the size and scope of its investments and commitments in Australia and New
Zealand, it should focus on its overseas activities and dispose of its domestic
entertainment assets.  During this same period, Citadel was searching for hard
asset investment opportunities in which to invest its cash ($21,440,000 at June
30, 1999).

     In the summer of that year, management began conversations with NAC, about
a potential transaction in which NAC would acquire, in partnership with Citadel,
all of the domestic cinema assets of Reading, including Reading's rights to
acquire the Manhattan-based City Cinemas chain.  In April 2000 Reading conveyed
a 50% membership interest in AFC to NAC in consideration of the issuance to it
of certain securities

                                      109

and granted to NAC, in consideration of the payment by NAC to Reading of an
option fee of $500,000, an option to acquire the remainder of Readings domestic
cinema assets. That option was subject to the right of Citadel to participate as
a 50/50 partner with NAC in those assets, if Citadel were to so elect.
Ultimately, NAC determined not to exercise that option, and determined instead
to invest in a developmental "dot.com" company. Reading has resold to NAC the
securities it received in consideration of the transfer of the 50% membership
interest in AFC for gross proceeds of approximately $14,702,000.

     During this same period, Citadel determined to proceed with the acquisition
from Reading of the remainder of Reading's domestic entertainment assets.
During 2000 and the first quarter of 2001, Reading conveyed to Citadel the
following domestic entertainment assets:

     The City Cinemas and OBI Transactions.  In December, 1998 Reading entered
into an agreement (the "Sutton Agreement") with Messrs. James J. Cotter and
Michael Forman and certain of their affiliates (collectively referred to here in
as "Sutton") to acquire the City Cinemas chain (the "City Cinemas Transaction")
and OBI (now Liberty Theaters) (the "OBI Merger").  In 2000, Reading assigned
the Sutton Agreement to Citadel, and Citadel reimbursed Reading for the
$1,000,000 deposit Reading had made to Sutton under the Sutton Agreement.  In
September 2000, Citadel completed the City Cinemas Transaction and the OBI
Merger under which Citadel leased from Sutton, under a ten-year operating lease,
four cinemas, obtained certain management rights with respect to an additional
six cinemas, and purchased Sutton's 16.7% membership interest in AFC.  Citadel
also obtained an option, exercisable in ten years, to purchase the assets
subject to the lease, including two fee interests, for $48,000,000, and
committed to lending Sutton up to $28,000,000 in 2007.  Citadel also merged with
OBI, issuing Citadel common stock for all of the outstanding shares of OBI.  The
OBI stock was valued at $10,000,000 in the transaction.  As a result of the City
Cinemas Transaction, the management of Angelika Film Center & Cafe (Soho), and
two other domestic cinemas owned by Reading, was transferred from City Cinemas
to Citadel.

     The Domestic Cinema Transactions.  In September, 2000, Citadel also
acquired from Reading the rights to the Angelika Film Center & Cafe project in
Dallas, Texas - an eight screen Angelika style cinema currently under
construction and slated for opening in Summer, 2001 (the "Angelika Dallas"), in
a transaction in which Citadel reimbursed Reading its investment in the
development and assumed Reading's obligations under the lease.  Reading, in
turn, assigned to Citadel its interest in the lease and committed to reimburse
Citadel a portion of Citadel's investment in the Angelika Dallas if Citadel did
not achieve at least a 20% return on equity during the second year of operation
of the cinema.  In March 2001, Reading sold the remainder of its domestic cinema
assets (other than its residual 33.3% membership interest in AFC) to Citadel in
consideration of the issuance by Citadel of a two-year purchase-money promissory
note in the amount of $1,706,000.

     The Royal George Theatre Complex Transaction.  In March 1999, Reading
acquired the Royal George Theatre Complex for approximately $3,000,000.  The
Royal George was acquired in a newly formed limited liability company ("RGT").
In June 2000, Citadel lent to RGT, at an interest rate of 10% per annum, the
funds needed to retire the purchase-money note issued by RGT to purchase the
theater.  In September, 2000 Citadel acquired RGT from Reading at approximately
the same price as was paid by Reading for that complex in March 1999.

     Management of Live Theater Assets.  Prior to the OBI Merger, the live
theater assets of OBI and the Royal George Theatre Complex were booked and
managed by Union Square Management, Inc., a third party theatre management
company.  Ms. Margaret Cotter, the daughter of James J. Cotter, was at that time
the Senior Vice President of that company.  In 1998, Craig guaranteed a $100,000
bank loan to Mr. Alan Schuster, the principal stockholder and President of Union
Square Management.  Following the closing of the OBI Merger, OBI was renamed
Liberty Theaters, Inc.  Citadel's live theaters are now booked and managed by
Off Broadway Investments LLC ("OBI Management"), a company wholly owned by
Margaret Cotter.  Ms. Cotter is the President of that company, and of Liberty
Theaters but receives no compensation for her service as the President of
Liberty Theaters other than the compensation paid to OBI Management.  OBI
Management has been retained on an at-will basis, on substantially the same
terms as Union Square Management, pending negotiation of a definitive agreement
and the approval of these agreements by the Citadel conflicts committee.

                                      110

OBI Management is a separate company and is not related to the OBI acquired by
Citadel in the OBI Merger and renamed Liberty Theaters.

     Investment in Plays.  From time to time the companies and Mr. Cotter and
the other members of management of the companies, are afforded the opportunity
to invest in the plays that play or may play in the live theatres owned by
Citadel.  These investments are monitored by Mr. Cotter, and periodically
reported to the conflicts committee of the respective boards of directors of the
companies.

     Agricultural Transactions

     Citadel, Craig and Reading collectively own approximately 40% of the equity
interest in three agricultural partnerships formed in 1997 to purchase
approximately 1,600 acres of agricultural land in Southern California commonly
know as the "Big 4 Ranch."  The property is principally improved with mature
citrus groves.  The transaction was originated and negotiated by Citadel.
However, in order to satisfy certain federal laws relating to access to federal
water supplies, ownership of the Big 4 Ranch was taken in the agricultural
partnerships, which are owned 40% by Citadel, 40% by Big 4 Ranch, Inc. and 20%
by Visalia LLC.  Visalia is owned 1% by Mr. Cotter and 99% by members of his
family.

     Big 4 Ranch was initially a wholly owned subsidiary of Citadel, and was
spun off to the stockholders of Citadel immediately prior to the acquisition by
the agricultural partnerships of Big 4 Ranch.  Accordingly, Craig and Reading
received their interests in Big 4 Ranch initially as a result of that spin-off.
Thereafter, Craig increased its holdings in Big 4 Ranch through the purchase of
additional Big 4 Ranch shares in privately-negotiated transactions.  Craig and
Reading own their interests in the agricultural partnerships indirectly through
their ownership of Citadel and Big 4 Ranch shares.  Craig and Reading currently
control Big 4 Ranch, owning 49% of its voting power.  In addition, Cecelia and a
trust for the benefit of one of Mr. Tompkins's children own an additional 3.2%
of Big 4 Ranch. Historically, the officers and directors of Craig have served as
the officers and directors of Big 4 Ranch.

     The Big 4 Ranch is farmed by Big 4 Ranch Farming, LLC, which is owned 80%
by Citadel and 20% by Visalia.  Farming is reimbursed by the agricultural
partnerships for all of its out-of-pocket costs and receives a fee equal to 5%
of the gross revenues of the agricultural partnerships, after deducting the
expenses of picking, packing and hauling. Farming, in turn, contracts with
Cecelia for certain bookkeeping and administrative services, for which it pays a
fee of $6,000 per month.  Farming is reimbursed for this expense from the
agricultural partnerships.  Cecelia also packs fruit for the agricultural
partnerships, and was paid $72,000 per annum for 1998, 1999, and 2000,
respectively.  Citadel, Craig and Reading provide various administrative
services for the agricultural partnerships and Big 4 Ranch, for which they
receive no compensation.

     Due to a variety of factors, principally bad weather and market conditions,
the agricultural partnerships have lost in excess of 100% of their equity, and
are being funded by loans from Citadel and Visalia. At the present time, we
intend to limit the activities of the agricultural partnerships to those that
can be covered by the cash flow from their operations. To date, Citadel and
Visalia have lent $4,840,000 and $820,000, respectively, to the agricultural
partnerships, and, in addition, have guaranteed (on an 80/20 basis) some
equipment leases entered into by the agricultural partnerships. Since December
1998, when the agricultural partnerships crop was wiped out by a freeze, Citadel
and Visalia have been funding the agricultural partnerships on an 80/20 basis.

     Certain Family Relationships

     Mr. Cotter, the principal controlling stockholder of Citadel, Craig and
Reading, has advised the companies boards of directors that he considers his
holdings in Craig and Citadel to be long-term investments to be passed to his
heirs.  The directors of Craig, Citadel and Reading believe that it is in the
best interests of these companies, and their respective stockholders, for Mr.
Cotter's heirs to become experienced in the operations and affairs of the
members of the companies.  Accordingly, Margaret Cotter is a member of the

                                      111

boards of directors of Craig and Big 4 Ranch, Inc. and the President of Liberty
Theaters.  Margaret Cotter has also served as an officer of Cecelia and Union
Square Management, Inc., and is the owner and President of OBI Management.
Ellen Cotter is the Vice President - Business Affairs of Craig and Reading and
of Citadel's cinema subsidiary.  James J. Cotter, Jr., the son of James J.
Cotter, serves as a director of Gish Biomedical, Inc., a publicly traded company
in which Citadel has an approximate 16% ownership interest.

     Miscellaneous Transactions

     Reading has loaned Mr. Robert F. Smerling $105,000 pursuant to a non-
interest bearing demand promissory note.

                        INDEPENDENT PUBLIC ACCOUNTANTS

     Citadel expects that a representative of Deloitte & Touche LLP will attend
the Citadel annual meeting and will have the opportunity to make a statement if
he or she desires to do so and to respond to appropriate questions.

                     ANNUAL REPORT TO CITADEL STOCKHOLDERS

     Copies of Citadel's annual report on Form 10-K for the year ended December
31, 2000 and quarterly report on Form 10-Q for the quarter ended June 30, 2001
are being furnished with this joint proxy statement/prospectus.

                         CITADEL STOCKHOLDER PROPOSALS

     Any Citadel stockholder who, in accordance with and subject to the
provisions of the proxy rules of the Securities and Exchange Commission, wishes
to submit a proposal for inclusion in Citadel's proxy statement for its 2002
annual meeting of stockholders, must deliver such proposal in writing to the
Secretary of Citadel at Citadel's principal executive offices at 550 South Hope
Street, Suite 1825, Los Angeles, CA 90071, no later than ___________, 2002.  If
Citadel is not notified of a stockholder proposal by _________, 2002, the
proxies held by management of Citadel may confer discretionary authority to vote
against such stockholder proposal, even though such proposal is not discussed in
the proxy statement.

     The Citadel board of directors will consider written nominations for
directors from stockholders. Nominations for the election of directors made by
the stockholders of Citadel must be made by written notice delivered to the
Secretary of Citadel at Citadel's principal executive offices not less than 120
days prior to the first anniversary of the immediately preceding annual meeting
of stockholders at which directors are elected.  Such written notice must set
forth, among other things, the name, age, address and principal occupation or
employment of such nominee, the number of shares of Citadel's common stock
beneficially owned by such nominee and such other information as is required by
the proxy rules of the Securities and Exchange Commission with respect to a
nominee of Citadel's board of directors.  Citadel will not consider any
nomination that is not made in accordance with the foregoing procedure.

                     DESCRIPTION OF CITADEL CAPITAL STOCK

     Citadel is authorized to issue 20,000,000 shares of voting common stock,
$0.01 par value, 100,000,000 shares of nonvoting common stock, $0.01 par value,
and 20,000,000 shares of undesignated preferred stock, $0.01 par value.
Immediately after the consolidation, based on shares of Craig common stock and
common preference stock and Reading common stock outstanding as of July 31,
2001, we estimate that there will be approximately 1,336,330 shares of Citadel
voting common stock outstanding and 20,484,988 shares of Citadel nonvoting
shares outstanding, 1,996,820 shares of Citadel common stock will be issuable
upon exercise of outstanding options assuming there are no option exercises and
no additional option grants after July 31, 2001, and no shares of Citadel
preferred stock will be issued and outstanding.

                                      112

Common Stock

     Holders of Citadel voting common stock are entitled to one vote per share
on all matters to be voted upon by the stockholders.  Holders of voting common
stock do not have cumulative voting rights, and, therefore, holders of a
majority of the shares voting for the election of directors can elect all of the
directors.  If this occurs, the holders of the remaining shares will not be able
to elect any directors.

     Holders of Citadel nonvoting common stock have no voting rights except that
the holders of nonvoting common stock will be entitled to vote as a separate
class on any amendments to the Citadel articles of incorporation or any merger
that would adversely affect their rights, privileges or preferences or any
liquidation or dissolution in which such holders would receive securities with
rights, privileges or preferences less beneficial to them as holders of such
Citadel nonvoting common stock.

     Holders of Citadel voting common stock and nonvoting common stock are
entitled to receive any dividends that our board of directors may declare from
funds legally available for distribution.  Citadel has never declared or paid
cash dividends on our common stock and expects to retain future earnings, if
any, for use in the operation and expansion of our business.  As a result, we do
not anticipate paying any cash dividends in the foreseeable future.  In
addition, Citadel may in the future enter into agreements with lenders that
could prohibit our paying cash dividends.

     In the event of liquidation, dissolution or winding up of Citadel, the
holders of Citadel voting common stock and nonvoting common stock are entitled
to share ratably in all assets legally available for distribution after payment
of all debts and other liabilities and subject to the prior rights of any
holders of preferred stock then outstanding. Holders of common stock have no
preemptive or other subscription or conversion rights. There are no redemption
or sinking fund provisions applicable to the Citadel voting common stock and
nonvoting common stock.

Preferred Stock

     Citadel is authorized to issue 20,000,000 shares of undesignated preferred
stock.  The Citadel board of directors has the authority without any further
stockholder vote to issue the preferred stock in one or more series and to fix
the price and rights of the preferred stock.  The issuance of preferred stock,
while providing desirable flexibility in connection with possible acquisitions
and other corporate purposes, could have the effect of delaying, deferring or
preventing a change in control of Citadel.  It could also adversely affect the
market price of Citadel common stock and the voting and other rights of the
holders of Citadel common stock.  Citadel has no current plans to issue any
shares of preferred stock.

Transfer Agent and Registrar

     The transfer agent and registrar for the Citadel common stock is Mellon
Investor Services LLC and can be contacted by phone at (800) 522-6645.

                                 LEGAL OPINION

     The validity of the shares of Citadel nonvoting common stock offered by
this joint proxy statement/ prospectus will be passed upon for Citadel by Kummer
Kaempfer Bonner & Renshaw, Las Vegas, Nevada.

                                    EXPERTS

     The financial statements and the related financial statement schedule of
Citadel incorporated in this joint proxy statement/prospectus by reference from
Citadel's annual report on Form 10-K for the year ended December 31, 2000 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.

                                      113

     The financial statements as of and for the years ended December 31, 2000
and 1999 of Reading incorporated in this joint proxy statement/prospectus by
reference from Reading's annual report on Form 10-K for the year ended December
31, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.

     The financial statements as of the years ended December 31, 2000 and 1999
of Craig incorporated in this joint proxy statement/prospectus by reference from
Craig's annual report on Form 10-K for the year ended December 31, 2000 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.

     The financial statements of Reading for the year ended December 31, 1998
appearing in Reading's annual report on Form 10-K and incorporated by reference
in this joint proxy statement/prospectus have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.

     The consolidated financial statements of Craig Corporation for the year
ended December 31, 1998 appearing in Craig Corporation's Annual Report (Form 10-
K) and incorporated by reference in the Joint Proxy Statement of Citadel Holding
Corporation, Craig Corporation and Reading Entertainment, Inc. which is referred
to and made a part of this Registration Statement, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.

                      DOCUMENTS INCORPORATED BY REFERENCE

     You should rely only on the information contained in or furnished with this
joint proxy statement/prospectus or to which we have referred you.  We have not
authorized anyone to provide you with any different information.

     This joint proxy statement/prospectus includes information that is
"incorporated by reference."  This means that Citadel, Craig and Reading
disclose information to you by referring you to another document filed
separately with the Securities and Exchange Commission.  The information
incorporated by reference is considered a part of this joint proxy
statement/prospectus, except for any information superseded by information
contained in this joint proxy statement/prospectus.  This joint proxy
statement/prospectus incorporates by reference the documents listed below, which
contain important business and financial information.

     All documents filed by Citadel, Craig or Reading under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, after the date of
this joint proxy statement/prospectus and before the date of the joint meetings
of stockholders of Citadel, Craig and Reading are incorporated by reference and
deemed to be a part of this joint proxy statement/prospectus from the date of
filing of those documents.

     The following documents, which were filed by Citadel with the Securities
and Exchange Commission, are incorporated by reference in this joint proxy
statement/prospectus:

          .  Citadel's annual report on Form 10-K for the fiscal year ended
December 31, 2000, filed on April 12, 2001.

          .  Citadel's quarterly report of Form 10-Q for the fiscal quarter
ended March 31, 2001, filed on May 15, 2001.

          .  Citadel's quarterly report or Form 10-Q for the fiscal quarter
ended June 30, 2001.

          .  Citadel's current report on Form 8-K, dated July 18, 2001, which
describes the agreement in principle to accomplish the consolidation.

          .  Citadel's current report on Form 8-K, dated August 17, 2001, which
describes the consolidation agreement.

                                      114

     The following documents, which were filed by Craig with the Securities and
Exchange Commission, are incorporated by reference in this joint proxy
statement/prospectus:

          .  Craig's annual report on Form 10-K for the fiscal year ended
December 31, 2000.

          .  Craig's quarterly report of Form 10-Q for the fiscal quarter ended
March 31, 2001.

          .  Craig's quarterly report of Form 10-Q for the fiscal quarter ended
June 30, 2001.

          .  Craig's current report on Form 8-K, dated July 18, 2001, which
describes the agreement in principle to accomplish the consolidation

          .  Craig's current report on Form 8-K, dated August 17, 2001, which
describes the consolidation agreement.

     The following documents, which were filed by Reading with the Securities
and Exchange Commission, are incorporated by reference into this joint proxy
statement/prospectus:

          .  Reading's annual report on Form 10-K for the fiscal year ended
December 31, 2000.

          .  Reading's quarterly report of Form 10-Q for the fiscal quarter
ended March 31, 2001.

          .  Reading's quarterly report of Form 10-Q for the fiscal quarter
ended June 30, 2001.

          .  Reading's current report on Form 8-K, dated July 18, 2001, which
describes the agreement in principle to accomplish the consolidation.

          .  Reading's current report on Form 8-K, dated August 17, 2001, which
describes the consolidation agreement.

     Any statement contained in a document incorporated or deemed to be
incorporated in this document by reference will be deemed to be modified or
superseded for purposes of this joint proxy statement/prospectus to the extent
that a statement contained in this document or any other subsequently filed
document that is deemed to be incorporated in this document by reference
modifies or supersedes the statement.  Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of
this joint proxy statement/prospectus.

     The documents incorporated by reference into this joint proxy
statement/prospectus, if not being delivered with this joint proxy
statement/prospectus, are available from Citadel, Craig and Reading upon
request.  We will provide to you a copy of any and all of the information that
is incorporated by reference in this joint proxy statement/prospectus (not
including exhibits to the information, unless those exhibits are specifically
incorporated by reference into this joint proxy statement/prospectus, and not
including documents that are being delivered with this joint proxy
statement/prospectus), without charge, upon written or oral request.  YOU SHOULD
MAKE ANY REQUEST FOR DOCUMENTS BY _____________, 2001 TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS.

  All requests for documents relating to Citadel, Craig or Reading should be
                                 directed to:

                          Citadel Holding Corporation
                        550 S. Hope Street, Suite 1875
                         Los Angeles, California 90071
                                (213) 239-0540
                        Attention:  Andrzej Matyczynski

                                      115

     Citadel, Craig and Reading have filed reports, proxy statements and other
information with the Securities and Exchange Commission.  Copies of their
reports, proxy statements and other information may be inspected and copied at
the public reference facilities maintained by the Securities and Exchange
Commission:

     Judiciary Plaza          Citicorp Center           Seven World Trade Center
     Room 1024                500 West Madison Street   13/th/ Floor
     450 Fifth Street, N.W.   Suite 1400                New York, New York 10048
     Washington, D.C. 20549   Chicago, Illinois 60661

     Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the Securities and Exchange Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-
0330.  The Securities and Exchange Commission maintains a website that contains
reports, proxy statements and other information regarding each of us.  The
address of the Securities and Exchange Commission website is http://www.sec.gov.

     Reports, proxy statements and other information concerning Citadel may also
be inspected at:

          .  The American Stock Exchange, 86 Trinity Place, New York, New York
             10006.

     Reports, proxy statements and other information concerning Craig may also
be inspected at:

          .  The New York Stock Exchange, 20 Broad Street, New York, New York
             10005.

     Reports, proxy statements and other information concerning Reading may also
be inspected at:

          .  The National Association of Securities Dealers, 1735 K Street,
             N.W., Washington, D.C. 20006.

     Citadel has filed a registration statement under the Securities Act with
the Securities and Exchange Commission with respect to the Citadel shares to be
issued in connection with the consolidation.  This joint proxy
statement/prospectus constitutes the prospectus of Citadel filed as part of the
registration statement.  This joint proxy statement/prospectus does not contain
all of the information set forth in the registration statement because certain
parts of the registration statement are omitted as permitted by the rules and
regulations of the Securities and Exchange Commission.  You may inspect and copy
the registration statement at any of the addresses listed above.

     THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO PURCHASE, CITADEL SHARES OR THE SOLICITATION OF A PROXY, IN ANY
JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE
THE OFFER, SOLICITATION OF AN OFFER OR PROXY STATEMENT IN THAT JURISDICTION.
NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MEANS, UNDER ANY CIRCUMSTANCES, THAT THERE HAS BEEN
NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED IN THIS DOCUMENT BY
REFERENCE OR IN ITS AFFAIRS SINCE THE DATE OF THIS JOINT PROXY
STATEMENT/PROSPECTUS.

     THE INFORMATION CONTAINED IN THIS DOCUMENT WITH RESPECT TO CITADEL WAS
PROVIDED BY CITADEL.

     THE INFORMATION CONTAINED IN THIS DOCUMENT WITH RESPECT TO CRAIG WAS
PROVIDED BY CRAIG.

     THE INFORMATION CONTAINED IN THIS DOCUMENT WITH RESPECT TO READING WAS
PROVIDED BY READING.

                                      116

================================================================================

                                                                            ANXA

                         AGREEMENT AND PLAN OF MERGER

                                     AMONG

                          CITADEL HOLDING CORPORATION

                            CRAIG MERGER SUB, INC.

                           READING MERGER SUB, INC.

                               CRAIG CORPORATION

                                      AND

                          READING ENTERTAINMENT, INC.

                          Dated as of August 17, 2001

================================================================================

                               TABLE OF CONTENTS

                                                                                                                Page
                                                                                                                ----
                                                                                                             
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 CRAIG..........................................................      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      Craig 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

                                      -i-

                                                                                                              
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

                                     -ii-

                                                                                                              
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 Craig..................................................     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

                                     -iii-

EXHIBITS
- --------
Exhibit 8.15      Affiliate Agreement

                                     -iv-

                                 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
Craig.........................................................    1
Craig and Reading Stock.......................................    6
Craig and Reading Stock Certificates..........................    5
Craig and Reading Stock Exchange Ratios.......................    8
Craig and Reading Stock Merger Consideration..................    5
Craig and Reading Stock Options...............................    8
Craig Benefit Plans...........................................   15
Craig Capital Stock...........................................   10
Craig Class B Stock...........................................   10
Craig Common Preference Stock.................................    3
Craig Common Preference Stock Certificate.....................    4
Craig Common Preference Stock Exchange Ratio..................    4
Craig Common Preference Stock Merger Consideration............    4
Craig Common Stock............................................    3
Craig Common Stock Certificate................................    3
Craig Common Stock Exchange Ratio.............................    3
Craig Common Stock Merger Consideration.......................    3
Craig Disclosure Letter.......................................    9
Craig ERISA Affiliate.........................................   15
Craig Financial Statements....................................   13
Craig Material Adverse Effect.................................   10
Craig Material Contracts......................................   19
Craig Merger..................................................    1
Craig Merger Sub..............................................    1
Craig Merger Sub Common Stock.................................    5
Craig Preferred Stock.........................................   10
Craig SEC Reports.............................................   12
Craig Special Meeting.........................................   49
Craig Stockholders' Approval..................................   19
Craig 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.........................................   22
Reading Common Stock..........................................    4
Reading Common Stock Certificate..............................    4
Reading Common Stock Exchange Ratio...........................    4
Reading Common Stock Merger Consideration.....................    4
Reading Disclosure Letter.....................................   21

                                      -v-

                                                              
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

                                     -vi-

                         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"), Craig Merger Sub, Inc., a Nevada corporation and direct, wholly-
owned subsidiary of Parent ("Craig Merger Sub"), Reading Merger Sub, Inc., a
Nevada corporation and direct, wholly-owned subsidiary of Parent ("Reading
Merger Sub"), Craig Corporation, a Nevada corporation ("Craig"), and Reading
Entertainment, Inc., a Nevada corporation ("Reading" and together with "Craig,"
the "Companies" or sometimes individually referred to as a "Company").

     Whereas, the respective boards of directors of Parent, Craig and Reading
deem it advisable and in the best interests of their respective stockholders
that Craig Merger Sub merge with and into Craig (the "Craig Merger") and that
Reading Merger Sub merge with and into Reading (the "Reading Merger" and
together with the Craig 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, Craig 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) Craig Merger Sub shall merge with and
into Craig and the separate corporate existence of Craig Merger Sub shall
thereupon cease and Craig shall be the surviving corporation in the Merger (the
"Craig 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 Craig 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 Craig 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 Craig in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Craig 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 Craig as in effect immediately prior to
the Effective Time shall be the bylaws of the Craig 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 Craig 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

                                      -2-

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
Craig Surviving Corporation shall be the directors and officers of Craig
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 Craig 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:

     a.      Craig
             -----

             (i)   Each share of common stock, par value $0.25 per share, of
Craig ("Craig 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 "Craig 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 Craig 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 ("Craig Common Stock
Certificate") that, immediately prior to the Effective Time, represented
outstanding shares of Craig Common Stock shall cease to have any ownership or
other rights with respect thereto, except the right to receive, upon the
surrender of such Craig Common Stock Certificate, the Parent Class A Stock (the
"Craig 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 Craig Common Stock Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the Craig 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 Craig 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 Craig 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 Craig ("Craig Common Preference Stock") issued and
outstanding immediately prior to

                                      -3-

the Effective Time shall be converted (subject to Section 3.4) into the right to
receive 1.17 shares (the "Craig Common Preference Stock Exchange Ratio") of
Parent Class A Stock. All such shares of Craig 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 ("Craig
Common Preference Stock Certificate") that, immediately prior to the Effective
Time, represented outstanding shares of Craig 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 Craig Common Preference Stock
Certificate, the Parent Class A Stock (the "Craig 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 Craig 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 Craig 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 Craig 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 Craig 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
          -------

          (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.

                                      -4-

          (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
          ------

          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.

     d.   Craig Merger Sub
          ----------------

          Each share of common stock, par value $0.001 per share, of Craig
Merger Sub (the "Craig 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 Craig Surviving Corporation, and shall, after the Craig
Merger, be the only shares of Craig Surviving Corporation issued and
outstanding.

     e.   Reading Merger Sub
          ------------------

          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 Craig Common Stock Certificate, Craig Common
Preference Stock Certificate or Reading Common Stock Certificate (collectively,
the "Craig and Reading Stock Certificates") with respect to the Craig Common
Stock Merger Consideration, Craig Common Preference Stock Merger Consideration
or Reading Common Stock Merger Consideration (collectively, the "Craig and
Reading Stock Merger Consideration") represented thereby until the holder of
record of such Craig and Reading Stock Certificate, as applicable, shall
surrender such Craig 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 Craig and
Reading Stock Certificate, there shall be paid to the record holder of the
certificate or certificates representing the Craig 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 Craig and Reading Stock
Merger Consideration, as applicable, and (ii) if the payment date for any
dividend or distribution payable with respect to such Craig and Reading Stock
Merger Consideration, as applicable, has not occurred prior to the surrender of
such Craig and Reading Stock Certificate, as applicable, at the appropriate
payment date therefor, the amount of

                                      -5-

dividends or other distributions with a record date after the Effective Time but
prior to the surrender of such Craig and Reading Stock Certificate and a payment
date subsequent to the surrender of such Craig and Reading Stock Certificate.

     g.     All Parent Class A Stock issued upon the surrender of the Craig 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 Craig and Reading Stock Certificates, as applicable, and
Craig Common Stock, Craig Common Preference Stock and Reading Common Stock
(collectively, the "Craig 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 Craig Surviving
Corporation or the Reading Surviving Corporation of shares of the Craig and
Reading Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Craig 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 Craig and Reading (the "Exchange Agent") for the
purpose of exchanging Craig and Reading Stock Certificates formerly representing
Craig 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
Craig 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 Craig 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 Craig 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 Craig and Reading Stock Merger Consideration, as applicable, in exchange for
surrendered Craig and Reading Stock Certificates formerly representing Craig 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 Craig and Reading Stock
Certificate or Certificates, as applicable, that immediately prior to the
Effective Time represented outstanding Craig and Reading Stock a letter of
transmittal and instructions for use in effecting the exchange of such Craig and
Reading Stock Certificate or Certificates, as applicable, for certificates
representing the Craig and Reading Stock Merger Consideration and, if
applicable, cash in lieu of fractional shares. Provision also shall be made for
holders of Craig 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
Craig and Reading Stock Certificates in exchange for the Craig and Reading Stock
Merger Consideration and, if applicable, cash, in lieu of fractional shares.

     c.     After the Effective Time, Craig Common Stock Certificates, Craig
Common Preference Stock Certificates and Reading Common Stock Certificates shall
represent the right,

                                      -6-

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 Craig
Common Stock Certificates, Craig 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 Craig Common Stock Certificates, Craig 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 Craig Common Stock
Certificates, Craig Preference Stock Certificates or Reading Common Stock
Certificates surrendered in exchange therefor, it shall be a condition to such
issuance that the Craig Common Stock Certificates, Craig 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 Craig and Reading Stock Merger Consideration and any cash in the
Exchange Fund that remain unclaimed by the holders of Craig 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 holder's Craig 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
Craig and Reading Stock Certificates or to pay amounts to which such holder is
entitled pursuant to Section 3.1.  If outstanding Craig 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 Craig and
Reading Stock Merger Consideration issuable in respect of such Craig 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 Craig and Reading Stock Merger Consideration issuable in respect
of such Craig 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 Craig and Reading Stock Merger Consideration evidenced by
such Craig 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, Craig, Reading or the Surviving
Corporations shall be liable to any holder of Craig and Reading Stock
Certificates for any amount paid, or Craig 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 Craig 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 Craig and

                                      -7-

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 Craig and Reading Stock Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Craig
and Reading Stock Certificate the Craig and Reading Stock Merger Consideration
and, if applicable, cash and unpaid dividends and other distributions on any
Craig 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 Craig and Reading outstanding at the Effective Time (the
"Craig 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 Craig 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 Craig and Reading Stock, as applicable, issuable upon the
exercise of such Craig and Reading Stock Option immediately prior to the
Effective Time by the applicable stock exchange ratio:  Craig Common Stock
Exchange Ratio, Craig Common Preference Stock Exchange Ratio or Reading Common
Stock Exchange Ratio (collectively, the "Craig 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 Craig and Reading Stock Exchange Ratio
(rounded up to the nearest whole cent) and otherwise upon the same terms and
conditions as such applicable Craig 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 Craig 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 Craig 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.

                                      -8-

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, Craig and Reading shall otherwise agree.

Section 3.6  Affiliates

     Notwithstanding anything to the contrary contained in Article III, Craig
and Reading Stock Certificates surrendered for exchange by any affiliate (as
defined in Section 8.15) of Craig 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 CRAIG

     Craig 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 Craig to Parent and
Reading as of the date hereof (the "Craig Disclosure Letter"):

Section 4.1  Organization and Qualification

       a.    Craig 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 Craig Material Adverse Effect (as defined
below).  Craig 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.  Craig 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.  Craig is not in default in any respect in the
performance, observation or fulfillment of any provision of its articles of
incorporation or bylaws.

                                      -9-

     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 Craig 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 Craig 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 Craig 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 "Craig 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 Craig and its
Subsidiaries taken as a whole; provided, that such term shall not include
effects that are (a) not applicable primarily to Craig 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
Craig SEC Reports (as defined in Section 4.5 below), in this Agreement and/or in
the Craig 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 Craig and Parent shall not be deemed a
"Subsidiary" of Reading.

Section 4.2  Capitalization

     The authorized capital stock of Craig consists of 7,500,000 shares of Craig
Common Stock, 50,000,000 shares of Craig Common Preference Stock, 20,000,000
shares of Class B common stock, par value of $0.01 per share ("Craig Class B
Stock"), and 1,000,000 shares of Preferred Stock, par value of $0.01 per share
("Craig Preferred Stock" and together with Craig Common Stock, Craig Common
Preference Stock, and Craig Class B Stock, the "Craig Capital Stock").  As of
the date of this Agreement, (a) 3,402,808 shares of Craig Common Stock were
issued and outstanding, (b) 7,058,408 shares of Craig Common Preference Stock
were issued and outstanding, (c) no shares of Craig Class B Stock were issued
and outstanding, (d) no shares of Craig Preferred Stock were issued and
outstanding and (e) stock options to acquire 664,940 shares of Craig Common
Stock and 65,000 shares of Craig Common Preference Stock were

                                     -10-

outstanding under all stock option plans and agreements of Craig or its
Subsidiaries. All of the outstanding shares of Craig 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 Craig to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its capital stock of any
class.

Section 4.3  Authority

     Craig 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 Craig is or will be a party and, subject
to obtaining Craig 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
Craig 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 Craig are
necessary to authorize this Agreement and the Ancillary Agreements to which
Craig is or will be a party or to consummate the transactions contemplated
hereby or thereby, other than Craig Stockholders" Approval as contemplated by
Section 8.11 hereof. This Agreement has been, and the Ancillary Agreements to
which Craig is or will be a party are, or upon execution will be, duly and
validly executed and delivered by Craig 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 Craig enforceable against Craig 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 Craig 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,

                                     -11-

orders, authorizations and permits that would not (x) result in a Craig Material
Adverse Effect, (y) materially impair the ability of Craig 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
Craig or any of its Subsidiaries is a party or by which Craig 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 Craig Material Adverse Effect, (ii) materially impair the
ability of Craig 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 Craig 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 Craig or any of its Subsidiaries under any agreement or instrument to
which Craig or any of its Subsidiaries is a party or by which Craig or any of
its Subsidiaries or any of their properties or assets is bound; or

     f.   result in any holder of any securities of Craig being entitled to
appraisal, dissenters" or similar rights.

Section 4.5  Craig SEC Reports

     Craig 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 "Craig SEC Reports").  As
of the respective dates such Craig SEC Reports were filed or, if any such Craig
SEC Reports were amended, as of the date such amendment was filed, each of the
Craig 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.

                                     -12-

Section 4.6  Financial Statements

     Each of the consolidated financial statements of Craig contained in the
Craig SEC Reports (including any related notes and schedules) (the "Craig
Financial Statements") has been prepared from, and is in accordance with, the
books and records of Craig 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 Craig 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 Craig 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 Craig Financial Statements or in the Craig SEC
Reports filed and publicly available prior to the date of this Agreement,
neither Craig 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 Craig Material Adverse Effect.

Section 4.8  Absence of Certain Changes

     Except as disclosed in the Craig SEC Reports filed and publicly available
prior to the date of this Agreement or as contemplated by this Agreement, since
June 30, 2001 (a) Craig 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 Craig 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 Craig, or any repurchase, redemption or other acquisition by Craig or
any of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, Craig or any of its
Subsidiaries, (d) there has not been any amendment of any term of any
outstanding security of Craig or any of its Subsidiaries, and (e) there has not
been any change in any method of accounting or accounting practice by Craig 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 Craig.

Section 4.9  Taxes

     Except as otherwise disclosed in the Craig SEC Reports filed and publicly
available prior to the date of this Agreement and for matters that would not
have a Craig Material Adverse Effect:

     a.      Craig 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)

                                     -13-

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.     Craig 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, Craig or any Subsidiary. No issue has been raised by any Tax Authority in
any Audit of Craig 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 Craig or any of its Subsidiaries. There
are no liens for Taxes upon the assets of Craig 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
Craig 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, Craig 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 Craig 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 Craig SEC Reports filed and publicly available
prior to the date of this Agreement and for matters that would not have a Craig
Material Adverse Effect, there is no suit, claim, action, proceeding or
investigation pending or, to Craig's knowledge, threatened against or directly
affecting Craig, any Subsidiaries of Craig or any of the directors or officers
of Craig 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 Craig
Material Adverse Effect, if

                                     -14-

adversely determined. Neither Craig nor any of its Subsidiaries, nor any
officer, director or employee of Craig 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
Craig or such Subsidiary nor, to the knowledge of Craig, is Craig, any
Subsidiary or any officer, director or employee of Craig or its Subsidiaries
under investigation by any Governmental Authority. Except as disclosed in the
Craig 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 Craig 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 Craig or
any trade or business, whether or not incorporated, which together with Craig
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 "Craig ERISA Affiliate")
within six years prior to the Effective Time (each a "Craig 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 Craig, 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 Craig
Material Adverse Effect; (iii) neither Craig nor any Craig ERISA Affiliate has
engaged in, and Craig and each Craig 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 Craig or any Craig ERISA Affiliate to any
liability for a breach of fiduciary duty under ERISA that could reasonably be
expected to result in a Craig Material Adverse Effect; (iv) no disputes are
pending or, to the knowledge of Craig or any Company ERISA Affiliate,
threatened; (v) neither Craig nor any Craig ERISA Affiliate has engaged in, and
Craig and each Craig 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 Craig Material Adverse Effect; (vi)
to the knowledge of Craig, 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

                                     -15-

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 Craig 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 Craig or a Craig
ERISA Affiliate.

       b.     No Craig 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 Craig or
a Craig ERISA Affiliate in connection with which Craig could be subject to any
liability, lien or encumbrance with respect to any Craig Benefit Plan or any
employee benefit plan described in section 3(3) of ERISA maintained, sponsored
or contributed to by a Craig ERISA Affiliate under ERISA or the Code.

       c.     Except as set forth in the Craig 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 Craig Material Adverse Effect, no employees of Craig
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 Craig SEC Reports filed and publicly available
prior to the date of this Agreement and except for matters that would not have a
Craig Material Adverse Effect:

       a.     The businesses of Craig 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 Craig 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
Craig or any of its Subsidiaries except in material compliance with all
Environmental Laws.

       c.     Neither Craig nor any of its Subsidiaries has received any written
notice from any Governmental Authority or third party or, to the knowledge of
Craig, any other communication alleging or concerning any material violation by
Craig or any of its Subsidiaries of, or responsibility or liability of Craig or
any of its Subsidiaries under, any Environmental Law.

                                     -16-

There are no pending, or to the knowledge of Craig, threatened, claims, suits,
actions, proceedings or investigations with respect to the businesses or
operations of Craig 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 Craig
Material Adverse Effect, nor does Craig have any knowledge of any fact or
condition that could give rise to such a claim, suit, action, proceeding or
investigation.

       d.     Craig 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 Craig and its Subsidiaries; there are no pending
or, to the knowledge of Craig, threatened, actions, proceedings or
investigations seeking to modify, revoke or deny renewal of any of such
approvals, permits, licenses, registrations and authorizations; and Craig 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 Craig or its
Subsidiaries or, to Craig's knowledge, any predecessor in interest at any of the
properties owned or operated by Craig, its Subsidiaries or a predecessor in
interest, or to the knowledge of Craig, at any disposal or treatment facility
which received Hazardous Substances generated by Craig, its Subsidiaries, or any
predecessor in interest which could reasonably be expected to result in
liabilities that have a Craig Material Adverse Effect.

       f.     To Craig's knowledge, no pending claims have been asserted or
threatened to be asserted against Craig 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 Craig or its Subsidiaries at property owned or operated by Craig or
its Subsidiaries, except as could not reasonably be expected to have a Craig
Material Adverse Effect.

Section 4.13  Compliance with Applicable Laws

       Craig 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 Craig 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
Craig 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.

                                     -17-

Section 4.14  Insurance

       Craig and its Subsidiaries currently have in place all policies of
insurance which are reasonably required in connection with the operation of the
businesses of Craig and its Subsidiaries as currently conducted in accordance
with applicable laws and all agreements relating to Craig and its Subsidiaries.
None of Craig, 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 Craig 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 Craig Material Adverse Effect.

Section 4.15  Labor Matters; Employees

       a.     Except as set forth in the Craig 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
Craig Material Adverse Effect, (i) there is no labor strike, dispute, slowdown,
work stoppage or lockout actually pending or, to the knowledge of Craig,
threatened against or affecting Craig or any of its Subsidiaries, (ii) none of
Craig 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 Craig or any of its Subsidiaries, (iii) none of the
employees of Craig or any of its Subsidiaries are represented by any labor
organization, (iv) Craig 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 Craig or any of its Subsidiaries pending or, to the
knowledge of Craig, 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 Craig 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 Craig 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 Craig 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 Craig or any of its Subsidiaries, or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of Craig or any of its Subsidiaries, nor has Craig or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in

                                     -18-

number to trigger application of any similar state or local law, in each case
that could reasonably be expected to have a Craig Material Adverse Effect.

Section 4.16  Permits

       Immediately prior to the Effective Time and except for Customary Post-
Closing Consents, Craig 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 Craig 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

       a.     Craig has filed as exhibits to the Craig 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 Craig 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
Craig, 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 "Craig Material Contracts").

       b.     Except as set forth in the Craig SEC Reports filed and publicly
available prior to the date of this Agreement, (i) all Craig 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) Craig is not in material breach or default with respect to, and to
the knowledge of Craig, no other party to any Craig 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 Craig
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 Craig 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
Craig 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
Craig that will be necessary to consummate the Craig 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 Craig
Common Stock and Craig Common Preference Stock on the record date, voting
together as a single class ("Craig Stockholders' Approval").

                                     -19-

Section 4.19  Proxy Statement/Prospectus; Registration Statement

       None of the information to be supplied by Craig or its Subsidiaries for
inclusion in (a) the joint proxy statement relating to the Craig 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 Craig 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

       Craig 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 mark 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 Craig 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 Craig Material Adverse Effect. No person has notified
either Craig 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 Craig and its Subsidiaries that could have a Craig
Material Adverse Effect, and, to Craig's knowledge, no person is infringing on
any right of Craig or any of its Subsidiaries with respect to any such
Intellectual Property. No claims are pending or, to Craig's knowledge,
threatened that Craig 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 Craig Material Adverse Effect.

Section 4.21  Brokers

       No broker, finder or investment banker (other than Marshall & Stevens,
Incorporated, the fees and expenses of which shall be paid in equal shares by
Parent, Craig and Reading) is entitled to any brokerage, finder's fee or other
fee or commission payable by Craig or any of its Subsidiaries in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of Craig or any of its Subsidiaries.

                                     -20-

Section 4.22  Fairness Opinion

       The Board of Directors of Craig has received a written opinion from
Marshall & Stevens, 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 Craig
Common Stock Exchange Ratio and Craig Common Preference Stock Exchange Ratio are
fair from a financial point of view to the public holders of the Craig Common
Stock and Craig 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 Craig 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
Craig 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 Craig 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

                                     -21-

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

                                     -22-

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.

                                     -23-

Section 5.5  Reading SEC Reports

       Reading has filed with the SEC, and has heretofore made available to
Parent and Craig 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

                                     -24-

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.

                                     -25-

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)

                                     -26-

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

                                     -27-

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.

                                     -28-

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

                                     -29-

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 Craig 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

                                     -30-

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 Marshall & Stevens,
Incorporated, the fees and expenses of which shall be paid in equal shares by
Parent, Craig 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

                                     -31-

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 Craig.

                                  ARTICLE VI

                   REPRESENTATIONS AND WARRANTIES OF PARENT

     Parent, Craig 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 Craig 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

                                     -32-

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.

     d.   Craig 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 Craig Merger Sub consists of 1,000 shares of Craig Merger Sub
Common Stock. As of the date of this Agreement, Craig Merger Sub has 100 shares
of Craig 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,
Craig 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, Craig 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, Craig 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, Craig 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, Craig
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,

                                     -33-

Craig Merger Sub and Reading Merger Sub, and no other corporate proceedings on
the part of Parent, Craig 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, Craig 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,
Craig 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, Craig 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, Craig 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, Craig 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;

                                     -34-

     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

                                     -35-

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.

                                     -36-

     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;

                                     -37-

(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.

                                     -38-

     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

                                     -39-

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.

                                     -40-

     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 Craig 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.

                                     -41-

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 Craig
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.

                                     -42-

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 Craig 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, Craig and
Reading shall otherwise agree in writing, or as otherwise contemplated by this
Agreement, Parent, Craig 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, Craig and Reading, which consent shall
not be unreasonably withheld:

     a.   Neither Parent, Craig 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, Craig 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, Craig 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, Craig 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, Craig 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 Craig and its
direct and indirect wholly owned Subsidiaries or among Reading

                                     -43-

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, Craig 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: Craig 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 Craig 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, Craig 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, Craig and Reading, as the case may
be, and its Subsidiaries taken as a whole;

     f.   Parent, Craig and Reading will not change any method of accounting or
accounting practice by Parent, Craig and Reading or any of their Subsidiaries,
except for any such change required by GAAP;

     g.   Parent, Craig 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, Craig 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, Craig 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, Craig 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 Craig 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

                                     -44-

(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 Craig 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 Craig
Benefit Plan, Reading Benefit Plan, or Parent Benefit Plan, as applicable, in a
manner, or take any other action with respect to any Craig 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 Craig 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 Craig 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
Craig Benefit Plan, Reading Benefit Plan, or Parent Benefit Plan, as applicable;

     k.      Parent, Craig 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, Craig 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.

                                     -45-

Section 8.2  Directors' and Officers' Indemnification

     Upon the effectiveness of the Mergers, Parent shall assume the obligations
of Craig and Reading, whether arising prior to or after such effectiveness,
under any then existing indemnification agreements between such directors and
executive officers and Craig 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

                                     -46-

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 Craig, 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, Craig 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, Craig and Reading will evaluate their personnel needs and consider
continuing the employment of certain employees of Parent, Craig and Reading and
their Subsidiaries on a case-by-case basis.  After the Effective Time, Parent
will initially provide to any employees of Parent, Craig and Reading and their
Subsidiaries who are to be employed by Parent, Craig 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

                                     -47-

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 Craig Benefit Plan, the Reading Benefit Plan
and any employment contracts or severance agreements.  The terms of each such
Craig 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,
Craig 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 Craig 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 Craig 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
Craig 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 Craig 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 Craig 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

     a.   Craig 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

                                     -48-

meeting of its stockholders (individually, the "Craig Special Meeting" and the
"Reading Special Meeting") for the purpose of securing the Craig 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 Craig
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, Craig 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, Craig 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, Craig and
Reading.  Each of Parent, Craig 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 Craig
and Reading shall furnish all information concerning Craig 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, Craig and Reading shall cause the

                                     -49-

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 Craig and Reading and Craig 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 Craig 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 Craig 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;

                                     -50-

     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 Craig 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 Craig 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 Craig 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, Craig and Reading, and James J. Cotter, each hereby agrees that,
at the Parent Annual Meeting, the Craig Special Meeting and the Reading Special
Meeting, as the case may be, or any other meeting of the stockholders of Parent,
Craig or Reading, however called, and in any action by written consent of the
stockholders of Parent, Craig or Reading, Parent, Craig and Reading, and James
J. Cotter, each will vote all of its or his respective shares of voting stock of
Parent, Craig 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 Craig 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

                                     -51-

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,
Craig and/or Reading (or any class thereof). In addition, Parent, Craig and
Reading, and James J. Cotter, 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 Craig 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.

     f.      Marshall & Stevens, Incorporated shall not have withdrawn or
modified in any material way its Joint Fairness Opinion.

                                     -52-

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 Craig 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 Craig

     The obligation of Craig to effect the Craig 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 Craig 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

                                     -53-

transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to Craig 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 Craig 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 Craig 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
Craig, 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 Craig, as the
case may be, as to the satisfaction of this condition.

     b.   All proceedings to be taken by Parent and Craig, 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 Craig, 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 Craig or their respective Subsidiaries,
taken as a whole, that would constitute a Parent Material Adverse Effect or a
Craig Material Adverse Effect, other than any such change that affects each of
Parent, Craig 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.

                                     -54-

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 Craig, Reading or
Parent:

     a.   by the mutual written consent of Parent, Craig and Reading;

     b.   by Parent, Craig 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 Craig, 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 Craig, 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 Craig, 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.

                                     -55-

                                  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, Craig Merger Sub          S. Craig Tompkins
       or Reading Merger Sub:                Vice Chairman of the Board of
                                             Directors
                                             Citadel Holding Corporation
                                             550 S. Hope Street, Suite 1825
                                             Los Angeles, California  90071
                                             Facsimile No: (213) 239-0548

          with a copy to:                    Kummer Kaempfer Bonner & Renshaw
                                             Seventh Floor
                                             3800 Howard Hughes Parkway
                                             Las Vegas, Nevada 89109
                                             Attention: Michael J. Bonner
                                             Facsimile No: (702) 796-7181

       and                                   William Soady
                                             Citadel Conflicts Committee
                                             Chairman
                                             c/o Citadel Holding Corporation
                                             550 S. Hope Street, Suite 1825
                                             Los Angeles, California  90071
                                             Facsimile No: (213) 239-0548

       To Craig:                             S. Craig Tompkins
                                             President
                                             Craig Corporation
                                             550 S. Hope Street, Suite 1825
                                             Los Angeles, California 90071
                                             Facsimile No: (213) 239-0548

          with a copy to:                    Troy & Gould
                                             16th Floor
                                             1801 Century Park East
                                             Los Angeles, California 90067
                                             Attention: Dale Short
                                             Facsimile No: (310) 201-4746

                                     -56-

           and                               William Gould
                                             Craig Conflicts Committee Chairman
                                             c/o Troy & Gould
                                             16th Floor
                                             1801 Century Park East
                                             Los Angeles, California 90067
                                             Facsimile No: (310) 201-4746

           To Reading:                       S. Craig Tompkins
                                             Vice Chairman of the Board of
                                             Directors Reading Entertainment,
                                             Inc.
                                             550 S. Hope Street, Suite 1825
                                             Los Angeles, California  90071
                                             Facsimile No:  (213) 239-0548

              with a copy to:                Jones Vargas
                                             3773 Howard Hughes Parkway
                                             Las Vegas, Nevada  89109
                                             Attention:  Craig Norville
                                             Facsimile No:  (702) 734-2722

           and                               Kenneth McCormick
                                             Reading Conflicts Committee
                                             Chairman
                                             c/o Reading Entertainment, Inc.
                                             550 S. Hope Street, Suite 1825
                                             Los Angeles, California  90071
                                             Facsimile No:  (213) 239-0548

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.

                                     -57-

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;

                                     -58-

     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]

                                     -59-

     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/ Andrzej Matyczynski
                                          -----------------------------------
                                           Name:  Andrzej Matyczynski
                                                  ----------------------------
                                           Title: Chief Financial Officer
                                                  ----------------------------

                                       Craig Merger Sub, Inc.

                                       By: /s/ Andrzej Matyczynski
                                          -----------------------------------
                                           Name:  Andrzej Matyczynski
                                                  ----------------------------
                                           Title: Chief Financial Officer
                                                  ----------------------------

                                       Reading Merger Sub, Inc.

                                       By: /s/ Andrzej Matyczynski
                                          -----------------------------------
                                           Name:  Andrzej Matyczynski
                                                  ----------------------------
                                           Title: Chief Financial Officer
                                                  ----------------------------

                                       Craig Corporation

                                       By: /s/ S. Craig Tompkins
                                           -----------------------------------
                                           Name:  S. Craig Tompkins
                                                  ----------------------------
                                           Title: President
                                                  ----------------------------

                                       Reading Entertainment, Inc.

                                       By: /s/ James J. Cotter
                                           -----------------------------------
                                           Name:  James J. Cotter
                                                  ----------------------------
                                           Title: Chairman
                                                  ----------------------------

                                       For purposes only of Section 8.17:

                                           /s/ James J. Cotter
                                           ___________________________________
                                           James J. Cotter

                                     -60-

                                  Exhibit 8.15

                          Form of Affiliate Agreement
                          ---------------------------

Citadel Holding Corporation
550 S. Hope Street, Suite 1825
Los Angeles, California  90071

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"), Craig Merger Sub, Inc., a Nevada corporation
("Craig Merger Sub"), Reading Merger Sub, a Nevada corporation ("Reading Merger
Sub"), Craig Corporation, a Nevada corporation ("Craig") and Reading
Entertainment, Inc., a Nevada corporation ("Reading"), pursuant to which Craig
Merger Sub will be merged with and into Craig, 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 Craig and/or (ii)
Class A common preference stock, par value $0.01 per share, of Craig 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
Craig 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 Craig 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 Craig 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-

                                    ANNEX B

                                                     FAIRNESS OPINION FOR
                                                     THE CONSOLIDATION OF
                                                     CRAIG CORPORATION
                                                     READING ENTERTAINMENT, INC.
                                                     CITADEL HOLDING CORPORATION

August 16, 2001                                    File Reference: 31-11-20222

The Boards of Directors of:
 Craig Corporation
 Reading Entertainment, Inc.
 Citadel Holding Corporation

The Conflicts Committees of the Boards of Directors of:
 Craig Corporation
 Reading Entertainment, Inc.
 Citadel Holding Corporation

c/o Mr. S. Craig Tompkins
Craig Corporation
550 South Hope Street, Suite 1825
Los Angeles, California 90071

Craig Corporation ("Craig"), Reading Entertainment, Inc. ("Reading") and Citadel
Holding Corporation ("Citadel") (and collectively "the Companies") currently
operate as an interrelated family of companies, with substantially overlapping
management and ownership. It is our understanding that the Boards of Directors
of Craig, Reading and Citadel 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. As
such, the Boards of Directors of Craig, Reading and Citadel have announced that
an Agreement in Principle has been entered into between the three companies
providing for the consolidation of the three companies under Citadel, in a
merger of equals transaction (the "Consolidation"). The Consolidation will be
structured as a merger of Craig (the "Craig Merger") with a newly formed first
tier subsidiary of Citadel (referred to herein as "NewCraigCo") and a merger of
Reading (the "Reading Merger") with another newly formed first tier subsidiary
of Citadel (referred to herein as "NewReadingCo").

Upon the effective date of the Craig Merger, every share of the Common Stock,
par value $0.25, of Craig and every share of the Class A Common Preference
Stock, par value $0.01, of Craig will be 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 converted into 1.25 shares of Citadel Class
A Stock. All holders of options to acquire equity securities

                                     The Board of Directors of Craig Corporation
                     Reading Entertainment, Inc. and Citadel Holding Corporation
                                                                 August 16, 2001
                                                                          Page 2

of Craig 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 above is collectively referred to as the "Merger Consideration."
Holders of Citadel Class A Nonvoting Common Stock and Citadel Class B Voting
Common Stock will hold the same shares immediately after the Consolidation as
they did immediately prior to the Consolidation, since Citadel will be the
survivor in the transaction.

You have requested our opinion ("the Opinion") as to whether the Consolidation
and Merger Consideration is fair to the public shareholders of Craig, Reading
and Citadel, from a financial point of view, pursuant to the terms and subject
to the conditions set forth in the Definitive Triparty Merger Agreement. We have
also been engaged to give advice with respect to the relative values of the
three companies, a fair exchange ratio of Citadel Class A Nonvoting Common Stock
for shares of Reading Common Stock, Craig Common Stock and Craig Common
Preference Stock, whether the Consolidation is in the best interest of the three
Companies and whether the same consideration (i.e., common equity) should be
provided to all stockholders. The date of this Opinion is August 16, 2001.

In arriving at our Opinion, we received and reviewed the following information
listed on Exhibit A attached.

In addition to reviewing the attached information, we have among other things:

     1.   Analyzed daily stock prices and trading volumes for Craig Common
          Stock, Craig Common Preference Stock, Reading Common Stock, Citadel
          Class A Nonvoting Common Stock and Citadel Class B Voting Stock for
          the period June 1, 2000 through July 11, 2001.

     2.   Considered the nature of the business and the history of the Companies
          and their strategic business units ("SBUs"); the economic outlooks of
          the United States, Puerto Rico, Australia, and New Zealand in general;
          the outlooks for the cinema and theater industries in particular; the
          SBUs earnings before interest and taxes

                                     The Board of Directors of Craig Corporation
                     Reading Entertainment, Inc. and Citadel Holding Corporation
                                                                 August 16, 2001
                                                                          Page 3

          (EBIT), earnings before interest, taxes, depreciation and amortization
          (EBITDA), revenues, book capital, and total assets for the past 5
          years (1996-2000) and the three-month interim period ended March 31,
          2001; the outlook for future EBIT, EBITDA and revenues; the net book
          value and adjusted market value of the Companies; the Companies'
          financial condition; and the Companies' dividend-paying capacity.

     3.   Considered the nature of the underlying real estate holdings of the
          Companies, relevant cost data, the local real estate markets for such
          holdings; and the income and cash generating capacity of the holdings.

     4.   Analyzed financial statements, prices and other materials regarding
          guideline publicly traded companies in the cinema industry; multiples
          of EBIT, EBITDA revenues, book capital and total assets of such
          guideline publicly traded companies; required rates of return on debt
          and equity capital; and such other relevant material as we deemed
          appropriate.

     5.   Analyzed the financial terms; operating results; financial condition;
          and multiples of EBIT, EBITDA, revenues, book capital and total assets
          of companies, to the extent publicly available, involved in certain
          recent business combinations in the cinema industry.

     6.   Compared certain statistical and financial information of the
          Companies with similar information for certain guideline publicly
          traded companies and industry composites in the cinema industry.

     7.   Analyzed the terms of certain real estate transactions, to the extent
          publicly available, for properties considered comparable to the
          underlying real estate holdings of the Companies.

     8.   Conducted discount cash flow analyses and capitalization of
          income/cash flow on various SBUs and underlying real estate holdings
          of the Companies.

                                     The Board of Directors of Craig Corporation
                     Reading Entertainment, Inc. and Citadel Holding Corporation
                                                                 August 16, 2001
                                                                          Page 4

     9.   Visited the Companies' headquarters in Los Angeles, California and
          conducted interviews with and relied upon the representations of
          Chairman and Chief Executive Officer James J. Cotter; Reading and
          Citadel Vice Chairman and Craig President, S. Craig Tompkins; Chief
          Financial Officer, Andrzej Matyczynski; and Vice President-Real
          Estate, Brett Marsh concerning the operations, financial condition,
          future prospects, and projected operations and performance of the
          Companies and their SBUs and underlying real estate holdings.

     10.  Visited certain other offices and real estate holdings of the
          Companies and conducted interviews with other employees of the
          Companies concerning the SBUs and underlying real estate holdings.

     11.  Conducted such other financial studies, analyses and inquiries, and
          considered such other matters as we deemed necessary and appropriate
          for our Opinion.

In rendering our Opinion, we have not independently verified the accuracy and
completeness of the financial information or other information furnished by the
Companies orally or in writing, or other information obtained from publicly
available sources. We reviewed the best currently available estimates and
judgments of the management of the Companies, as to the expected future
financial and operating performance of the Companies and their SBUs and
underlying real estate holdings, and did not undertake any obligation
independently to verify the underlying assumptions made in connection with such
forecasts, estimates or judgments. Our Opinion is based on business, economic,
market and other conditions as they exist as of the date of this Opinion. We
have assumed that the factual circumstances and terms, as they exist at the date
of this Opinion, will remain substantially unchanged through the time the
Consolidation is completed.

This Opinion has been prepared for the Boards of Directors of and for the
Conflicts Committees of the Boards of Directors of Craig, Reading and Citadel in
connection with their respective consideration of the Consolidation and may not
be used for any other purpose without Marshall & Stevens Incorporated's express,
prior, written consent; provided that, this Opinion may be included in the
combination proxy/registration statement

                                     The Board of Directors of Craig Corporation
                     Reading Entertainment, Inc. and Citadel Holding Corporation
                                                                 August 16, 2001
                                                                          Page 5

sent by the Companies to their shareholders concerning the Consolidation so long
as the Opinion is reproduced in full in such combination proxy/registration
statement and any summary of the Opinion in the combination proxy/registration
statement is reasonably acceptable to Marshall & Stevens Incorporated. Our fee
for the provision of this Opinion is not contingent upon our conclusion
regarding the fairness of the Consolidation to the public shareholders of the
Companies, from a financial point of view.

Based upon the foregoing and upon such other factors as deemed relevant,
including the attached assumptions and limiting conditions, it is our Opinion
that, as of the date of this Opinion, the Consolidation and the Merger
Consideration are fair to the public shareholders of Craig Corporation, Reading
Entertainment, Inc. and Citadel Holding Corporation, from a financial point of
view, pursuant to the terms and subject to the conditions set forth in the
Definitive Triparty Merger Agreement.

Very truly yours,

/s/ MARSHALL & STEVENS INCORPORATED

JFS/ced

ASSUMPTIONS AND LIMITING CONDITIONS

Title
No investigation of legal title was made, and we render no opinion as to
ownership of the Companies or their SBUs or underlying assets.

Date of Opinion
The date of this Opinion is August 16, 2001. The amounts reported are based on
the purchasing power of the relevant currencies as of that date. The analyst
assumes no responsibility for economic or physical factors occurring subsequent
to the date of this Opinion that may affect the Opinion reported.

Visitation
The Companies and certain SBUs and underlying real estate holdings were visited
by senior analysts of Marshall & Stevens Incorporated. When the date of our
visit differs from the date of our Opinion, we assume no material change in the
operations of the Companies or their SBUs or the underlying real estate holdings
unless otherwise noted in the Opinion.

Non-Financial and Valuation Expertise
No opinion is intended to be expressed for matters that require legal or
specialized expertise, investigation, or knowledge beyond that customarily
employed by financial analysts or valuation consultants.

Information and Data
Information supplied by others that was considered in this analysis is from
sources believed to be reliable, and no further responsibility is assumed for
its accuracy.  We reserve the right to make such adjustments to the Opinion
herein reported based upon consideration of additional or more reliable data
that may become available subsequent to the issuance of this Opinion.

Litigation Support
Depositions, expert testimony, attendance in court, and all preparations/support
for same arising from this Opinion shall not be required unless arrangements for
such services have been previously made.

Management
The Opinion expressed herein assumes the continuation of prudent management
policies over whatever period of time is deemed reasonable and necessary to
maintain the character and integrity of the Companies or their SBUs or
underlying real estate holdings.

Purpose
We have presented Marshall & Stevens Incorporated's considered Opinion based on
the facts and data obtained during the course of this investigation.  This
Opinion has been prepared for the sole purpose stated herein and shall not be
used for any other purpose.

ASSUMPTIONS AND LIMITING CONDITIONS

Unexpected Conditions
We assume there are no hidden or unexpected conditions associated with the
Companies or their SBUs or underlying real estate holdings that might adversely
affect value.  We also assume no responsibility for changes in market conditions
that may require an adjustment to our Opinion.

Hazardous Substances
Hazardous substances, if present within a business, can introduce an actual or
potential liability that may adversely affect the marketability and value of the
Companies or their SBUs or underlying real estate holdings. In this Opinion,
with the exception of the environmental liability associated with the Reading
North Viaduct Property located in the city of Philadelphia, no consideration has
been given to such liabilities or their impact on value.

Contingent Liabilities
Our conclusions do not consider the impact of any contingent liabilities of the
Companies, either known or unknown, except those those relative to the 1996 tax
returns of Reading and Craig that are under review by the Internal Revenue
Service. According to the Management of the Companies, as of the date of this
Opinion, there were no contingent liabilities that were considered material,
other than those mentioned in the preceding sentence.

Future Events/Projections
The reader is advised that this Opinion is somewhat dependent upon future events
with respect to industry performance, economic conditions, and the ability of
the Companies and their SBUs and underlying real estate holdings to meet certain
operating projections. In this Opinion, the operating projections have been
developed from information supplied by the Management of the Companies and their
SBUs and underlying real estate holdings. The operating projections incorporate
various assumptions including, but not limited to, net sales, net sales growth,
profit margins, income taxes, depreciation, capital expenditures, working
capital levels, and discount rates, all of which are critical to the Opinion.
The operating projections are deemed to be reasonable and valid at the date of
this Opinion; however, there is no assurance or implied guarantee that the
assumed facts will be validated or that the circumstances will actually occur.
We reserve the right to make adjustments to this Opinion herein reported as may
be required by any modifications in the prospective outlook for the economy, the
industry, and/or the operations of the Companies or their SBUs or underlying
real estate holdings.

                                   EXHIBIT A

                                   EXHIBIT A

1.   Draft Form of Definitive Merger Agreement

2.   Draft Form of Quarterly Reports on Form 10Q for Citadel Holding
     Corporation, Craig Corporation and Reading Entertainment Inc. for the
     quarterly period ended June 30, 2001

3.   Draft Board Resolutions

4.   Draft Form of S-4 Proxy/Registration Statement

5.   Draft of Agreement in Principle

6.   July 18, 2001 Press Release relative to Consolidation Transaction

7.   Form 10-K for Reading Entertainment Inc. for the fiscal year ended December
     31, 2000

8.   Form 10-K for Craig Corporation for the fiscal year ended December 31, 2000

9.   Form 10-K for Citadel Holding Corporation for the fiscal year ended
     December 31, 2000

10.  Reading Entertainment, Inc. Form 10-Q for the period ended March 31, 2001

11.  Craig Corporation Form 10-Q for the period ended March 31, 2001

12.  Citadel Holding Corporation Form 10-Q for the period ended March 31, 2001

13.  Profit & Loss Accounts at December 2000

14.  Profit & Loss Accounts at March 2001

15.  Trends of 1998, 1999 and 2000

16.  2001 Budget

17.  Australia's 2002-2003 cash flow

18.  Brand Building Income Statement for the years ended 1998, 1999 and 2000

19.  Big 4 Ranch Income Statement for the years ended 1998, 1999 and 2000

20.  Big 4 Ranch, Inc. Balance Sheets as of March 31, 2001 and Income Statement
     for the three months ended March 31, 2001

21.  Domestic Real Estate Book Values

22.  Australian Real Estate Book Values

23.  Murray Hill Transaction

24.  City Cinemas Agreement and Plan of Merger

25.  Certificate of Designation of Reading Entertainment, Inc. setting forth the
     Voting Powers, Designations, Preferences, Limitations, Restrictions and
     Relative Rights of Series A Voting Cumulative Convertible Preferred Stock
     and Series B Voting Cumulative Convertible Preferred Stock

26.  Reading Entertainment, Inc. Non-Qualified Stock Option Agreement

27.  Citadel Holding Corporation 1999 Stock Option Plan

28.  Craig Corporation 1999 Stock Option Plan

29.  Reading Entertainment, Inc. list of subsidiaries and incorporation dates

30.  Reading Entertainment, Inc. Consolidated Subsidiaries and Unconsolidated
     Interests

31.  Union Square sale package

32.  Craig Corporation Proxy Statement for annual meeting held in 1999

33.  Craig Corporation Form 8-K filed January 21, 2001

34.  Craig Corporation Class A Common Stock Preliminary Prospectus Dated April
     21, 1990

35.  March 20, 2001 Press Release relative to Consolidation Transaction

36.  Opinion of IRS National Office about the transfer of Slater Stock by Craig
     to Reading

37.  Board Paper relative to Maitland Cinemas March 2001

38.  Form 3 and 4 for JMG and Pacific Assets Management investment in Craig
     common preference stock

39.  Reconciliation of real estate book values

40.  Breakdown of balance sheet accounts

41.  Reading Entertainment, Inc. property information asset summary

42.  Fax from Pat Rucci to Cherin Mooradian dated 6/6/2001 detailing book value
     as of December 2000 of the Reading Co. real estate owned within
     Philadelphia

43.  REI Memorandum to Cheryl Quinlan from Kathie Smith dated 4/4/2001 detailing
     REI properties

44.  Complete appraisal of real property by Cushman & Wakefield Inc. dated
     January 28, 2000 on the Orpheum Theater - summary report

45.  Valuation report by LandMark White - dated 11/21/2000 on the Bundaberg
     Reading Cinema

46.  CB Richard Ellis valuation report prepared for the Bank of New Zealand on
     Wakefield Carpark, 24 Tory Street, Wellington

47.  Lease summary at 9/30/2000 on Waurn Ponds 8

48.  Valuation report dated 12/22/1999 on Waurnvale Shopping Centre Geelong
     Reading Cinemas

49.  Memorandum of sale of Murray Hill Theatre dated 5/11/2001
     from Ira S. Levin to Michael R. Forman et al

50.  Cushman & Wakefield Inc. Limited Appraisal in a restricted format value-in-
     use report - date 6/21/2000 on the Minetta Lane Theater

51.  Complete appraisal in a summary format dated 3/27/2000 by Cushman &
     Wakefield of the Union Square Theater

52.  Newmark Realty Advisors confidential investment memorandum on 44 Union
     Square East

53.  Organization chart of Reading Entertainment, Inc., as of February 2001

54.  LandMark White valuation report as of 12/5/2000 on Red Yard, 100 Parramatta
     Road, Auburn, NSW

55.  LandMark White valuation as of 1/6/2000 on 100 Parramatta Road Auburn, NSW

56.  LandMark White valuation report as of 12/5/2000 of Belmont Entertainment
     Complex, Knutsford Avenue and Fulham Street, Belmont, WA

57.  LandMark White valuation report as of November 21, 2000 on Horner, Hall
     Everage Streets, Moonee Ponds

58.  Lease summary as of 9/30/2000 on Townville 6

59.  Lease summary as of 9/30/2000 on Mandurah 6

60.  Lease summary as of 9/30/2000 on Dubbo 5

61.  Lease summary as of 9/30/2000 on Market City 5

62.  Lease summary as of 9/30/2000 on Melbourne

63.  Lease summary as of 9/30/2000 on Redbank Queenlands 8

64.  Lease summary as of 9/30/2000 on Harbourtown

65.  Lease summary as of 9/30/2000 in The Classic

66.  Lease summary as of 9/30/2000 on Plaza Carolina

67.  Lease summary as of 9/30/2000 on Palma Real Humacao

68.  Lease summary as of 9/30/2000 on Mayaguez Mall

69.  Lease summary as of 9/30/2000 on Mayaguez Town Center (University)

70.  Lease summary as of 9/30/2000 on Plaza Del Norte Hatillo

71.  Lease summary as of 9/30/2000 on Plaza Las Americas

72.  Lease summary as of 9/30/2000 on Senorial Plaza

73.  Lease summary as of 9/30/2000 on Cayey

74.  Wilmington & Northern Trial balance - combined totals as of 5/30/2001

75.  CB Richard Ellis, complete appraisal in self-contained report form of 600
     Brand Building Glendale, California, as of 11/9/2000

76.  Alliance appraisal of Bay 4 Farm, as of 1/1/2000 in Summary format

77.  Lease summary as of 9/30/2000 in Mission Bay 4

78.  LandMark White Valuation Report, retail development 121 Enoggera Road,
     Newmarket QLD 4057 dated 11/10/2000

79.  CB Richard Ellis valuation report on Courtenay central site, Courtenay
     Place, Wakefield Street, Wellington - dated August 2000

80.  CB Richard Ellis - valuation report of the Courtenay Central Cinema a
     retail complex, Courtenay Place, Wellington - dated September 2000

81.  LandMark White valuation Report on Burwood Brickwork site, 78 Middleborough
     Road, Burwood - dated 12/15/2000

82.  Alliance Appraisal's valuation report on Big 4 farm as of 12/1/2000

                                    ANNEX C

                 FIRST AMENDMENT TO THE 1999 STOCK OPTION PLAN
                        OF CITADEL HOLDING CORPORATION

     This First Amendment to the 1999 Stock Option Plan of Citadel Holding
Corporation (the "First Amendment") is adopted this ___ day of ___, 2001 by the
board of directors of Citadel Holding Corporation (the "Company") and its
stockholders.

                                R E C I T A L S

     Whereas, the 1999 Stock Option Plan of Citadel Holding Corporation (the
"Plan") was approved by the stockholders of the Company on September 12, 2000;

     Whereas, the board of directors of the Company have approved of a
consolidation transaction, in which two newly-formed subsidiaries of the Company
will be merged with and into Craig Corporation ("Craig") and Reading
Entertainment, Inc. ("Reading), pursuant to the terms of the Agreement and Plan
of Merger, dated as of August 17, 2001, among the Company, Craig and Reading
(the "Merger Agreement");

     Whereas, pursuant to the Merger Agreement, the Company has agreed to, among
other things, (i) assume each outstanding stock option of Craig and Reading, and
(ii) change the name of the Company to Reading International, Inc.; and

     Whereas, upon the effectiveness of the consolidation, each option to
purchase Craig or Reading common stock that is outstanding immediately prior to
the consolidation will automatically become an option to purchase either Class A
non-voting common stock, par value $0.01 per share, of the Company ("Class A
Stock") or Class B voting common stock, par value $0.01 per share, of the
Company ("Class B Stock" and together with Class A Stock, "Common Stock"); and

     Whereas, the Merger Agreement and each of the transactions contemplated
therein, including this First Amendment, was approved by the stockholders of the
Company on ____, 2001.

     Now therefore, in consideration of the recitals, covenants and conditions
contained herein, and for other good valuable consideration the receipt and
sufficiency of which is hereby acknowledged. The Company and its stockholders
agree to amend the Plan as follows:

1.   AMENDMENT TO THE NAME OF THE OPTION PLAN

     The name of the Plan shall be amended to be called the "1999 Stock Option
Plan of Reading International, Inc.".

2.   AMENDMENT TO PARAGRAGH 3 OF THE OPTION PLAN

     Paragraph 3 of the Option Plan is amended in its entirety to read as
     follows:

     Subject to the provisions of 6.1.1 of this Plan, the total number of shares
     of stock which may be issued under options granted pursuant to this Plan
     shall not exceed 1,200,000 shares of Common Stock.  The shares covered by
     the portion of any grant under this Plan which expires, terminates or is
     cancelled unexercised shall become available again for grants under this
     Plan.  Where the exercise price of an Option is paid by means of the
     optionee's surrender of previously owned shares of Common Stock or the
     Company's withholding of shares otherwise issuable upon

     exercise of the Option as permitted herein, only the net number of shares
     issued and which remain outstanding in connection with such exercise shall
     be deemed "issued" and no longer available for issuance under this Plan. No
     eligible person shall be granted Options during any twelve month period
     covering more than 100,000 shares.

3.   CONFLICT BETWEEN THE FIRST AMENDMENT AND THE OPTION PLAN

     If there is a conflict between any of the provisions of this First
Amendment and any of the provisions of the Plan, the provisions of this First
Amendment shall control.

4.   NO OTHER AMENDMENTS OR CHANGES

     Except as expressly amended or modified by this First Amendment, all of the
terms and conditions of the Plan shall remain unchanged and in full force and
effect.

5.   GOVERNING LAW

     This First Amendment shall be governed by and construed in accordance with
Nevada law.

                                        Citadel Holding Corporation

                                        By:__________________________
                                        Its:__________________________

                                      -2-

                                    ANNEX D

                           CERTIFICATE OF AMENDMENT
                                      OF
                           ARTICLES OF INCORPORATION
                                      OF
                          CITADEL HOLDING CORPORATION
                             A Nevada Corporation

     The undersigned hereby certify as follows:

     1.   They are the duly elected and acting President and Secretary of
Citadel Holding Corporation (the "Corporation").

     2.   On August 16, 2001, the Board of Directors of the Corporation approved
the amendment of the Corporation's Articles of Incorporation, pursuant to
Section 78.385 of the Nevada Revised Statutes, as amended.

     3.   On October 24, 2001, upon the recommendation of the Board of Directors
of the Corporation, the stockholders holding a majority of the outstanding
voting common stock of the Corporation approved the amendment of the
Corporation's Articles of Incorporation.

     4.   That the Articles of Incorporation of the Corporation are hereby
amended as follows:

                                   ARTICLE I
                                     NAME

               The name of the corporation is Reading International, Inc. (the
          "Corporation").

     In Witness Whereof, the undersigned have executed this Certificate of
Amendment as of the _____ day of _______, 2001.

                                              __________________________________
                                               ______________, President

                                              __________________________________
                                              _______________, Secretary

                                    ANNEX E

                           INDEMNIFICATION AGREEMENT

          This Indemnification Agreement (this "Agreement") is made this ___ day
of _______________, 20__, between ________________, a Nevada corporation (the
"Company"), and _______________, an individual ("Indemnitee").

                                   RECITALS

          Whereas, Indemnitee is either a member of the board of directors
("Board" or "Board of Directors"), an officer, an employee or an agent of the
Company, or more than one of such positions, or is serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,  and in such capacity or
capacities is performing a valuable service for the Company;

          Whereas, the Corporation has adopted bylaws ("Bylaws") providing for
the indemnification of the officers, directors, employees and agents of the
Company or individuals serving at the request of the Company as directors,
officers, employees or agents of another corporation, partnership, joint
venture, trust or other enterprise; ("Covered Persons");

          Whereas, the Bylaws and Nevada Revised Statute ("NRS") Sections 78.751
and 78.7502 (the "State Statutes") specifically provide that they are not
exclusive, and thereby contemplate that agreements may be entered into between
the Company and a Covered Person with respect to indemnification of such Covered
Person;

          Whereas, Indemnitee is willing to serve, to continue to serve, and to
take on additional service for and on behalf of the Company on the condition
that Indemnitee is indemnified as set forth in this Agreement;

          Whereas, it is intended that Indemnitee shall be paid promptly by the
Company all amounts necessary to effectuate in full the indemnity provided in
this Agreement; and

          Whereas, to induce Indemnitee to continue to serve as a director,
officer, employee or agent, the Company has determined and agreed to enter into
this Agreement with Indemnitee.

          Now, Therefore, in consideration of Indemnitee's continued service as
a director or officer of the Company after the date hereof, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and Indemnitee hereby agree as follows:

                                   AGREEMENT

     1.   Indemnification of Indemnitee. The Company hereby agrees to hold
          -----------------------------
harmless and indemnify Indemnitee to the fullest extent authorized or permitted
by the provisions of the State Statutes, or any successor statute or amendment
thereof, or any other statutory provisions authorizing or permitting such
indemnification that is adopted after the date of this Agreement.

                                      E-1

     2.   Additional Indemnity.  Subject only to the exclusions set forth in
          --------------------
Section 3 of this Agreement, the Company hereby further agrees to hold harmless,
indemnify and defend Indemnitee:

          (a)  against any and all expenses (including fees for attorneys,
accountants, private investigators, court and transcript costs, fees and
expenses of witnesses, travel expenses and all other like disbursements or
expenses reasonably incurred by or for Indemnitee), judgments damages, fines,
penalties and amounts paid in settlement (including all interest assessments and
other charges paid or payable in connection with or in respect of such judgment,
fines, penalties, or amounts paid in settlement) actually and reasonably
incurred by or for Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Company)(a "Covered
Action") to which Indemnitee is made a party as a result of the fact that at the
time of the act or omission which is the subject matter of such Covered Action
the Indemnitee was a director, officer, employee or agent of the Company, and

          (b)  otherwise to the fullest extent as may be provided to Indemnitee
by the Company under the non-exclusivity provisions of Article VII of the Bylaws
of the Company and the State Statutes.  The provisions of this Agreement are in
addition to, and not in limitation of, the provisions of such Article VII and
the State Statutes.

     3.   Limitations on Additional Indemnity.  No indemnity pursuant to
          -----------------------------------
Sections 1 and 2 of this Agreement shall be paid by the Company to the extent
that:

          (a)  payment therefor is actually made to Indemnitee under a valid and
collectible insurance policy or policies, except with respect to any excess
amount due to Indemnitee beyond the amount of payment to Indemnitee under such
insurance policy or policies.  Notwithstanding the availability of such
insurance policy or policies, Indemnitee also may claim indemnification from the
Company pursuant to this Agreement by assigning to the Company in writing any
claims of Indemnitee under such insurance policy or policies to the extent of
the amount Indemnitee is paid by the Company;

          (b)  Indemnitee is indemnified by the Company otherwise than pursuant
to this Agreement;

          (c)  final judgment is rendered against Indemnitee for the payment of
dividends or other distributions to stockholders of the Company in violation of
the provisions of Subsection 2 of Nevada Revised Statutes (S) 78.300, as
amended;

          (d)  final judgment is rendered against Indemnitee for an accounting
of profits made from the purchase or sale by Indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Act"), or other similar provisions of any federal,
state or local statutory law;

          (e)  Indemnitee's conduct giving rise to the claim for indemnification
is finally adjudged by a court of competent jurisdiction to have been a breach
of fiduciary duty which involved intentional misconduct, fraud or a knowing
violation of the law; and/or

          (f)  except as otherwise provided in this Agreement, in connection
with all or

                                      E-2

any part of a suit or other proceeding which is initiated or maintained by or on
behalf of Indemnitee, or any suit or other proceeding by Indemnitee against the
Company or its directors, officers, employees or other agents, unless (i) such
indemnification is expressly required by Nevada law; (ii) the suit or other
proceeding was expressly authorized by an official act of the Board of Directors
of the Company or (iii) such indemnification is provided by the Company, in its
sole discretion, pursuant to the powers vested in the Company under Nevada law.

     4.   Continuation of Indemnity.  All agreements and obligations of the
          -------------------------
Company contained in this Agreement shall continue during the period Indemnitee
is a Covered Person (, and shall continue thereafter for so long as Indemnitee
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Indemnitee was a Covered Person.

     5.   Advancement of Expenses.  In the event Indemnitee incurs costs or
          -----------------------
expenses in connection with the defense of any such civil, criminal,
administrative or investigative action, suit or proceeding (including any costs
or expenses incurred for any appeal therefor), the Company agrees to pay such
costs or expenses as they are incurred and in advance of the final disposition
of the action, suit or proceeding within 30 calendar days of submission of bills
or vouchers for such costs or expenses, provided that Indemnitee delivers to
Company prior to such payment a written undertaking by or on behalf of
Indemnitee to repay the amount paid by the Company if it is ultimately
determined by a court of competent jurisdiction that Indemnitee is not entitled
to be indemnified by the Company.  By such undertaking, Indemnitee agrees to
reimburse the Company for all amounts paid by the Company in defending such
civil, criminal, administrative or investigative action, suit or proceeding
against Indemnitee, including amounts paid in settlement, in the event and only
to the extent that it is ultimately determined by a court of competent
jurisdiction that Indemnitee is not entitled to be indemnified by the Company
for such expenses under the provisions of the State Statute, Bylaws, this
Agreement or otherwise.  However, in the case of an action brought against
Indemnitee by the Company pursuant to the provisions of Section 16(b) of the
Act, or other similar provisions of any federal, state or local statutory law
for an accounting of profits made from the purchase or sale by Indemnitee of
securities of the Company, , Indemnitee's costs and expenses will not be
advanced unless such advancement is approved by the Board of Directors by a
majority vote of a quorum consisting of directors who are not parties to the
action, suit or proceeding, or, if such a quorum cannot be obtained, by
independent legal counsel in a written opinion that such indemnification is
proper in the circumstances.

     6.   Presumptions and Effect on Certain Proceedings.  Upon making a request
          ----------------------------------------------
for indemnification, Indemnitee shall be presumed to be entitled to
indemnification under this Agreement. The termination of any action, suit or
proceeding by judgment, order, settlement, arbitration award, conviction or by a
plea of nolo contendere or its equivalent shall not affect this presumption
except as may be provided in Section 3 of this Agreement.

     7.   Notification and Defense of Claim.  Promptly after receipt by
          ---------------------------------
Indemnitee of notice of the commencement of any action, suit or proceeding, if a
request with respect thereto is to be made against the Company under this
Agreement, Indemnitee shall notify the Company of the commencement thereof; but
the failure by Indemnitee to notify the Company will not relieve the Company of
any liability which it may have to Indemnitee under this Agreement or otherwise.
With respect to any such action, suit or proceeding as to which Indemnitee
notifies

                                      E-3

the Company as required herein:

          (a)  The Company shall be entitled to participate therein at its own
expense; and

          (b)  Except as otherwise provided below, to the extent that it may
wish, the Company, jointly with any other indemnifying party similarly notified,
shall be entitled to assume the defense of Indemnitee with counsel reasonably
satisfactory to Indemnitee.  After notice from the Company to Indemnitee of its
election to assume the defense of Indemnitee in the action, suit or proceeding,
the Company will not be liable to Indemnitee under this Agreement for any legal
or other expenses subsequently incurred by Indemnitee in connection with the
defense thereof, other than reasonable costs of investigation or as otherwise
provided below.  Indemnitee shall have the right to employ its own counsel in
such action, suit or proceeding, but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense shall be
at the sole expense of Indemnitee unless (i) the employment of counsel by
Indemnitee at the Company's expense has been authorized in writing by the
Company; (ii) Indemnitee shall have reasonably concluded, upon advice of counsel
experienced in such matters, that there may be a conflict of interest between
the Company and Indemnitee in the conduct of the defense of such action; or
(iii) the Company shall not in fact have employed counsel to assume the defense
of such action, suit or proceeding.  In each such instance set forth in (i)
through (iii) of this paragraph (b), the  reasonable cost of Indemnitee's
counsel shall be borne by the Company.  Notwithstanding the foregoing, the
Company shall not be entitled to assume the defense of any action, suit or
proceeding brought against Indemnitee by or on behalf of the Company or as to
which Indemnitee shall have reasonably made the conclusion provided in (ii)
above.

          (c)  The Company shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without the Company's prior written consent. The Company shall not
settle any action or claim in any manner that would impose any penalty or
limitation on Indemnitee without Indemnitee's prior written consent. Neither the
Company nor Indemnitee will unreasonably withhold consent to any proposed
settlement.

     8.   Enforcement.
          -----------

          (a)  The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on the Company hereby in
order to induce Indemnitee to continue as a Covered Person, and acknowledges
that Indemnitee is relying on this Agreement in continuing in such capacity.

          (b)  In the event Indemnitee is required to bring any action to
enforce his or her rights or to collect moneys due under this Agreement, the
Company shall advance Indemnitee all of Indemnitee's reasonable fees and
expenses in bringing and pursuing such action. Indemnitee shall be responsible
for reimbursement to the Company of such advance in the event that Indemnitee is
not successful in such action.

     9.   No Employment Rights.  Nothing in this Agreement is intended to confer
          --------------------
on Indemnitee any right to continue in the employ of the Company for any period
of time or to interfere with or otherwise restrict in any way the rights of the
Company or of Indemnitee,

                                      E-4

which rights are hereby expressly reserved by each, to terminate Indemnitee's
service at any time and for any reason, with or without cause, except as may be
provided otherwise in an agreement, if any, between the Company and Indemnitee.

     10.  Severability.  Each of the provisions of this Agreement are separate
          ------------
and distinct and independent of one another, so that if any provision of this
Agreement shall be held by a court of competent jurisdiction to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not
effect the validity or enforceability of the other provisions of this Agreement.
If any provision of this Agreement is so held to be invalid or unenforceable,
the parties agree that the court making such determination shall have the power
to amend such provision or to delete specific words or phrases so that such
provision shall then be enforceable to the fullest extent permitted by law
unless such change is contrary to the intent of the parties hereto.

     11.  Subrogation.  In the event of payment to Indemnitee under this
          -----------
Agreement, the Company shall be subrogated to the extent of the amount of such
payment to all rights of recovery of Indemnitee, who shall execute all papers
required and shall do everything that may be necessary or reasonable to secure
such rights, including, without limitation, the execution of such documents
necessary or reasonable to enable the Company to effectively bring suit to
enforce such rights.

     12.  Governing Law.  This Agreement shall be governed by, and construed
          -------------
in accordance with, the laws of the State of Nevada without resort to conflict
of laws principles.

     13.  Binding Effect; Amendment.  This Agreement shall be binding on the
          -------------------------
parties, their heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Indemnitee, his or her heirs, personal
representatives and assigns, and to the benefit of the Company, its successors
and assigns. No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in a writing signed by both parties.

     14.  Notices.  All notices, requests, demands and other communications
          -------
hereunder shall be in writing and shall be deemed to have been duly given (i)
when delivered by hand and receipted for by the party to whom said communication
shall have been directed or (ii), if mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which said
communication is so mailed and addressed to the appropriate party at the
following address:

          If to Indemnitee:   _________________________
                              _________________________
                              _________________________

          If to the Company:  _________________________
                              _________________________
                              _________________________
                              Attention: President

                                      E-5

          With a copy to:     _________________________
                              _________________________
                              _________________________

     A party may change its address by delivering notice of such change in
the manner set forth in this Section 14.

          In Witness Whereof, the parties hereto have executed this
Indemnification Agreement as of the date first above written.

"Indemnitee"                                 "Company"

__________________________________      By:  ___________________________

                                        Its: ___________________________

                                      E-6

                                    ANNEX F

                          CITADEL HOLDING CORPORATION
                            AUDIT COMMITTEE CHARTER
                                  MAY 23, 2000

This Audit Committee Charter ("Charter") has been adopted by the Board of
Directors ("BOD") of Citadel Holding Corporation ("Citadel" or the "Company").
The Audit Committee of Citadel ("Committee") shall review and reassess this
charter annually and recommend any proposed changes to the BOD for approval.

Role and Independence:  Organization
- ------------------------------------

The Committee assists the BOD in fulfilling its responsibility for oversight of
the quality and integrity of the accounting, auditing, internal control and
financial reporting practices of the Company.  The Committee will also have
other duties as assigned by the BOD from time to time.

The membership of the Committee shall consist of at least three directors, who
are each free of any relationship that, in the opinion of the BOD, may interfere
with such member's individual exercise of independent judgment.  Each Committee
member shall also meet the independence and financial literacy requirements for
serving on audit committees, and at least one member shall have accounting, or
related financial management expertise, all as set forth in the applicable rules
of the American Stock Exchange.  The Committee shall maintain free and open
communication with the independent auditors and Company management.  In
discharging its oversight role, the Committee is empowered to investigate any
matter relating to the Company's accounting, auditing, internal control or
financial reporting practices brought to its attention, with full access to all
of the Company books, records, facilities, and personnel.  The Committee may
retain outside counsel, auditors or other advisors.

One member of the Committee shall be appointed as chair.  The chair shall be
responsible for leadership of the Committee, including scheduling and presiding
over meetings, preparing agendas, and making regular reports to the Board.  The
chair will also maintain regular liaison with the CEO, CFO, and the lead
independent audit partner.

                                      F-1

The Committee shall meet at least four times a year, or more frequently as the
Committee considers necessary.  At least once each year, the Committee shall
have separate private meetings with the independent auditors and management.

Responsibilities
- ----------------

Although the Committee may wish to consider other duties from time to time, the
general recurring activities of the Committee in carrying out its oversight
roles are described below.  The Committee shall be responsible for:

     .  Recommending to the BOD the independent auditors to be retained (or
        nominated for shareholder approval) to audit the financial statements of
        the Company. Such auditors are ultimately accountable to the BOD and the
        Committee, as representatives of the shareholders.

     .  Evaluating, together with the Board and management, the performance of
        the independent auditors and, where appropriate, replacing such
        auditors.

     .  Obtaining annually from the independent auditors a formal written
        statement describing all relationships between the auditors and the
        Company, consistent with Independence Standards Board Number 1. The
        Committee shall actively engage in a dialogue with the independent
        auditors with respect to any relationships that may impact the
        objectivity and independence of the auditors and shall take, or
        recommend that the Board take, appropriate actions to oversee and
        satisfy itself as to the auditors independence.

     .  Reviewing the audited financial statements and discussing them with
        management and the independent auditors. These discussions shall include
        the matters required to be discussed under Statement of Auditing
        Standards No. 61 and consideration of the quality of the Company's
        accounting principles as applied in its financial reporting, including a
        review of particularly sensitive accounting estimates, reserves and
        accruals, judgmental areas, audit adjustments (whether or not recorded),
        and other such inquiries as the Committee or the independent auditors
        shall deem appropriate. Based on such review, the Committee shall make
        its recommendation to the Board as to the inclusion of the Company's
        audited financial statements in the Company's Annual Report on Form
        10-K.

                                      F-2

     .  Reviewing the annual management letter with the independent auditors.

     .  Reviewing and approving audit fees.

     .  Reviewing alleged fraudulent actions or violations of law as reported by
        the independent auditors and communicating such matters to the BOD as
        deemed appropriate.

     .  Issuing an annual report to be included in the Company's proxy statement
        as required by the rules of the Securities and Exchange Commission.

     .  Overseeing the relationship with the independent auditors, including
        discussing with the auditors the nature and rigor of the audit process,
        receiving and reviewing audit reports, and providing the auditors full
        access to the Committee (and the BOD) to report on any and all
        appropriate matters.

     .  Discussing with a representative of management and the independent
        auditors: (1) the interim financial information contained in the
        Company's Quarterly Report on Form 10-Q prior to its filing, and (2) the
        results of the review of such information by the independent auditors.

     .  Discussing with management and the independent auditors the quality and
        adequacy of and compliance with the Company's internal controls.

     .  Discussing with management and/or the Company's general counsel any
        legal matters (including the status of pending litigation) that may have
        a material impact on the Company's financial statements, and any
        material reports or inquiries from regulatory or governmental agencies.

The Committee's job is one of oversight.  Management is responsible for the
preparation of the Company's financial statements and the independent auditors
are responsible for auditing those financial statement.  The Committee and the
BOD recognize that management and the independent auditors have more resources
and time, and more detailed knowledge and information regarding the Company's
accounting, auditing, internal control, and financial reporting practices that
the Committee does.  Accordingly, the Committee's oversight role does not
provide any expert or special assurance as to the financial statements and other
financial information provided by the Company to its shareholders and others.

                                      F-3

                                    PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.  Indemnification of Directors and Officers

     As permitted by Chapter 78 of Nevada Revised Statutes, the registrant's
articles of incorporation includes a provision that limits the liability of
directors and officers to the maximum extent permitted by Nevada law.  Nevada
law provides that except for certain regulatory exceptions, a director or
officer is not individually liable to the corporation or its stockholders for
money damages as a result of any act or failure to act in his capacity as a
director or officer unless it is proven that: (i) his act or failure to act
constituted a breach of his fiduciary duties as a director or officer; and (ii)
the breach of those duties involved intentional misconduct, fraud or a knowing
violation of law.

     As permitted by Section 78.7502 and 78.751 of the Nevada Revised Statutes,
the registrant's articles of incorporation further provide:

          .    For mandatory indemnification, to the fullest extent permitted by
applicable law, for any person who is or was a director or officer, or is or was
serving at the request of the registrant as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or nonprofit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses (including
attorneys' fees) reasonably incurred by such person.

          .    That the registrant's obligation to indemnify any person who was
or is serving at the registrant's request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, enterprise or
nonprofit entity must be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit entity.

          .    That the registrant must advance to all indemnified parties the
expenses (including attorney's fees) incurred in defending any proceeding
provided that indemnified parties (if they are directors or officers) must
provide the registrant an undertaking to repay such advances if indemnification
is determined to be unavailable.

          .    That the rights conferred in the articles of incorporation are
not exclusive.

          .    That the registrant may not retroactively amend the articles of
incorporation provisions relating to indemnity.

     The indemnification provision in the registrant's articles of incorporation
may be sufficiently broad to permit indemnification of the registrant's
directors and officers for liabilities arising under the Securities Act.

                                      II-1

Item 21.  Exhibits and Financial Statement Schedules

(a)  Exhibits

     Exhibit No.                                         Description
     -----------                                         -----------
                  
       2.1           Agreement and Plan of Merger dated as of August 17, 2001 by and among Citadel
                     Holding Corporation, Craig Merger Sub, Inc., Reading Merger Sub, Inc., Craig
                     Corporation and Reading Entertainment, Inc. (filed as Exhibit 10 to Citadel's
                     Current Report on Form 8-K dated August 17, 2001 and incorporated herein by
                     reference).

       3.1           Amended and Restated Articles of Incorporation of Citadel Holding Corporation
                     (filed as Exhibit 3.1 to Citadel's Annual Report on Form 10-K for the year ended
                     December 31, 1999 and incorporated herein by reference).

       3.2           Amended and Restated Bylaws of Citadel Holding Corporation (filed as Exhibit 3.2
                     to Citadel's Annual Report on Form 10-K for the year ended December 31, 1999 and
                     incorporated herein by reference).

       4.1           Specimen Class A Nonvoting Common Stock Certificate of Citadel Holding Corporation.*

       4.2           Specimen Class B Voting Common Stock Certificate of Citadel Holding Corporation.*

       5.1           Opinion of Kummer Kaempfer Bonner & Renshaw regarding the legality of the
                     securities being issued.*

      10.1           Tax Disaffiliation Agreement dated as of August 4, 1994 by and between Citadel
                     Holding Corporation and Fidelity Federal Bank (filed as Exhibit 10.27 to Citadel's
                     Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 and incorporated
                     herein by reference).

      10.2           Exchange Agreement dated September 4, 1996 among Citadel Holding Corporation,
                     Citadel Acquisition Corp., Inc., Craig Corporation, Craig Management, Inc.,
                     Reading Entertainment, Inc., and Reading Company (filed as Exhibit 10.51 to
                     Citadel's Annual Report on Form 10-K for the year ended December 31, 1996 and
                     incorporated herein by reference).

      10.3           Asset Put and Registration Rights Agreement dated October 15, 1996 among Citadel
                     Holding Corporation, Citadel Acquisition Corp., Inc., Reading Entertainment, Inc.,
                     and Craig Corporation (filed as Exhibit 10.52 to Citadel's Annual Report on Form
                     10-K for the year ended December 31, 1996 and incorporated herein by reference).

      10.4           Articles of Incorporation of Reading Entertainment, Inc., (filed as Exhibit 10.7
                     to Citadel's Annual Report on Form 10-K for the year ended December 31, 1999 and
                     incorporated herein by reference).

      10.5           Certificate of Designation of the Series A Voting Cumulative Convertible Preferred
                     Stock of Reading Entertainment, Inc. (filed as Exhibit 10.7a to Citadel's Annual
                     Report on Form 10-K for the year ended December 31, 1999 and incorporated herein
                     by reference).

                                      II-2

               
    10.6          Stock Purchase Agreement dated as of April 11, 1997 by and between Citadel Holding
                  Corporation and Craig Corporation (filed as Exhibit 10.56 to Citadel's Quarterly
                  Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein
                  by reference).

    10.7          Secured Promissory Note dated as of April 11, 1997 issued by Craig Corporation to
                  Citadel Holding Corporation in the principal amount of $1,998,000 (filed as
                  Exhibit 10.60 to Citadel's Quarterly Report on Form 10-Q for the quarter ended
                  March 31, 1997 and incorporated herein by reference).

    10.8          Management Services Agreement dated December 26, 1997 between Big 4 Farming LLC
                  and Cecilia Packing (filed as Exhibit 10.71 to Citadel's Annual Report on Form
                  10-K for the year ended December 31, 1997 and incorporated herein by reference).

    10.9          Promissory Note dated December 20, 1999 between Citadel Holding Corporation and
                  Nationwide Life Insurance  3 (filed as Exhibit 10.36 to Citadel's Annual Report on
                  Form 10-K for the year ended December 31, 1999 and incorporated herein by
                  reference).

   10.10          Employment Agreement between Citadel Holding Corporation and Andrzej Matyczynski
                  (filed as Exhibit 10.37 to Citadel's Annual Report on Form 10-K for the year ended
                  December 31, 1999 and incorporated herein by reference).**

   10.11          Citadel 1999 Employee Stock Option Plan (filed as Exhibit 10.38 to Citadel's
                  Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated
                  herein by reference).**

   10.12          Amendment and Plan of Merger dated as of July 28, 2000 by and among Citadel
                  Holding Corporation, Citadel Off Broadway Theatre, Inc., Off Broadway Investments,
                  Inc., Michael R. Forman and James J. Cotter (filed as Exhibit A to Citadel's Proxy
                  Statement on Schedule 14A dated August 12, 2000 and incorporated herein by
                  reference).

   10.13          Form of Indemnification Agreement between Citadel Holding Corporation and each of
                  its directors and executive officers (contained as ANNEX F to the joint proxy
                  statement (prospectus made part of this registration statement).

   10.14          Agreement and Plan of Merger, dated as of July 28, 2000, among Citadel, Citadel
                  Off Broadway Theatres, Inc., OBI, Michael R. Forman, and James J. Cotter (filed
                  as Exhibit A to the Proxy Statement dated August 12, 2000 of Citadel and
                  incorporated herein by reference).  (Schedules to the Agreement and Plan of Merger
                  are listed in the table of contents thereto and will be filed with the Commission
                  on request of the Commission.)

   10.15          Agreement of Purchase and Sale of Membership Interest, dated as of July 28, 2000,
                  among Citadel Cinemas, Inc. ("Citadel Cinemas"), James J. Cotter, and Michael R.
                  Forman (filed as Exhibit 10.1 to Citadel's Current Report on Form 8-K dated
                  September 19, 2000 and incorporated herein by reference).

   10.16          Promissory Note, dated as of July 28, 2000, from Citadel Cinemas payable to James
                  J. Cotter, in the principal amount of $2,250,000 (filed as Exhibit 10.2 to
                  Citadel's Current Report on Form 8-K dated September 19, 2000 and incorporated
                  herein by reference).

                                      II-3

               
    10.17         Promissory Note, dated as of July 28, 2000, from Citadel Cinemas payable to
                  Michael R. Forman in the principal amount of $2,250,000 (filed as Exhibit 10.3 to
                  Citadel's Current Report on Form 8-K dated September 19, 2000 and incorporated
                  herein by reference).

    10.18         Guaranty, dated as of July 28, 2000, by Citadel of Citadel Cinema's obligations
                  under the Promissory Note to James J. Cotter (filed as Exhibit 10.4 to Citadel's
                  Current Report on Form 8-K dated September 19, 2000 and incorporated herein by
                  reference).

    10.19         Guaranty, dated as of July 28, 2000 of Citadel of Citadel Cinemas's obligations
                  under the Promissory Note to Michael R. Forman (filed as Exhibit 10.5 to Citadel's
                  Current Report on Form 8-K dated September 19, 2000 and incorporated herein by
                  reference).

    10.20         Lease Agreement, dated as of July 28, 2000, between Sutton Hill Capital, L.L.C.
                  ("SHC") and Citadel Cinemas (filed as Exhibit 10.6 to Citadel's Current Report on
                  Form 8-K dated September 19, 2000 and incorporated herein by reference).

    10.21         Lease Guarantee, dated as of July 28, 2000, by Citadel of Citadel Cinemas's
                  obligations under the Lease Agreement (filed as Exhibit 10.7 to Citadel's Current
                  Report on Form 8-K dated September 19, 2000 and incorporated herein by reference).

    10.22         Agreement With Respect to Fee Option, dated as of July 29, 2000, between SHC and
                  Citadel Realty, Inc. (filed as Exhibit 10.8 to Citadel's Current Report on Form
                  8-K dated September 19, 2000 and incorporated herein by reference).

    10.23         Guaranty, dated as of July 28, 2000, by Citadel of Citadel Realty, Inc.'s
                  obligations under the Agreement With Respect to Fee Option (filed as Exhibit 10.9 to
                  Citadel's Current Report on Form 8-K dated September 19, 2000 and incorporated herein
                  by reference).

    10.24         Guaranty, dated as of July 28, 2000, by James J. Cotter and Michael R. Forman
                  (filed as Exhibit 10.10 to Citadel's Current Report on Form 8-K dated September 19,
                  2000 and incorporated herein by reference).

    10.25         Guaranty dated as of July 28, 2000, by Sutton Hill Associates with respect to
                  certain obligations of SHC (filed as Exhibit 10.13 to Citadel's Current Report on
                  Form 8-K dated September 19, 2000 and incorporated herein by reference).

    10.26         License Agreement, dated as of July 28, 2000, between SHC and Citadel Cinemas
                  (filed as Exhibit 10.14 to Citadel's Current Report on Form 8-K dated September 19,
                  2000 and incorporated herein by reference).

    10.27         Administrative Services Agreement, dated as of July 28, 2000, between City
                  Cinemas, Inc. and Citadel Cinemas (filed as Exhibit 10.15 to Citadel's Current
                  Report on Form 8-K dated September 19, 2000 and incorporated herein by reference).

    10.28         Submanagement Agreement, dated as of July 28, 2000, between City Cinemas, Inc. and
                  Citadel Cinemas (filed as Exhibit 10.16 to Citadel's Current Report on Form 8-K
                  dated September 19, 2000 and incorporated herein by reference).

    10.29         Citadel Standby Credit Facility, dated as of July 28, 2000, between SHC and
                  Citadel (filed as Exhibit 10.17 to Citadel's Current Report on Form 8-K dated
                  September 19, 2000 and incorporated herein by reference).

    10.30         Registration Rights Agreement, dated as of September 20, 2000, among Citadel,
                  James J. Cotter, and Michael R. Forman (filed as Exhibit 10.18 to Citadel's Current
                  Report on Form 8-K dated September 19, 2000 and incorporated herein by reference).
     21.1         Subsidiaries of Citadel Holding Corporation (filed as Exhibit 21.1 to Citadel's
                  Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated
                  herein by reference).

     23.1         Consent of Deloitte & Touche LLP relating to Citadel Holding Corporation.

                                      II-4

               
    23.2          Consent of Deloitte & Touche LLP relating to Craig Corporation.

    23.3          Consent of Deloitte & Touche LLP relating to Reading Entertainment, Inc.

    23.4          Consent of Ernst & Young LLP relating to Craig Corporation.

    23.5          Consent of Ernst & Young LLP relating to Reading Entertainment, Inc.

    23.6          Consent of Kummer Kaempfer Bonner & Renshaw (included in Exhibit 5.1).*

    23.7          Consent of Marshall & Stevens Incorporated.

    24.1          Power of Attorney regarding this Registration Statement (contained on page II-7
                  of this registration statement).

    99.1          Form of Citadel Holding Corporation Proxy Card.

    99.2          Form of Craig Corporation Proxy Card.

    99.3          Form of Reading Entertainment, Inc. Proxy Card.

     __________________

     *   To be filed by amendment.
     **  These exhibits constitute the executive compensation plans and
         arrangements of Citadel Holding Corporation.

     (b) Financial Statement Schedules

         Financial Statement Schedule III - Real Estate and Accumulated
         Depreciation.

     (c) Reports, Opinions or Appraisals

     Opinion of Marshall & Stevens Incorporated (attached as ANNEX B to the
joint proxy statement/prospectus filed as part of this registration statement).

Item 22.  Undertakings

     (1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or Section 15(d) of the
Securities Exchange  Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be initial bona fide offering thereof.

     (2) The undersigned registrant hereby undertakes as follows:  that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.

     (3) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (2) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Exchange Act and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and

                                      II-5

that, for purposes of determining any liability under the Securities Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (4) Insofar as the indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.  In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

     (5) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporate documents by first class mail or other
equally prompt means.  This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.

     (6) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

                                      II-6

                                  SIGNATURES

     Pursuant to the requirements of the Securities Act, Citadel Holding
Corporation has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Los
Angeles, State of California, on the 24th of August, 2001.

                                          CITADEL HOLDING CORPORATION

                                          By: /s/ ANDRZEJ MATYCZYNSKI
                                             ---------------------------
                                             Chief Financial Officer

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints S. Craig Tompkins and Andrzej Matyczynski
and each of them, his attorneys-in-fact, each with the power of substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, as amended, and all
post-effective amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the Securities and
Conversion Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

                                                                                       
                                                   Chairman and Chief Executive Officer      August 24, 2001
        /S/ JAMES J. COTTER                        (Principal Executive Officer)
- ----------------------------------------
          James J. Cotter

      /S/ ANDRZEJ MATYCZYNSKI                      Chief Financial Officer                   August 24, 2001
- ----------------------------------------           (Principal Financial and Accounting
       Andrzej Matyczynski                         Officer)

      /S/  S. CRAIG TOMPKINS                       Director                                  August 24, 2001
- ----------------------------------------
        S. Craig Tompkins

     /S/ ROBERT M. LOEFFLER                        Director                                  August 24, 2001
- ----------------------------------------
        Robert M. Loeffler

     /S/ WILLIAM C. SOADY                          Director                                  August 24, 2001
- ----------------------------------------
     William C. Soady

     /S/ ALFRED VILLASENOR, JR.                    Director                                  August 24, 2001
- ----------------------------------------
     Alfred Villasenor, Jr.

                                      II-7

                       Financial Statement Schedule III
                   Real Estate and Accumulated Depreciation
                               DECEMBER 31, 2000
                            (Dollars in thousands)

                                                                    Initial Cost                    Costs Capitalized
                                                      -----------------------------------------
                                                                               Building and           Subsequent to
                                Encumbrances             Land                  Improvements            Acquisition
- --------------------------    ---------------         -----------          --------------------      ---------------
                                                                                        
Commercial office building        $10,872                 $2,951                 $4,180                  $2,919

                                                                                                      Life on Which
                                                                    Accumulated        Date           Depreciation
                                 Land       Building    Total       Depreciation     Acquired          is Computed
- --------------------------    ----------  ----------- ----------  ----------------  -----------     ----------------
                                                                                  
Commercial office building      $2,951      $7,099     $10,050        $(1,021)         5/8/95              40

(1) The property listed above was acquired pursuant to agreements entered into
    between the Company and Fidelity at the time of the Restructuring.  The
    aggregate gross cost of property held at December 31, 2000 for federal
    income tax purposes approximated $7,514,000.

(2) The following reconciliation reflects the aggregate rollforward activity of
    property held and accumulated depreciation for the three years ended
    December 31, 2000.

                                                          Gross Amount                       Accumulated Depreciation
- ------------------------------                          ----------------                     ------------------------
                                                                                       
Balance at January 1, 1998                                  $14,535                                 $  (883)
 Depreciation expense                                            --                                    (363)
 Improvements                                                   588                                      --
- ------------------------------                          ----------------                     ------------------------
Balance at December 31, 1998                                $15,123                                 $(1,246)
 Depreciation expense                                            --                                    (206)
 Cost of real estate sold                                    (6,608)                                    700
 Other                                                          (32)                                     --
- ------------------------------                          ----------------                     ------------------------
Balance at December 31, 1999                                $ 8,483                                 $  (752)
 Depreciation expense                                            --                                    (269)
 Improvements                                                 1,567                                      --
- ------------------------------                          ----------------                     ------------------------
Balance at December 31, 2000                                $10,050                                 $(1,021)
- ------------------------------                          ----------------                     ------------------------

                                 EXHIBIT INDEX
                                 -------------

Exhibit No.                                  Description
- -----------                                  -----------

   2.1         Agreement and Plan of Merger dated as of August 17, 2001 by and
               among Citadel Holding Corporation, Craig Merger Sub, Inc.,
               Reading Merger Sub, Inc., Craig Corporation and Reading
               Entertainment, Inc. (filed as Exhibit 10 to Citadel's current
               report on Form 8-K dated August 17, 2001 and incorporated herein
               by reference).

   3.1         Amended and Restated Articles of Incorporation of Citadel Holding
               Corporation (filed as Exhibit 3.1 to Citadel's Annual Report on
               Form 10-K for the year ended December 31, 1999 and incorporated
               herein by reference).

   3.2         Amended and Restated Bylaws of Citadel Holding Corporation (filed
               as Exhibit 3.2 to Citadel's Annual Report on Form 10-K for the
               year ended December 31, 1999 and incorporated herein by
               reference).

   4.1         Specimen Class A Nonvoting Common Stock Certificate of Citadel
               Holding Corporation.*

   4.2         Specimen Class B Voting Common Stock Certificate of Citadel
               Holding Corporation.*

   5.1         Opinion of Kummer Kaempfer Bonner & Renshaw regarding the
               legality of the securities being issued.*

   10.1        Tax Disaffiliation Agreement dated as of August 4, 1994 by and
               between Citadel Holding Corporation and Fidelity Federal Bank
               (filed as Exhibit 10.27 to Citadel's Quarterly Report on Form 10-
               Q for the quarter ended June 30, 1994 and incorporated herein by
               reference).

   10.2        Exchange Agreement dated September 4, 1996 among Citadel Holding
               Corporation, Citadel Acquisition Corp., Inc., Craig Corporation,
               Craig Management, Inc., Reading Entertainment, Inc., and Reading
               Company (filed as Exhibit 10.51 to Citadel's Annual Report on
               Form 10-K for the year ended December 31, 1996 and incorporated
               herein by reference).

   10.3        Asset Put and Registration Rights Agreement dated October 15,
               1996 among Citadel Holding Corporation, Citadel Acquisition
               Corp., Inc., Reading Entertainment, Inc., and Craig Corporation
               (filed as Exhibit 10.52 to Citadel's Annual Report on Form 10-K
               for the year ended December 31, 1996 and incorporated herein by
               reference).

   10.4        Articles of Incorporation of Reading Entertainment, Inc., (filed
               as Exhibit 10.7 to Citadel's Annual Report on Form 10-K for the
               year ended December 31, 1999 and incorporated herein by
               reference).

   10.5        Certificate of Designation of the Series A Voting Cumulative
               Convertible Preferred Stock of Reading Entertainment, Inc. (filed
               as Exhibit 10.7a to Citadel's Annual Report on Form 10-K for the
               year ended December 31, 1999 and incorporated herein by
               reference).

   10.6        Stock Purchase Agreement dated as of April 11, 1997 by and
               between Citadel Holding Corporation and Craig Corporation (filed
               as Exhibit 10.56 to Citadel's

               Quarterly Report on Form 10-Q for the quarter ended March 31,
               1997 and incorporated herein by reference).

   10.7        Secured Promissory Note dated as of April 11, 1997 issued by
               Craig Corporation to Citadel Holding Corporation in the principal
               amount of $1,998,000 (filed as Exhibit 10.60 to Citadel's
               Quarterly Report on Form 10-Q for the quarter ended March 31,
               1997 and incorporated herein by reference).

   10.8        Management Services Agreement dated December 26, 1997 between Big
               4 Farming LLC and Cecilia Packing (filed as Exhibit 10.71 to
               Citadel's Annual Report on Form 10-K for the year ended December
               31, 1997 and incorporated herein by reference).

   10.9        Promissory Note dated December 20, 1999 between Citadel Holding
               Corporation and Nationwide Life Insurance 3 (filed as Exhibit
               10.36 to Citadel's Annual Report on Form 10-K for the year ended
               December 31, 1999 and incorporated herein by reference).

   10.10       Employment Agreement between Citadel Holding Corporation and
               Andrzej Matyczynski (filed as Exhibit 10.37 to Citadel's Annual
               Report on Form 10-K for the year ended December 31, 1999 and
               incorporated herein by reference).**

   10.11       Citadel 1999 Employee Stock Option Plan (filed as Exhibit 10.38
               to Citadel's Annual Report on Form 10-K for the year ended
               December 31, 1999 and incorporated herein by reference).**

   10.12       Amendment and Plan of Merger dated as of July 28, 2000 by and
               among Citadel Holding Corporation, Citadel Off Broadway Theatre,
               Inc., Off Broadway Investments, Inc., Michael R. Forman and James
               J. Cotter (filed as Exhibit A to Citadel's Proxy Statement on
               Schedule 14A dated August 12, 2000 and incorporated herein by
               reference).

   10.13       Form of Indemnification Agreement between Citadel Holding
               Corporation and each of its directors and executive officers
               (contained as ANNEX F to the joint proxy statement (prospectus
               made part of this registration statement).

   10.14       Agreement and Plan of Merger, dated as of July 28, 2000, among
               Citadel, Citadel Off Broadway Theatres, Inc., OBI, Michael R.
               Forman, and James J. Cotter. (filed as Exhibit A to the Proxy
               Statement dated August 12, 2000 of Citadel and incorporated
               herein by reference). (Schedules to the Agreement and Plan of
               Merger are listed in the table of contents thereto and will be
               filed with the Commission on request of the Commission.)

   10.15       Agreement of Purchase and Sale of Membership Interest, dated as
               of July 28, 2000, among Citadel Cinemas, Inc. ("Citadel
               Cinemas"), James J. Cotter, and Michael R. Forman (filed as
               Exhibit 10.1 to Citadel's Current Report on Form 8-K dated
               September 19, 2000 and incorporated herein by reference).

   10.16       Promissory Note, dated as of July 28, 2000, from Citadel Cinemas
               payable to James J. Cotter, in the principal amount of $2,250,000
               (filed as Exhibit 10.2 to Citadel's Current Report on Form 8-K
               dated September 19, 2000 and incorporated herein by reference).

   10.17       Promissory Note, dated as of July 28, 2000, from Citadel Cinemas
               payable to Michael R. Forman in the principal amount of
               $2,250,000 (filed as Exhibit 10.3 to Citadel's Current Report on
               Form 8-K dated September 19, 2000 and incorporated herein by
               reference).

   10.18       Guaranty, dated as of July 28, 2000, by Citadel of Citadel
               Cinema's obligations under the Promissory Note to James J. Cotter
               (filed as Exhibit 10.4 to Citadel's Current Report on Form 8-K
               dated September 19, 2000 and incorporated herein by reference).

   10.19       Guaranty, dated as of July 28, 2000 of Citadel of Citadel
               Cinemas's obligations under the Promissory Note to Michael R.
               Forman (filed as Exhibit 10.5 to Citadel's Current Report on Form
               8-K dated September 19, 2000 and incorporated herein by
               reference).

   10.20       Lease Agreement, dated as of July 28, 2000, between Sutton Hill
               Capital, L.L.C. ("SHC") and Citadel Cinemas (filed as Exhibit
               10.6 to Citadel's Current Report on Form 8-K dated September 19,
               2000 and incorporated herein by reference).

   10.21       Lease Guarantee, dated as of July 28, 2000, by Citadel of Citadel
               Cinemas's obligations under the Lease Agreement (filed as Exhibit
               10.7 to Citadel's Current Report on Form 8-K dated September 19,
               2000 and incorporated herein by reference).

   10.22       Agreement With Respect to Fee Option, dated as of July 29, 2000,
               between SHC and Citadel Realty, Inc. (filed as Exhibit 10.8 to
               Citadel's Current Report on Form 8-K dated September 19, 2000 and
               incorporated herein by reference).

   10.23       Guaranty, dated as of July 28, 2000, by Citadel of Citadel
               Realty, Inc.'s obligations under the Agreement With Respect to
               Fee Option (filed as Exhibit 10.9 to Citadel's Current Report on
               Form 8-K dated September 19, 2000 and incorporated herein by
               reference).

   10.24       Guaranty, dated as of July 28, 2000, by James J. Cotter and
               Michael R. Forman (filed as Exhibit 10.10 to Citadel's Current
               Report on Form 8-K dated September 19, 2000 and incorporated
               herein by reference).

   10.25       Guaranty dated as of July 28, 2000, by Sutton Hill Associates
               with respect to certain obligations of SHC (filed as Exhibit
               10.13 to Citadel's Current Report on Form 8-K dated September 19,
               2000 and incorporated herein by reference).

   10.26       License Agreement, dated as of July 28, 2000, between SHC and
               Citadel Cinemas (filed as Exhibit 10.14 to Citadel's Current
               Report on Form 8-K dated September 19, 2000 and incorporated
               herein by reference).

   10.27       Administrative Services Agreement, dated as of July 28, 2000,
               between City Cinemas, Inc. and Citadel Cinemas (filed as Exhibit
               10.15 to Citadel's Current Report on Form 8-K dated September 19,
               2000 and incorporated herein by reference).

   10.28       Submanagement Agreement, dated as of July 28, 2000, between City
               Cinemas, Inc. and Citadel Cinemas (filed as Exhibit 10.16 to
               Citadel's Current Report on Form 8-K dated September 19, 2000 and
               incorporated herein by reference).

   10.29       Citadel Standby Credit Facility, dated as of July 28, 2000,
               between SHC and Citadel (filed as Exhibit 10.17 to Citadel's
               Current Report on Form 8-K dated September 19, 2000 and
               incorporated herein by reference).

   10.30       Registrations Rights Agreement, dated as of September 20, 2000,
               among Citadel, James J. Cotter, and Michael R. Forman (filed as
               Exhibit 10.18 to Citadel's Current Report on Form 8-K dated
               September 19, 2000 and incorporated herein by reference).

   21.1        Subsidiaries of Citadel Holding Corporation (filed as Exhibit
               21.1 to Citadel's Annual Report on Form 10-K for the year ended
               December 31, 1999 and incorporated herein by reference).

   23.1        Consent of Deloitte & Touche LLP relating to Citadel Holding
               Corporation.

   23.2        Consent of Deloitte & Touche LLP relating to Craig Corporation.

   23.3        Consent of Deloitte & Touche LLP relating to Reading
               Entertainment, Inc.

   23.4        Consent of Ernst & Young LLP relating to Craig Corporation.

   23.5        Consent of Ernst & Young LLP relating to Reading Entertainment,
               Inc.

   23.6        Consent of Kummer Kaempfer Bonner & Renshaw (included in Exhibit
               5.1).*

   23.7        Consent of Marshall & Stevens Incorporated.

   24.1        Power of Attorney regarding this Registration Statement
               (contained on page II-7 of this registration statement).

   99.1        Form of Citadel Holding Corporation Proxy Card.

   99.2        Form of Craig Corporation Proxy Card.

   99.3        Form of Reading Entertainment, Inc. Proxy Card.

______________________

 *   To be filed by amendment.

                                 EXHIBIT 23.1

                         INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
Citadel Holding Corporation on Form S-4 of our report dated April 6, 2001,
appearing in the Annual Report on Form 10-K of Citadel Holding Corporation for
the year ended December 31, 2000 and to the reference to us under the heading "
Experts" in the Prospectus, which is part of this Registration Statement.

DELOITTE & TOUCHE LLP

Los Angeles, California
August 21, 2001

                                 EXHIBIT 23.2

                         INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
Citadel Holding Corporation on Form S-4 of our report dated April 11, 2001,
appearing in the Annual Report on Form 10-K of Craig Corporation for the year
ended December 31, 2000 and to the reference to us under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.

DELOITTE & TOUCHE LLP

Los Angeles, California
August 21, 2001

                                 EXHIBIT 23.3

                         INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
Citadel Holding Corporation on Form S-4 of our report dated April 6, 2001,
appearing in the Annual Report on Form 10-K of Reading Entertainment, Inc. for
the year ended December 31, 2000 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.

DELOITTE & TOUCHE LLP

Los Angeles, California
August 21, 2001

                                 EXHIBIT 23.4

                        CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 31, 1999, with respect to the consolidated
financial statements of Craig Corporation for the year ended December 31, 1998,
included in its Annual Report (Form 10-K) for the year ended December 31, 2000,
filed with the Securities and Exchange Commission and incorporated by reference
in the Joint Proxy Statement of Citadel Holding Corporation, Craig Corporation
and Reading Entertainment, Inc. that is made a part of the Registration
Statement (Form S-4) and Prospectus of Citadel Holding Corporation for the
registration of shares of Citadel Holding Corporation Class A Non-Voting Common
Stock dated August 24, 2001.

ERNST & YOUNG LLP

Los Angeles, California
August 21, 2001

                                 EXHIBIT 23.5

                        CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 18, 1999, with respect to the consolidated
financial statements of Reading Entertainment, Inc. for the year ended December
31, 1998, included in its Annual Report (Form 10-K) for the year ended December
31, 2000, filed with the Securities and Exchange Commission and incorporated by
reference in the Joint Proxy Statement of Citadel Holding Corporation, Craig
Corporation and Reading Entertainment, Inc. that is made a part of the
Registration Statement (Form S-4) and Prospectus of Citadel Holding Corporation
for the registration of 21,511,327 shares of Citadel Corporation Class A Non-
Voting Common Stock dated August 24, 2001.

ERNST & YOUNG LLP

Philadelphia, Pennsylvania
August 21, 2001

                                 EXHIBIT 23.7

                  CONSENT OF MARSHALL & STEVENS INCORPORATED

We hereby consent to the use of our name and to the description of our opinion
letter, dated August 16, 2001, in, and to the inclusion of our opinion as ANNEX
B to, the Joint Proxy Statement/Prospectus of Citadel Holding Corporation, Craig
Corporation and Reading Entertainment, Inc. made part of the Registration
Statement on Form S-4 of Citadel Holding Corporation.

                                        MARSHALL & STEVENS INCORPORATED

Chicago, Illinois
August 22, 2001

- -------------------------------------------------------------------------------

PROXY                                                                    EX 99.1

                          CITADEL HOLDING CORPORATION

                        ANNUAL MEETING OF STOCKHOLDERS
                          TO BE HELD OCTOBER 24, 2001

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

  The undersigned hereby revokes all prior proxies and constitutes and
appoints James J. Cotter and S. Craig Tompkins, and each or any of them,
proxies of the undersigned, with full power of substitution, to vote all of
the shares of Citadel Holding Corporation (the "Company") which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
the Company to be held at 10:00, A.M., local time, on October 24, 2001 at
      ,       , California, for the following purposes and any adjournment or
postponement thereof, as follows:

                          (Continued on reverse side)

- -------------------------------------------------------------------------------
                             FOLD AND DETACH HERE

- --------------------------------------------------------------------------------
                                                                Please mark  [X]
                                                                your votes as
                                                                indicated in
                                                                this example

In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment thereof.

1. ELECTION OF DIRECTORS

INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the following list: James J. Cotter,
William C. Soady, Alfred Villasenor, Jr., Robert M. Loeffler and S. Craig
Tompkins.

              FOR                       WITHHOLD AUTHORITY TO
      all nominees listed                   vote for all
      below (excepted as                      nominees.
    marked to the contrary.)

              [_]                                [_]

2. PROPOSAL TO APPROVE THE ISSUANCE OF CITADEL SHARES IN CONNECTION WITH THE
   CONSOLIDATION OF CITADEL, CRAIG CORPORATION AND READING ENTERTAINMENT, INC.

             FOR                AGAINST              ABSTAIN
             [_]                  [_]                  [_]

3. PROPOSAL TO APPROVE THE ADOPTION OF THE AMENDMENT TO THE CITADEL 1999 STOCK
   OPTION PLAN.

             FOR                AGAINST              ABSTAIN
             [_]                  [_]                  [_]

4. PROPOSAL TO APPROVE THE ADOPTION OF THE AMENDMENT TO THE ARTICLES OF
   INCORPORATION OF CITADEL.

             FOR                AGAINST              ABSTAIN
             [_]                  [_]                  [_]

5. PROPOSAL TO RATIFY AND APPROVE THE FORM OF CITADEL INDEMNIFICATION AGREEMENT.

             FOR                AGAINST              ABSTAIN
             [_]                  [_]                  [_]

THIS PROXY WILL BE VOTED AS SPECIFIED. IF A CHOICE IS NOT SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR AND FOR EACH OF THE ABOVE
PROPOSALS.

THIS PROXY SHOULD BE DATED, SIGNED BY THE STOCKHOLDER EXACTLY AS SUCH
STOCKHOLDER'S NAME APPEARS ON SUCH STOCKHOLDER'S STOCK CERTIFICATE AND RETURNED
PROMPTLY TO THE COMPANY C/O MELLON INVESTOR SERVICES, LLC, IN THE ENCLOSED
ENVELOPE. PERSONS SIGNING IN AS A BENEFICIARY CAPACITY SHOULD SO INDICATE.

Signature _____________________________________________ Dated:____________ ,2001
                                       Telephone Number

Please sign name(s) exactly as registered) (if there are co-owners, both should
sign)

- --------------------------------------------------------------------------------
                             FOLD AND DETACH HERE

- --------------------------------------------------------------------------------

PROXY                                                                   EX 99.2

                               CRAIG CORPORATION

                        SPECIAL MEETING OF STOCKHOLDERS
                          TO BE HELD OCTOBER 24, 2001

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

  The undersigned hereby revokes all prior proxies and constitutes and
appoints James J. Cotter and S. Craig Tompkins, and each or any of them,
proxies of the undersigned, with full power of substitution, to vote all of
the shares of Common Stock and Class A Common Preference Stock of Craig
Corporation (the "Company") which the undersigned may be entitled to vote at
the Special Meeting of Stockholders of the Company to be held at 10:00 A.M.,
local time, on October 24, 2001 at       ,       , California, for the
following purposes and any adjournment or postponement thereof, as follows:

      (Continued, and to be marked, dated and signed, on the other side)

- --------------------------------------------------------------------------------
                             FOLD AND DETACH HERE

- -------------------------------------------------------------------------------
                                                                Please mark  [X]
                                                                your votes as
                                                                indicated in
                                                                this example

1. PROPOSAL TO APPROVE THE CONSOLIDATION AGREEMENT AMONG CRAIG CORPORATION,
   CITADEL HOLDING CORPORATION AND READING ENTERTAINMENT, INC.

                FOR             AGAINST                 ABSTAIN

                [ ]               [ ]                     [ ]

THIS PROXY SHOULD BE DATED, SIGNED BY THE STOCKHOLDER EXACTLY AS SUCH
STOCKHOLDER'S NAME APPEARS ON SUCH STOCKHOLDER'S STOCK CERTIFICATE AND RETURNED
PROMPTLY TO THE COMPANY C/O MELLON INVESTOR SERVICES, LLC, IN THE ENCLOSED
ENVELOPE. PERSONS SIGNING IN AS A BENEFICIARY CAPACITY SHOULD SO INDICATE.

THIS PROXY WILL BE VOTED AS SPECIFIED. IF A CHOICE IS NOT SPECIFIED, THIS PROXY
WILL BE VOTED FOR THE ABOVE PROPOSAL.

Signature ______________________________________________  Dated:__________ ,2001
                                        Telephone Number

Please sign name(s) exactly as registered) (if there are co-owners, both should
sign)

- --------------------------------------------------------------------------------
                             FOLD AND DETACH HERE

- -------------------------------------------------------------------------------

PROXY                                                                   Ex 99.3

                          READING ENTERTAINMENT, INC.

                        SPECIAL MEETING OF STOCKHOLDERS
                          TO BE HELD OCTOBER 24, 2001

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

  The undersigned hereby revokes all prior proxies and constitutes and
appoints James J. Cotter, Robert F. Smerling and S. Craig Tompkins, and each
or any of them, proxies of the undersigned, with full power of substitution,
to vote all of the shares of Common Stock and any shares of Preferred Stock of
Reading Entertainment, Inc. (the "Company") which the undersigned may be
entitled to vote at the Special Meeting of Stockholders of the Company to be
held at 10:00 A.M., local time, on October 24, 2001 at       ,       ,
California, for the following purposes and any adjournment or postponement
thereof, as follows:

      (Continued, and to be marked, dated and signed, on the other side)
- --------------------------------------------------------------------------------
                             FOLD AND DETACH HERE

- --------------------------------------------------------------------------------
                                                                Please mark [X]
                                                                your votes as
                                                                indicated in
                                                                this example

1. PROPOSAL TO APPROVE THE CONSOLIDATION AGREEMENT AMONG CRAIG CORPORATION,
   CITADEL HOLDING CORPORATION AND READING ENTERTAINMENT, INC.

          FOR                      AGAINST                    ABSTAIN
          [_]                        [_]                        [_]

THIS PROXY WILL BE VOTED AS SPECIFIED. IF A CHOICE IS NOT SPECIFIED, THIS PROXY
WILL BE VOTED FOR THE ABOVE PROPOSAL.

THIS PROXY SHOULD BE DATED, SIGNED BY THE STOCKHOLDER EXACTLY AS SUCH
STOCKHOLDER'S NAME APPEARS ON SUCH STOCKHOLDER'S STOCK CERTIFICATE AND RETURNED
PROMPTLY TO THE COMPANY C/O WELLS FARGO SHAREOWNER SERVICES IN THE ENCLOSED
ENVELOPE. PERSONS SIGNING IN AS A BENEFICIARY CAPACITY SHOULD SO INDICATE.

Signature __________________________________________ Dated: _______________,2001
                                   Telephone Number

Please sign name(s) exactly as registered) (if there are co-owners, both should
sign)

- --------------------------------------------------------------------------------
                             FOLD AND DETACH HERE