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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ISSUER TENDER OFFER STATEMENT
SCHEDULE 13E-4
(PURSUANT TO SECTION 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. 4)
CinemaStar Luxury Theaters, Inc.
(Name of Issuer)
CinemaStar Luxury Theaters, Inc.
(Name of Person(s) Filing Statement)
Redeemable Warrants Expiring on February 6, 2000
(Title of Class of Securities)
172-44-C-11-1
(CUSIP Number of Class of Securities)
Ronald P. Givner, Esq.
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars
Los Angeles, California 90067
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
September 24, 1996
(Date Tender Offer First Published,
Sent or Given to Security Holders)
Calculation of Filing Fee
<TABLE>
<CAPTION>
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Transaction Valuation Amount of Filing Fee
<S> <C>
$35,437,500* $7,087.50 - paid
- -----------------------------------------------------------------------------
</TABLE>
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the
*/ The Redeemable Warrants are being modified to allow for the exercise at
$4.50* per Redeemable Warrant for one share of Common Stock and one Class B
Warrant. Pursuant to Rule 457(g), the filing fee is based on the market price
for the Common Stock ($7.50) as determined by Rule 457(c) and Rule 0-11(a)(4),
times 4,735,000 Redeemable Warrants.
* Estimated for purposes of calculating the filing fee.
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offsetting fee was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing. CinemaStar Luxury Theaters, Inc. Form SB-2 Registration Statements
(333-4422) filed May 3, 1996 and Form SB-2 Registration Statement (33-86716).
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ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is: CinemaStar Luxury
Theaters, Inc. ("CinemaStar"). The address of the issuer's principal executive
office is 431 College Boulevard, Oceanside, California 92057.
(b) Redeemable Warrants to purchase Common Stock expiring
on February 6, 2000 and currently exercisable at $6.00 per underlying share (the
"Redeemable Warrants"). There are 4,725,000 Redeemable Warrants outstanding,
none of which are held by officers or directors of CinemaStar. Additional
Redeemable Warrants would be issued upon exercise of the Representative's
Warrants issued in the initial public offering. This Schedule 13E-4 relates to
temporarily reducing the exercise price of the Redeemable Warrants to
$3.50 and issuing one Class B Warrant upon exercise of each Redeemable
Warrant. See in general Exhibit A hereto, the Prospectus of CinemaStar dated
September 24, 1996 (the "Prospectus"), particularly the section "The Offer"
and "Description of Securities". (For information on the Common Stock,
Redeemable Warrants and Class B Warrants, the information in the Prospectus
under "Description of Securities" is hereby incorporated herein by reference.)
(c) The information from the section captioned "Market
Prices" in the Prospectus concerning the principal market in which the
Redeemable Warrants are traded is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Not applicable.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFICE AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
Information concerning the purpose of the subject tender offer
and the planned disposition of the securities is incorporated herein by
reference to the section captioned "The Offer - Purpose of the Offer" in the
Prospectus. Except as described in the Prospectus, there are no present plans
or proposals which relate to or would result in:
(a) The acquisition of additional securities of CinemaStar
or the disposition of securities of CinemaStar;
(b) An extraordinary corporate transaction, such as a
liquidation, involving CinemaStar or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of
CinemaStar or any of its subsidiaries;
(d) Any change in the present Board of Directors or
management of CinemaStar, including, but not limited to, any plans or proposals
to change the number or the terms of directors, to fill any existing vacancy on
the Board or to change any material term of the employment contract of any
executive officer;
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(e) Paying dividends or changing the dividend policy or
indebtedness or capitalization of CinemaStar;
(f) Any other material change in CinemaStar, its corporate
structure or business;
(g) Changing CinemaStar's Articles of Incorporation or
By-Laws or taking other actions which might impede the acquisition of control
of CinemaStar by any person;
(h) Causing a class of equity security of CinemaStar to be
delisted from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national securities
association;
(i) Causing a class of equity security of CinemaStar to
become eligible for termination of registrant pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934, as amended; or
(j) Causing the suspension of CinemaStar's obligation to
file reports pursuant to Section 15(d) of the Securities Exchange Act of 1933,
as amended.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Neither CinemaStar nor, to the best knowledge of CinemaStar,
any of the executive officers or directors of CinemaStar or its subsidiaries,
or any associate of any of the foregoing, has engaged in any transactions
involving the Redeemable Warrants during the 40 business days prior to the date
hereof except as set forth in the section captioned "The Offer - Recent
Transaction" in the Prospectus which is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
Neither CinemaStar nor, to the best knowledge of the
CinemaStar, any of its executive officers, directors or affiliates is a party
to any contract, arrangement, understanding or relationship relating directly
or indirectly to the tender offer with respect to securities of the CinemaStar
which would require disclosure under applicable rules and regulations of the
Securities Exchange Act of 1934, as amended.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Information concerning persons retained or employed to make
solicitations in connection with the subject tender offer is incorporated
herein by reference to the section captioned "The Offer - Solicitation of
Tenders" in the Prospectus.
ITEM 7. FINANCIAL INFORMATION.
(a) See the Financial Statements in the Prospectus which
are hereby incorporated herein by reference. See also the information in the
Prospectus under the headings "Prospectus Summary - Summary Financial Data" and
"Market Prices" incorporated herein by reference.
(b) Not applicable.
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ITEM 8. ADDITIONAL INFORMATION.
(a) Neither the CinemaStar nor, to CinemaStar's knowledge,
any of its executive officers, directors or affiliates is a party to any
present or proposed contract, arrangement, understanding or relationship
between then and the CinemaStar that is material to a decision by holders of
Redeemable Warrants to accept or reject the tender offer.
Other than the information contained in the Preliminary
Prospectus, there is no additional material information which is necessary to
make the above requirement statements, in light of the circumstances under
which they were made, not materially misleading.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)-1 The Prospectus, dated September 24, 1996 to
Registration Statement on Form SB-2 (File No. 333-4422)(1).
(a)-2 Letter to Holders of Redeemable Warrants.*
(a)-3 Letters to Brokers, et al.*
(a)-4 Letter to Clients.*
(a)-5 Notice of Guaranteed Delivery.*
(a)-6 Class B Warrant Agreement (with form of certificate
attached).*
(a)-7 Warrant Solicitation Agreement with Form of Warrant.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) See Exhibit (a)-1.
_______________________________
* Filed herewith.
(1) Incorporated by reference to the Rule 424(b)(3) Prospectus dated September
24, 1996 to Registration Statement 333-4422 on Form SB-2.
(2) Incorporated by reference to Exhibit 4.6 to Amendment No. 3 to Registration
Statement No. 333-422 on Form SB-2.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: September 24, 1996 CINEMASTAR LUXURY THEATERS, INC.
By: /s/ John Ellison, Jr.
-------------------------------
John Ellison, Jr.
President
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
(a)-1 The Prospectus, dated September 24, 1996, filed
under Rule 424(b)(3) to Registration Statement on
Form SB-2 (File No. 333-4422)
(a)-2 Letter to Holders of Redeemable Warrants
(a)-3 Letter to Brokers, et al.
(a)-4 Letter to Clients
(a)-5 Notice of Guaranteed Delivery
(a)-7 Warrant Solicitation Agreement with Form of Warrant
</TABLE>
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Exhibit (a)-2
[CINEMASTAR LUXURY THEATERS, INC. Stationary]
September 24, 1996
Dear Redeemable Warrantholder:
As part of a plan to raise additional capital, CinemaStar
Luxury Theaters, Inc. (the "Company") has temporarily reduced the price at which
each of its outstanding Redeemable Warrants (the "Warrants") may be exercised
and to also offer Class B Redeemable Warrants upon exercise along with the
Common Stock already provided for. From the date hereof until October 25,
1996, unless the offer (the "Offer") is extended, the exercise price of each of
the outstanding Redeemable Warrants has been reduced to $3.50 per Warrant, and
upon the tender and exercise of each Redeemable Warrant, the holder will receive
one share of Common Stock and one Class B Warrant. The Offer is not conditioned
upon the tender and exercise of a minimum number of Redeemable Warrants. Upon
the conclusion of the Offer, the exercise price of each Redeemable Warrant will
revert to $6.00 until February 6, 2000, the expiration date of the Redeemable
Warrants, with each Warrant exercisable for only one share of Common Stock and
no Class B Redeemable Warrants.
I urge you to consider carefully this opportunity to exercise
your Redeemable Warrants pursuant to the Offer. The Offer affords Redeemable
Warrantholders the opportunity to make an equity investment in the Company on
terms more attractive than those otherwise available.
The accompanying Prospectus provides important information
about the Company and the detailed terms of the Offer. Please read and consider
it carefully. Any Redeemable Warrantholders electing to exercise Redeemable
Warrants pursuant to the Offer should either (i) fill out the subscription form
on the back of the Redeemable Warrant certificate and forward it along with
cash, a certified or official bank check made payable to "Continental Stock
Transfer & Trust Company, Agent for CinemaStar Luxury Theaters, Inc." or a wire
transfer for the benefit of the Company in the amount of the aggregate exercise
price and any other required documents to Continental Stock Transfer & Trust
Company, or (ii) request a broker or bank to
<PAGE> 2
effect the transaction, all as more fully described in the accompanying
Prospectus.
Redeemable Warrantholders not exercising their Redeemable
Warrants may realize a portion of the economic benefit to them of the Offer by
selling their Redeemable Warrants in the market. You are urged to obtain current
market quotations for the Redeemable Warrants and Common Stock or contact your
broker.
Questions and requests for assistance or for additional copies
of the Prospectus should be directed to The Boston Group, L.P., the Company's
soliciting agent, at (310) 843-9007.
Again, I urge you to give your careful consideration to the
Offer described in the accompanying Prospectus.
Sincerely yours,
John Ellison, Jr.
President
2
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Exhibit (a)-3
CINEMASTAR LUXURY THEATERS, INC.
NOTICE OF OFFER TO HOLDERS
OF REDEEMABLE WARRANT
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
OCTOBER 25, 1996, UNLESS EXTENDED.
To Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees:
We are asking you, as the record holder of Redeemable Warrants
of CinemaStar Luxury Theaters, Inc. (the "Company"), to bring to the attention
of clients for whom you hold Redeemable Warrants the Company's offer (the
"Offer") to reduce temporarily the exercise price for the Company's outstanding
Redeemable Warrants and to further modify the Redeemable Warrants to provide
that on the exercise of a Redeemable Warrant, the Company will issue one share
of Common Stock, plus one Class B Redeemable Warrant. The Offer, commenced on
September 24, 1996, and will end on October 25, 1996, unless extended (the
"Expiration Date"). After the Offer, each Redeemable Warrant will revert back to
its original terms which entitles the holder until February 6, 2006, to purchase
one share of Common Stock at a price of $6.00.
Each Class B Redeemable Warrant is exercisable until September 15,
2001 to purchase one share of Common Stock at $6.50.
For your information, we are enclosing herewith the following
materials:
1. Prospectus dated September 24, 1996.
2. Letter to Redeemable Warrantholders of the Company from
John Ellison, Jr., President of the Company, dated September 24, 1966.
3. Notice of Guaranteed Delivery to be used to accept the
Offer if the Redeemable Warrants and all other required documents are not
immediately available or cannot be delivered to the Depository Trust Company,
the Midwest Securities Trust Company or the Philadelphia Depository Trust
Company by the Expiration Date or if the procedure for book-entry transfer
cannot be completed prior to the Expiration Date.
4. A printed form of letter which may be sent to customers for
whose account you hold Redeemable Warrants registered in your name or in the
name of your nominee, with
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space provided for obtaining such customers' instructions with regard to the
Offer.
5. Envelopes addressed to Continental Stock Transfer & Trust
Company, the Depository, to be used by you to return the tendered and executed
Redeemable Warrants.
WE URGE YOU TO CONTACT YOUR CUSTOMERS AS PROMPTLY AS POSSIBLE.
PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M. NEW YORK
CITY TIME, ON OCTOBER 25, 1996, UNLESS EXTENDED.
In all cases, the delivery of Common Stock and Class B
Redeemable Warrants for Redeemable Warrants accepted for tender and exercise
pursuant to the Offer will be made only after timely receipt by the Depository
of certificates evidencing such Redeemable Warrants (or a confirmation of a
book-entry transfer of such Redeemable Warrants into the book entry account at
one of the Book-Entry Transfer Facilities (as defined in the Prospectus)) with
the subscription form on the back of such Redeemable Warrant certificates
properly completed and duly executed and any other required documents.
Payment of the Redeemable Warrant exercise price may be made,
at the Redeemable Warrantholder's option, in the form of cash, a certified or
official bank check made payable to "Continental Stock Transfer & Trust Company,
Agent for CinemaStar Luxury Theaters, Inc." or by wire transfer to Continental
Stock Transfer & Trust Company for the benefit of CinemaStar Luxury Theaters,
Inc. Redeemable Warrantholders who wish to exercise their Redeemable Warrants
should complete the subscription form on the back of the Redeemable Warrant
certificates to be Depository and deliver the same by hand or by mail to:
Continental Stock Transfer & Trust Company, Two Broadway, New York, New York
10004, Attn: Corporate Trust Department. While the method of delivery of
Redeemable Warrants (which may be by hand or by mail) is at the option and risk
of the Redeemable Warrantholders, it is suggested that delivery, if made by
mail, be registered or certified and properly insured.
If Redeemable Warrantholders wish to exercise their Redeemable
Warrants, but it is impracticable for them to forward their Redeemable Warrants
and all other required documents prior to the Expiration Date, an exercise may
be effected by following the guaranteed delivery procedure described in the
Prospectus under the caption "The Offer--How to Tender and Exercise".
The Company will promptly reimburse brokers and other nominees
for the reasonable expenses incurred by them in forwarding materials relating to
the Offer to the beneficial holders of the Redeemable Warrants. The Company will
pay such brokerage commissions or fees and all applicable transfer taxes with
respect to the exercise of Redeemable Warrants pursuant to the Offer which would
ordinarily be associated with the regular
2
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exercise of such Redeemable Warrants, except in the case of deliveries of Common
Stock or Class B Warrants or certificates for unexercised Redeemable Warrants
that are to be made to any person other than a registered holder of Redeemable
Warrants.
Questions or requests for additional copies of the enclosed
materials should be directed to The Boston Group, L.P., Telephone No.
1-(310) 843-9007.
CINEMASTAR LUXURY SUITES, INC.
NOTHING CONTAINED HEREIN OR IN THE DOCUMENTS ENCLOSED HEREWITH
SHALL CONSTITUTE YOUR OR ANY OTHER PERSON THE AGENT FOR THE COMPANY, THE
DEPOSITORY OR THE SOLICITING AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS SPECIFICALLY SET FORTH THEREIN.
3
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Exhibit (a)-4
CINEMASTAR LUXURY THEATERS, INC.
NOTICE OF OFFER TO HOLDERS OF REDEEMABLE WARRANTS
THE OFFER AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON OCTOBER 25, 1996, UNLESS EXTENDED
September 24, 1996
To Our Clients:
Enclosed for your consideration is the Prospectus, dated
September 24, 1996, of CinemaStar Luxury Theaters, Inc. (the "Company"),
relating to the Offer described therein, together with a Letter to Redeemable
Warrantholders from the Company. This material is being forwarded to you as the
beneficial owner of Redeemable Warrants of the Company carried by us in your
account but not registered in your name. A tender and exercise of such
Redeemable Warrants may be made only by us as the holder of record and pursuant
to your instructions. The Letter to Redeemable Warrantholders is furnished to
you for your information only and cannot be used by you to tender and exercise
Redeemable Warrants held by us for your account.
Accordingly, we request instructions as to whether you wish us
to tender and exercise any or all of the Redeemable Warrants held by us for your
account, pursuant to the terms and conditions set forth in the Prospectus.
Your instructions to us should be forwarded as promptly as
possible in order to permit us to tender and exercise on your behalf in
accordance with the provisions of the Offer, which terminates at 5:00 p.m. New
York City time, on October 25, 1996, unless extended (the "Expiration Date").
The Offer is not conditioned upon the exercise of a minimum number of Redeemable
Warrants.
All Redeemable Warrants properly tendered and exercised and
not withdrawn prior to the Expiration Date will be deemed to have been accepted
by the Company when, as and if the Company has given oral or written notice
thereof to the Depository.
If you wish to have us tender and exercise any or all of the
Redeemable Warrants held by us for your account, will you kindly so instruct us
by completing, executing, detaching and returning to us the instruction form set
forth below. An envelope in which to return your instructions to us is enclosed.
If you authorize the exercise of your Redeemable Warrants, all such Redeemable
Warrants will be exercised unless otherwise specified in your instructions. Your
instructions should be
1
<PAGE> 2
forwarded to us in ample time to permit us to submit a tender and exercise of
Redeemable Warrants on your behalf prior to the Expiration Date. The Company
will pay such brokerage commissions or fees with respect to the exercise of
Redeemable Warrants pursuant to the Offer which would ordinarily be associated
with the regular exercise of such Redeemable Warrants.
The Offer is made solely by the Prospectus and is being made
to all Redeemable Warrantholders. The Offer can only be accepted by residents of
states set forth in the Prospectus under "The Offer - Blue Sky Law". If the
Company becomes aware of beneficial owners in other states, the Company will
seek to clear the Offer in such states. If, after such good faith effort, the
Company cannot comply with such state statute, the Offer will not be made to
(nor will exercises of Redeemable Warrants be accepted from or on behalf of) the
holders of Redeemable Warrants in such state. In any state where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Company by one or
more registered brokers or dealers licensed under the laws of such state.
2
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INSTRUCTIONS WITH RESPECT TO THE
CINEMASTAR LUXURY THEATERS, INC.
The undersigned acknowledge(s) receipt of your letter
enclosing the Prospectus, dated September 24, 1996, of CinemaStar Luxury
Theaters, Inc., such Prospectus and the other documents referred to in your
letter.
This will instruct you to tender and exercise the number of
Redeemable Warrants of CinemaStar Luxury Theaters, Inc. indicated below held by
you for the account of the undersigned, pursuant to the terms and conditions set
forth in the Prospectus.
The undersigned represents that the exercise of the within
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc. and shall be entitled to receive compensation as set forth in the
Prospectus.
Number of Redeemable Warrants SIGN HERE
to be tendered and exercised:
- ----------------------------- ------------------------------
Dated: , 1996
---------------- ------------------------------
(Signature(s))
------------------------------
(Please type or print name(s)
here)
------------------------------
(Please type or print address)
------------------------------
(Please type or print Area
Code and Telephone Number)
3
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Exhibit (a)-5
NOTICE OF GUARANTEED DELIVERY
for
Tendered and Exercised Redeemable Warrants
of
CINEMASTAR LUXURY THEATERS, INC.
As set forth in the Prospectus dated September 24, 1996 (the
"Prospectus") under "The Offer--How to Tender and Exercise" this form or one
substantially equivalent hereto must be used to tender and exercise Redeemable
Warrants of CinemaStar Luxury Theaters, Inc., a California corporation, pursuant
to the Offer (as defined in the Prospectus) if the certificate(s) for the
Redeemable Warrants to be exercised are not immediately available, or the
procedure for book-entry transfer cannot be completed on a timely basis or a
Redeemable Warrantholder cannot deliver the certificate(s) and all other
required documents to the Depository at the address listed below prior to the
Expiration Date (as defined in the Prospectus). This form may be delivered by
hand or sent by facsimile transmission or mail to the Depository and must be
received by the Depository on or prior to the Expiration Date.
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(Depositary)
By Mail: By Hand:
Two Broadway Two Broadway
New York, New York 10004 19th Floor
Attn: Corporate Trust Department New York, New York 10004
Telephone:
(212) 509-4000 ext. 227
Facsimile:
(212) 509-5150
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
1
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Gentlemen:
The undersigned hereby tenders and exercises the number of
Redeemable Warrants of CinemaStar Luxury Theaters, Inc., a California
corporation, set forth below upon the terms and subject to the conditions set
forth in the Prospectus dated September 24, 1996, receipt of which is hereby
acknowledged, together with cash or a certified or official bank check made
payable to "Continental Stock Transfer & Trust Company, Agent for CinemaStar
Luxury Theaters, Inc." or a wire transfer to the Depository for the benefit of
CinemaStar Luxury Theaters, Inc. in the amount of the aggregate exercise price
of the Redeemable Warrants tendered and exercised, pursuant to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The
Offer--How to Tender and Exercise."
Number of Redeemable Warrants Name(s) of Record Holder(s):
to be Tendered and Exercised:
- ----------------------------- ------------------------------
------------------------------
Certificate Nos. (if available) Please Print Address(es) Here:
- ----------------------------- ------------------------------
- ----------------------------- ------------------------------
------------------------------
Check ONE box if Redeemable
Warrants will be exercised
by book-entry transfer: Area Code and Telephone Number:
/ / The Depository Trust
Company
------------------------------
/ / Midwest Securities Trust
Company
/ / Philadelphia Depository
Trust Company Signature(s)
------------------
Account Number Dated: , 1996
-------------- ------------------
GUARANTEE
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The undersigned, a member firm of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States, guarantees that (a) the above named
person(s) owns the Redeemable Warrants exercised hereby and (b) the undersigned
will deliver to the Depository the certificates representing the Redeemable
Warrants exercised hereby in proper form for tender and exercise with required
signature guarantees (or written confirmation of book-entry transfer of such
Redeemable Warrants into the Depository's account at The Depository Trust
Company, the Midwest Securities Trust Company or the Philadelphia Depository
Trust Company), together, in each case, with cash or a certified or official
bank check made payable to CinemaStar Luxury Theaters, Inc. or a wire transfer
to the Depository for the benefit of CinemaStar Luxury Theaters, Inc. in the
amount of the aggregate exercise price of the Redeemable Warrants exercised, and
any other required documents, all within three New York Stock Exchange trading
days after the Expiration Date.
- -------------------------------- ------------------------------
(Address) (Name of Firm)
- -------------------------------- ------------------------------
(Area Code and Telephone Number) (Authorized Signature)
Dated: , 1996
---------------
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EXHIBIT (a)-7
CINEMASTAR LUXURY THEATERS, INC.
431 College Boulevard
Oceanside, CA 92057
WARRANT SOLICITATION AGREEMENT
AGREEMENT dated this 24th day of September 1996, by and among the
Boston Group, L.P. (the "Soliciting Agent") and CinemaStar Luxury Theaters, Inc.
("CinemaStar").
WITNESSETH:
WHEREAS, CinemaStar has offered to the holders of its warrants to
purchase one share of Common Stock that expire on February 6, 2000 (the
"Redeemable Warrants") to lower the exercise price from $6.00 to $4.00 for each
Redeemable Warrant and to issue upon the exercise of each Redeemable Warrant
one share of Common Stock (no par value) and one Class B Redeemable Warrant
which enables the holder thereof to purchase one share of Common Stock at an
exercise price of $7.50 per Class B Warrant ("the Offer").
WHEREAS, CinemaStar has filed, with the Securities and Exchange
Commission, a Prospectus dated September 16, 1996 as part of a Registration
Statement on Form SB-2 (the "Prospectus") relating to the Offer and;
WHEREAS, CinemaStar desires to engage the Soliciting Agent to assist in
the solicitation of the exercise of the Redeemable Warrants and the Soliciting
Agent is willing to be so engaged pursuant to the terms stated herein.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
1. Engagement. CinemaStar hereby engages and appoints the Soliciting
Agent to serve as its exclusive Solicitation Agent for CinemaStar in connection
with the Offer.
2. Solicitation. The Soliciting Agent is hereby authorized to solicit
holders of the Redeemable Warrants pursuant to the terms hereof and of the
enclosed Prospectus or any revisions thereof, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the applicable
rules and regulations of the Securities and Exchange Commission thereunder, the
Rules of Fair Practice of the National Association of Securities Dealer(s),
Inc., and the applicable state securities laws and regulations.
<PAGE> 2
3. Solicitation Material. Copies of the Prospectus relating to
the Offer have been furnished to the Soliciting Agent with this Agreement and
the Soliciting Agent agrees to deliver a copy of the then effective Prospectus
to each Redeemable Warrant holder. The Soliciting Agent is authorized to use
only such documents and other Offer literature prepared by CinemaStar and the
Soliciting Agent is not authorized to make use of any Prospectus or to make use
of soliciting literature not so prepared or furnished, or to make any
representations or furnish any information other than that contained in the
Prospectus or in such sales literature. The Soliciting Agent will be supplied
without charge a reasonable number of Prospectuses and other soliciting
literature as may, from time to time, be prepared. The Soliciting Agent agrees
not to deliver any soliciting literature to any person unless accompanied or
proceeded by the then effective Prospectus.
4. Offer Acceptance Procedures. Executed and exercised Redeemable
Warrants together with cash or a certified or official bank check made payable
to CinemaStar Luxury Theaters, Inc. in the amount of the aggregate exercise
price should be mailed to Continental Stock Transfer & Trust Company,
("Depository"). If Redeemable Warrants and checks are received by the
Soliciting Agent, the Soliciting Agent agrees to deliver such Redeemable
Warrants, and checks to the Depositary immediately upon its receipt. Upon
receipt of the proper consideration, the Redeemable Warrant properly completed
and executed by the record holders, and after acceptance by CinemaStar as set
forth in the Offer, the Depository will deliver one share of Common Stock and
one Class B Warrant.
5. Compensation.
A. Fee. Subject to the valid exercise by the holder of the
Redeemable Warrants, the Soliciting Agent is entitled to receive from
CinemaStar a fee equal to five percent (5%) of the exercise price paid upon
each tender and exercise of the Redeemable Warrants pursuant to the Offer. In
addition, CinemaStar agrees to pay the Soliciting Agent a fee equal to four
percent (4%) of the proceeds upon exercise of each Class B Warrant.
B. Warrants. In addition to the above described fee,
CinemaStar shall issue to Soliciting Agent warrants ("Compensation Warrants")
equal in number to ten (10) percent of the aggregate number of Redeemable
Warrants actually redeemed under the Offer. Each Compensation Warrant shall
have an exercise price equal to the fair market value of one share of
CinemaStar's Common Stock on the date the Offer expires. The Compensation
Warrants shall not be sold, transferred, assigned, pledged or hypothecated by
any person, except by operation of law or by reason of reorganization of
CinemaStar, for a period of one year following the effective date of the Offer.
The form of the Compensation Warrant shall be substantially identical to the
form of Warrant attached hereto as Exhibit "A".
6. Expenses. Whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, CinemaStar agrees to
pay all costs, fees and expenses, incurred in connection with the performance
of its obligations hereunder and in connection with the transactions
contemplated hereby, including (i) all filing fees, attorneys' fees and
expenses incurred by CinemaStar or the Soliciting Agent in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) under the Blue Sky laws, (ii) the filing fee of the National
Association of Securities Dealers, Inc., (iii) all other fees, costs and
expenses referred to in Item 25 of the Registration Statement, and (iv) shall
reimburse the Soliciting Agent for any and all of its reasonable out-of-pocket
expenses, including fees and disbursements of its counsel not to exceed
$25,000, incurred by the Soliciting Agent in connection with the Soliciting
Agent's performance of this Agreement.
7. Inspection of Records. During the period of the Offer and for
thirty (30) days thereafter, but in no event after the termination of this
Agreement, the Soliciting Agent may, at any time during business hours, examine
the records of CinemaStar and the Depository which relates to the Offer.
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<PAGE> 3
8. Termination. The term of this Agreement shall be the longer of
(i) five (5) years from and after the date first above written or (ii) one (1)
year after expiration of the last to expire of the Class B Warrants. The
obligations of CinemaStar provided for in Section 5 and 6 above and Section 9
below shall survive the termination of expiration of the term of this
Agreement.
9. Indemnification. CinemaStar agrees to indemnify and hold
harmless the Soliciting Agent, the directors, officers, employees and agents of
the Soliciting Agent and each person who controls the Soliciting Agent within
the meaning of Section 15 of the Securities Act of 1933, as amended (the "Act")
or Section 20 of the Exchange Act of 1934, as amended (the "Exchange Act")
against any and all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject under the Act, the Exchange
Act, or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or action in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement as
originally filed, or in any amendment thereof, or in any Preliminary Prospectus
or the Prospectus, or any amendment thereof, or supplement thereto, or any of
the soliciting literature provided by CinemaStar, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action.
10. Notices. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be deemed sufficiently
given if sent by first-class mail, postage prepaid, addressed as follows: if to
CinemaStar, at 431 College Boulevard, Oceanside, CA 92057, Attention: John
Ellison, President, with copies to Ron Givner, Jeffer, Mangels, Butler &
Marmaro LLP; if to the Soliciting Agent, at 1999 Avenue of the Stars, Suite
2500, Los Angeles, CA 90067, Attention: Robert DiMinico, Chairman, with copies
to Barry D. Falk, Jeffers, Wilson & Shaff, LLP.
11. Supplements and Amendments. CinemaStar and the Soliciting
Agent may from time to time supplement or amend this Agreement in writing
without the approval of any holders of Redeemable Warrants in order to cure any
ambiguity or to correct or supplement any provisions contained herein or to
make any other provisions in regard to matters or questions arising hereunder
which CenemaStar and the Soliciting Agent may deem necessary or desirable and
which do not adversely affect the interests of the holders of Redeemable
Warrants.
12. Assignments. This Agreement may not be assigned by any party
without the express written approval of all other parties, except that the
Soliciting Agent may assign this Agreement to its successors.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of New York.
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<PAGE> 4
14. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any person or corporation other than CinemaStar and the
Soliciting Agent any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of
CinemaStar and the Soliciting Agent.
15. Descriptive Headings. The descriptive headings of the sections
of this Agreement are inserted for convenience only and shall not control or
affect the meanings or construction of any of the provisions hereof.
16. Enforceability. If any of the provisions of this Agreement are
held to be void or unenforceable, all of the other provisions shall nonetheless
continue in full force and effect.
17. Waiver. The waiver by any of the parties hereto of a breach or
alleged breach of the terms of this Agreement by the other party shall not
constitute a waiver of any other breach or alleged breach.
18. Entire Agreement. This Agreement supersedes all previous
arrangements and agreements whether written or oral, and comprises the entire
agreement, between CinemaStar and the Soliciting Agent in respect of the
subject matter hereof.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CINEMASTAR LUXURY THEATRES, INC.
/s/ John Ellison, Jr.
---------------------------------------
John Ellison, Jr., President
AGREED and ACCEPTED:
We agree and accept all the terms and conditions stated in the above
Agreement. We hereby acknowledge receipt of copies of the Prospectus referred
to above.
Dated: September 24, 1996
THE BOSTON GROUP, L.P.
"Soliciting Agent"
By: /s/ Robert DiMinico
------------------------------------
Robert DiMinico, Chairman
Address: 1999 Avenue of the Stars,
Suite 2500, Los Angeles, California
90067
<PAGE> 6
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993. SUCH WARRANTS AND SHARES MAY NOT
BE SOLD, OFFERED FOR SALE, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
CINEMASTAR LUXURY THEATERS, INC.
WARRANT
DATED: __________ __,1996
_________________________
Holder: The Boston Group. L.P.
Number of Warrants: ____________
_________________________
THIS CERTIFIES THAT Holder is the owner of the number of Warrants set
forth above of CinemaStar Luxury Theaters, Inc., a California corporation
(hereinafter called the "Company"). Each Warrant entitles the registered
holder to purchase for $______ (as adjusted, the "Exercise Price") one share of
Common Stock of the Company ("Common Stock").
1. Right To Exercise Warrants. The rights represented by this
Warrant may be exercised at the Holder's option at any time commencing twelve
(12) months from the date of this Warrant (the "Exercise Date"), and
terminating at 2:00 p.m., Los Angeles time, forty-eight (48) months after the
Exercise Date.
2. Exercise of Warrants. Subject to the other provisions of this
Warrant, the rights represented by this Warrant may be exercised by (i)
surrender of this Warrant (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to
Holder at the address of Holder appearing on the books of the Company); and
(ii) payment to the Company of the exercise price for the number of shares
specified in the above-mentioned purchase form together with applicable stock
transfer taxes, if any. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date the Warrant is
surrendered and payment is made in accordance with the foregoing provisions of
this Section 3, and the person or persons in whose name or names the
certificates for shares of Common Stock shall be issuable
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<PAGE> 7
upon such exercise shall become the holder or holders of record of such Common
Stock at that time and date. The certificates for the Common Stock so
purchased shall be delivered to Holder within a reasonable time, not exceeding
ten (10) business days, after the rights represented by this Warrant shall have
been so exercised, and shall bear a legend substantially similar to the
following restrictive legend:
"This security has not been registered under the Securities Act of
1933 and may not be sold or offered for sale unless registered under
said Act and any applicable state securities laws or unless the
Company has received an opinion of counsel satisfactory to the Company
that such registration is not required."
3. Assignment. Subsequent to the twelve (12) month holding period,
this Warrant may be transferred, sold, assigned or hypothecated, only pursuant
to a valid and effective registration statement or if the Company has received
from counsel to the Company a written opinion, in a form reasonably acceptable
to the Company, to the effect that registration of the Warrant or the Common
Stock underlying the Warrant is not necessary in connection with such transfer,
sale, assignment of hypothecation. Any such assignment shall be effected by
Holder (i) executing the form of assignment at the end hereof; (ii)
surrendering the Warrant for cancellation to the Company, accompanied by the
opinion of counsel to the Company referred to above; and (ii) delivery to the
Company of a statement by the transferee Holder (in a form acceptable to the
Company and its counsel) that such Warrant is being acquired by such Holder for
investment and not with a view to its distribution or resale; whereupon the
Company shall issue, in the name or names specified by Holder (including
Holder) new Warrants representing in the aggregate rights to purchase the same
number of Shares as are purchasable under the Warrant surrendered. The term
"Holder" shall be deemed to include any person to whom this Warrant is
transferred in accordance with the terms herein.
4. Registration Rights. Holder will have the following registration
rights with respect to the Warrant and shares of Common Stock underlying the
Warrant (the "Warrant Shares"):
(a) Demand Registration. At any time commencing on twelve (12)
months from the date of issuance of the Warrant, and expiring four (4) years
thereafter, Holder shall have the right (which right is in addition to the
registration rights under Section 4(b) hereof), exercisable by written notice
to the Company, to have the Company prepare, file and use its best efforts to
have declared effective by the Securities and Exchange Commission (the
"Commission"), on one occasion, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Holder, if any, in order to comply
with the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), so as to permit a public offering and sale by Holder of the Warrants and
Warrant Shares owned and held of record by the Holder at the time of exercise
of such registration rights, for a period of twenty- four (24) consecutive
months.
(b) Piggy-Back Registration. If at any time the Company
proposes to register any of
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<PAGE> 8
its securities under the Securities Act (other than in connection with a
merger, acquisition, exchange offer, redemption or pursuant to Form S- 8 or
successor form) it will give written notice by registered mail, at least twenty
(20) days prior to the filing of each such registration statement to the Holder
of its intention to do so. Upon the written request of Holder given within ten
(10) days after receipt of any such notice of Holder's desire to include any
Warrants or Warrant Shares owned by Holder in such proposed registration
statement, the Company shall afford Holder the opportunity to have such
Warrants or Warrant Shares registered under such registration; provided,
however, that Holder shall not have the right to include any Warrants or
Warrant Shares in the event that the registration relates to solely to the
registration of (or updating of an existing registration relating to )
Redeemable Warrants (as defined in the Warrant Solicitation Agreement dated
_______________, 1996) and underlying shares of Common Stock registered in
connection with the Company's initial public offering. The "piggy-back"
registration rights described in this Section 4(b) shall terminate on the
earlier to occur of (i) five (5) years from the date hereof or (ii) at such
time as the Warrants or Warrant Shares, as the case may be, are saleable in one
or more transactions pursuant to Rule 144(k) of the Securities Act.
Notwithstanding anything to the contrary contained in the
provisions of the Section 4(b) the Company shall have the right at any time
after it shall have given written notice pursuant to the Section 4(b)
(irrespective of whether a written request for inclusion of any such securities
shall have been made) to elect not to file any such proposed registration
statement, or to withdraw the same after the filing but prior to the effective
date thereof.
(c) Limitation on Registration Rights. Notwithstanding anything
to the contrary contained in this Warrant, (i) the Company shall not be
obligated to effect a registration pursuant to Section 4 of this Agreement
during the period starting with the date ninety (90) days prior to the
Company's estimated date of filing of, and ending on a date ninety (90) days
following the effective date of, a registration statement pertaining to an
underwritten public offering of the Company's securities, provided that the
Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective and that the Company's estimate
of the date of filing such registration statement is made in good faith; and
(ii) if the Company shall furnish Holder a certificate signed by the President
of the Company stating that in the good faith judgment of the Board of
Directors it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, then the Company's
obligations to use its best efforts to file a registration statement on demand
by the Holder shall be deferred for a period not to exceed ninety (90) days;
provided, however, that the Company shall not obtain such a deferral more than
once in any twelve (12) month period.
5. Common Stock. The Company covenants and agrees that all shares of
Common Stock which may be issued upon exercises hereof will, upon issuance, be
duly and validly issued, fully paid and non-assessable and no personal
liability will attach to the holder thereof. The Company further covenants and
agrees that, during the periods within which this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock for issuance upon exercise of this Warrant and all other
Warrants.
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<PAGE> 9
6. No Stockholder Rights. This Warrant shall not entitle Holder to
any voting rights or other rights as a stockholder of the Company.
7. Adjustment of Rights. In the event that the outstanding shares of
Common Stock of the Company are at any time increased or decreased or changed
into or exchanged for a different number or kind of share or other security of
the Company or of another corporation through reorganization, merger,
consolidation, liquidation, recapitalization, stock split, combination of
shares or stock dividends payable with respect to such Common Stock,
appropriate adjustments in the Exercise Price and the number and kind of such
securities than subject to this Warrant shall be made effective as of the date
of such occurrence so that the position of Holder upon exercise will be the
same as it would have been had he owned immediately prior to the occurrence of
such events the Common Stock subject to this Warrant. Such adjustment shall be
made successively whenever any event listed above shall occur and the Company
will notify Holder of the Warrant of each such adjustment. Any fraction of a
share resulting from any adjustment shall be eliminated and the price per share
of the remaining shares subject to this Warrant adjusted accordingly.
8. Cashless Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the principal office of the
Company together with the properly endorsed purchase form and notice of such
election in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following formula:
X = Y (A - B)
---------
A
Where X = the number of shares of Common Stock to be issued to
the Holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the Warrant
is being exercised, the portion of the Warrant being
canceled (at the date of such calculation)
A = the fair market value of one share of the Common Stock
(at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
For the purposes of the above calculation, fair market value of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, that in the event that at the time of any such
exercise the Common Stock (i) is listed on any established stock
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<PAGE> 10
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the fair market value of a share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in common stock) on the last
market trading day prior to the day of determination, as reporting in the Wall
Street Journal or such other source as the Board of Directors of the Company
deems reliable or (ii) is not listed on any established stock exchange or a
national market system but is quoted on the NASDAQ System (but not on the
National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the fair market value of
a share of common stock shall be the mean between the bid and asked priced for
the common stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such source as the
Board of Directors of the Company deems reliable.
9. Notices. Unless applicable law requires a different method of
giving notice, any and all notices, demands or other communications required or
desired to be given hereunder by any party shall be in writing. Assuming that
the contents of the notice meet the requirements of the specific Section of
this Warrant which mandates the giving of that notice, a notice shall be
validly given or made to another party if served-either personally or is
postage prepaid, or if transmitted by telegraph, telecopy or other electronic
written transmission device or if sent by overnight courier service, and if
addressed to the applicable party as set forth below. If such notice, demand
or other communication is served personally, service shall be conclusively
deemed made at the time of such personal service. If such notice, demand or
other communication is given by mail, service shall be conclusively deemed
given upon the earlier of receipt or seventy-two (72) hours after the deposit
thereof in the United States mail, postage pre-paid. If such notice, demand or
other communication is given by overnight courier, or electronic transmission,
service shall be conclusively made at the time of confirmation of delivery.
The addresses for Holder and the Company are as follows:
If to Holder:
The Boston Group, L.P.
1999 Avenue of the Stars
Los Angeles, California 90067
Telecopier No.: 310-226-2796
If to the Company:
CinemaStar Luxury Theaters, Inc.
431 College Boulevard
Oceanside, California 92057
Telecopier No.: (619) 630-8593
Attention: John Ellison, Jr.
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<PAGE> 11
Any party hereto may change its or his or its address for the purpose of
receiving notices, demands and other communications as herein provided, by a
written notice given in the aforesaid manner to the other parties hereto.
10. Governing Law. This Warrant shall be governed by an construed in
accordance with the internal laws of California.
IN WITNESS WHEREOF, the Company has cause this Warrant to be signed by
its duly authorized officers, and to be dated as of the date set forth above.
CINEMASTAR LUXURY THEATERS, INC.
By:
-------------------------------
Name: John Ellison, Jr.
President
ACKNOWLEDGED, AGREED AND ACCEPTED BY HOLDER:
THE BOSTON GROUP, L.P.
By:
-------------------------------
Name: Robert DiMinico
Chairman
6
