<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 21, 1996
CINEMASTAR LUXURY THEATERS, INC.
(Exact name of registrant as specified in its charter)
California 0-25252 33-0451054
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
431 College Boulevard
Oceanside, California 92057-5435
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (619) 630-2011
<PAGE> 2
Item 5. Other Events
On May 21, 1996, Registrant issued a Convertible Debenture in
the principal amount of $500,000 (the "Debenture") to La Salle Investment, Ltd.,
an Irish corporation (the "Purchaser"), in a transaction pursuant to Regulation
S as promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended. The Debenture is convertible into shares of Common
Stock of the Registrant at a conversion price at $4.25 per share.
The Purchaser has agreed that from May 21, 1996 until after
the fortieth (40th) day after such date (the "Restrictive Period"), any offer,
sale or transfer of the Debenture or the shares of common stock issuable upon
conversion of the Debenture (including any interests therein), shall be subject
to various restrictions in accordance with Regulation S.
The Debenture bears interest at the rate of four percent (4%)
per annum, payable quarterly. If not sooner converted, the principal amount of
the Debenture is due and payable on May 21, 1999.
In connection with the placement of the Debenture, Registrant
paid placement agent commissions in the amount of $61,750 to a placement agent.
For further information see Exhibits 4.1 and 4.2 attached
hereto.
On May 29, 1996, Registrant received notice from Purchaser of
its intention to convert into 127,152 shares of common stock of Registrant a
Convertible Debenture in the principal amount of $500,000, plus accrued
interest, issued to Purchaser on April 11, 1996.
2
<PAGE> 3
Item 7. Financial Statements and Exhibits
(c) Exhibits.
4.1 Debenture, dated May 21, 1996.
4.2 Offshore Securities Subscription Agreement.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: June 6, 1996 CINEMASTAR LUXURY THEATERS, INC.
By: /s/ RANDAL SIVILLE
---------------------------------------
Randal Siville
Vice President - Finance and Accounting
4
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially Numbered
Number Description Page
<S> <C> <C>
4.1 Debenture, dated
May 21, 1996
4.2 Offshore Securities
Subscription Agreement
</TABLE>
5
<PAGE> 1
EXHIBIT 4.1
THIS CONVERTIBLE DEBENTURE AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"). UNTIL THE FORTY-FIRST (41ST) DAY AFTER THE SALE OF THIS CONVERTIBLE
DEBENTURE PURSUANT TO REGULATION S IS COMPLETED, NO CONVERTIBLE DEBENTURE OR
UNDERLYING SHARES MAY BE OFFERED, SOLD OR TRANSFERRED (INCLUDING ANY INTERESTS
THEREIN) IN THE UNITED STATES OR TO A "U.S. PERSON" (AS DEFINED IN REGULATION S
PROMULGATED UNDER THE ACT) OR FOR THE ACCOUNT AND BENEFIT OF ANY U.S. PERSON,
EXCEPT AS PROVIDED IN SAID REGULATION S. ANY RESALE THEREAFTER MUST BE PURSUANT
TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION.
CINEMASTAR LUXURY THEATERS,INC.
A California Corporation
Dated: May 21, 1996
NO. 2
CinemaStar Luxury Theaters, Inc., a California corporation (the
"Corporation"), is indebted and, for value received, promises to pay to the
order of La Salle Investment Ltd., on May 21, 1999 (the "Due Date") (unless this
Debenture shall have been sooner called for redemption as herein provided), upon
presentation of this Debenture, five hundred thousand dollars ($500,000) (the
"Principal Amount") and to pay interest on the Principal Amount at the rate of
4% per annum as provided herein.
The Corporation covenants, promises and agrees as follows:
1. Interest. Interest which shall accrue on the Principal Amount shall be
payable in four quarterly installments on the first day of each fiscal quarter
beginning on the first day of the fiscal quarter following the fiscal quarter in
which payment of the Principal Amount is made to the Corporation. Interest for
the first quarter shall be pro rata for the number of days of the first fiscal
quarter after payment of the Principal Amount is made to the Corporation. All
accrued and unpaid interest shall be payable on the Due Date. All payments of
principal and interest or principal or interest shall be made at c/o Sagem-JC-
Roder, 14 Cour de Rive, Geneva, Switzerland, or at such other place as may be
designated in writing by the holder hereof.
2. Redemption.
2.1. This Debenture is subject to redemption at the option of the
Corporation in whole or in part prior to the Due Date at any time and from time
to time without penalty or premium. The Corporation may exercise its right to
redeem this Debenture prior to maturity by giving notice (the "Redemption
Notice") thereof to
1
<PAGE> 2
the holder of this Debenture as it appears on the books of the Corporation,
which notice shall specify the terms of redemption (including the place at which
the holder of the Debenture may obtain payment), the principal amount of the
Debenture to be redeemed (the "Redemption Amount") and shall fix a date for
redemption (the "Redemption Date"), which date shall not be less than 30 days
nor more than 60 days after the date of the Redemption Notice.
2.2. On the Redemption Date, the Corporation shall pay all accrued and
unpaid interest on the Debenture up to and including the Redemption Date and
shall pay to the holder hereof a dollar amount equal to the Redemption Amount.
2.3 The foregoing notwithstanding, the Corporation may redeem this
Debenture and repay the principal and accrued interest in lieu of delivery of
common stock of the Borrower pursuant to the holder's Conversion Notice as set
forth below.
3. Conversion.
3.1. The holder of this Debenture shall have the right, at such
holder's option, at any time, to convert all or part of the principal and
accrued interest of this Debenture into such number of fully paid and
nonassessable shares of Common Stock of the Corporation (the "Common Stock") as
shall be provided herein.
3.2. The holder of this Debenture may exercise the conversion right
provided in this Section 3 by giving written notice (the "Conversion Notice") to
the Corporation of the exercise of such right and stating the name or names in
which the stock certificate or stock certificates for the shares of Common Stock
are to be issued and the address to which such certificates shall be delivered.
The Conversion Notice shall be accompanied by the Debenture. The number of
shares of Common Stock that shall be issuable upon conversion of the Debenture
shall equal the outstanding principal and accrued interest divided by $4.25;
provided, however, that no fractional shares have been issued and the number of
shares of Common Stock to be issued rounded up to the next whole share.
3.3. Conversion shall be deemed to have been effected on the date the
Conversion Notice is given (the "Conversion Date"). Within 10 business days
after receipt of the Conversion Notice, the Corporation shall issue and deliver
against a signed receipt therefor or by United States registered mail, return
receipt requested, to the address designated by the holder of this Debenture in
the Conversion Notice, a stock certificate or stock certificates of the
Corporation representing the number of shares of Common Stock to which such
holder is entitled.
3.4 Reservation of Shares. The Corporation shall at all times reserve
and keep available, free from preemptive rights,
2
<PAGE> 3
unissued or treasury shares of Common Stock sufficient to effect the conversion
of this Debenture.
4. Default.
4.1. The entire unpaid and unredeemed balance of the Principal Amount
and all Interest accrued and unpaid on this Debenture shall, at the election of
the holder, be and become immediately due and payable upon the occurrence of any
of the following events (a "Default Event"):
(a) The non-payment by the Corporation when due of principal and
interest or of any other payment as provided in this Debenture.
(b) If the Corporation (i) applies for or consents in writing to
the appointment of, or if there shall be a taking of possession by, a receiver,
trustee or liquidator for the Corporation of all or substantially all of its
property; (ii) admits in writing its inability to pay its debts as they become
due; (iii) makes a general assignment for the benefit of creditors; (iv) files
any petition for relief under the Bankruptcy Code or any similar federal or
state statute; (v) defaults with respect to any evidence of indebtedness or
liability for borrowed money, or any such indebtedness shall not be paid as and
when due and payable; or (vi) has assessed or imposed against it, or if there
shall exist, any general or specific lien for any federal, state or local taxes
or charges against any of its property or assets other than liens for taxes not
yet due or being contested in good faith.
(c) Any failure by the Corporation to issue and deliver shares of
Common Stock as provided herein upon conversion of this Debenture.
Notwithstanding the foregoing, the Corporation shall have thirty days (30) days
from the receipt of a written Notice of Default to cure said Default Event, and
no acceleration of payments hereunder shall be deemed to have occurred until the
thirtieth day after the Corporation's receipt of a written Notice of Default
from the holder of this Debenture. Upon such cure, the terms of this Debenture
shall continue in effect.
4.2. Each right, power or remedy of the holder hereof upon the
occurrence of any Default Event as provided for in this Debenture or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Debenture or now or hereafter existing at law or in equity
or by statute, and the exercise or beginning of the exercise by the holder or
transferee hereof of any one or more of such rights, powers or remedies shall
not preclude the simultaneous or later exercise by the holder hereof of any or
all such other rights, powers or remedies.
3
<PAGE> 4
5. Failure to Act and Waiver. No failure or delay by the holder hereof to
insist upon the strict performance of any term of this Debenture or to exercise
any right, power or remedy consequent upon a Default Event hereunder shall
constitute a waiver of any such term or of any such breach, or preclude the
holder hereof from exercising any such right, power or remedy at any later time
or times. By accepting payment after the due date of any amount payable under
this Debenture, the holder hereof shall not be deemed to waive the right either
to require payment when due of all other amounts payable under this Debenture,
or to declare a Default Event for failure to effect such payment of any such
other amount.
The failure of the holder of this Debenture to give notice of any failure
or breach of the Corporation under this Debenture shall not constitute a waiver
of any right or remedy in respect of such continuing failure or breach or any
subsequent failure or breach.
6. Consent to Jurisdiction. The Corporation hereby agrees and consents that
any action, suit or proceeding arising out of this Debenture may be brought in
any appropriate court in the State of California, including the United States
District Court for the Central District of California or in any other court
having jurisdiction over the subject matter, all at the sole election of the
holder hereof, and by the issuance and execution of this Debenture the
Corporation irrevocably consents to the jurisdiction of each such court.
7. Transfer/Negotiability. This Debenture shall be transferred on the books
of the Corporation only by the registered holder hereof or by his/her attorney
duly authorized in writing or by delivery to the Corporation of a duly executed
Assignment substantially in the form attached hereto as Exhibit A. The foregoing
notwithstanding, the Corporation shall not transfer this Debenture nor any of
the shares of common stock issuable upon conversion in the United States or to a
"U.S. Person" (as defined in Regulation S promulgated under the Act) or for the
account and benefit of any U.S. Person, except as provided in said Regulation S,
until forty-one days from the date of issuance of this Debenture. The
Corporation shall be entitled to treat any holder of record of the Debenture as
the holder in fact thereof and shall not be bound to recognize any equitable or
other claim to or interest in this Debenture in the name of any other person,
whether or not it shall have express or other notice thereof, save as expressly
provided by the Laws of California. Subject to receipt of a duly executed
Assignment, the Debenture shall be assigned by the holder thereof for value, to
a Holder in Due Course as defined by the Uniform Commercial
4
<PAGE> 5
Code. The Borrower hereby makes an unconditional promise to repay the principal
and accrued interest of this Debenture on or before the date due to any such
Holder in Due Course and acknowledges that repayment to a Holder in Due Course
is not subject to any claims or defenses the Borrower may have against the
Lender.
8. Notices. All notices and communications under this Debenture shall be in
writing and shall be either delivered in person or accompanied by a signed
receipt therefor or mailed first-class United States certified mail, return
receipt requested, postage prepaid, and addressed as follows:
if to the Corporation, to:
CinemaStar Luxury Theaters, Inc.
431 College Blvd.
Oceanside, CA 92057-5435
with a copy to:
Joel I. Bennett, Esq.
Jeffer, Mangels, Butler & Marmaro, LLP
2121 Avenue of the Stars, Tenth Floor
Los Angeles, California 90067-5010
and, if to the holder of this Debenture, to the address of such holder as it
appears in the books of the Corporation. Any notice of communication shall be
deemed given and received as of the date of such delivery or three days after
deposit with an overnight courier service or five (5) days after deposit with
the U.S. Postal Service as first class air mail.
9. Governing Law. This Debenture shall be governed by and construed and
enforced in accordance with the laws of the State of California, or, where
applicable, the laws of the United States, without regard to conflicts of law.
10. Incorporation by Reference. The terms and conditions set forth in that
certain Offshore Securities Subscription Agreement between the corporation and
La Salle Investment Ltd., are incorporated herein by this reference, and any
transferee or subsequent holder of this Debenture (or the shares of common
5
<PAGE> 6
stock issued upon conversion thereof, during the Restricted Period as defined by
Regulation S) shall be subject to and bound by the provisions of such agreement.
IN WITNESS WHEREOF, the Corporation has caused this Debenture to be duly
executed.
CINEMASTAR LUXURY THEATERS, INC.
By: ___________________
John Ellison, Jr.
President
Attest:
_________________
Jon Meloan
Secretary
6
<PAGE> 7
Exhibit A
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby assigns to:
________________________ the three year 4% Convertible Debenture of CINEMASTAR
LUXURY THEATERS, INC., No. and hereby irrevocably appoints ,
Attorney, to transfer said debenture on the books of the within named
corporation, with full power of substitution in the premises.
WITNESS my hand and seal this day of , 199_.
(SEAL)
(SEAL)
WITNESS:
7
<PAGE> 1
EXHIBIT 4.2
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT is executed in
reliance upon the transactional "safe harbor" afforded by Regulation S
("Regulation S") as promulgated by the Securities and Exchange Commission
("SEC"), under the Securities Act of 1933, as amended ("1933 Act").
THIS AGREEMENT has been executed by the undersigned in
connection with the placement of $500,000 principal amount of Convertible
Debentures (hereinafter referred to as the "Convertible Debentures") of
CINEMASTAR LUXURY THEATERS, INC. ("Seller") by the Seller located at 431 College
Boulevard, Oceanside, California 92057, a corporation organized under the laws
of California, United States of America (hereinafter referred to as "Seller").
The undersigned (hereinafter referred to as "Buyer") is located at and is a
corporation organized under the laws of or is a citizen and resident of the
country set forth below the Buyer's signature, hereby represents and warrants
to, and agrees with the Seller as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
a. PURCHASE PRICE. The undersigned hereby subscribes for
Convertible Debentures in the principal amount of Five Hundred Thousand Dollars
($500,000) (the "Convertible Debentures") of the Seller, convertible into shares
of Common Stock of CinemaStar at a conversion price at $4.25 per Share, for an
aggregate Purchase Price of Five Hundred Thousand Dollars ($500,000) payable in
United States Dollars.
b. FORM OF PAYMENT. The Buyer shall pay the Purchase Price by
delivering good funds in United States Dollars to the Company for closing by
delivery of the Shares versus payment of the Purchase Price.
2. SUBSCRIBER REPRESENTATIONS; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
a. OFFSHORE TRANSACTION. The Buyer represents and warrants to
the Seller as follows:
(i) The Buyer is not organized under the laws of or is
not a citizen or resident of the United States and, if not an individual, was
not formed for the purpose of investing in Regulation S securities, does not
have any of its securities registered under the Securities Exchange Act of 1934
and is not owned by U.S. Persons as defined in Regulation S and herein;
(ii) At the time the buy order to purchase the
Convertible Debentures was originated, the Buyer was outside the United States;
<PAGE> 2
(iii) No offer to purchase the Convertible Debentures
was made in the United States nor were any "directed selling efforts" as defined
in Rule 902 of Regulation S made in the United States;
(iv) The Buyer is purchasing the Convertible Debentures
for the Buyer's own account and for investment purposes and not with the view
toward distribution of the Convertible Debentures or the shares of Common Stock
issuable upon conversion of the Convertible Debentures. The Buyer does not have
any contract, understanding or arrangement with any person to sell, transfer or
grant participation to such person or any third person with respect to the
Convertible Debentures or the shares of Common Stock issuable upon conversion of
the Convertible Debentures;
(v) All subsequent offers and sales of the Convertible
Debentures and the shares of Common Stock issuable upon conversion of the
Convertible Debentures shall be made in compliance with Regulation S, pursuant
to registration of the securities under the 1933 Act or pursuant to an exemption
from such registration;
(vi) The Buyer understands that the Convertible
Debentures and the shares of Common Stock issuable upon conversion of the
Convertible Debentures are being offered and sold to the Buyer in reliance on
specific safe harbor from the registration requirements of the 1933 Act and that
the Seller is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the applicability of such safe harbor and the
suitability of the Buyer to acquire the Convertible Debentures and the shares of
common stock issuable upon conversion of the Convertible Debentures. The Buyer
understands the conditions of the exemption from registration afforded by
Section 4(1) of the Securities Act and acknowledges that there can be no
assurance that it will be able to rely on such exemption;
(vii) The Buyer acknowledges that the Buyer has
received and reviewed the information supplied by the Company pursuant to
Section 3b hereof;
(viii) The Buyer agrees that from the date hereof until
after the fortieth (40th) day after the last closing of the purchase of the
Convertible Debentures hereunder and any similar sales under substantially
identical Offshore Securities Subscription Agreements (the "Restrictive Period")
upon any offer, sale or transfer of the Convertible Debentures or the shares of
common stock issuable upon conversion of the Convertible Debentures (including
any interests therein), that the Buyer, or any successor, or any Professional
(as defined in Section 3a(xv) hereof) (except for sales of any Convertible
Debentures or shares of Common Stock registered under the 1933
-2-
<PAGE> 3
Act or otherwise exempt from such registration) (a) will not sell to a U.S.
Person or to an account of or for the benefit of a U.S. Person or anyone
believed to be a U.S. Person; (b) will not engage in any efforts to sell the
Convertible Debentures or any shares of common stock issuable upon conversion of
the Convertible Debentures in the United States; (c) will, at the time the buy
order or transfer is originated, believe the buyer or transferee is outside the
United States; (d) will send to a Professional acting as agent or principal, a
confirmation or other notice stating that the Professional is subject to the
same restrictions on transfer to U.S. Persons or for the account of or benefit
of U.S. Persons during the Restrictive Period as provided herein; and (e) will
not in connection with the common stock of the Seller engage in the United
States in any short selling, option writing, equity swaps or other types of
hedging transactions or derivative transactions. The Seller will not honor or
register and will not be obligated to honor or register any transfer in
violation of these provisions.
(ix) The Buyer understands that the Convertible
Debentures and the shares of common stock issuable upon conversion of the
Convertible Debentures are being offered and sold to it in reliance on specific
provisions of federal and state securities laws and that the Seller is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the applicability of such provisions. Accordingly, the Buyer agrees to
notify the Seller of any events which would cause the representations and
warranties of the Buyer to be untrue or breached at any time after the execution
of this Agreement by the Buyer and prior to the expiration of the Restricted
Period;
(x) This Offshore Securities Subscription Agreement has
been duly authorized, validly executed, and delivered on behalf of the Buyer and
is a valid and binding agreement enforceable against the Buyer in accordance
with its terms, subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights generally;
(xi) Any offering documents received by the Buyer
include statements to the effect that the Convertible Debentures and the shares
of common stock issuable upon conversion of the Convertible Debentures have not
been registered under the Securities Act and may not be offered or sold in the
United States or to U.S. persons during the Restricted Period, unless the
Convertible Debentures and shares of common stock issuable upon conversion of
the Convertible Debentures are registered or unless such resale is exempt from
or not subject to the registration requirements of the Securities Act;
(xii) The Buyer, in making the decision to purchase the
Convertible Debentures and shares of common stock
-3-
<PAGE> 4
issuable upon conversion of the Convertible Debentures subscribed for, has
relied upon independent investigations made by it and has not relied on any
information or representations made by third parties and the Buyer believes that
the Purchase Price is reasonably related to the Restricted Period, the
historical validity of the market price of the Common Stock of the Seller, the
current financial condition of the Seller, the dilution represented by the sale
of the Convertible Debentures and shares of common stock issuable upon
conversion of the Convertible Debentures and any other sales of the Common Stock
of the Seller occurring simultaneously or concurrently herewith, current stock
market conditions and other relevant information concerning the Seller; the
Buyer acknowledges that it is a sophisticated investor, that it has invested in
other Regulation S transactions by other issuers, and that an investment in the
Convertible Debentures and shares of common stock issuable upon conversion of
the Convertible Debentures involves a high degree of risk;
(xiii) The Buyer has not taken any action that would
cause the Seller to be subject to any claim for commission or other fee or
remuneration by any broker, finder, or other person and the Buyer hereby
indemnifies the Seller against any such claim caused by the actions of the Buyer
or any of its employees or agents; however, the Buyer acknowledges that The
Boston Group, L.P. will in connection with the sale of the Convertible
Debentures and shares of common stock issuable upon conversion of the
Convertible Debentures receive a 10% commission and a 3% non-accountable expense
allowance;
(xiv) For purposes hereof, in general, a "U.S. Person"
means any natural person, resident of the United States; any partnership or
corporation organized or incorporated under the laws of the United States or any
state or territory thereof; any estate of which any executor or administrator is
a U.S. Person; any trust of which any trustee is a U.S. Person; any agency or
branch of a foreign entity located in the United States; any nondiscretionary
account or similar account, other than estate or trust, held by a dealer or
other fiduciary for the benefit or account of the U.S. Person; any discretionary
account or similar account, other than estate or trust, held by dealer or other
fiduciary organized, incorporated or (if an individual) resident of the United
States; and any partnership or corporation if organized or incorporated under
the laws of any foreign jurisdiction and formed by a U.S. Person principally for
the purpose of investing in securities and not registered under the 1933 Act
unless it is organized and incorporated and owned by "accredited investors," as
defined under Rule 501(a) under the 1933 Act, who are not natural persons,
estates or trusts. "U.S. Person" is further defined in Rule 902(o) under the
1933 Act;
(xv) A "Professional" is a "distributor" as defined in
Rule 902(c) under the 1933 Act (generally any underwriter, or other person, who
participates, pursuant to a contractual arrangement, in the distribution of the
Convertible
-4-
<PAGE> 5
Debentures and shares of common stock issuable upon conversion of the
Convertible Debentures); a dealer as defined in Section 2(12) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (encompassing those who
engage in the business of trading or dealing in securities as agent, broker, or
principal); or a person receiving a selling concession, fee or other
remuneration in respect of the Convertible Debentures and shares of common stock
issuable upon conversion of the Convertible Debentures sold.
b. NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Buyer
understands that no Federal, State or foreign governmental agency has passed on
or made any recommendation or endorsement of the Convertible Debentures and
shares of common stock issuable upon conversion of the Convertible Debentures.
c. SALES OF THE CONVERTIBLE DEBENTURES AND SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THE CONVERTIBLE DEBENTURES, IF ANY, TO BE MADE
THROUGH THE BOSTON GROUP, L.P. The Buyer covenants that any sale of the
Convertible Debentures and shares of common stock issuable upon conversion of
the Convertible Debentures shall be made through the Buyer's account at The
Boston Group, L.P., on usual and customary terms. Any such sale of the
Convertible Debentures and shares of common stock issuable upon conversion of
the Convertible Debentures shall be made in compliance with Regulation S, shall
not be made prior to the end of the Restrictive Period, and shall otherwise
conform with all of the conditions set forth elsewhere in this Agreement.
3. SELLER REPRESENTATIONS.
a. REPORTING COMPANY STATUS. The Seller is a "reporting
company" as defined by Rule 902 of Regulation S. The Seller is in full
compliance, to the extent applicable, with all reporting obligations under
Section 12(g) of the Exchange Act. The Seller has registered its Common Stock
pursuant to Section 12(g) of the Exchange Act and the Common Stock trades on the
NASDAQ Small Capital Market.
b. CURRENT PUBLIC INFORMATION. The Seller has furnished the
Buyer with copies of the Seller's Post-Effective Amendment No. 1 to Form SB-2
Registration Statement and its Form 10-K/SB for the year ended March 31, 1995
and the Form 10-Q/SB for the quarter ended December 31, 1995 (collectively the
"SEC Filings"), and other publicly available documents, and the Seller's
Regulation S Offering Circular dated May , 1996.
-5-
<PAGE> 6
c. OFFSHORE TRANSACTION.
(i) The Seller has not offered the Convertible
Debentures and shares of common stock issuable upon conversion of the
Convertible Debentures which are the subject of this Agreement to any person in
the United States, any identifiable groups of U.S. citizens abroad, or to any
U.S. Person as that term is defined in Regulation S.
(ii) At the time the buy order was originated, the
Seller and/or its agents reasonably believed the Buyer was outside of the United
States and was not a U.S. Person.
(iii) The Seller and/or its agents reasonably believe
that the transaction has not been pre-arranged with a buyer in the United
States.
d. NO DIRECTED SELLING EFFORTS. In regard to the transaction
contemplated by this Agreement, the Seller has not conducted any "directed
selling efforts" as that term is defined in Rule 902 of Regulation S nor has the
Seller conducted any general solicitation relating to the offer and sale of the
securities which are the subject of this transaction to persons resident within
the United States or elsewhere.
e. CONCERNING THE CONVERTIBLE DEBENTURES AND SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THE CONVERTIBLE DEBENTURES. The Convertible
Debentures and shares of common stock issuable upon conversion of the
Convertible Debentures when issued and delivered will be duly and validly
authorized and issued, fully paid and non-assessable and will not subject the
holders thereof to personal liability by reason of being such holders. There are
no preemptive rights of any shareholder of the Company.
f. SUBSCRIPTION AGREEMENT. This Offshore Securities
Subscription Agreement has been duly authorized, validly executed and delivered
on behalf of the Seller and is a valid and binding agreement of the Seller
enforceable against it in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally.
g. NON-CONTRAVENTION. The execution and delivery of this
Offshore Securities Subscription Agreement and the consummation of the issuance
of the Convertible Debentures and shares of common stock issuable upon
conversion of the Convertible Debentures and the transactions contemplated by
this Offshore Securities Subscription Agreement do not and will not conflict
with or result in a breach by the Seller of any of the terms or provisions of,
or constitute a default under, the articles of incorporation or bylaws of the
Seller or any indenture, mortgage, deed of trust or other material agreement or
instrument to which the Seller is a party or by which it or any
-6-
<PAGE> 7
of its respective properties or assets are bound, or any existing applicable
law, rule or regulation or any applicable decree, judgment or order of any
court, Federal or State regulatory body, administrative agency or other
governmental body having jurisdiction over the Seller or any of its properties
or assets.
h. APPROVALS. The Seller is not aware of any authorization,
approval or consent of any governmental body which is legally required for the
issuance and sale of the Convertible Debentures and shares of common stock
issuable upon conversion of the Convertible Debentures as contemplated by the
Offshore Securities Subscription Agreement.
i. MISCELLANEOUS. The sale of the Convertible Debentures and
shares of common stock issuable upon conversion of the Convertible Debentures
and any other shares of the Common Stock of the Seller occurring simultaneously
or concurrently herewith, are not part of a plan or scheme to evade the
registration requirements of the 1933 Act. The Seller believes that the Purchase
Price is reasonably related to the Restricted Period, the historical validity of
the market price of the Common Stock of the Seller, the current financial
condition of the Seller, the dilution represented by the sale of the Convertible
Debentures and shares of common stock issuable upon conversion of the
Convertible Debentures and any other sales of the Common Stock of the Seller
occurring simultaneously or concurrently herewith, current stock market
conditions and other relevant information concerning the Seller.
4. SAFE HARBOR RELIANCE ON REPRESENTATIONS. The Buyer understands that
the offer and sale of the Convertible Debentures and shares of common stock
issuable upon conversion of the Convertible Debentures are not being registered
under the 1933 Act. The Seller is relying on the rules governing offers and
sales made outside the United States pursuant to Regulation S.
5. TRANSFER AGENT INSTRUCTIONS. The Seller's transfer agent will be
instructed to issue one or more share certificates representing the Convertible
Debentures and shares of common stock issuable upon conversion of the
Convertible Debentures with a Regulation S restrictive legend as set forth in
the Regulation S Offering Circular in the name of the Buyer and in such
denominations to be specified prior to closing. The Seller further warrants that
such Regulation S restrictive legend and a "stop transfer" notice will remain on
the certificates for the Convertible Debentures and shares of common stock
issuable upon conversion of the Convertible Debentures only until the end of the
Restrictive Period. Nothing in this Section 5, however, shall affect in any way
the Buyer's obligations and agreement to comply with all applicable securities
laws upon resale of the Convertible Debentures and shares of common stock
issuable upon conversion of the Convertible Debentures.
-7-
<PAGE> 8
6. SHARE DELIVERY INSTRUCTIONS. The Share certificates shall be
delivered to the Buyer on a delivery versus payment basis at such times and
places to be mutually agreed.
7. CLOSING DATE. The date of the issuance and the sale of the
Convertible Debentures and shares of common stock issuable upon conversion of
the Convertible Debentures (the "closing") shall be May 21, 1996, or such other
mutually agreed to time and place.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The Buyer
understands that the Seller's obligation to sell the Convertible Debentures and
shares of common stock issuable upon conversion of the Convertible Debentures is
conditioned upon:
a. The receipt and acceptance by the Seller of this Offshore
Securities Subscription Agreement for all of the Convertible Debentures and
shares of common stock issuable upon conversion of the Convertible Debentures as
evidenced by execution of this Subscription Agreement by the President or any
Vice President of the Seller; and
b. Delivery to the Company by the Buyer of good funds as
payment in full for the purchase of the Convertible Debentures and shares of
common stock issuable upon conversion of the Convertible Debentures.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The Seller
understands that the Buyer's obligation to purchase the Convertible Debentures
and shares of common stock issuable upon conversion of the Convertible
Debentures is conditioned upon:
a. Acceptance by the Buyer of a satisfactory Offshore
Securities Subscription Agreement for the sale of the Convertible Debentures and
shares of common stock issuable upon conversion of the Convertible Debentures as
evidenced by execution of this Offshore Securities Subscription Agreement by the
President or any Vice President of the Buyer or if an individual, by the Buyer;
and
b. Delivery of Convertible Debentures and shares of common
stock issuable upon conversion of the Convertible Debentures with restrictive
legend as described herein.
10. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of California, United States of
America. A facsimile transmission of this signed agreement shall be legal and
binding on all parties hereto.
11. INTERPRETATION. All terms used herein that are defined in
Regulation S under the 1933 Act shall have the meaning set forth therein.
-8-
<PAGE> 9
IN WITNESS WHEREOF, this Offshore Securities Subscription Agreement was
duly executed on the date first written below.
Dated this 15th day of the month of May, 1996.
Official Signatory of the CINEMASTAR LUXURY THEATERS,
Seller: INC.
By:________________________
John Ellison, Jr.,
President
Accepted this 15th day of the month of May, 1996.
Official Signatory of the ___________________________________
Buyer: ____________________________
By:________________________________
(Authorized Signature)
___________________________________
(Print Name and Title)
___________________________________
(Address)
___________________________________
___________________________________
(Jurisdiction of
Incorporation
or Formation or Jurisdiction
of Citizenship and Residency)
-9-
