-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DcBqG14wlHsZp89SIIZeqT3gcAMJeN2VsLnuflHDOLKbRNsd+Rzknb85lZza5ghW Krb/FZIT1D9bnkTsIPE6JA== 0000950148-96-001119.txt : 19960607 0000950148-96-001119.hdr.sgml : 19960607 ACCESSION NUMBER: 0000950148-96-001119 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960521 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960606 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINEMASTAR LUXURY THEATERS INC CENTRAL INDEX KEY: 0000931085 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE THEATERS [7830] IRS NUMBER: 330451054 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25252 FILM NUMBER: 96577632 BUSINESS ADDRESS: STREET 1: 431 COLLEGE BLVD CITY: OCEANSIDE STATE: CA ZIP: 92057-5435 BUSINESS PHONE: 6196302011 MAIL ADDRESS: STREET 1: 431 COLLEGE BLVD CITY: OCEANSIDE STATE: CA ZIP: 92057-5435 FORMER COMPANY: FORMER CONFORMED NAME: NICKELODEON THEATER CO INC DATE OF NAME CHANGE: 19941128 8-K 1 FORM 8-K 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 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 3 Item 7. Financial Statements and Exhibits (c) Exhibits. 4.1 Debenture, dated May 21, 1996. 4.2 Offshore Securities Subscription Agreement. 3 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 5 EXHIBIT INDEX
Exhibit Sequentially Numbered Number Description Page 4.1 Debenture, dated May 21, 1996 4.2 Offshore Securities Subscription Agreement
5 EX-4.1 2 DEBENTURE, DATED MAY 21, 1996 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 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 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 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 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 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 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 EX-4.2 3 OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT 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; 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- 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- 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- 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- 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- 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- 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- 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- -----END PRIVACY-ENHANCED MESSAGE-----