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EXHIBIT 1
CINEMARK USA, INC.
$105,000,000
8-1/2% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
January 8, 1998
MORGAN STANLEY & CO. INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
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CINEMARK USA, INC.
$105,000,000
8-1/2% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
January 8, 1998
New York, New York
MORGAN STANLEY & CO. INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies & Gentlemen:
Cinemark USA, Inc., a Texas corporation ("Cinemark"), proposes
to issue and sell to Morgan Stanley & Co. Incorporated and BancAmerica
Robertson Stephens (the "Initial Purchasers") an aggregate of $105,000,000
principal amount of 8-1/2% Senior Subordinated Notes due 2008 (the "Notes"),
subject to the terms and conditions set forth herein. The Notes will be issued
pursuant to an indenture (the "Indenture"), to be dated the Closing Date (as
defined below), between Cinemark and U.S. Trust Company of Texas, N.A., as
trustee (the "Trustee") which shall be in a form substantially similar to those
certain existing indentures between Cinemark and the Trustee dated as of August
15, 1996 and June 26, 1997.
1. ISSUANCE OF SECURITIES.
Cinemark proposes, upon the terms and subject to the
conditions set forth herein, to issue and sell to the Initial Purchasers an
aggregate of $105,000,000 principal amount of the Notes. The Notes and the
Exchange Notes (as defined below) issuable in exchange therefor are
collectively referred to herein as the "Securities." The proceeds to Cinemark
from the sale to the Initial Purchasers of the Notes will be used as described
under "Use of Proceeds" in the Offering Memorandum (as defined below).
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act of 1933, as amended (the "Act"), the Notes (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR BENEFIT
OF, ANY PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT
PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
DATE OF ORIGINAL ISSUANCE OF THIS SECURITY AND THE LAST DATE
ON WHICH CINEMARK OR ANY AFFILIATE OF CINEMARK WAS THE OWNER
OF
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THIS SECURITY (THE "RESALE RESTRICTION TERMINATION DATE")
RESELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A)
TO CINEMARK, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO
A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH THE RESALE PROVISIONS OF RULE 144A, (C) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (D)
PURSUANT TO THE RESALE LIMITATIONS PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
(F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (BASED UPON
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO CINEMARK IF
CINEMARK SO REQUESTS) SUBJECT IN EACH OF THE FOREGOING CASES
TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY
OR THE PROPERTY OF SUCH ACCOUNT BE AT ALL TIMES WITHIN ITS
CONTROL AND TO COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. THE FOREGOING RESTRICTIONS ON
RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE RESTRICTION
TERMINATION DATE.
2. OFFERING.
The Notes will be offered and sold to the Initial Purchasers
pursuant to an exemption from the registration requirements under the Act.
Cinemark will prepare an offering memorandum dated the date hereof in form and
substance satisfactory to the Initial Purchasers (the "Offering Memorandum"),
relating to Cinemark and its subsidiaries and the issuance of the Notes.
The Initial Purchasers have advised Cinemark that the Initial
Purchasers will make offers of the Notes on the terms to be set forth in the
Offering Memorandum, as amended or supplemented, solely (1) within the United
States to persons whom the Initial Purchasers reasonably believe to be
"qualified institutional buyers," as defined in Rule 144A under the Act
("QIBs") and (2) outside the United States to persons other than U.S. persons
in compliance with Regulation S under the Act. The QIBs and the non-U.S.
persons from whom the Initial Purchasers will solicit offers to buy, and to
whom the Initial Purchasers will offer to sell, the Notes in compliance with
Regulation S also are referred to herein as the "Eligible Purchasers." Sales
to Eligible Purchasers under this Agreement are referred to herein as "Exempt
Resales". The Initial Purchasers will offer the Notes to such Eligible
Purchasers at prices to be determined by the Initial Purchasers from time to
time.
Holders (including subsequent transferees) of the Notes will
have the registration rights set forth in an exchange registration rights
agreement relating thereto (the "Registration Rights Agreement"), to be dated
the Closing Date, which will be in substantially the form of those certain
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registration rights agreements dated as of August 15, 1996 and June 26, 1997 by
and among Cinemark and the Purchasers named therein, for so long as such Notes
constitute "Transfer Restricted Securities" (as defined in such Registration
Rights Agreements). Pursuant to terms and conditions contained in the
Registration Rights Agreement, Cinemark will agree to use its best efforts to
file with the Securities and Exchange Commission (the "Commission"), under the
circumstances set forth therein, (i) a registration statement under the Act
(the "Exchange Offer Registration Statement") relating to a second series of
8-1/2% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be offered
in exchange for the Notes (the "Exchange Offer") and (ii) a shelf registration
statement pursuant to Rule 415 under the Act (the "Shelf Registration
Statement") relating to the resale by certain holders of the Notes, and to use
its best efforts to cause such Registration Statements to be declared effective
and to consummate the Exchange Offer. This Purchase Agreement (this
"Agreement"), the Securities, the Indenture and the Registration Rights
Agreement are hereinafter sometimes referred to collectively as the "Operative
Documents."
3. PURCHASE, SALE AND DELIVERY.
(a) On the basis of the representations, warranties and
covenants contained in this Agreement, and subject to its terms and conditions,
Cinemark agrees to issue and sell to the Initial Purchasers, and each Initial
Purchaser agrees, severally and not jointly, to purchase from Cinemark, that
aggregate principal amount of the Notes set forth opposite its name on Schedule
I hereto. The Initial Purchasers shall pay a purchase price equal to 99.00% of
the principal amount of the Notes.
(b) Delivery of, and payment of the purchase price for, the
Notes shall be made at the offices of Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 1700 Pacific Avenue, Suite 4100, Dallas, Texas 75201 or such other
location as may be mutually acceptable. Such delivery and payment shall be
made at 9:30 a.m. New York City time on January 14, 1998 or at such other date
and time as shall be agreed upon by the Initial Purchasers and Cinemark. The
time and date of such delivery and payment are herein called the "Closing
Date."
(c) On the Closing Date, one or more of the Notes in
definitive form, registered in such names and in such denominations as
specified by the Initial Purchasers at least two business days prior to such
date, having an aggregate principal amount of $105,000,000 shall be delivered
by Cinemark to the Initial Purchasers (or as the Initial Purchasers direct),
against payment by the Initial Purchasers of the purchase price therefor by
wire transfer of same day funds to an account or accounts designated by
Cinemark, provided that Cinemark shall give at least two business days' prior
written notice to the Initial Purchasers of the information required to effect
such wire transfer. The Notes shall be made available to the Initial
Purchasers for inspection not later than 9:30 a.m. New York City time on the
business day immediately preceding the Closing Date.
4. AGREEMENTS OF CINEMARK.
Cinemark covenants and agrees with the Initial Purchasers as
follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing,
of (i) the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of
any of the Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority and (ii) the happening of any
event that makes any statement of a material fact made in the Offering
Memorandum untrue or that requires the making of any additions to or
changes in the Offering Memorandum in order to make the
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statements therein, in the light of the circumstances under which they
are made, not misleading. Cinemark shall use its best efforts to
prevent the issuance of any stop order or order suspending the
qualification or exemption of any of the Securities under any state
securities or Blue Sky laws and, if at any time any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption of any of the Securities
under any state securities or Blue Sky laws, Cinemark shall use its
best efforts to obtain the withdrawal or lifting of such order at the
earliest practicable time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to Cinemark, without charge, as
many copies of the Offering Memorandum, and any amendments or
supplements thereto, as the Initial Purchasers may reasonably request.
Cinemark consents to the use of the Offering Memorandum, and any
amendments and supplements thereto required pursuant hereto, by the
Initial Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Offering Memorandum prior
to the Closing Date unless the Initial Purchasers shall previously
have been advised thereof and shall have consented to, or not have
reasonably objected thereto, in writing within a reasonable time after
being furnished a copy thereof. Cinemark shall promptly prepare, upon
the Initial Purchasers' request, any amendment or supplement to the
Offering Memorandum that the Initial Purchasers or Cinemark believe
may be necessary or advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation of
any Exempt Resale, any event shall occur as a result of which, in the
judgment of Cinemark or in the opinion of counsel for Cinemark or
counsel for the Initial Purchasers, it becomes necessary or advisable
to amend or supplement the Offering Memorandum in order to make the
statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to an Eligible Purchaser which is a
prospective purchaser, not misleading, or if it is necessary or
advisable to amend or supplement the Offering Memorandum to comply
with applicable law, (i) to notify the Initial Purchasers and (ii)
forthwith to prepare an appropriate amendment or supplement to such
Offering Memorandum so that the statements therein as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Offering Memorandum will
comply with applicable law.
(e) To cooperate with the Initial Purchasers and counsel for
the Initial Purchasers in connection with the qualification or
registration of the Notes under the securities or Blue Sky laws of
such jurisdictions as the Initial Purchasers may reasonably request
and to continue such qualification in effect so long as required for
the Exempt Resales; provided, however that Cinemark shall not be
required in connection therewith to register or qualify as a foreign
corporation where it is not now so qualified or to take any action
that would subject it to service of process in suits or taxation, in
each case, except as to matters and transactions relating to Exempt
Resales, in any jurisdiction where it is not now so subject.
(f) To use the proceeds from the sale of the Notes in the
manner described in the Offering Memorandum under the caption "Use of
Proceeds."
(g) Not to claim voluntarily, and to resist actively any
attempts to claim, the benefit of any usury laws against the holders
of any Securities.
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(h) To do and perform all things required to be done and
performed under this Agreement by it prior to the Closing Date and use
its best efforts to satisfy all conditions precedent on its part to
the delivery of the Notes.
(i) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Notes in a manner that
would require the registration under the Act of the sale to the
Initial Purchasers or the QIBs of the Notes or to take any other
action that would result in the Exempt Resales not being exempt from
registration under the Act.
(j) For so long as any of the Securities remain outstanding
and during any period in which Cinemark is not subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to make available to any holder of the Notes in
connection with any sale thereof and any prospective purchaser of such
Notes designated by such holder, the information required by Rule
144A(d)(4) under the Act.
(k) To use its best efforts to cause the Exchange Offer to be
made in accordance with and subject to the terms set forth in the
Registration Rights Agreement in the appropriate form to permit
registered Exchange Notes to be offered in exchange for the Notes and
to comply with all applicable federal and state securities laws in
connection with the Exchange Offer.
(l) To comply in all material respects with all of the
agreements set forth in the Operative Documents and in the
representation letter of Cinemark to The Depository Trust Company
("DTC") relating to the approval of the Securities by DTC for
"book-entry" transfer.
(m) To cooperate with the Initial Purchasers to effect the
inclusion of the Securities in the National Association of Securities
Dealers, Inc. ("NASD") Private Offering, Resales and Trading through
Automated Linkages ("PORTAL") market and to obtain approval of the
Securities by DTC for "book-entry" transfer.
(n) During a period of two years following the Closing Date,
to deliver without charge to the Initial Purchasers promptly upon
their becoming available, copies of (i) all reports or other publicly
available information that Cinemark shall mail or otherwise make
available to its stockholders and (ii) all reports, financial
statements and proxy or information statements filed by Cinemark with
the Commission or any national securities exchange and such other
publicly available information concerning Cinemark and its
subsidiaries including without limitation, press releases, as the
Initial Purchasers may reasonably request.
(o) Not to, and to cause its affiliates not to, offer, sell,
contract to sell or grant any option to purchase or otherwise transfer
or dispose of any Securities or any other debt security issued by
Cinemark (other than a private loan, credit or financing agreement
with a bank or similar financing institution) or any security
convertible into or exchangeable or exercisable for any such debt
security, for a period of 90 days after the Closing Date, without the
Initial Purchasers' prior written consent, except for (i) sales or
transfers between affiliates of Cinemark and (ii) the issue and
exchange of the Exchange Notes for the Notes in the Exchange Offer.
(p) Prior to the Closing Date, to furnish to the Initial
Purchasers, as soon as they have been prepared by Cinemark, a copy of
any unaudited interim financial statements for any period
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subsequent to the periods covered by the financial statements
appearing in the Offering Memorandum.
(q) Not to, and not to permit any of its subsidiaries to,
take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of Cinemark to facilitate
the sale or resale of either the Notes or the Exchange Notes. Except
as permitted by the Act, Cinemark will not distribute any (i) offering
memorandum, including, without limitation, the Offering Memorandum or
(ii) other offering material, in connection with the offering and sale
of the Securities.
5. REPRESENTATIONS AND WARRANTIES.
(a) Cinemark represents and warrants to the Initial Purchasers
that as of the date hereof (except as otherwise expressly provided):
(i) The Offering Memorandum is being prepared in
connection with the Exempt Resales. The Offering Memorandum and any
supplement or amendment to it will not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained
in this paragraph shall not apply to statements in or omissions from
the Offering Memorandum (or any supplement or amendment thereto) made
in reliance upon and in conformity with information relating to the
Initial Purchasers furnished to Cinemark in writing by the Initial
Purchasers expressly for use therein. No stop order preventing the
use of the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued.
(ii) Cinemark (x) has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, (y) has all requisite corporate power
and authority to carry on its business as it is being conducted
currently and as will be described in the Offering Memorandum and to
own, lease and operate its properties, and (z) is duly qualified and
in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified (a) could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on
the properties, business, results of operations or financial condition
of Cinemark and its subsidiaries taken as a whole or (b) could not,
individually or in the aggregate, reasonably be expected to materially
interfere with or materially adversely affect the issuance of the
Securities pursuant hereto, or (c) could not in any manner interfere
with Cinemark's ability to perform its obligations under this
Agreement or any other Operative Document or any of the transactions
to be described in the Offering Memorandum under the caption "Use of
Proceeds" (any of the events set forth in clauses (a), (b) or (c), a
"Material Adverse Effect").
(iii) Each of Cinemark International, Inc. and Cinemark
Properties, Inc. (collectively, the "Material Subsidiaries") (A) has
been duly organized or incorporated, as applicable, and is validly
existing and in good standing under the laws of its jurisdiction of
organization or incorporation, (B) has all requisite power (corporate
or other) and authority to carry on its business as it is currently
being conducted and as will be described in the Offering Memorandum
and to own, lease and operate its properties, and (C) is duly
qualified and in good standing as a foreign
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organization or corporation, as applicable, authorized to do business
in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except
where the failure to be so qualified could not reasonably be expected
to have a Material Adverse Effect.
(iv) All of the issued and outstanding shares of capital
stock of Cinemark's subsidiaries have been duly authorized, validly
issued and are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights. Cinemark owns,
directly or indirectly, shares of capital stock of each of its
subsidiaries, as listed on Schedule 5(a)(iv). Except as will be set
forth in the Offering Memorandum, all such shares of capital stock of
its subsidiaries are owned, directly or indirectly, by Cinemark free
and clear of any material lien, encumbrance, claim, security interest,
restriction on transfer, stockholders' agreement, voting trust or
other restrictions. Cinemark does not directly or indirectly own any
shares of capital stock or any other securities or any corporation or
have any equity interest in any firm, partnership, association or
other entity except as described on Schedule 5(a)(iv).
(v) All of the outstanding shares of capital stock of
Cinemark have been duly authorized, validly issued, and are fully paid
and nonassessable and were not issued in violation of any preemptive
or similar rights. On September 30, 1997, after giving pro forma
effect to the issuance and sale of the Notes pursuant hereto and the
other transactions described therein, Cinemark would have had an
authorized and outstanding capitalization as will be set forth in the
Offering Memorandum under the caption "Capitalization," subject to the
notes and assumptions included therein.
(vi) Except as will be set forth in the Offering
Memorandum, there are not currently any outstanding material
subscriptions, rights, warrants, calls, commitments of sale or options
to acquire, or instruments convertible into or exchangeable for,
capital stock or other equity interests of Cinemark or any of its
subsidiaries.
(vii) Cinemark has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Operative Documents and to consummate the transactions contemplated
hereby and thereby, including, without limitation, the corporate power
and authority to issue, sell and deliver the Securities as provided
herein and therein.
(viii) When the Notes are issued and delivered pursuant to
this Agreement, no Note will be of the same class (within the meaning
of Rule 144A under the Act) as securities of Cinemark that are listed
on a national securities exchange under Section 6 of the Exchange Act
or that are quoted in a United States automated inter-dealer
quotation system.
(ix) This Agreement has been duly and validly authorized,
executed and delivered by Cinemark and (assuming the due
authorization, execution and delivery of this Agreement by the Initial
Purchasers) is the legal, valid and binding agreement of Cinemark,
enforceable against Cinemark in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at
law) (the "Enforceability Exceptions").
(x) The Indenture has been duly and validly authorized by
Cinemark and, when duly executed and delivered by Cinemark, the
Indenture will be the legal, valid and binding obligation
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of Cinemark, enforceable against Cinemark in accordance with its
terms, subject to the Enforceability Exceptions. The Offering
Memorandum will contain an accurate summary of the material terms of
the Indenture.
(xi) The Registration Rights Agreement has been duly and
validly authorized by Cinemark and, when duly executed and delivered
by Cinemark, the Registration Rights Agreement will be the legal,
valid and binding obligation of Cinemark, enforceable against Cinemark
in accordance with its terms, subject to the Enforceability
Exceptions. The Offering Memorandum will contain an accurate summary
of the material terms of the Registration Rights Agreement.
(xii) The Notes have been duly and validly authorized by
Cinemark for issuance and sale to the Initial Purchasers pursuant to
this Agreement and, when issued and authenticated in accordance with
the terms of the Indenture and delivered against payment therefor in
accordance with the terms hereof and thereof, the Notes will be the
legal, valid and binding obligations of Cinemark, enforceable against
Cinemark in accordance with their terms and entitled to the benefits
of the Indenture, subject to the Enforceability Exceptions. The
Offering Memorandum will contain an accurate summary of the material
terms of the Notes.
(xiii) When the Exchange Notes have been duly and validly
authorized for issuance by Cinemark and, when issued and authenticated
in accordance with the terms of the Exchange Offer and the Indenture,
the Exchange Notes will be the legal, valid and binding obligations of
Cinemark, enforceable against Cinemark in accordance with their terms
and entitled to the benefits of the Indenture, subject to the
Enforceability Exceptions.
(xiv) Neither Cinemark nor any of its subsidiaries is (A)
in violation of its charter or bylaws or equivalent documents, (B) in
default in the performance of any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties
is subject, or (C) in violation of any local, state, federal or
foreign law, statute, ordinance, rule, regulation, judgment or court
decree applicable to it or any of its assets or properties (whether
owned or leased), except, in the case of clauses (A) (with respect to
subsidiaries other than the Material Subsidiaries), (B) and (C), for
any such violation or default that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
To the best knowledge of Cinemark, there exists no condition that,
with notice or the passage of time or both, would constitute such a
default under any such document or instrument except for any such
default that could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(xv) None of (A) the execution, delivery or performance by
Cinemark of this Agreement and the other Operative Documents, (B) the
issuance and sale of the Securities, nor (C) the consummation by
Cinemark of the transactions to be described in the Offering
Memorandum under the caption "Use of Proceeds", violates, conflicts
with or constitutes a breach of any of the terms or provisions of, or
a default under (or an event that with notice or the lapse of time, or
both, would constitute a default), or requires consent (other than
those consents that have been obtained or will be obtained prior to
the Closing Date) under, or results in the imposition of a lien or
encumbrance on any properties of Cinemark or its subsidiaries, or an
acceleration of any indebtedness of Cinemark or its subsidiaries
pursuant to, (i) the charter or bylaws (or equivalent documents) of
Cinemark or any of its subsidiaries, (ii) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
which Cinemark or any of its subsidiaries is a party or by which
Cinemark or any of its subsidiaries is bound or to
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which any of their respective properties is subject, (iii) any
statute, rule or regulation applicable to Cinemark or any of its
subsidiaries or their respective assets or properties or (iv) any
judgment, order or decree of any court or governmental agency or
authority having jurisdiction over Cinemark or any of its subsidiaries
or their respective assets or properties, except in the case of
clauses (ii), (iii) and (iv), for any such violation, default,
consent, imposition of a lien or acceleration that could not,
individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect. Except as may be required under applicable
state securities or Blue Sky laws, and except for any NASD filings and
the filing of a registration statement under the Act and qualification
of the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act") in connection with the Registration Rights
Agreement, no consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, any court
or governmental agency, body or administrative agency or any other
person is required for (1) the execution, delivery and performance by
Cinemark of this Agreement and the other Operative Documents or (2)
the issuance and sale of the Securities and the transactions
contemplated thereby, except such as have been obtained and made and
except where the failure to obtain such consents or waivers would not,
individually or in the aggregate, have a Material Adverse Effect.
(xvi) There is (i) no action, suit, investigation or
proceeding before or by any court, arbitrator or governmental agency,
body or official, domestic or foreign, now pending or, to the
knowledge of Cinemark, threatened or contemplated to which Cinemark or
any of its subsidiaries is or may be a party or to which the business
or property of Cinemark or any of its subsidiaries is or may be
subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or, to the
knowledge of Cinemark, that has been proposed by any governmental
body, and (iii) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of competent
jurisdiction to which Cinemark or any of its subsidiaries is or may be
subject or to which the business, assets, or property of Cinemark or
any of its subsidiaries is or may be subject, that, in the case of
clauses (i), (ii) and (iii) above, (A) is required to be disclosed in
the Offering Memorandum and that will not be so disclosed or (B)
could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(xvii) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any
governmental agency that prevents the issuance of the Securities or
prevents or suspends the use of the Offering Memorandum; no
injunction, restraining order or order of any nature by a federal or
state court of competent jurisdiction has been issued that prevents
the issuance of the Securities or prevents or suspends the sale of the
Securities in any jurisdiction referred to in Section 4(e) hereof; and
every request of any securities authority or agency of any
jurisdiction for additional information has been complied with in all
material respects.
(xviii) There is (i) no significant unfair labor practice
complaint pending against Cinemark or any of its subsidiaries, nor, to
the knowledge of Cinemark, threatened against any of them, before the
National Labor Relations Board, any state or local labor relations
board or any foreign labor relations board, and no significant
grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against
Cinemark or any of its subsidiaries or, to the knowledge of Cinemark,
threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage pending against Cinemark or any of its
subsidiaries nor, to the knowledge of Cinemark, threatened against any
of them and (iii) no union organizing or union representation question
existing with respect to the employees of Cinemark
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or any of its subsidiaries. No claim has been filed against Cinemark
or any of its subsidiaries alleging violation of (A) any federal,
state or local law or foreign law relating to discrimination in
hiring, promotion or pay of employees, (B) any applicable wage or hour
laws or (C) any provision of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or the rules and regulations
thereunder, except as could not reasonably be expected to have a
Material Adverse Effect.
(xix) Neither Cinemark nor any of its subsidiaries, nor any
of their respective officers, directors, employees, agents or
affiliates or any other person acting on their behalf has, directly or
indirectly, given or agreed to give any money, gift or similar benefit
to any customer, supplier, employee or agent of a customer or
supplier, official or employee of any governmental agency,
instrumentality of any government or any political party or candidate
for office (domestic or foreign) or other person who was, at the time,
in a position to help or hinder the business of Cinemark or its
subsidiaries (or assist Cinemark or its subsidiaries in connection
with any actual or proposed transaction) which would at the time have
been reasonably likely to subject Cinemark or its subsidiaries to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign) except for such damages or penalties,
either individually or in the aggregate, that could not reasonably be
expected to have a Material Adverse Effect.
(xx) Each of Cinemark and its subsidiaries has (A) good
and indefeasible title to all of the properties and assets material to
the business of Cinemark and its subsidiaries taken as a whole as
owned by it, free and clear of all liens, charges, encumbrances and
restrictions (except (i) liens constituting Permitted Liens under the
Indenture and (ii) liens, charges, encumbrances and restrictions that
do not in the aggregate materially detract from the value of such
properties and assets or materially impair the use thereof in the
operation of the business of Cinemark and its subsidiaries, taken as a
whole), (B) peaceful and undisturbed possession under all material
leases to which any of them is a party as lessee and each of which
lease is valid and binding and no default which would have a Material
Adverse Effect exists thereunder, (C) all licenses, certificates,
permits, authorizations, approvals, franchises and other rights from,
and has made all declarations and filings with, all federal, state and
local authorities, all self-regulatory authorities and all courts and
other tribunals (each, an "Authorization") necessary to engage in the
business conducted by any of them in the manner to be described in the
Offering Memorandum, except as could not reasonably be expected to
have a Material Adverse Effect and (D) no reason to believe that any
governmental body or agency is considering limiting, suspending or
revoking any such Authorization. All such Authorizations are valid
and in full force and effect and each of Cinemark and its subsidiaries
is in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities having jurisdiction with
respect thereto. All leases to which Cinemark or any of its
subsidiaries is a party are valid and binding and no default by
Cinemark or any such subsidiary, as the case may be, has occurred and
is continuing thereunder and no material defaults by the landlord are
existing under any such lease, except in each case as could not
reasonably be expected to have a Material Adverse Effect.
(xxi) All Federal and other material tax returns required
to be filed by Cinemark or any of its subsidiaries in all
jurisdictions have been so filed. All Federal and other material
taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from such
entities or that are due and payable have been paid, other than those
being contested in good faith and for which adequate reserves have
been provided. There are no material proposed additional tax
assessments against Cinemark or any of its subsidiaries, or the
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assets or property of Cinemark or any of its subsidiaries which could
reasonably be expected to, if the assessments were made, have a
Material Adverse Effect.
(xxii) To the knowledge of Cinemark and without independent
verification, the properties of Cinemark and its subsidiaries, taken
as a whole, are structurally sound with no known defects which would
have a Material Adverse Effect, are in operating condition and good
repair (reasonable wear and tear excepted) and are adequate for their
uses.
(xxiii) The Company and its subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or other approvals
would not, singly or in the aggregate, have a Material Adverse Effect
on the Company and its subsidiaries, taken as a whole.
(xxiv) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(xxv) Neither Cinemark nor any of its subsidiaries is an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), or analogous foreign laws and
regulations.
(xxvi) There are no holders of securities of Cinemark or any
of its subsidiaries who, by reason of the execution by Cinemark of
this Agreement or any other Operative Document or the consummation by
Cinemark of the transactions contemplated hereby and thereby, have the
right to request or demand that Cinemark or any of its subsidiaries
register under the Act or analogous foreign laws and regulations
securities held by them.
(xxvii) Cinemark believes that it and each of its
subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect
thereto.
(xxviii) Cinemark and each of its subsidiaries maintains, or
Cinemark maintains on behalf of its subsidiaries, insurance covering
its or their material properties, operations, personnel and
businesses. Cinemark believes that such insurance insures against
such losses and risks as are
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adequate to protect Cinemark and its subsidiaries and their respective
businesses. Neither Cinemark nor any of its subsidiaries has received
notice from any insurer or agent of such insurer that substantial
capital improvements or other material expenditures will have to be
made in order to continue such insurance. All such insurance is
outstanding and duly in force on the date hereof and will be
outstanding and duly in force on the terms in effect on the date
hereof on commercially reasonable terms.
(xxix) Neither Cinemark nor any of its subsidiaries has (i)
taken, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of Cinemark or any of its
subsidiaries to facilitate the sale or resale of the Notes or (ii)
since January 6, 1998 sold, bid for, purchased or paid any person any
compensation for soliciting purchases of the Notes or paid or agreed
to pay to any person any compensation for soliciting another to
purchase any other securities of Cinemark or any of its subsidiaries.
(xxx) No registration under the Act of the Notes is
required for the sale of the Notes to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming (i) that the
purchasers who buy the Notes in the Exempt Resales are Eligible
Purchasers and (ii) the accuracy of the Initial Purchasers'
representations regarding the absence of general solicitation in
connection with the sale of the Notes to the Initial Purchasers and
the Exempt Resales contained herein. No form of general solicitation
or general advertising was used by Cinemark or any of its subsidiaries
or any of their representatives (although no representation or
warranty is made as to actions taken by the Initial Purchasers and its
representatives) in connection with the offer and sale of any of the
Notes or in connection with Exempt Resales, including, but not limited
to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising. No securities of the
same class as the Notes have been issued and sold by Cinemark or any
of its subsidiaries within the six-month period immediately prior to
the date hereof.
(xxxi) The execution and delivery of this Agreement, the
other Operative Documents and the sale of the Notes to be purchased by
the Eligible Purchasers will not involve any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986. The representations made in the
preceding sentence are made in reliance upon and subject to the
accuracy of, and compliance with, the representations and covenants
made or deemed made by the QIBs as will be set forth in the Offering
Memorandum under the caption "Notice to Investors."
(xxxii) The Offering Memorandum, as of its date, and each
amendment or supplement thereto, as of its date, will contain the
information specified in, and meets the requirements of, Rule
144A(d)(4) under the Act.
(xxxiii) Subsequent to the respective dates as of which
information will be given in the Offering Memorandum and up to the
Closing Date, except as will be set forth in the Offering Memorandum,
(A) neither Cinemark nor any of its subsidiaries has incurred any
liabilities or obligations, direct or contingent, which are material,
individually or in the aggregate, to Cinemark and its subsidiaries,
taken as a whole, nor entered into any material transaction not in the
ordinary course of business, (B) there has not been, individually or
in the aggregate, any change or development of which Cinemark is aware
which could reasonably be expected to result in a
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Material Adverse Effect of the type described in clause (a) of such
definition and (C) there has been no dividend or distribution of any
kind declared, paid or made by Cinemark or any of its subsidiaries on
any class of their capital stock.
(xxxiv) None of the execution, delivery and performance of
this Agreement, the issuance and sale of the Securities, the
application of the proceeds from the issuance and sale of the
Securities and the consummation of the transactions contemplated
thereby as set forth in the Offering Memorandum, will violate
Regulations G, T, U or X promulgated by the Board of Governors of the
Federal Reserve System or analogous foreign laws and regulations.
(xxxv) The accountants who have certified or will certify
the financial statements included or to be included as part of the
Offering Memorandum are independent accountants. The annual
historical financial statements of Cinemark to be included in the
Offering Memorandum comply as to form in all material respects with
the requirements applicable to registration statements on Form S-1
under the Act and will present fairly in all material respects the
financial position and results of operations of Cinemark at the
respective dates and for the respective periods indicated. Such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods presented. The pro forma adjustments and as
adjusted information to be included in the Offering Memorandum will
give effect to assumptions made on a reasonable basis and will present
fairly in all material respects the historical and proposed
transactions contemplated by the Offering Memorandum and this
Agreement. The other financial and statistical information and data
to be included in the Offering Memorandum, historical, as adjusted and
pro forma, will be accurately presented on a basis consistent with the
financial statements to be included in the Offering Memorandum and the
books and records of Cinemark.
(xxxvi) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between or among Cinemark or
any of its subsidiaries and any other person that would reasonably be
expected to give rise to a valid claim against Cinemark or any of its
subsidiaries or the Initial Purchasers for a brokerage commission,
finder's fee or like payment in connection with the issuance, purchase
and sale of the Securities.
(xxxvii) After giving effect to the transactions contemplated
by the Offering Memorandum, the Company shall be solvent as determined
in accordance with the applicable provisions of the Texas Business
Corporation Act.
(xxxviii) There exist no conditions that would constitute a
default by Cinemark (or an event which with notice or the lapse of
time, or both, would constitute a default) under any of the Operative
Documents.
(xxxix) Each certificate signed by any officer of Cinemark
and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by
Cinemark to the Initial Purchasers as to the matters covered thereby.
Cinemark acknowledges that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 8 hereof, counsel to Cinemark and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
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(b) Each Initial Purchaser, severally and not jointly,
represents, warrants and covenants to Cinemark and agrees that:
(i) Such Initial Purchaser is a QIB as defined in Rule
144A under the Act.
(ii) Such Initial Purchaser (A) is not acquiring the Notes
with a view to any distribution thereof that would violate the Act or
the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the
Notes only to Eligible Purchasers in reliance on the exemption from
the registration requirements of the Act provided by Rule 144A and
Regulation S.
(iii) No form of general solicitation or general
advertising has been or will be used by such Initial Purchaser or any
of its representatives in connection with the Exempt Resales,
including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(iv) Such Initial Purchaser agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the Notes only
from, and will offer to sell the Notes only to, Eligible Purchasers.
Such Initial Purchaser further agrees (A) that it will offer to sell
the Notes only to, and will solicit offers to buy the Notes only from
(1) QIBs who in purchasing such Notes will be deemed to have
represented and agreed that they are purchasing the Notes for their
own accounts or accounts with respect to which they exercise sole
investment discretion and that they or such accounts are QIBs and (2)
non-U.S. persons outside the United States in reliance on Regulation S
and (B) that such Notes will not have been registered under the Act
and may be resold, pledged or otherwise transferred only (x)(I) to a
person who the seller reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A, (II) in a transaction meeting
the requirements of Rule 144, (III) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904
under the Act or (IV) in accordance with another exemption from the
registration requirements of the Act (and based upon an opinion of
counsel reasonably acceptable to Cinemark if Cinemark so requests),
(y) to Cinemark, (z) pursuant to an effective registration statement
under the Act and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other
applicable jurisdiction and (C) that the holder will, and each
subsequent holder is required to, notify any purchaser from it of the
security evidenced thereby of the resale restrictions set forth in (B)
above.
(v) Such Initial Purchaser represents and agrees that (A)
it has not offered or sold and prior to the date six months after the
Closing Date will not offer or sell any Notes to persons in the United
Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer
to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (B) it has complied and will
comply with all applicable provisions of the Financial Services Act
1986 and the Public Offers of Securities Regulations 1995 with respect
to anything done by it in relation to the Notes in, form or otherwise
involving the United Kingdom, and (C) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Notes to a person
who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements)
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(Exemptions) Order 1996 (as amended) or is a person to whom such
document may otherwise lawfully be issued or passed on.
Each Initial Purchaser understands that Cinemark and, for
purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 8 hereof, counsel to Cinemark and counsel to the
Initial Purchasers will rely upon the accuracy and truth of the
foregoing representations and hereby consents to such reliance.
6. INDEMNIFICATION.
(a) Cinemark agrees to indemnify and hold harmless, to the
fullest extent permitted by applicable law, each Initial Purchaser,
each person, if any, who controls any Initial Purchaser within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and the respective officers, directors, partners, employees,
representatives and agents of any Initial Purchaser or any controlling
persons, against any and all losses, liabilities, claims, damages and
expenses whatsoever (including but not limited to reasonable
attorneys' fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any
and all amounts paid in settlement of any claim or litigation
(collectively, "Losses")), joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Offering Memorandum, or in any supplement thereto or amendment
thereof, 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, in the light of
the circumstances under which they were made, not misleading;
provided, however, that Cinemark will not be liable in any such case
to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in the Offering Memorandum in reliance upon and in conformity
with written information furnished to Cinemark by or on behalf of the
Initial Purchasers expressly for use therein. This indemnity
agreement will be in addition to any liability which Cinemark may
otherwise have, including under this Agreement.
(b) Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless Cinemark, each person, if any, who
controls Cinemark within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and the respective officers,
directors, partners, employees, representatives and agents of Cinemark
or any controlling persons, against any and all Losses to which they
may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Offering Memorandum, or in any amendment thereof or supplement
thereto, 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, in the light of
the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to Cinemark by or on behalf of the Initial
Purchasers expressly for use therein; provided, however, that in no
case shall any Initial Purchaser be liable or responsible under this
subsection (b) for any amount in excess of the
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discounts and commissions received by the Initial Purchaser unless
such Losses are a result of the gross negligence or willful misconduct
of the Initial Purchaser. This indemnity will be in addition to any
liability which any Initial Purchaser may otherwise have, including
under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it
may have under this Section 6, except to the extent that it has been
prejudiced in any material respect by such failure, or from any
liability which it may otherwise have). In case any such action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified
party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless
(i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of
such action and the indemnifying party has agreed in writing to pay
the fees and expenses of such counsel, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the
action, or (iii) such indemnified party or parties shall have
concluded, upon the advice of counsel, that there may be defenses
available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which
case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties),
in any of which events such fees and expenses of counsel shall be
borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above, shall only be
liable for the legal expenses of one counsel (in addition to any local
counsel) for all indemnified parties in each jurisdiction in which any
claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable
for any settlement of any claim or action effected without its prior
written consent; provided, however, that such consent was not
unreasonably withheld.
7. CONTRIBUTION.
In order to provide for contribution in circumstances in which
the indemnification provided for in Section 6 is for any reason held to be
unavailable or is insufficient to hold harmless a party indemnified thereunder,
Cinemark, on the one hand, and the Initial Purchasers, on the other hand, shall
contribute to the aggregate losses, claims, damages, liabilities and expenses
of the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by Cinemark, any contribution received by
Cinemark from persons, other than the Initial Purchasers, who may also be
liable for contribution, including persons who control Cinemark within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which
Cinemark and the Initial Purchasers may be subject, in such proportion as is
appropriate to reflect the relative benefits received by Cinemark, on the one
hand, and the Initial Purchasers, on the other hand, from the offering of the
Notes or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the
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indemnifying party not having received notice as provided in Section 6, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of Cinemark, on the one hand, and the
Initial Purchasers, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by Cinemark, on the one hand, and the Initial Purchasers, on
the other hand, shall be deemed to be in the same proportion as (x) the total
proceeds from the offering of Notes (net of discounts and commissions but
before deducting expenses) received by Cinemark, and (y) the discounts and
commissions received by the Initial Purchasers, respectively. The relative
fault of Cinemark, on the one hand, and of the Initial Purchasers, on the other
hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
Cinemark, on the one hand, or the Initial Purchasers, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. Cinemark and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 7, (i) in no case shall the Initial Purchasers be required to
contribute any amount in excess of the amount by which the discounts and
commissions applicable to the Notes purchased by the Initial Purchasers
pursuant to this Agreement exceeds the amount of any damages which the Initial
Purchasers have otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 7, each
person, if any, who controls the Initial Purchasers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and the respective
officers, directors, partners, employees, representatives and agents of the
Initial Purchasers or any controlling persons shall have the same rights to
contribution as the Initial Purchasers, and each person, if any, who controls
Cinemark, within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and the respective officers, directors, partners, employees,
representatives and agents of Cinemark or any controlling persons shall have
the same rights to contribution as Cinemark, subject in each case to clauses
(i) and (ii) of this Section 7. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 7, notify such
party or parties from whom contribution may be sought, but the failure to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 7 or otherwise.
8. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS.
The obligations of the Initial Purchasers to purchase and pay
for the Notes, as provided herein, shall be subject to the following
conditions:
(a) All of the representations and warranties of Cinemark
contained in this Agreement shall be true and correct on the date
hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and the Closing Date, respectively.
Cinemark shall have performed or complied with all of the agreements
herein contained and required to be performed or complied with by it
at or prior to the Closing Date.
(b) The Offering Memorandum shall have been prepared in form
and substance satisfactory to the Initial Purchasers and shall have
been printed and copies distributed to the
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Initial Purchasers in New York as soon as practicable after the date
of this Agreement but not later than 12:00 p.m., New York City time,
on January 13, 1998 or at such later date and time as to which the
Initial Purchasers may agree, and no stop order suspending the
qualification or exemption from qualification of the Notes in any
jurisdiction referred to in Section 4(e) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(c) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which could, as of the Closing Date, reasonably be
expected to have a Material Adverse Effect; no action, suit or
proceeding shall have been commenced and be pending against or
affecting or threatened against, Cinemark or any of its subsidiaries
before any court or arbitrator or any governmental body, agency or
official that, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect; and no stop order shall have
been issued preventing the use of the Offering Memorandum, or any
amendment or supplement thereto, or which could reasonably be expected
to have a Material Adverse Effect.
(d) Since the dates as of which information is given in the
Offering Memorandum and other than as set forth in the Offering
Memorandum, (i) there shall not have been any material and adverse
change or any development that is reasonably likely to result in a
material and adverse change in the long-term debt, or material
increase in the short-term debt, of Cinemark or any of its
subsidiaries from that set forth in the Offering Memorandum, (ii) no
dividend or distribution of any kind shall have been declared, paid or
made by Cinemark or any of its subsidiaries on any class of its
capital stock, and (iii) neither Cinemark nor any of its subsidiaries
shall have incurred any liabilities or obligations other than
contracts entered into in the ordinary course of business, direct or
contingent, that individually or in the aggregate could have a
Material Adverse Effect and that are required to be disclosed on a
balance sheet or notes thereto in accordance with generally accepted
accounting principles and are not disclosed on the latest balance
sheet or notes thereto included in the Offering Memorandum. Since the
date hereof and since the dates as of which information is given in
the Offering Memorandum, there shall not have occurred any material
adverse change in the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of Cinemark
and its subsidiaries taken as a whole.
(e) The Initial Purchasers shall have received a certificate,
dated the Closing Date, signed on behalf of Cinemark by its president
and chief operating officer and its chief financial officer (i)
confirming as of the Closing Date, the matters set forth in paragraphs
(a), (b), (c) and (d) of this Section 8, (ii) stating that on the
Closing Date, Cinemark will use the proceeds of the offering and sale
of the Notes as set forth in the Offering Memorandum, and (iii)
stating that as of the Closing Date, no facts have come to such
officers' attention that would cause such officers to believe that the
Offering Memorandum, as of its date or the Closing Date, contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(f) The Initial Purchasers shall have received on the Closing
Date (i) the opinion, dated the Closing Date, of Akin, Gump, Strauss,
Hauer & Feld, L.L.P., Dallas, Texas, counsel to Cinemark,
substantially to the effect set forth in Exhibit B hereto and (ii) a
statement of Michael D. Cavalier, General Counsel of Cinemark, to the
effect set forth in Exhibit C hereto. In providing such opinion, Akin,
Gump, Strauss, Hauer & Feld, L.L.P., shall opine as to the federal
laws of
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the United States, the laws of the State of Texas and, to the extent
set forth therein, the laws of the State of New York.
(g) The Initial Purchasers shall have received on the Closing
Date the opinion, dated the Closing Date, of Haynes & Boone, counsel
to the Trustee, to the effect that (i) the Trustee is a national
banking association or state chartered bank or trust company and is
duly incorporated and validly existing in good standing under the laws
of the jurisdiction in which it is incorporated, (ii) the Trustee has
the corporate power and authority necessary to enter into the
Indenture and authenticate the Securities as Trustee thereunder, (iii)
the Indenture has been duly and validly authorized, executed and
delivered by the Trustee and is the legal, valid and binding agreement
of the Trustee enforceable against the Trustee in accordance with its
terms and (iv) the Notes have been duly authenticated and delivered by
the Trustee pursuant to the terms of this Agreement and the Indenture.
(h) The Initial Purchasers shall have received on the Closing
Date the opinion, dated the Closing Date, of Simpson Thacher &
Bartlett (a partnership which includes professional corporations),
counsel to the Initial Purchasers, covering such matters as are
customarily covered in such opinions.
(i) Prior to the printing of the Offering Memorandum and at
the Closing Date the Initial Purchasers shall have received from
Deloitte & Touche, L.L.P., independent public accountants for
Cinemark, dated as of the date of this Agreement and as of the Closing
Date, customary comfort letters addressed to the Initial Purchasers
and in form and substance previously agreed upon by the Initial
Purchasers and counsel to the Initial Purchasers with respect to the
financial statements and certain financial information of Cinemark and
its subsidiaries contained in the Offering Memorandum.
(j) Cinemark and the Trustee shall have entered into the
Indenture and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof.
(k) Cinemark shall have entered into the Registration Rights
Agreement and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof.
(l) Simpson Thacher & Bartlett shall have been furnished with
such documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 8 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions
herein contained.
(m) Prior to the Closing Date, Cinemark shall have furnished
to the Initial Purchasers such further information, certificates and
documents as the Initial Purchasers may reasonably request.
All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by Cinemark will be in compliance
with the provisions hereof only if they are reasonably satisfactory in form and
substance to the Initial Purchasers and their counsel. Cinemark will furnish
the Initial Purchasers with such conformed copies of such opinions,
certificates, letters and other documents as they shall reasonably request.
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9. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS.
All representations and warranties, covenants and agreements
of the Initial Purchasers and Cinemark contained in this Agreement, including
without limitation, the agreements contained in Sections 10(d) and 13, the
indemnity agreements contained in Section 6 and the contribution agreements
contained in Section 7, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Initial Purchasers,
any controlling person thereof or by or on behalf of Cinemark or any
controlling person thereof, and shall survive delivery of and payment for the
Notes to and by the Initial Purchasers. The representations contained in
Section 5 and the agreements contained in Sections 6, 7 and 10(d) and 12 shall
survive the termination of this Agreement, including any termination pursuant
to Section 10.
10. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to Cinemark from
the Initial Purchasers, without liability (other than with respect to Sections
6 and 7) on the Initial Purchasers' part to Cinemark if, on or prior to such
date, (i) Cinemark shall have failed, refused or been unable to perform in any
material respect any agreement on its part to be performed hereunder, (ii) any
other condition to the obligations of the Initial Purchasers hereunder as
provided in Section 8 is not fulfilled when and as required in any material
respect, (iii) in the reasonable judgment of the Initial Purchasers, any
material adverse change shall have occurred since the respective dates as of
which information is given in the Offering Memorandum in the condition
(financial or otherwise), business, properties, assets, liabilities, prospects,
net worth, results of operations or cash flows of Cinemark and its
subsidiaries, taken as a whole, other than as set forth in the Offering
Memorandum, or (iv)(A) any domestic or international event or act or occurrence
has materially disrupted, or in the opinion of the Initial Purchasers will in
the immediate future materially disrupt, the market for Cinemark's securities
or for securities in general; or (B) trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market
shall have been suspended or materially limited, or minimum or maximum prices
for trading shall have been established, or maximum ranges for prices for
securities shall have been required, on such exchange, or by such exchange or
other regulatory body or governmental authority having jurisdiction; or (C)
trading of any securities of Cinemark shall have been suspended on any exchange
or in any over-the-counter market; or (D) a banking moratorium shall have been
declared by federal or state authorities, or a moratorium in foreign exchange
trading by major international banks or persons shall have been declared; or
(E) there is an outbreak or escalation of armed hostilities involving the
United States on or after the date hereof, or if there has been a declaration
by the United States of a national emergency or war, the effect of which shall
be, in the Initial Purchasers' judgment, to make it inadvisable or
impracticable to proceed with the offering or delivery of the Notes on the
terms and in the manner contemplated in the Offering Memorandum; or (F) there
shall have been such a material adverse change in general economic, political
or financial conditions or if the effect of international conditions on the
financial markets in the United States shall be such as, in the Initial
Purchasers' judgment, makes it inadvisable or impracticable to proceed with the
offering or delivery of the Notes as contemplated thereby; or (G) (1) there
shall have occurred a downgrading in the rating accorded the Notes by any
"nationally recognized statistical rating organization" as that term is defined
by the Commission for purposes of Rule 436(g)(2) of the rules and regulations
of the Commission under the Act or (2) any such organization shall have
publicly announced that it has
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under surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Notes.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, telephonic facsimile, or telegraph, confirmed in
writing by letter within three days thereof.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than a termination pursuant to Section 11(b)(iv))
or if the sale of the Notes provided for herein is not consummated because any
condition to the obligations of the Initial Purchasers set forth herein is not
satisfied or because of any refusal, inability or failure on the part of
Cinemark to perform any agreement herein or comply with any provision hereof,
Cinemark will, subject to demand by the Initial Purchasers, reimburse the
Initial Purchasers for all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of Initial Purchasers' counsel), incurred by the
Initial Purchasers in connection herewith.
11. DEFAULTING INITIAL PURCHASERS.
(a) If, on the Closing Date, any Initial Purchaser defaults
in the performance of its obligations under this Agreement, the remaining
non-defaulting Initial Purchaser may make arrangements for the purchase of the
Notes by other persons satisfactory to Cinemark and the non-defaulting Initial
Purchaser, but if no such arrangements are made within 36 hours after such
default, this Agreement shall terminate without liability on the part of the
non-defaulting Initial Purchaser or Cinemark, except that Cinemark will
continue to be liable for the payment of expenses only to the extent set forth
in Sections 11(d) and 13(a) and except that the provisions of Sections 6 and 7
shall not terminate and shall remain in effect. As used in this Agreement, the
term "Initial Purchaser" includes, for all purposes of this Agreement unless
the context otherwise requires, any party not listed in Schedule I hereto who,
pursuant to this Section 12, purchases the Notes which a defaulting Initial
Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to Cinemark or the
non-defaulting Initial Purchaser for damages caused by its default. If other
persons are obligated or agree to purchase the Notes of a defaulting Initial
Purchaser, either the non-defaulting Initial Purchaser or Cinemark may postpone
the Closing Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for Cinemark or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement and Cinemark agrees to promptly make any amendment or supplement
to the Offering Memorandum that effects any such changes.
12. FEES AND EXPENSES.
(a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
Cinemark agrees to pay all costs, expenses, fees and taxes in connection with
this Agreement and the transactions contemplated hereby and by the other
Operative Documents, including without limitation all costs, expenses, fees and
taxes relating to: (i) the preparation, printing, filing and distribution of
the Offering Memorandum (including, without limitation, financial statements)
and all amendments and supplements thereto required pursuant hereto, (ii) the
preparation (including, without limitation, duplication costs) and delivery of
this Agreement, the other Operative Documents, all preliminary and final Blue
Sky memoranda and all other agreements, memoranda, correspondence and other
documents prepared and delivered in connection herewith and with the Exempt
Resales, (iii) the issuance, transfer and delivery by Cinemark of the
Securities to the Initial Purchasers, (iv) the qualification or registration of
the Securities for offer and sale under the securities or
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Blue Sky laws of the jurisdictions referred to in paragraph (e) above
(including, without limitation, the cost of printing and mailing a preliminary
and final Blue Sky Memorandum and the reasonable fees and disbursements of
counsel to the Initial Purchasers relating thereto), (v) furnishing such copies
of the Offering Memorandum, and all amendments and supplements thereto, as may
be reasonably requested for use in connection with Exempt Resales, (vi) the
preparation of certificates for the Securities (including, without limitation,
printing and engraving thereof), (vii) the fees, disbursements and expenses of
counsel to Cinemark and its independent public accountants, (viii) all expenses
and listing fees in connection with the application for quotation of the Notes
in the PORTAL market, (ix) all fees and expenses (including fees and expenses
of counsel to Cinemark) of Cinemark in connection with the approval of the
Securities by DTC for "book-entry" transfer, (x) rating the Securities by
rating agencies, (xi) the fees and expenses of the Trustee and its counsel in
connection with the Indenture and the Securities, (xii) the performance by
Cinemark of its other obligations under this Agreement and the other Operative
Documents and (xiii) other expenses incurred by Cinemark in connection with the
marketing and sale of the Securities.
(b) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
and except as otherwise provided in Section 11(d), the Initial Purchasers agree
to pay all of their out-of-pocket expenses not specifically provided for in
Section 13(a) hereof, including the fees and expenses of Initial Purchasers'
counsel.
13. NOTICE.
All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchasers shall be mailed, delivered, or telexed, telegraphed or telecopied
and confirmed in writing to Simpson Thacher & Bartlett, 425 Lexington Avenue,
New York, New York 10017, Attention: Gary L. Sellers, Esq., telecopy number:
(212) 455-2502; and if sent to Cinemark, shall be mailed, delivered or telexed,
telegraphed or telecopied and confirmed in writing to Cinemark USA, Inc., 7502
Greenville Avenue, Suite 800, Dallas, Texas 75231, Attention: Jeffrey J.
Stedman and Michael D. Cavalier, telecopy number: (214) 369-9972, with a copy
to Akin, Gump, Strauss, Hauer & Feld, L.L.P., 1700 Pacific Avenue, Suite 4100,
Dallas, Texas 75201, Attention: Terry M. Schpok, P.C., telecopy number:
(214) 969-4343; provided, however, that any notice pursuant to Sections 6 or 7
shall be mailed, delivered or telexed, telegraphed or telecopied and confirmed
in writing within three days thereof.
14. PARTIES.
This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Initial Purchasers, Cinemark and the controlling persons
and agents referred to in Sections 6 and 7, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. The term "successors and assigns"
shall not include a purchaser, in its capacity as such, of the Notes from the
Initial Purchasers.
15. CONSTRUCTION.
This Agreement shall be construed in accordance with the
internal laws of the State of New York. Time is of the essence in this
Agreement.
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16. CAPTIONS.
The captions included in this Agreement are included solely
for convenience of reference and are not to be considered a part of this
Agreement.
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17. COUNTERPARTS.
This Agreement may be executed in various counterparts which
together shall constitute one and the same instrument.
Very truly yours,
CINEMARK USA, INC.
By: /s/ JEFFREY J. STEDMAN
--------------------------------
Name: Jeffrey J. Stedman
Title: Senior Vice President
Accepted and agreed to as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
By: /s/ JOEL P. FELDMANN
---------------------------
Name: Joel P. Feldman
Title: Managing Director
BANCAMERICA ROBERTSON STEPHENS
By: /s/ BRUCE R. THOMPSON
---------------------------
Name: Bruce R. Thompson
Title: Managing Director
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SCHEDULE I
Aggregate Principal
Initial Purchasers Amount of Notes
- ------------------ ---------------
Morgan Stanley & Co. Incorporated $ 94,500,000
BancAmerica Robertson Stephens 10,500,000
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Total $105,000,000
S-1