1
Exhibit 99.5
DEPOSITARY AGREEMENT
September __, 1996
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Ladies and Gentlemen:
CinemaStar Luxury Theaters, Inc., a California corporation
(the "Company"), proposes to offer (the "Offer") to holders of its outstanding
Redeemable Warrants the right to exercise such Redeemable Warrants for
$__________ per Redeemable Warrant and receive one share of Common Stock, ($.01)
(the "Common Stock") and one Class B Redeemable Warrant ("Class B Warrants")
upon the exercise of each Redeemable Warrant. Each Class B Warrant entitles the
holder thereof to purchase one share of Common Stock at a specified exercise
price. The Offer is being made all in accordance with and subject to the terms
and conditions set forth in a Prospectus (the "Prospectus") of the Company dated
September __, 1996.
The Offer will commence upon the mailing to holders of the
Redeemable Warrants the Prospectus (the "Initial Date"), and will terminate at
the date and time as set forth in the Prospectus, subject to extension by the
Company by written notice, or by oral notice promptly confirmed in writing, to
you (such time and date, as they may be extended, are herein referred to as the
"Expiration Date"). The terms of the Offer are set forth in the Prospectus.
Subject to the provisions hereof, the Company hereby appoints
you, and you hereby agree to act, as the Depository for purposes of receiving,
accepting for delivery and otherwise acting upon tenders and exercises of the
Redeemable Warrants in accordance with the Prospectus and with the terms and
conditions of the Offer.
In connection with your appointment as Depository, the
following documents have been delivered to you:
(a) A copy of the Prospectus;
(b) The Class B Warrant Agreement; and
(c) Specimen of the Class B Warrants.
You are hereby authorized and you hereby agree:
(a) To receive all tenders and exercises of Redeemable
Warrants made pursuant to the Offer;
(b) To examine each Redeemable Warrant delivered or
mailed to you to determine whether or not all
requirements necessary to constitute a valid tender
and exercise of the Redeemable Warrant, as set forth
in the Prospectus,
2
have been met. All Redeemable Warrants must be
tendered and exercised on the terms and conditions
set forth in the Prospectus, unless waived by the
Company. You are not authorized to accept any
alternative, conditional or contingent tender and
exercises, or any other tender and exercises that you
deem to have been improperly made, except with the
consent of the Company. In the event a Redeemable
Warrant Certificate has been improperly completed or
executed or in the case where a Redeemable Warrant
Certificate do not bear the requisite endorsement or
are not accompanied by appropriate stock powers (if
required by the Offer), or if some other irregularity
in connection with the purported tender and exercise
exists, you will endeavor to take such action as you
believe necessary and appropriate to cause such
irregularity to be corrected. You may notify the
person tendering and exercising the Redeemable
Warrants in writing and/or by telephone of each such
irregularity or defect. The determination to waive
any irregularities or conditions to tenders and
exercises or granting of consents shall be made
solely by the Company, and the determination made by
the Company shall be final and binding;
(c) To record (including day, month and approximate time
of receipt) and hold, subject to farther instructions
from the Company, all tenders and exercises of
Redeemable Warrants received by you (along with all
funds so received) and determined to have been
validly made;
(d) To report periodically to the Company and The Boston
Group, L.P., the Company's Solicitation Agent for the
Offer, on the number of tenders and exercises made
and the number of Redeemable Warrants surrendered;
(e) To accept delivery of tenders and exercises made
without the initial receipt and deposit of Redeemable
Warrants by actual delivery or by book-entry transfer
as described in the Offer, if:
(1) the Notice of Guaranteed Delivery has been
executed by an Eligible Institution (as
defined in the Offer) and the holder prior
to the Expiration Date; and
(2) the Redeemable Warrants, the exercise price
and any other documents required by the
Offer are received by you within three New
York Stock Exchange trading days after the
Expiration Date, and to record the day,
month and approximate time that the
documentation and funds referred to in
clauses (i) and (ii) is received by you;
(f) In the event a holder of shares of Redeemable
Warrants delivers to you a number of Redeemable
Warrants in excess of the number of Redeemable
Warrants actually tendered and exercised under the
Offer, to return such Redeemable Warrants to the
tendering Redeemable Warrants in accordance with the
Offer;
(g) To follow and to act in accordance with the terms of
the Offer and amendments, modifications or
supplements to these instructions, and upon any
-2-
3
further instructions in connection with the Offer,
any of which may be given to you by the President,
the Chief Financial Officer or any Vice President of
the Company or such other person or persons as the
Company shall designate in writing, including
instructions with respect to any extension of the
Offer;
(h) To return to the tendering and exercising holders of
Redeemable Warrants, in accordance with the
provisions of the Offer, any Redeemable Warrants that
were not properly tendered and exercised and as to
which the irregularities or defects were not cured or
waived, or Redeemable Warrants that were withdrawn in
accordance with the terms of the Offer as described
in the Prospectus, or if the Offer is terminated in
accordance with its terms;
(i) If the Offer has been consummated, to deliver as soon
as practicable, but not earlier than seven days after
the Expiration Date, by First Class Mail, postage
prepaid, to holders of shares of Redeemable Warrants
who have properly tendered and exercised and whose
tenders and exercises have been accepted by the
Company, the Common Stock and Class B Warrants as set
forth in the Offer, at the addresses specified in
such Redeemable Warrants with proper procedures to
ensure the protection of the Common Stock and Class B
Warrants during mailing;
(j) To follow and act upon ail instructions properly
completed and given pursuant to any Offer received by
you;
(k) To return all certificates for Redeemable Warrants
properly tendered and exercised to the Company as
directed by the Company; and
(l) To maintain such records with respect to the Offer as
the Company may reasonably request at the Company's
cost and expense.
You acknowledge that you have a list as of a recent date of
all holders of Redeemable Warrants eligible to tender and exercise such
Redeemable Warrants pursuant to the Offer, and a fist of the number of
Redeemable Warrants owned of record by each such holder.
As Depository you:
(a) shall have no duties or obligations other than those
specifically set forth herein or as may subsequently
be agreed to by you and the Company;
(b) will not be required to and will make no
representations and have no responsibilities as to
the validity, accuracy, value or genuineness of (i)
the Offer, (ii) any Redeemable Warrants or documents
deposited with you, (iii) any Common Stock and Class
B Warrants delivered by you pursuant to the Offer,
(iv) any documents prepared by the Company in
connection with the Offer, or (v) any signatures or
endorsements, other than your own;
(c) shall not be obligated to take any legal action
hereunder that might in your reasonable judgment
involve any expense or liability unless you have been
furnished with reasonable indemnity by the Company;
-3-
4
(d) may rely on and shall be protected in acting on the
written or oral instructions with respect to any
matter relating to your actions as Depository
specifically covered by this Agreement or
supplementing or qualifying any such instructions of
any officer of the Company authorized to give
instructions under paragraph (g) above;
(e) may rely on and shall be protected in acting upon any
certificate, instrument, opinion, notice, letter,
telegram or any other document or security delivered
to you and reasonably and in good faith believed by
you to be genuine and to have been duly signed by the
proper party or parties;
(f) may consult counsel satisfactory to you (including
counsel for the Company) and the advice or opinion of
such counsel shall be full and complete authorization
and protection in respect of any action taken,
suffered or omitted by you hereunder in good faith
and in accordance with such advice or opinion of such
counsel;
(g) shall not be called on at any time to advise, and
shall not advise, any person tendering pursuant to
the Offer as to the value of the Redeemable Warrants
tendered and exercised pursuant to the Offer; and
(h) shall not be liable for anything which you may do or
refrain from doing in connection with this Agreement
except for your own gross negligence, willful
misconduct or bad faith.
For your services as Depository you shall be entitled to fees
in the amounts agreed upon and stated in a separate letter attached hereto as
Exhibit A. The Company shall indemnify and hold you harmless against any loss or
liability incurred, without gross negligence, willful misconduct or bad faith on
your part, arising out of or in connection with the administration of your
duties hereunder, including the cost of defending you against any such claim or
liability; provided, however, that this indemnity shall not extend to any losses
of Redeemable Warrants certificates or other documents occurring in the process
of delivery of Redeemable Warrants Stock to you or Common Stock and Class B
Warrants by you. In no case shall the Company be liable pursuant to this
paragraph with respect to any claim against you unless you shall have notified
the Company by letter, or by cable or telex confirmed by letter, of the written
assertion of a claim against you or of any action commenced against you,
promptly after you shall have received any such written assertion of any such
claim or shall have been served with the summons or other first legal process
giving information as to the nature and basis of the claim, but failure so to
notify the Company shall not relieve the Company from any liability which it may
have otherwise than pursuant to this paragraph. The Company shall be entitled to
participate at its own expense in the defense of any such claim which may be
asserted against you, and if the Company so elects at any time after receipt of
such notice, the Company may assume the defense of any suit brought to enforce
any such claim; provided, however, that if there exists a conflict of interest
which would make it inappropriate for the same counsel to represent both you and
the Company, you shall be entitled to retain your own counsel at the expense of
the Company, Notwithstanding the foregoing, the Depository may retain its own
counsel in connection with the defense of any such claim at its own expense.
-4-
5
This Depository Agreement shall be construed and enforced in
accordance with the laws of the State of New York and shall inure to the benefit
of and the obligations created hereby shall be binding upon the successors and
assigns of the parties hereto.
Unless otherwise expressly provided herein, all notices,
requests, demands and other communications hereunder shall be in writing, shall
be delivered by hand, by telephonic facsimile transmission with a confirmed
telephonic transmission answer back or by First Class Mail, postage pre-paid,
shall be deemed given when received and shall be addressed to you and the
Company at the respective addresses listed below or to such other addresses as
you or the Company shall designate from time to time in writing forwarded in
like manner.
If to the Company, to: CinemaStar Luxury Theaters
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attn: John Ellison, Jr.
With copies to: Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attn: Joel I. Bennett, Esq.
If to you, to: Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Attn: Compliance Department
If you are in accord with the above, please indicate your
agreement herewith by having an authorized officer sign the enclosed copy of
this letter as indicated and return it to the undersigned.
Very truly yours,
CINEMASTAR LUXURY THEATERS, INC.
By:___________________________________
John Ellison, Jr.
President
Agreed to and Accepted:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By:______________________________
William F. Seegraber,
Vice President
Date: September __, 1996
-5-