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EXHIBIT 1.2
CINEMASTAR LUXURY THEATERS, INC.
431 College Boulevard
Oceanside, CA 92057
WARRANT SOLICITATION AGREEMENT
AGREEMENT dated this 16th day of September 1996, by and among the
Boston Group, L.P. (the "Soliciting Agent") and CinemaStar Luxury Theaters, Inc.
("CinemaStar").
WITNESSETH:
WHEREAS, CinemaStar has offered to the holders of its warrants to
purchase one share of Common Stock that expire on February 6, 2000 (the
"Redeemable Warrants") to lower the exercise price from $6.00 to $4.00 for each
Redeemable Warrant and to issue upon the exercise of each Redeemable Warrant
one share of Common Stock (no par value) and one Class B Redeemable Warrant
which enables the holder thereof to purchase one share of Common Stock at an
exercise price of $7.50 per Class B Warrant ("the Offer").
WHEREAS, CinemaStar has filed, with the Securities and Exchange
Commission, a Prospectus dated September 16, 1996 as part of a Registration
Statement on Form SB-2 (the "Prospectus") relating to the Offer and;
WHEREAS, CinemaStar desires to engage the Soliciting Agent to assist in
the solicitation of the exercise of the Redeemable Warrants and the Soliciting
Agent is willing to be so engaged pursuant to the terms stated herein.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
1. Engagement. CinemaStar hereby engages and appoints the Soliciting
Agent to serve as its exclusive Solicitation Agent for CinemaStar in connection
with the Offer.
2. Solicitation. The Soliciting Agent is hereby authorized to solicit
holders of the Redeemable Warrants pursuant to the terms hereof and of the
enclosed Prospectus or any revisions thereof, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the applicable
rules and regulations of the Securities and Exchange Commission thereunder, the
Rules of Fair Practice of the National Association of Securities Dealer(s),
Inc., and the applicable state securities laws and regulations.
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3. Solicitation Material. Copies of the Prospectus relating to
the Offer have been furnished to the Soliciting Agent with this Agreement and
the Soliciting Agent agrees to deliver a copy of the then effective Prospectus
to each Redeemable Warrant holder. The Soliciting Agent is authorized to use
only such documents and other Offer literature prepared by CinemaStar and the
Soliciting Agent is not authorized to make use of any Prospectus or to make use
of soliciting literature not so prepared or furnished, or to make any
representations or furnish any information other than that contained in the
Prospectus or in such sales literature. The Soliciting Agent will be supplied
without charge a reasonable number of Prospectuses and other soliciting
literature as may, from time to time, be prepared. The Soliciting Agent agrees
not to deliver any soliciting literature to any person unless accompanied or
proceeded by the then effective Prospectus.
4. Offer Acceptance Procedures. Executed and exercised Redeemable
Warrants together with cash or a certified or official bank check made payable
to CinemaStar Luxury Theaters, Inc. in the amount of the aggregate exercise
price should be mailed to Continental Stock Transfer & Trust Company,
("Depository"). If Redeemable Warrants and checks are received by the
Soliciting Agent, the Soliciting Agent agrees to deliver such Redeemable
Warrants, and checks to the Depositary immediately upon its receipt. Upon
receipt of the proper consideration, the Redeemable Warrant properly completed
and executed by the record holders, and after acceptance by CinemaStar as set
forth in the Offer, the Depository will deliver one share of Common Stock and
one Class B Warrant.
5. Fee. Subject to the valid exercise by the holder of the
Redeemable Warrants, the Soliciting Agent is entitled to receive from
CinemaStar a fee equal to four percent (4%) of the exercise price paid upon
each tender and exercise of the Redeemable Warranty pursuant to the Offer. In
addition, CinemaStar agrees to pay the Soliciting Agent a fee equal to four
percent (4%) of the proceeds upon exercise of each Class B Warrant.
6. Expenses. Whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, CinemaStar agrees to
pay all costs, fees and expenses, incurred in connection with the performance
of its obligations hereunder and in connection with the transactions
contemplated hereby, including (i) all filing fees, attorneys' fees and
expenses incurred by CinemaStar or the Soliciting Agent in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) under the Blue Sky laws, (ii) the filing fee of the National
Association of Securities Dealers, Inc., (iii) all other fees, costs and
expenses referred to in Item 25 of the Registration Statement, and (iv) shall
reimburse the Soliciting Agent for any and all of its reasonable out-of-pocket
expenses, including fees and disbursements of its counsel not to exceed
$25,000, incurred by the Soliciting Agent in connection with the Soliciting
Agent's performance of this Agreement.
7. Inspection of Records. During the period of the Offer and for
thirty (30) days thereafter, but in no event after the termination of this
Agreement, the Soliciting Agent may, at any time during business hours, examine
the records of CinemaStar and the Depository which relates to the Offer.
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8. Termination. The term of this Agreement shall be the longer of
(i) five (5) years from and after the date first above written or (ii) one (1)
year after expiration of the last to expire of the Class B Warrants. The
obligations of CinemaStar provided for in Section 5 and 6 above and Section 9
below shall survive the termination of expiration of the term of this
Agreement.
9. Indemnification. CinemaStar agrees to indemnify and hold
harmless the Soliciting Agent, the directors, officers, employees and agents of
the Soliciting Agent and each person who controls the Soliciting Agent within
the meaning of Section 15 of the Securities Act of 1933, as amended (the "Act")
or Section 20 of the Exchange Act of 1934, as amended (the "Exchange Act")
against any and all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject under the Act, the Exchange
Act, or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or action in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement as
originally filed, or in any amendment thereof, or in any Preliminary Prospectus
or the Prospectus, or any amendment thereof, or supplement thereto, or any of
the soliciting literature provided by CinemaStar, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action.
10. Notices. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be deemed sufficiently
given if sent by first-class mail, postage prepaid, addressed as follows: if to
CinemaStar, at 431 College Boulevard, Oceanside, CA 92057, Attention: John
Ellison, President, with copies to Ron Givner, Jeffer, Mangels, Butler &
Marmaro LLP; if to the Soliciting Agent, at 1999 Avenue of the Stars, Suite
2500, Los Angeles, CA 90067, Attention: Robert DiMinico, Chairman, with copies
to Barry D. Falk, Jeffers, Wilson & Shaff, LLP.
11. Supplements and Amendments. CinemaStar and the Soliciting
Agent may from time to time supplement or amend this Agreement in writing
without the approval of any holders of Redeemable Warrants in order to cure any
ambiguity or to correct or supplement any provisions contained herein or to
make any other provisions in regard to matters or questions arising hereunder
which CenemaStar and the Soliciting Agent may deem necessary or desirable and
which do not adversely affect the interests of the holders of Redeemable
Warrants.
12. Assignments. This Agreement may not be assigned by any party
without the express written approval of all other parties, except that the
Soliciting Agent may assign this Agreement to its successors.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of New York.
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14. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any person or corporation other than CinemaStar and the
Soliciting Agent any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of
CinemaStar and the Soliciting Agent.
15. Descriptive Headings. The descriptive headings of the sections
of this Agreement are inserted for convenience only and shall not control or
affect the meanings or construction of any of the provisions hereof.
16. Enforceability. If any of the provisions of this Agreement are
held to be void or unenforceable, all of the other provisions shall nonetheless
continue in full force and effect.
17. Waiver. The waiver by any of the parties hereto of a breach or
alleged breach of the terms of this Agreement by the other party shall not
constitute a waiver of any other breach or alleged breach.
18. Entire Agreement. This Agreement supersedes all previous
arrangements and agreements whether written or oral, and comprises the entire
agreement, between CinemaStar and the Soliciting Agent in respect of the
subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CINEMASTAR LUXURY THEATRES, INC.
/s/ John Ellison, Jr.
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John Ellison, Jr., President
AGREED and ACCEPTED:
We agree and accept all the terms and conditions stated in the above
Agreement. We hereby acknowledge receipt of copies of the Prospectus referred
to above.
Dated: September 16, 1996
THE BOSTON GROUP, L.P.
"Soliciting Agent"
By: /s/ Robert DiMinico
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Robert DiMinico, Chairman
Address: 1999 Avenue of the Stars,
Suite 2500, Los Angeles, California
90067
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