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EXHIBIT 10.3
PURCHASE SALE OF STOCK AGREEMENT OF CINEMASTAR LUXURY THEATERS, S.A DE C.V.,
ENTERED INTO BETWEEN ATLANTICO & ASS, S.A. DE C.V., REPRESENTED HEREIN BY MR.
MARCO ANTONIO ALEMAN BONILLA, HEREINAFTER REFERRED TO AS THE "SELLER", AND ON
THE OTHER PART BY CINEMASTAR LUXURY THEATERS, INC. AND CINEMASTAR LUXURY
CINEMAS, INC., COMPANIES DULY INCORPORATED UNDER THE LAWS OF THE UNITED STATES,
HEREINAFTER JOINTLY REFERRED TO AS THE "BUYER", REPRESENTED HEREIN BY MR. FRANK
J. MORENO, PURSUANT TO THE FOLLOWING RECITALS AND CLAUSES:
RECITALS
I. The SELLER hereby represents:
a) That SELLER is the owner of 25% of the capital stock of the company
Cinemastar Luxury Theaters, S.A de C.V. (henceforth referred to as
CINEMASTAR) a corporation duly existing and formed in accordance with
the laws of the Mexican Republic, and they are willing to transfer
their interests in favor of Cinemastar Luxury Theaters, Inc. and
Cinemastar Luxury Cinemas, Inc., through the execution of this
purchase sale of stock agreement (the "Agreement").
b) That CINEMASTAR by-laws were duly formalized by means of public
instrument number 6800, volume 270, passed before the faith of Mr.
Marco Antonio Mayo Barron, Notary Public number 11, in the city of
Tijuana, Baja California. The by-laws were recorded at the Public
Registry of Property and Commerce of the city of Tijuana, State of
Baja California, under entry number 5067316, Commerce Section, on
April 23, 1996.
c) That the capital stock and shares that SELLER owns are 425 of Series
"B".
d) That SELLER's shares are free and clear of all liens, security
interests, claims or liabilities with respect to taxes, pledges,
voting rights, or similar restrictions of any kind whatsoever.
e) That his authority to act on behalf of the SELLER is currently in
force and it has not been revoked nor limited in any manner
whatsoever.
f) That SELLER wishes to transfer its CINEMASTAR interests to the BUYERS
with the following binding terms and conditions.
II. THE BUYERS' representative states:
a) Cinemastar Luxury Theaters, Inc. and Cinemastar Luxury Cinemas, Inc.
are companies duly formed and incorporated in accordance with the laws
of the United States of America.
b) That Cinemastar Luxury Theaters, Inc. has a legitimate interest in
acquiring 424 shares of the stock interest owned by the SELLER,
providing that all requirements of law have been met to perfect the
transfer of shares in accordance with the laws of the Mexican
Republic.
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c) That Cinemastar Luxury Cinemas, Inc. has a legitimate interest in
acquiring 1 share of the stock interest owned by the SELLER, providing
that all requirements of law have been met to perfect the transfer of
shares in accordance with the laws of the Mexican Republic.
d) That his authority to act on behalf of the BUYERS is currently in
force and has not been revoked nor limited in any manner whatsoever.
III. The consummation of the purchase and sale of the 425 shares as provided for
in this Agreement (the "Closing") shall take place at the offices of
CinemaStar, on November 23, 1998 (the "Closing Date"). The certificates
representing the 425 shares and appropriately executed stock powers shall
be delivered to Buyers.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
CLAUSES
CLAUSE 1. PURCHASE AND SALE OF STOCK.
1.1 PURCHASE OF STOCK. In accordance with the terms and subject to the
conditions specified in this agreement, the SELLER in this act sells,
assigns, conveys, transfers, and delivers to the BUYERS the
certificates, as well as the entire rights, title and interest of 425
shares of CINEMASTAR, and the BUYERS purchase and acquire the entire
right, title, and interest of said shares, free and clear of all
liens, security interests, claims, or liabilities with respect to
taxes, pledges, voting agreements, or similar restrictions of any kind
whatsoever, with the understanding that Cinemastar Luxury Theaters,
Inc. acquire 424 shares, and Cinemastar Luxury Cinemas, Inc. acquire 1
share of the stock interest owned by the SELLER.
CLAUSE 2. PURCHASE PRICE.
2.1 The BUYERS shall pay as a purchase price to the SELLER the amount of
US $330,000.00 (three hundred and thirty thousand dollars 00/100) for
the transfer of SELLER's ownership interest in CINEMASTAR (the
"Purchase Price").
2.2 The BUYERS shall receive the full Purchase Price by means of a
certified check upon execution of this agreement.
CLAUSE 3. WARRANTIES AND REPRESENTATIONS OF THE SELLER.
3.1 That, to the extent of their knowledge, all recitals and declarations
made by them are correct and truthful.
3.2 That CINEMASTAR is currently in strict compliance of all obligations
regarding environmental, sanitary, labor, social security, and tax
issues
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applicable by law, and that it has obtained proper authorizations,
permits, and licenses required by law for its daily course of
business.
3.3 That CINEMASTAR does not have any outstanding debts , nor any economic
or administrative contingency regarding the concepts to which are
referred in paragraph 3.2 above, arising from of violations or failure
to comply with the respective laws.
3.4 That CINEMASTAR is current in the payment of its taxes and other
contributions, as well as governmental fees and utilities charges,
whether federal, state or municipal.
3.5 That CINEMASTAR has no pending lawsuits, trials, proceedings, claims,
investigations, or any other circumstance of any nature from any
individual, corporation or governmental agency against it, or of which
it may be a part, and as a consequence could result in a contingent or
real liability for CINEMASTAR.
3.6 That policies for human resources administration, salaries, and other
labor and fringe benefits, as well as the occupational health and
safety measures, and training and skill development programs being
implemented by the company with regard to its employees, are in strict
observance of the tax, labor, environmental, and social security
regulations.
3.7 The Seller is a corporation duly organized, validly existing and in
good standing under the laws of Mexico, state of Baja California, and
has full power, corporate or otherwise, legal capacity and authority
to enter into and perform its obligations under this Agreement.
3.8 The Seller has taken all action required by law, its Articles of
Incorporation, and its Bylaws to authorize the execution, delivery and
performance of this Agreement.
3.9 This Agreement, upon execution and delivery, shall constitute the
legal, valid and binding act of the Seller, enforceable against the
Seller in accordance with its terms (except as enforcement may be
limited by bankruptcy, insolvency, reorganization, priority, or other
laws relating to or affecting the enforcement of creditors' rights or
by laws affecting generally the availability of equitable remedies).
3.10 The 425 shares shall be issued and delivered to the Buyers free and
clear of any and all liens, encumbrances, security interests, pledges,
claims, voting trust agreements and equities of any kind or nature
except for the interests and encumbrances created by this Agreement.
3.11 Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby: (A) violate,
conflict with, result in a breach of, or constitute a default under
the Articles of Incorporation, Bylaws or other organizational
documents of the Seller, or any agreement, instrument or obligation to
which the Seller is a party, or by which its assets
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may be bound or affected; (B) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Seller; or (C)
require the consent, approval or permission of any third party.
CLAUSE 4. INDEMNITY.
4.1 In addition to the ability of the BUYERS to conduct all kinds of
investigations on the subject, the SELLER agrees to defend, indemnify
and hold harmless the BUYERS, its representatives, shareholders,
administrators, divisions, departments, affiliate companies, parent
companies, holdings, employees, agents, successors, assignees, and
other subordinates, against any and all losses, claims, lawsuits,
actions, damages, liabilities, expenses, and other costs of any nature
and amount (including legal fees), demanded or not demanded, known or
unknown, foreseen or unforeseen, ordinary or extraordinary, that may
arise on or after the execution of this agreement as a consequence of:
4.1.1 Inaccuracies, false statements or failures to comply with all
the recitals, clauses, and warranties granted herein or agreed
upon by the SELLER in this agreement.
4.1.2 Default of the SELLER with regard to compliance of any term,
condition, clause, or obligations contained in or derived from
the present agreement.
4.1.3 Debt or accounts payable to third parties, including tax
credits, based on which any creditor may have a right or
interest in CINEMASTAR's shares.
4.1.4 The existence of creditors not previously disclosed to the
BUYERS.
It is hereby understood that if the BUYERS have suffered hardship, loss,
claim, lawsuit, action, damage or the necessity to deal with or make
themselves responsible for any liability, expenses, or other costs of any
nature and amount stated in this clause, or paid or received by the BUYERS
or its parent companies, affiliate companies, or employees, the SELLER
hereby obligates itself to reimburse and pay in full all such expenses and
other costs as defined in this clause, within 10 days following the date on
which SELLER is notified of such expenses or damages suffered by the
BUYERS. Such notice must be acknowledged by means of a receipt and
forwarded in writing to the address stated herein for all of the SELLERS.
CLAUSE 5. NOTICES.
5.1 All communications, notices, service of process, requests, citations,
and any other that must be made between the parties relating to this
agreement, including but not limited to changes of domicile, as stated
below, must be delivered at the following domiciles:
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BUYER SELLERS
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CLAUSE 6. TAXES.
6.1 The parties agree that each party shall be exclusively responsible
for payment of the corresponding taxes derived from the transfer of
the shares. Specifically, the SELLER shall be responsible for
payment of the corresponding income tax caused as a consequence of
their transfer of shares in favor of the BUYERS.
CLAUSE 7. AMENDMENTS TO THIS AGREEMENT.
7.1 Any amendment or addition to the present agreement shall not produce
legal effect unless same is made in writing and duly signed by all
of the parties executing this instrument.
CLAUSE 8. WAIVER OF RIGHTS.
8.1 The SELLER represents that CINEMASTAR does not owe it any
compensation, amount or dividend in the present or future, and thus
expressly waives any right to claim any amount relating to same.
8.2 Therefore, the sole consideration to be paid to the SELLER are those
amounts agreed upon herein.
CLAUSE 9. INTERPRETATION, COMPLIANCE, JURISDICTION AND VENUE.
9.1 Any controversy or dispute arising from, related to, or as
consequence of the interpretation and compliance of this agreement
will be determined by the laws of the Mexican United States, and
therefore, parties submit to the venue of a jurisdiction of the
courts of the city of Tijuana, Baja California, Mexico.
CLAUSE 10. SURVIVAL.
10.1 The representations and warranties of the parties set forth above
shall survive the Closing.
CLAUSE 11. BINDING AGREEMENT.
11.1 This Agreement shall inure to the benefit of and be binding on the
parties hereto and on each of their respective heirs, executors,
successors, personal representatives, and assigns.
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CLAUSE 12. SEVERABILITY.
12.1 Should any other provision or portion of this Agreement be held
unenforceable or invalid for any reason, the remaining provisions
and portions of this Agreement shall be unaffected by such holding,
unless to do so would alter substantially the intended effect of
this Agreement.
CLAUSE 13. SPECIFIC PERFORMANCE.
13.1 The parties acknowledge and agree that the 425 shares cannot be
readily purchased and sold in the open market, and for that reason,
among others, the parties agree that failure to perform the
obligations under this Agreement will result in irreparable damage
to the other parties in the event that this Agreement is not
specifically enforced. Should any dispute arise under this
Agreement, the parties agree that a decree of specific performance
shall be an appropriate remedy. All remedies shall be cumulative and
not exclusive and shall be in addition to all other remedies which
the parties may have.
CLAUSE 14. WAIVER.
14.1 A waiver by any Party of any provision of this Agreement shall not
affect its validity or enforceability or constitute a waiver of
future enforcement of that provision or of any other provision of
this Agreement.
CLAUSE 15. COUNTERPARTS.
15.1 This Agreement may be executed in counterparts, each executed copy
of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
CLAUSE 16. HEADINGS.
16.1 The subject headings of articles, paragraphs, and subparagraphs of
this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its
provisions.
CLAUSE 17. SOLE AND ONLY AGREEMENT.
17.1 This Agreement supersedes all prior oral or written agreements
between the parties with respect to their subject matter and
constitute (along with the documents referred to in this Agreement)
the sole and only agreements of the parties hereto with respect to
their subject matter.
CLAUSE 18. ATTORNEY'S FEES.
18.1 If any of the parties hereto commences an action against the others
to enforce any of the terms hereof, or to obtain damages for any
alleged breach of any of the terms hereof, or for a declaration of
rights hereunder, the losing party or parties shall pay to the
prevailing party or parties the prevailing party's or parties'
attorneys' fees and costs incurred in connection
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with prosecution of such action, whether or not such action proceeds
to trial or appeal.
CLAUSE 19. NECESSARY ACTS.
19.1 All parties to this Agreement shall perform any and all acts as well
as execute any and all documents that may be reasonably necessary to
fully carry out the provisions and intent of this Agreement.
IN WITNESS HEREOF, parties to this agreement execute same with 5 copies on
November 23, 1998 in the city of Tijuana, Baja California, Mexico.
THE SELLER
/s/ Mr. Marco Antonio Aleman Bonilla
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ATLANTICO & ASS, S.A. DE C.V.,
represented by Mr. Marco Antonio Aleman Bonilla
THE BUYERS
/s/ Mr. Frank J. Moreno /s/ Mr. Frank J. Moreno
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CINEMASTAR LUXURY THEATERS, INC. CINEMASTAR LUXURY CINEMAS, INC.
represented by Mr. Frank J. Moreno represented by Mr. Frank J. Moreno
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