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EXHIBIT 10.1
HOLLYWOOD THEATERS, INC.
10 5/8% SENIOR SUBORDINATED NOTES
DUE AUGUST 1, 2007
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unconditionally guaranteed as to
the payment of principal,
premium, if any, and interest by
Hollywood Theater Holdings, Inc.
and Crown Theater Corp.
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PURCHASE AGREEMENT
July 31, 1997
Xxxxxxx, Xxxxx & Co.,
BancAmerica Securities, Inc.
As representatives of the several Purchasers
named in Schedule I hereto,
c/x Xxxxxxx, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Hollywood Theaters, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$110,000,000 principal amount of the Notes specified above. The Securities
will be unconditionally guaranteed as to the payment of principal, premium, if
any, and interest (the "Guarantees") by Hollywood Theater Holdings, Inc.
("Holdings"), Crown Theater Corp. ("Crown") and any future Restricted
Subsidiary (as defined in the Indenture referred to in Section 1(f) below) of
the Company (collectively, the "Guarantors"). Holdings and Crown are
corporations incorporated under the laws of Delaware and Missouri,
respectively. The Company is the wholly owned subsidiary of Holdings and Crown
is the wholly owned subsidiary of the Company ; Crown is the only subsidiary of
the Company. The Notes and the Guarantees are hereinafter collectively called
the "Securities".
1. The Company, Holdings and Crown represent and warrant to, and
agree with, each of the Purchasers that:
(a) A preliminary offering circular, dated July 15, 1997
(the "Preliminary Offering Circular") and an offering circular, dated
July 31, 1997 (the "Offering Circular"), in each case including the
international supplement thereto, have been prepared in
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connection with the offering of the Securities. The Preliminary
Offering Circular or the Offering Circular and any amendments or
supplements thereto did not and will not, as of their respective
dates, contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by a Purchaser through Xxxxxxx, Xxxxx & Co. expressly for use
therein;
(b) Neither the Company, nor any Guarantor has sustained
since the date of the latest audited financial statements included in
the Offering Circular any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular and other than such loss or
interference which would not, individually or in the aggregate, have a
material adverse effect on the general affairs, management, financial
position, stockholders' equity or results of operations of the Company
and its subsidiaries considered as a consolidated entity (a "Material
Adverse Effect"); and, since the respective dates as of which
information is given in the Offering Circular, there has not been any
change in the capital stock or long-term debt of the Company, or any
Guarantor or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries considered
as a consolidated entity, otherwise than as set forth or contemplated
in the Offering Circular;
(c) The Company and the Guarantors have good and
marketable title in fee simple to all real property and good title to
all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described in
the Offering Circular or such as would not, individually or in the
aggregate, have a Material Adverse Effect; and any real property and
buildings held under lease by the Company and the Guarantors are held
by them under valid, subsisting and enforceable leases with such
exceptions as are not material and would not, individually or in the
aggregate, have a Material Adverse Effect;
(d) Each of the Company and the Guarantors has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Offering Circular, and has been duly
qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to
require such qualification, except where the failure to be so
qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect;
(e) The Company has an authorized capitalization as set
forth in the Offering Circular, and all of the issued shares of
capital stock of the Company have been duly and
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validly authorized and issued and are fully paid and non-assessable;
and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(f) The Notes have been duly authorized and, when issued
and delivered to the Purchasers against payment therefor as provided
by this Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding
obligations of the Company entitled to the benefits provided by the
indenture to be dated as of August 7, 1997 (the "Indenture") between
the Company and U.S. Trust Company of Texas, N.A., as Trustee (the
"Trustee"), under which they are to be issued, which will be
substantially in the form previously delivered to you; the Guarantees
have been duly authorized and, when the Notes have been issued and
delivered pursuant to this Agreement with the Guarantees endorsed
thereon, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Guarantors
entitled to the benefits provided by the Indenture, subject, as to
enforcement, to fraudulent conveyance laws; the Indenture has been
duly authorized and, when executed and delivered by the Company, the
Guarantors and the Trustee, the Indenture will constitute a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Indenture
will conform in all material respects to the descriptions thereof in
the Offering Circular;
(g) None of the transactions contemplated by this
Agreement (including, without limitation, the use of the proceeds from
the sale of the Securities) will violate or result in a violation of
Regulations G, T, U, and X of the Board of Governors of the Federal
Reserve System;
(h) The issue and sale of the Securities and the
compliance by the Company and the Guarantors with all of the
provisions of the Securities, the Indenture, this Agreement and the
Exchange and Registration Rights Agreement between the Company and the
Purchasers to be entered into as of August 7, 1997 (the "Registration
Rights Agreement") and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any Guarantor
is a party or by which the Company or any Guarantor is bound or to
which any of the property or assets of the Company or any Guarantor is
subject, except for such conflicts, breaches, violations or defaults
that would not, individually or in the aggregate, have a Material
Adverse Effect, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company or any Guarantor or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company, or any of the Guarantors or any of
their properties, except, with respect to such statutes, orders, rules
or regulations, for such violations that would not, individually or in
the aggregate, have a Material Adverse Effect; and assuming that
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the representations and warranties of the Purchasers in Section 3
hereof are true and correct, no consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body of the United States or any State or
territory thereof is required for the issue and sale of the Securities
or the consummation by the Company or the Guarantors of the
transactions contemplated by this Agreement, the Registration Rights
Agreement or the Indenture, except for the filing and effectiveness
of a registration statement by the Company and the Guarantors with the
Commission pursuant to the United States Securities Act of 1933, as
amended (the "Act") and qualification of the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the
Securities by the Underwriters;
(i) Neither the Company nor any Guarantor is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound , except for such
obligations, covenants or conditions that would not, individually or
in the aggregate, have a Material Adverse Effect;
(j) The statements set forth in the Offering Circular
under the caption "Description of Notes", insofar as they purport to
constitute a summary of the terms of the Securities, and under the
captions "Description of New Senior Bank Facility", "Offer and Resale"
and "Certain U.S. Federal Tax Consequences to Non-U.S. Holders",
insofar as they purport to describe the provisions of the laws and
documents referred to therein fairly and accurately summarize, in all
material respects, the matters referred to therein with respect to
such legal matters and documents;
(k) Other than as set forth in the Offering Circular,
there are no legal or governmental proceedings pending to which the
Company, or any Guarantor is a party or of which any property of the
Company, or any Guarantor is the subject which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(l) When the Securities are issued and delivered pursuant
to this Agreement, the Securities will not be of the same class
(within the meaning of Rule 144A under the United States Securities
Act of 1933, as amended (the "Act")) as securities which are listed on
a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation
system;
(m) Each of the Company and the Guarantors is not, and
after giving effect to the offering and sale of the Securities, will
not be an "investment company", or an entity "controlled" by an
"investment company", as such terms are defined in the United States
Investment Company Act of 1940, as amended (the "Investment Company
Act");
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(n) Neither the Company, the Guarantors nor any person
acting on its or their behalf has offered or sold the Securities by
means of any general solicitation or general advertising within the
meaning of Rule 502(c) under the Act or, with respect to Securities
sold outside the United States to non-U.S. persons (as defined in Rule
902 under the Act), by means of any directed selling efforts within
the meaning of Rule 902 under the Securities Act and each of the
Company, the Guarantors, any of its or their affiliates and any person
acting on its or their behalf has complied with and will implement the
"offering restriction" within the meaning of such Rule 902;
(o) Within the preceding six months, neither the Company,
the Guarantors nor any other person acting on behalf of the Company or
the Guarantors has offered or sold to any person any Securities, or
any securities of the same or a similar class as the Securities, other
than Securities offered or sold to the Purchasers hereunder;
(p) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes;
(q) Xxxxxx Xxxxxxxx LLP, who have certified certain
financial statements of Holdings and its subsidiaries and of Theaters
Acquired from GC Companies, Inc., Escape Theaters, Inc., Theaters
Acquired from United Artists Theatre Circuit, Inc. and, Theaters
Acquired from Crown Cinema Corporation and Crown Theater Corporation
are independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder; and
(r) The Registration Rights Agreement, which shall be
substantially in the form previously delivered to you, has been duly
authorized, and, when executed and delivered by the Company (assuming
due authorization, execution and delivery by the Purchasers), will
constitute a valid and legally binding agreement of the Company
enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles.
2. Subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Company, at
a purchase price of 97% of the principal amount thereof, plus accrued interest,
if any, from August 7, 1997 to the Time of Delivery hereunder, the principal
amount of Securities set forth opposite the name of such Purchaser in Schedule
I hereto, each of which will have duly endorsed thereon the Guarantee of each
Guarantor, and the Guarantors agree to issue their Guarantees accordingly.
3. Upon the authorization by you of the release of the
Securities, the several Purchasers propose to offer the Securities for sale
upon the terms and conditions set forth in this Agreement and the Offering
Circular and each Purchaser hereby represents and warrants to, and agrees with
the Company that:
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(a) It will offer and sell the Securities only to: (i)
persons who it reasonably believes are "qualified institutional
buyers" ("QIBs") within the meaning of Rule 144A under the Act in
transactions meeting the requirements of Rule 144A or, (ii) upon the
terms and conditions set forth in Annex I to this Agreement;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form
of general solicitation or general advertising, including but not
limited to the methods described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser
hereunder will be represented by one or more global Securities in book-entry
form which will be deposited by or on behalf of the Company with The Depository
Trust Company ("DTC") or its designated custodian. The Company will deliver
the Securities to Xxxxxxx, Xxxxx & Co., for the account of each Purchaser,
against payment by or on behalf of such Purchaser of the purchase price
therefor by wire transfer, payable to the order of the Company in Federal (same
day) funds, by causing DTC to credit the Securities to the account of Xxxxxxx,
Xxxxx & Co. at DTC. The Company will cause the certificates representing the
Securities to be made available to Xxxxxxx, Xxxxx & Co. for checking at least
twenty-four hours prior to the Time of Delivery (as defined below) at the
office of DTC or its designated custodian (the "Designated Office"). The time
and date of such delivery and payment shall be 9:30 a.m., New York City time,
on August 7, 1997 or such other time and date as Xxxxxxx, Xxxxx & Co. and the
Company may agree upon in writing. Such time and date are herein called the
"Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by the
Purchasers pursuant to Section 7(k) hereof, will be delivered at such time and
date at the offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Closing Location") (or such other location as the Company and
the Purchasers mutually agree), and the Securities will be delivered at the
Designated Office, all at the Time of Delivery. A meeting will be held at the
Closing Location on the Business Day next preceding the Time of Delivery (at
such time as the Company and the Purchasers mutually agree), at which meeting
the final drafts of the documents to be delivered pursuant to the preceding
sentence will be available for review by the parties hereto. For the purposes
of this Section 4, "Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in the
Closing Location are generally authorized or obligated by law or executive
order to close.
5. Each of the Company and the Guarantors, jointly and severally,
agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form reasonably
approved by you; during the time period set forth in Section 5(c), to
make no amendment or any supplement to the Offering Circular which
shall be reasonably disapproved by you promptly after reasonable
notice thereof; and to furnish you with copies thereof;
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(b) Promptly from time to time to take such action as you
may reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities, provided that in
connection therewith neither the Company nor the Guarantors shall be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New
York Business Day next succeeding the date of this Agreement or as
promptly as practicable thereafter and from time to time, to furnish
the Purchasers with a copy of the Offering Circular in New York City
and each amendment or supplement thereto signed by an authorized
officer of the Company with the independent accountants' report(s) in
the Offering Circular, and any amendment or supplement containing
amendments to the financial statements covered by such report(s),
signed by the accountants, and additional copies thereof in such
quantities as you may reasonably request, and if, at any time prior to
the expiration of nine months after the date of the Offering Circular
or such earlier date on which the offering and initial resale of the
Securities shall have been completed, any event shall have occurred as
a result of which the Offering Circular as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Offering Circular is delivered, not misleading,
or, if for any other reason it shall be necessary or desirable during
such same period to amend or supplement the Offering Circular, to
notify you and upon your request to prepare and furnish without charge
to each Purchaser and to any dealer in securities as many copies as
you may from time to time reasonably request of an amended Offering
Circular or a supplement to the Offering Circular which will correct
such statement or omission;
(d) During the period beginning from the date hereof and
continuing until the date six months after the Time of Delivery, not
to offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder, any securities of the Company that are
substantially similar to the Notes, without your prior written
consent;
(e) Not to be or become, at any time prior to the
expiration of three years after the Time of Delivery, an open-end
investment company, unit investment trust, closed-end investment
company or face-amount certificate company that is or is required to
be registered under Section 8 of the Investment Company Act;
(f) At any time when the Company or Holdings is not
subject to Section 13 or 15(d) of the Exchange Act, for the benefit of
holders from time to time of Securities, to furnish at its expense,
upon request, to holders of Securities and prospective purchasers of
securities information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under
the Act;
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(g) If requested by you, to use its best efforts to cause
the Securities to be eligible for the PORTAL trading system of the
National Association of Securities Dealers, Inc.;
(h) To furnish to the holders of the Securities as soon
as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date
of the Offering Circular), consolidated summary financial information
of the Company and its subsidiaries for such quarter in reasonable
detail;
(i) During a period of two years from the date of the
Offering Circular, to furnish to you copies of all reports or other
communications (financial or other) furnished to the Trustee, and to
deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the United
States Securities and Exchange Commission (the "Commission") or any
securities exchange on which the Securities or any class of securities
of the Company or any Guarantor is listed; and (ii) such additional
public information concerning the business and financial condition of
the Company and the Guarantors as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to
the extent the accounts of the Company, its subsidiaries or relevant
Guarantor are consolidated in reports furnished to its stockholders
generally or to the Commission);
(j) During the period of two years after the Time of
Delivery, the Company and the Guarantors will not, and will not permit
any of their "affiliates" (as defined in Rule 144 under the Securities
Act) to, resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them,
except pursuant to an effective registration statement under the Act;
(k) To execute and deliver the Registration Rights
Agreement prior to the Time of Delivery;
(l) To use the net proceeds received by it from the sale
of the Securities pursuant to this Agreement in the manner specified
in the Offering Circular under the caption "Use of Proceeds"; and
(m) To take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to
any U.S. person (as defined in Rule 902 under the Act) of any
Securities or any substantially similar security issued by the Company
or the Guarantors, within six months subsequent to the date on which
the distribution of the Securities has been completed (as notified to
the Company by Xxxxxxx, Xxxxx & Co.), is made under restrictions and
other circumstances reasonably designed not to affect the status of
the offer and sale of the Securities in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Act.
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6. Each of the Company and the Guarantors, jointly and severally,
covenants and agrees with the several Purchasers that the Company will pay or
cause to be paid the following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the issue of the
Securities and all other expenses in connection with the preparation and
printing of the Preliminary Offering Circular and the Offering Circular and any
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Purchasers and dealers; (ii) the cost of printing or producing
any Agreement among Purchasers, this Agreement, the Indenture, the Registration
Rights Agreement, any Blue Sky and Legal Investment Memoranda, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Purchasers in
connection with such qualification and in connection with the Blue Sky and
legal investment surveys; (iv) any fees charged by securities rating services
for rating the Securities; (v) the cost of preparing the Securities; (vi) the
fees and expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; (vii) any cost incurred in connection with the designation of
the Securities for trading in PORTAL; and (viii) all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, and Sections 8 and 11
hereof, the Purchasers will pay all of their own costs and expenses, including
the fees of their counsel, transfer taxes on resale of any of the Securities by
them, and any advertising expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject,
in their discretion, to the condition that all representations and warranties
and other statements of the Company and the Guarantors herein are, at and as of
the Time of Delivery, true and correct, the condition that each of the Company
and the Guarantors shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) Xxxxxxxx & Xxxxxxxx, counsel for the Purchasers shall
have furnished to you such opinion or opinions (a draft of each such
opinion is attached as Xxxxx XX(c) hereto), dated the Time of Delivery
for such Securities, with respect to the incorporation of the Company,
the validity of the Indenture, the Securities and the Registration
Rights Agreement, the Offering Circular and other related matters as
you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them
to pass upon such matters;
(b) Xxxxx & Xxxxx, L.L.P., counsel for the Company and
the Guarantors, shall have furnished to you their written opinion (a
draft of such opinion is attached as Xxxxx XX(d) hereto), dated the
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) Each of the Company and the Guarantors has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation with the corporate power and
authority to own its properties and conduct its business as
described in the Offering Circular
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(such counsel being entitled to rely in respect of their
opinion in this clause as to Crown upon an opinion of local
counsel, provided that such counsel state that they believe
that both you and they are justified in relying upon such
opinion);
(ii) The Company has an authorized capitalization
as set forth in the Offering Circular, and all of the issued
shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and
non-assessable;
(iii) All of the issued shares of capital stock of
Crown have been duly and validly authorized and issued, are
fully paid and non-assessable, and are owned by the Company
free and clear of all liens, encumbrances, equities or claims
other than the lien created pursuant to the New Bank Facility
(as defined in the Indenture) (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of
local counsel and in respect of matters of fact upon
certificates of officers of the Company or the Guarantors,
provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions
and certificates);
(iv) To such counsel's knowledge and other than as
set forth in the Offering Circular, there are no legal or
governmental proceedings pending to which the Company or any
Guarantor is a party or of which any property of the Company
or any Guarantor is the subject which, individually or in the
aggregate, would reasonably be expected to have a Material
Adverse Effect; and, to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(v) This Agreement and the Registration Rights
Agreement have been duly authorized, executed and delivered by
the Company and the Guarantors (such counsel being entitled to
rely in respect of their opinion in this clause as to Crown
upon an opinion of local counsel, provided that such counsel
state that they believe that both you and they are justified
in relying upon such opinion);
(vi) The Notes and the Guarantees have been duly
authorized by the Company and the Guarantors respectively; the
global Note representing Notes sold pursuant to Rule 144A
under the Act and the temporary global Note representing Notes
sold pursuant to Regulation S under the Act have been duly
executed, authenticated, issued and delivered; the Guarantees
have been duly executed, issued and endorsed onto the global
Note and temporary global Note and the Guarantees constitute
valid and legally binding joint and several obligations of
each of the Guarantors entitled to the benefits provided by
the Indenture, subject, as to enforcement, to fraudulent
conveyance laws; the global Note and temporary global Note
constitute valid and legally binding obligations of the
Company and the Notes in definitive form, when executed,
authenticated, issued and delivered with the Guarantees
endorsed thereon in exchange for the temporary global Note in
accordance with the terms of the Indenture, will have been
duly executed, authenticated, issued and delivered and will
constitute valid
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and legally binding obligations of the Company, in each case
entitled to the benefits provided by the Indenture, and the
Guarantees to be endorsed on the definitive Notes, when
executed, issued and endorsed onto such definitive Notes, will
have been duly executed, issued and endorsed onto the
definitive Notes and will constitute valid and legally binding
joint and several obligations of each of the Guarantors
entitled to the benefits provided by the Indenture, subject,
as to enforcement, to fraudulent conveyance laws; and the
global Note, the temporary global Note, the Guarantees and the
Indenture conform, and the Notes and the Guarantees endorsed
thereon will conform, in all material respects to the
descriptions thereof in the Offering Circular (such counsel
being entitled to rely in respect of their opinion in this
clause as to Crown upon an opinion of local counsel, provided
that such counsel state that they believe that both you and
they are justified in relying upon such opinion);
(vii) The Indenture has been duly authorized,
executed and delivered by the Company and the Guarantors and
constitutes a valid and legally binding instrument of the
Company and the Guarantors, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
equity principles (such counsel being entitled to rely in
respect of their opinion in this clause as to Crown upon an
opinion of local counsel, provided that such counsel state
that they believe that both you and they are justified in
relying upon such opinion);
(viii) The issue and sale of the Securities and the
compliance by the Company and the Guarantors with all of the
provisions of the Securities, the Indenture, this Agreement
and the Registration Rights Agreement and the consummation of
the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any Guarantor
is a party or by which the Company or any Guarantor is bound
or to which any of the property or assets of the Company or
any Guarantor is subject and which has been identified to such
counsel by the Company or the Guarantors as material (based on
the standards found in Section 601 of Regulation S-K under the
Act) as reflected on the exhibit attached to such opinion, nor
will such actions result in any violation of the provisions of
the Certificate of Incorporation or By-laws of the Company or
any Guarantor or any statute or any order (which order is
known to such counsel), rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any Guarantor or any of their properties (provided
that such counsel may express no opinion with respect to
compliance with any federal or state securities or anti-fraud
rule or regulation except as otherwise specifically stated in
this opinion), except, with respect to such statutes, orders,
rules or regulations, for such conflicts, breaches, violations
or defaults that would not, individually or in the aggregate,
have a Material Adverse Effect (such counsel being entitled to
rely in respect of their opinion in this clause as to Crown
-11-
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upon an opinion of local counsel, provided that such counsel
state that they believe that both you and they are justified
in relying upon such opinion);
(ix) Assuming that the representations and
warranties of the Purchasers in Section 3 hereof are true and
correct, no consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of the United States or any State
or territory thereof is required for the issue and sale of the
Securities or the consummation by the Company or the
Guarantors of the transactions contemplated by this Agreement,
the Registration Rights Agreement or the Indenture, except for
the filing and effectiveness of a registration statement by
the Company and the Guarantors with the Commission pursuant to
the Act and qualification of the Indenture under the Trust
Indenture Act and except that such counsel need express no
opinion as to state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the
Purchasers;
(x) The statements set forth in the Offering
Circular under the caption "Description of Notes", insofar as
they purport to constitute a summary of the terms of the
Securities, and under the captions "Description of New Senior
Bank Facility" and "Certain U.S. Federal Tax Consequences to
Non-U.S. Holders", insofar as they purport to describe the
provisions of the laws and documents referred to therein,
fairly and accurately summarize, in all material respects, the
matters referred to therein with respect to such legal matters
and documents;
(xi) No registration of the Securities under the
Act, and no qualification of an indenture under the Trust
Indenture Act with respect thereto, is required for the offer,
sale and initial resale of the Securities by the Purchasers in
the manner contemplated by this Agreement assuming that the
representations and warranties of the Purchasers in Section 3
hereof are true and correct; and
(xii) Neither the Company nor any of the Guarantors
is an "investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the
Investment Company Act.
In rendering such opinion Xxxxx & Xxxxx, L.L.P. may state
that they express no opinion as to the laws of any jurisdiction other
than the Federal laws of the United States, the laws of the State of
Texas, the State of New York and the General Corporation Law of the
State of Delaware. With respect to the opinions relating to Crown in
clauses (i), (iii), (v), (vi), (vii), (viii) and (ix) above, Xxxxx &
Xxxxx need not render such opinions if the Purchasers are provided an
opinion of counsel for Crown (which counsel shall be satisfactory to
you), dated the Time of Delivery, in form and substance satisfactory
to you, to the effect of the opinions in such clauses.
Xxxxx & Xxxxx, L.L.P. shall have also stated that, while they
themselves have not checked the accuracy and completeness of, or
otherwise verified, and are not passing upon and assume no
responsibility for the accuracy or completeness of, the statements
contained in the Offering Circular, except to the limited extent
stated in paragraphs (ii),
-12-
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(vi), and (x) above, in the course of their review and discussion of
the contents of the Offering Circular with certain officers and other
representatives of the Company and the Company's independent
accountants, but without independent check or verification, no facts
have come to their attention which cause them to believe that the
Offering Circular (other than the financial statements, schedules and
notes thereto and the other financial information contained therein,
as to which such counsel need express no belief) contained as of its
date, or contains as of the Time of Delivery, an untrue statement of a
material fact or omitted or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) On the date of the Offering Circular prior to the
execution of this Agreement and also at the Time of Delivery, Xxxxxx
Xxxxxxxx LLP shall have furnished to you a letter or letters, dated
the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Xxxxx XX hereto (the
executed copy of the letter delivered prior to the execution of this
Agreement is attached as Annex II(a) hereto and a draft of the form of
letter to be delivered as of the Time of Delivery is attached as Xxxxx
XX(b) hereto);
(d) (i) Neither the Company nor any Guarantor shall have
sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular, and (ii) since the respective
dates as of which information is given in the Offering Circular there
shall not have been any change in the capital stock or long-term debt
of the Company or any Guarantor or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company or the Guarantors, otherwise than as set
forth or contemplated in the Offering Circular, the effect of which,
in any such case described in Clause (i) or (ii), is in the judgment
of the Purchasers so material and adverse as to make it impracticable
or inadvisable to proceed with the offering or the delivery of the
Securities on the terms and in the manner contemplated in this
Agreement and in the Offering Circular;
(e) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Company's or any Guarantor's
debt securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes
of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's or
any Guarantor's debt securities;
(f) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation
in trading in securities generally on the New York Stock Exchange;
(ii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; or (iii) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States
-13-
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of a national emergency or war, if the effect of any such event
specified in this clause (iii) in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the offering or
the delivery of the Securities on the terms and in the manner
contemplated in the Offering Circular; or (iv) the occurrence of any
material adverse change in the existing financial, political or
economic conditions in the United States or elsewhere which, in the
judgment of the Representatives, would materially and adversely affect
the financial markets or the markets for the Securities and other debt
securities;
(g) The Securities have been designated for trading on
PORTAL;
(h) The Company shall have used its best efforts to
comply with the provisions of Section 5(c) hereof with respect to the
furnishing of offering circulars on the New York Business Day next
succeeding the date of this Agreement;
(i) The Company shall have entered into the New Bank
Facility with the lenders named therein;
(j) The Company shall have agreed to close on August 14,
1997 the purchase of assets of, and assignment of leases from, General
Cinema Corp. of Oklahoma, Inc. ("General") pursuant to the Purchase
and Assignment Agreement, dated July 25, 1997 and amended July 30,
1997, between the Company and General, and all documents and funds
necessary to effect such closing, in form and substance satisfactory
to you, shall have been deposited in escrow in a manner satisfactory
to you for release on August 14, 1997; and
(k) The Company shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of officers of
the Company satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Guarantors
herein at and as of such Time of Delivery, as to the performance by
the Company and the Guarantors of all of their obligations hereunder
to be performed at or prior to such Time of Delivery, as to the
matters set forth in subsection (d) of this Section and as to such
other matters as you may reasonably request.
8. (a) The Company, and the Guarantors, jointly and severally,
will indemnify and hold harmless each Purchaser against any losses, claims,
damages or liabilities, joint or several, to which such Purchaser may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, and will reimburse each Purchaser for any legal or
other expenses reasonably incurred by such Purchaser in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that neither the Company nor the Guarantors shall
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
-14-
15
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through Xxxxxxx, Xxxxx & Co. expressly for use
therein.
(b) Each Purchaser will indemnify and hold harmless the Company
and the Guarantors against any losses, claims, damages or liabilities to which
the Company and the Guarantors may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Circular or
the Offering Circular, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Offering Circular or the Offering Circular or any such amendment or supplement
in reliance upon and in conformity with written information furnished to the
Company by such Purchaser through Xxxxxxx, Xxxxx & Co. expressly for use
therein; and will reimburse the Company and the Guarantors for any legal or
other expenses reasonably incurred by the Company and the Guarantors in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(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 the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as
-15-
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a result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Guarantors on the one hand and the Purchasers
on the other from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Guarantors on the one hand and the Purchasers on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Guarantors on the one hand and the Purchasers on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Purchasers, in
each case as set forth in the Offering Circular. The relative fault 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 the Company or the
Guarantors on the one hand or the Purchasers on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Guarantors and the
Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities and
Holdings underwritten by it and distributed to investors were offered to
investors exceeds the amount of any damages which such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. The Purchasers' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Guarantors under this
Section 8 shall be in addition to any liability which the Company and the
Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Purchaser within the
meaning of the Act; and the obligations of the Purchasers under this Section 8
shall be in addition to any liability which the respective Purchasers may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company or the Guarantors and to each person, if
any, who controls the Company or the Guarantors within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to
purchase the Securities which it has agreed to purchase hereunder, you may in
your discretion arrange for you or another party or other parties to purchase
such Securities on the terms contained herein. If
-16-
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within thirty-six hours after such default by any Purchaser you do not arrange
for the purchase of such Securities, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Securities on such terms.
In the event that, within the respective prescribed periods, you notify the
Company that you have so arranged for the purchase of such Securities, or the
Company notifies you that it has so arranged for the purchase of such
Securities, you or the Company shall have the right to postpone the Time of
Delivery for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Offering Circular, or in any other
documents or arrangements, and the Company agrees to prepare promptly any
amendments to the Offering Circular which in your opinion may thereby be made
necessary. The term "Purchaser" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount of
such Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro rata
share (based on the principal amount of Securities which such Purchaser agreed
to purchase hereunder) of the Securities of such defaulting Purchaser or
Purchasers for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount of
Securities which remains unpurchased exceeds one-eleventh of the aggregate
principal amount of all the Securities, or if the Company shall not exercise
the right described in subsection (b) above to require non-defaulting
Purchasers to purchase Securities of a defaulting Purchaser or Purchasers, then
this Agreement shall thereupon terminate, without liability on the part of any
non-defaulting Purchaser or the Company, except for the expenses to be borne by
the Company and the Purchasers as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Guarantors and the several
Purchasers, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Purchaser or any controlling person of any
Purchaser, or the Company, the Guarantors, or any officer or director or
controlling person of the Company or the Guarantors, and shall survive delivery
of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Guarantors shall then be under any
liability to any Purchaser except as provided in Sections 6 and 8 hereof; but,
if for any other reason, the Securities are not delivered
-17-
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by or on behalf of the Company and the Guarantors as provided herein, the
Company and the Guarantors, jointly and severally, will reimburse the
Purchasers through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Purchasers in making preparations for the purchase, sale and delivery of the
Securities, but neither the Company nor the Guarantors shall then be under
further liability to any Purchaser except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Purchasers, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Purchaser made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you in care of Xxxxxxx, Xxxxx & Co., 00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration Department; and if to the
Company shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Company set forth in the Offering Circular, Attention:
Secretary; provided, however, that any notice to a Purchaser pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Purchaser at its address set forth in its Purchasers'
Questionnaire, or telex constituting such Questionnaire, which address will be
supplied to the Company by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers, the Company, the Guarantors and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
or any Guarantor and each person who controls the Company, any Guarantor or any
Purchaser, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Securities from any
Purchaser shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such respective counterparts shall together constitute
one and the same instrument.
-18-
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If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Purchasers, the
Company and the Guarantors. It is understood that your acceptance of this
letter on behalf of each of the Purchasers is pursuant to the authority set
forth in a form of Agreement among Purchasers, the form of which shall be
submitted to the Company for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
Hollywood Theaters, Inc.
By: /s/ Xxxxx X. Xxxxxxxxxxxx
---------------------------------
Name:
Title:
Hollywood Theater Holdings, Inc.
By: /s/ Xxxxx X. Xxxxxxxxxxxx
---------------------------------
Name:
Title:
Crown Theater Corp.
By: /s/ Xxxxx X. Xxxxxxxxxxxx
---------------------------------
Name:
Title:
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
BancAmerica Securities, Inc.
By: /s/ Xxxxxxx, Xxxxx & Co.
--------------------------------------
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Purchasers
-19-
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SCHEDULE I
Principal
Amount of
Securities
to be
Purchaser Purchased
--------- ------------
Xxxxxxx, Xxxxx & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,000,000
BancAmerica Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000,000
-------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 110,000,000
=============
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ANNEX I
(1) The Securities have not been and will not be registered under
the Act and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons except in accordance with Regulation S
under the Act or pursuant to an exemption from the registration requirements of
the Act. Each Purchaser represents that it has offered and sold the
Securities, and will offer and sell the Securities (i) as part of their
distribution at any time and (ii) otherwise until 40 days after the later of
the commencement of the offering and the Time of Delivery, only in accordance
with Rule 903 of Regulation S or Rule 144A under the Act. Accordingly, each
Purchaser agrees that neither it, its affiliates nor any persons acting on its
or their behalf has engaged or will engage in any directed selling efforts with
respect to the Securities, and it and they have complied and will comply with
the offering restrictions requirement of Regulation S. Each Purchaser agrees
that, at or prior to confirmation of sale of Securities (other than a sale
pursuant to Rule 144A), it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the Securities
Act. Terms used above have the meaning given to them by Regulation
S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Securities, except with its affiliates or with the prior
written consent of the Company.
(2) Notwithstanding the foregoing, Securities in registered form
may be offered, sold and delivered by the Purchasers in the United States and
to U.S. persons pursuant to Section 3 of this Agreement without delivery of the
written statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has
not offered or sold and prior to the date six months after the date of issue of
the Securities will not offer or sell any Securities 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 of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from 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 issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements)
A-1
22
(Exemptions) Order 1996 of Great Britain or is a person to whom the document
may otherwise lawfully be issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver
any of the Securities in any jurisdiction outside the United States except
under circumstances that will result in compliance with the applicable laws
thereof, and that it will take at its own expense whatever action is required
to permit its purchase and resale of the Securities in such jurisdictions.
Each Purchaser understands that no action has been taken to permit a public
offering in any jurisdiction outside the United States where action would be
required for such purpose. Each Purchaser agrees not to cause any
advertisement of the Securities to be published in any newspaper or periodical
or posted in any public place and not to issue any circular relating to the
Securities, except in any such case with Xxxxxxx, Xxxxx & Co.'s express written
consent and then only at its own risk and expense.
A-2
23
ANNEX II
Pursuant to Section 7(d) of the Purchase Agreement, the accountants
shall furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries under rule 101 of the
American Institute of Certified Public Accountants' Code of
Professional Conduct, and its interpretations and rulings;
(ii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the most recent fiscal year and for the
period from the Company's inception through December 31, 1995 included
in the Offering Circular agrees with the corresponding amounts (after
restatements where applicable) in the audited consolidated financial
statements for such periods;
(iii) On the basis of limited procedures not constituting
an audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Offering Circular, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular are
not in conformity with generally accepted accounting
principles applied on the basis substantially consistent with
the basis for the audited consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Offering Circular;
(B) any other unaudited income statement data and
balance sheet items included in the Offering Circular do not
agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
consolidated financial statements included in the Offering
Circular;
(C) the unaudited financial statements which were
not included in the Offering Circular but from which were
derived any unaudited condensed financial statements referred
to in Clause (A) and any unaudited income statement data and
balance sheet items included in the Offering Circular and
referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the Offering
Circular;
24
(D) any unaudited pro forma consolidated
condensed financial statements included in the Offering
Circular do not comply as to form in all material respects
with the applicable accounting requirements or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five
days prior to the date of such letter, there have been any
changes in the consolidated capital stock or any increase in
the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Purchasers, or any increases in any items specified by the
Purchasers, in each case as compared with amounts shown in the
latest balance sheet included in the Offering Circular except
in each case for changes, increases or decreases which the
Offering Circular discloses have occurred or may occur or
which are described in such letter; and
(F) for the period from the date of the latest
financial statements included in the Offering Circular to the
specified date referred to in Clause (E) there were any
decreases in consolidated revenues or any increases in
operating loss or the total or per share amounts of
consolidated net loss, or any increases or decreases in any
items specified by the Purchasers, in each case as compared
with the comparable period of the preceding year and with any
other period of corresponding length specified by the
Purchasers, except in each case for decreases or increases
which the Offering Circular discloses have occurred or may
occur or which are described in such letter; and
(iv) In addition to the examination referred to in their
report(s) included in the Offering Circular and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (ii) and (iii) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Offering
Circular, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
2
