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EXHIBIT 1
CONFORMED COPY
CINEMARK USA, INC.
$75,000,000
9-5/8% Series C Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
June 20, 1997
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
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CINEMARK USA, INC.
$75,000,000
9-5/8% Series C Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
June 20, 1997
New York, New York
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies & Gentlemen:
Cinemark USA, Inc., a Texas corporation ("Cinemark"), proposes
to issue and sell to Bear, ▇▇▇▇▇▇▇ & Co. Inc. (the "Initial Purchaser") an
aggregate of $75,000,000 principal amount of 9-5/8% Series C Senior
Subordinated Notes due 2008 (the "Series C Notes"), subject to the terms and
conditions set forth herein. The Series C Notes will be issued pursuant to an
indenture (the "Indenture"), to be dated the Closing Date (as defined below),
between Cinemark and U.S. Trust Company of Texas, N.A., as trustee (the
"Trustee") which shall be in a form substantially similar to that certain
existing indenture between Cinemark and the Trustee dated as of August 15,
1996.
1. ISSUANCE OF SECURITIES.
Cinemark proposes, upon the terms and subject to the
conditions set forth herein, to issue and sell to the Initial Purchaser an
aggregate of $75,000,000 principal amount of Series C Notes. The Series C
Notes and the Series D Notes (as defined below) issuable in exchange therefor
are collectively referred to herein as the "Securities." The proceeds to
Cinemark from the sale to the Initial Purchaser of the Series C Notes will be
used as described under "Use of Proceeds" in the Offering Memorandum (as
defined below).
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act of 1933, as amended (the "Act"), the Series C Notes (and all securities
issued in exchange therefor or in substitution thereof) shall bear the
following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD TO, OR FOR THE ACCOUNT OR BENEFIT
OF, ANY PERSON EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT
PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE
DATE OF ORIGINAL ISSUANCE OF THIS SECURITY AND THE LAST DATE
ON WHICH CINEMARK OR ANY AFFILIATE OF CINEMARK WAS THE OWNER
OF THIS SECURITY (THE "RESALE RESTRICTION TERMINATION DATE")
RESELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A)
TO CINEMARK, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
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RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A
PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH THE RESALE PROVISIONS OF RULE 144A, (C) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (D)
PURSUANT TO THE RESALE LIMITATIONS PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
(F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (BASED UPON
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO CINEMARK IF
CINEMARK SO REQUESTS) SUBJECT IN EACH OF THE FOREGOING CASES
TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY
OR THE PROPERTY OF SUCH ACCOUNT BE AT ALL TIMES WITHIN ITS
CONTROL AND TO COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. THE FOREGOING RESTRICTIONS ON
RESALE WILL NOT APPLY SUBSEQUENT TO THE RESALE RESTRICTION
TERMINATION DATE.
2. OFFERING.
The Series C Notes will be offered and sold to the Initial
Purchaser pursuant to an exemption from the registration requirements under the
Act. Cinemark will prepare an offering memorandum dated the date hereof in
form and substance satisfactory to the Initial Purchaser (the "Offering
Memorandum"), relating to Cinemark and its subsidiaries and the issuance of the
Series C Notes.
The Initial Purchaser has advised Cinemark that the Initial
Purchaser will make offers of the Series C Notes on the terms to be set forth
in the Offering Memorandum, as amended or supplemented, solely to persons whom
the Initial Purchaser reasonably believes to be "qualified institutional
buyers," as defined in Rule 144A under the Act ("QIBs"). The QIBs also are
referred to herein as the "Eligible Purchasers." Sales to Eligible Purchasers
under this Agreement are referred to herein as "Exempt Resales" The Initial
Purchaser will offer the Series C Notes to such Eligible Purchasers at prices
to be determined by the Initial Purchaser from time to time.
Holders (including subsequent transferees) of the Series C
Notes will have the registration rights set forth in an exchange registration
rights agreement relating thereto (the "Registration Rights Agreement"), to be
dated the Closing Date, which will be in substantially the form of that certain
registration rights agreement dated as of August 15, 1996 by and among Cinemark
and the Purchasers named therein, for so long as such Series C Notes constitute
"Transfer Restricted Securities" (as defined in such Registration Rights
Agreement). Pursuant to terms and conditions contained in the Registration
Rights Agreement, Cinemark will agree to use its best efforts to file with the
Securities and Exchange Commission (the "Commission"), under the circumstances
set forth therein, (i) a registration statement under the Act (the "Exchange
Offer Registration Statement") relating to the 9-5/8% Senior Subordinated
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Notes due 2008, Series D (the "Series D Notes") to be offered in exchange for
the Series C Notes (the "Exchange Offer") and (ii) a shelf registration
statement pursuant to Rule 415 under the Act (the "Shelf Registration
Statement") relating to the resale by certain holders of the Series C Notes,
and to use its best efforts to cause such Registration Statements to be
declared effective and to consummate the Exchange Offer. This Purchase
Agreement (this "Agreement"), the Securities, the Indenture and the
Registration Rights Agreement are hereinafter sometimes referred to
collectively as the "Operative Documents."
3. PURCHASE, SALE AND DELIVERY.
(a) On the basis of the representations, warranties and
covenants contained in this Agreement, and subject to its terms and conditions,
Cinemark agrees to issue and sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from Cinemark, that aggregate principal amount of
Series C Notes set forth opposite its name on Schedule I hereto. The Initial
Purchaser shall pay a purchase price equal to 103% of the principal amount of
the Series C Notes.
(b) Delivery of, and payment of the purchase price for, the
Notes shall be made at the offices of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇,
L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or such other
location as may be mutually acceptable. Such delivery and payment shall be
made at 9:30 a.m. New York City time on June 26, 1997 or at such other date and
time as shall be agreed upon by the Initial Purchaser and Cinemark. The time
and date of such delivery and the payment of the purchase price are herein
called the "Closing Date."
(c) On the Closing Date, one or more of the Series C Notes in
definitive form, registered in such names and in such denominations as
specified by the Initial Purchaser at least two business days prior to such
date, having an aggregate principal amount of $75,000,000 shall be delivered by
Cinemark to the Initial Purchaser (or as the Initial Purchaser directs),
against payment by the Initial Purchaser of the purchase price therefor by wire
transfer of same day funds to an account or accounts designated by Cinemark,
provided that Cinemark shall give at least two business days' prior written
notice to the Initial Purchaser of the information required to effect such wire
transfer. The Series C Notes shall be made available to the Initial Purchaser
for inspection not later than 9:30 a.m. New York City time on the business day
immediately preceding the Closing Date.
4. AGREEMENTS OF CINEMARK.
Cinemark covenants and agrees with the Initial Purchaser as
follows:
(a) To advise the Initial Purchaser promptly and, if
requested by the Initial Purchaser, confirm such advice in writing, of
(i) the issuance by any state securities commission of any stop order
suspending the qualification or exemption from qualification of any of
the Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority and (ii) the happening of any
event that makes any statement of a material fact made in the Offering
Memorandum untrue or that requires the making of any additions to or
changes in the Offering Memorandum in order to make the statements
therein, in the light of the circumstances under which they are made,
not misleading. Cinemark shall use its best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of any of the Securities under any state securities or Blue
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Sky laws and, if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption of any of the Securities under any state securities or
Blue Sky laws, Cinemark shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest practicable time.
(b) To furnish the Initial Purchaser and those persons
identified by the Initial Purchaser to Cinemark, without charge, as
many copies of the Offering Memorandum, and any amendments or
supplements thereto, as the Initial Purchaser may reasonably request.
Cinemark consents to the use of the Offering Memorandum, and any
amendments and supplements thereto required pursuant hereto, by the
Initial Purchaser in connection with Exempt Resales.
(c) Not to amend or supplement the Offering Memorandum prior
to the Closing Date unless the Initial Purchaser shall previously have
been advised thereof and shall have consented to, or not have
reasonably objected thereto, in writing within a reasonable time after
being furnished a copy thereof. Cinemark shall promptly prepare, upon
the Initial Purchaser's request, any amendment or supplement to the
Offering Memorandum that the Initial Purchaser or Cinemark believe may
be necessary or advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation of
any Exempt Resale, any event shall occur as a result of which, in the
judgment of Cinemark or in the opinion of counsel for Cinemark or
counsel for the Initial Purchaser, it becomes necessary or advisable
to amend or supplement the Offering Memorandum in order to make the
statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to an Eligible Purchaser which is a
prospective purchaser, not misleading, or if it is necessary or
advisable to amend or supplement the Offering Memorandum to comply
with applicable law, (i) to notify the Initial Purchaser and (ii)
forthwith to prepare an appropriate amendment or supplement to such
Offering Memorandum so that the statements therein as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that such Offering Memorandum will
comply with applicable law.
(e) To cooperate with the Initial Purchaser and counsel for
the Initial Purchaser in connection with the qualification or
registration of the Series C Notes under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchaser may reasonably
request and to continue such qualification in effect so long as
required for the Exempt Resales; provided, however that Cinemark shall
not be required in connection therewith to register or qualify as a
foreign corporation where it is not now so qualified or to take any
action that would subject it to service of process in suits or
taxation, in each case, except as to matters and transactions relating
to Exempt Resales, in any jurisdiction where it is not now so subject.
(f) To use the proceeds from the sale of the Series C Notes
in the manner described in the Offering Memorandum under the caption
"Use of Proceeds."
(g) Not to claim voluntarily, and to resist actively any
attempts to claim, the benefit of any usury laws against the holders
of any Securities.
(h) To do and perform all things required to be done and
performed under this Agreement by it prior to the Closing Date and use
its best efforts to satisfy all conditions precedent on its part to
the delivery of the Series C Notes.
(i) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Series C Notes in
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a manner that would require the registration under the Act of the sale
to the Initial Purchaser or the QIBs of the Series C Notes or to take
any other action that would result in the Exempt Resales not being
exempt from registration under the Act.
(j) For so long as any of the Securities remain outstanding
and during any period in which Cinemark is not subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to make available to any holder of Series C Notes in
connection with any sale thereof and any prospective purchaser of such
Series C Notes designated by such holder, the information required by
Rule 144A(d)(4) under the Act.
(k) To use its best efforts to cause the Exchange Offer to be
made in accordance with and subject to the terms set forth in the
Registration Rights Agreement in the appropriate form to permit
registered Series D Notes to be offered in exchange for the Series C
Notes and to comply with all applicable federal and state securities
laws in connection with the Exchange Offer.
(l) To comply in all material respects with all of the
agreements set forth in the Operative Documents and in the
representation letter of Cinemark to The Depository Trust Company
("DTC") relating to the approval of the Securities by DTC for
"book-entry" transfer.
(m) To cooperate with the Initial Purchaser to effect the
inclusion of the Securities in the National Association of Securities
Dealers, Inc. ("NASD") Private Offering, Resales and Trading through
Automated Linkages ("PORTAL") market and to obtain approval of the
Securities by DTC for "book-entry" transfer.
(n) During a period of two years following the Closing Date,
to deliver without charge to the Initial Purchaser promptly upon their
becoming available, copies of (i) all reports or other publicly
available information that Cinemark shall mail or otherwise make
available to its stockholders and (ii) all reports, financial
statements and proxy or information statements filed by Cinemark with
the Commission or any national securities exchange and such other
publicly available information concerning Cinemark and its
subsidiaries including without limitation, press releases, as the
Initial Purchaser may reasonably request.
(o) Not to, and to cause its affiliates not to, offer, sell,
contract to sell or grant any option to purchase or otherwise transfer
or dispose of any Securities or any other debt security issued by
Cinemark (other than a private loan, credit or financing agreement
with a bank or similar financing institution) or any security
convertible into or exchangeable or exercisable for any such debt
security, for a period of 90 days after the Closing Date, without the
Initial Purchaser's prior written consent, except for (i) sales or
transfers between affiliates of Cinemark and (ii) the issue and
exchange of Series D Notes for Series C Notes in the Exchange Offer.
(p) Prior to the Closing Date, to furnish to the Initial
Purchaser, as soon as they have been prepared by Cinemark, a copy of
any unaudited interim financial statements for any period subsequent
to the periods covered by the financial statements appearing in the
Offering Memorandum.
(q) Not to and not to permit any of its subsidiaries to take,
directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of Cinemark to facilitate
the sale or resale of either the Series C Notes or the Series D Notes.
Except as permitted by the Act, Cinemark will not
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distribute any (i) offering memorandum, including, without limitation,
the Offering Memorandum or (ii) other offering material, in connection
with the offering and sale of the Securities.
5. REPRESENTATIONS AND WARRANTIES.
(a) Cinemark represents and warrants to the Initial Purchaser
that as of the date hereof (except as otherwise expressly provided):
(i) The Offering Memorandum is being prepared in
connection with the Exempt Resales. The Offering Memorandum and any
supplement or amendment to it will not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained
in this paragraph shall not apply to statements in or omissions from
the Offering Memorandum (or any supplement or amendment thereto) made
in reliance upon and in conformity with information relating to the
Initial Purchaser furnished to Cinemark in writing by the Initial
Purchaser expressly for use therein. No stop order preventing the use
of the Offering Memorandum, or any amendment or supplement thereto, or
any order asserting that any of the transactions contemplated by this
Agreement are subject to the registration requirements of the Act, has
been issued.
(ii) Cinemark (x) has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, (y) has all requisite corporate power
and authority to carry on its business as it is being conducted
currently and as will be described in the Offering Memorandum and to
own, lease and operate its properties, and (z) is duly qualified and
in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified (a) could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on
the properties, business, results of operations or financial condition
of Cinemark and its subsidiaries taken as a whole or (b) could not,
individually or in the aggregate, reasonably be expected to materially
interfere with or materially adversely affect the issuance of the
Securities pursuant hereto, or (c) could not in any manner interfere
with Cinemark's ability to perform its obligations under this
Agreement or any other Operative Document or any of the transactions
to be described in the Offering Memorandum under the caption "Use of
Proceeds" (any of the events set forth in clauses (a), (b) or (c), a
"Material Adverse Effect").
(iii) Each of Cinemark International, Inc. and Cinemark
Properties, Inc. (collectively, the "Material Subsidiaries") (A) has
been duly organized or incorporated, as applicable, and is validly
existing and in good standing under the laws of its jurisdiction of
organization or incorporation, (B) has all requisite power (corporate
or other) and authority to carry on its business as it is currently
being conducted and as will be described in the Offering Memorandum
and to own, lease and operate its properties, and (C) is duly
qualified and in good standing as a foreign organization or
corporation, as applicable, authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect.
(iv) All of the issued and outstanding shares of capital
stock of Cinemark's subsidiaries have been duly authorized, validly
issued and are fully paid and nonassessable and were not issued
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in violation of any preemptive or similar rights. Cinemark owns,
directly or indirectly, shares of capital stock of each of its
subsidiaries, as listed on Schedule 5(a)(iv). Except as will be set
forth in the Offering Memorandum, all such shares of capital stock of
its subsidiaries are owned, directly or indirectly, by Cinemark free
and clear of any material lien, encumbrance, claim, security interest,
restriction on transfer, stockholders' agreement, voting trust or
other restrictions. Cinemark does not directly or indirectly own any
shares of capital stock or any other securities or any corporation or
have any equity interest in any firm, partnership, association or
other entity except as described on Schedule 5(a)(iv).
(v) All of the outstanding shares of capital stock of
Cinemark have been duly authorized, validly issued, and are fully paid
and nonassessable and were not issued in violation of any preemptive
or similar rights. On March 31, 1997, after giving pro forma effect
to the issuance and sale of the Series C Notes pursuant hereto and the
other transactions described therein, Cinemark would have had an
authorized and outstanding capitalization as will be set forth in the
Offering Memorandum under the caption "Capitalization," subject to the
notes and assumptions included therein.
(vi) Except as will be set forth in the Offering
Memorandum, there are not currently any outstanding material
subscriptions, rights, warrants, calls, commitments of sale or options
to acquire, or instruments convertible into or exchangeable for,
capital stock or other equity interests of Cinemark or any of its
subsidiaries.
(vii) Cinemark has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Operative Documents and to consummate the transactions contemplated
hereby and thereby, including, without limitation, the corporate power
and authority to issue, sell and deliver the Securities as provided
herein and therein.
(viii) When the Series C Notes are issued and delivered
pursuant to this Agreement, no Series C Note will be of the same class
(within the meaning of Rule 144A under the Act) as securities of
Cinemark that are listed on a national securities exchange under
Section 6 of the Exchange Act or that are quoted in a United States
automated inter-dealer quotation system.
(ix) This Agreement has been duly and validly authorized,
executed and delivered by Cinemark and (assuming the due
authorization, execution and delivery of this Agreement by the Initial
Purchaser) is the legal, valid and binding agreement of Cinemark,
enforceable against Cinemark in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at
law) (the "Enforceability Exceptions").
(x) The Indenture has been duly and validly authorized by
Cinemark and, when duly executed and delivered by Cinemark, the
Indenture will be the legal, valid and binding obligation of Cinemark,
enforceable against Cinemark in accordance with its terms, subject to
the Enforceability Exceptions. The Offering Memorandum will contain
an accurate summary of the material terms of the Indenture.
(xi) The Registration Rights Agreement has been duly and
validly authorized by Cinemark and, when duly executed and delivered
by Cinemark, the Registration Rights Agreement will be the legal,
valid and binding obligation of Cinemark, enforceable against Cinemark
in
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accordance with its terms, subject to the Enforceability Exceptions.
The Offering Memorandum will contain an accurate summary of the
material terms of the Registration Rights Agreement.
(xii) The Series C Notes have been duly and validly
authorized by Cinemark for issuance and sale to the Initial Purchaser
pursuant to this Agreement and, when issued and authenticated in
accordance with the terms of the Indenture and delivered against
payment therefor in accordance with the terms hereof and thereof, the
Series C Notes will be the legal, valid and binding obligations of
Cinemark, enforceable against Cinemark in accordance with their terms
and entitled to the benefits of the Indenture, subject to the
Enforceability Exceptions. The Offering Memorandum will contain an
accurate summary of the material terms of the Series C Notes.
(xiii) When the Series D Notes have been duly and validly
authorized for issuance by Cinemark and, when issued and authenticated
in accordance with the terms of the Exchange Offer and the Indenture,
the Series D Notes will be the legal, valid and binding obligations of
Cinemark, enforceable against Cinemark in accordance with their terms
and entitled to the benefits of the Indenture, subject to the
Enforceability Exceptions.
(xiv) Neither Cinemark nor any of its subsidiaries is (A)
in violation of its charter or bylaws or equivalent documents, (B) in
default in the performance of any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties
is subject, or (C) in violation of any local, state, federal or
foreign law, statute, ordinance, rule, regulation, judgment or court
decree applicable to it or any of its assets or properties (whether
owned or leased), except, in the case of clauses (A) (with respect to
subsidiaries other than the Material Subsidiaries), (B) and (C), for
any such violation or default that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
To the best knowledge of Cinemark, there exists no condition that,
with notice or the passage of time or both, would constitute such a
default under any such document or instrument except for any such
default that could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(xv) None of (A) the execution, delivery or performance by
Cinemark of this Agreement and the other Operative Documents, (B) the
issuance and sale of the Securities, nor (C) the consummation by
Cinemark of the transactions to be described in the Offering
Memorandum under the caption "Use of Proceeds", violates, conflicts
with or constitutes a breach of any of the terms or provisions of, or
a default under (or an event that with notice or the lapse of time, or
both, would constitute a default), or requires consent (other than
those consents that have been obtained or will be obtained prior to
the Closing Date) under, or results in the imposition of a lien or
encumbrance on any properties of Cinemark or its subsidiaries, or an
acceleration of any indebtedness of Cinemark or its subsidiaries
pursuant to, (i) the charter or bylaws (or equivalent documents) of
Cinemark or any of its subsidiaries, (ii) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
which Cinemark or any of its subsidiaries is a party or by which
Cinemark or any of its subsidiaries is bound or to which any of their
respective properties is subject, (iii) any statute, rule or
regulation applicable to Cinemark or any of its subsidiaries or their
respective assets or properties or (iv) any judgment, order or decree
of any court or governmental agency or authority having jurisdiction
over Cinemark or any of its subsidiaries or their respective assets or
properties, except in the case of clauses (ii), (iii) and (iv), for
any such violation, default, consent, imposition of a lien or
acceleration that could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. Except as may
be required under applicable state securities or Blue Sky
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laws, and except for any NASD filings and the filing of a registration
statement under the Act and qualification of the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") in
connection with the Registration Rights Agreement, no consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, any court or governmental
agency, body or administrative agency or any other person is required
for (1) the execution, delivery and performance by Cinemark of this
Agreement and the other Operative Documents or (2) the issuance and
sale of the Securities and the transactions contemplated thereby,
except such as have been obtained and made and except where the
failure to obtain such consents or waivers would not, individually or
in the aggregate, have a Material Adverse Effect.
(xvi) There is (i) no action, suit, investigation or
proceeding before or by any court, arbitrator or governmental agency,
body or official, domestic or foreign, now pending or, to the
knowledge of Cinemark, threatened or contemplated to which Cinemark or
any of its subsidiaries is or may be a party or to which the business
or property of Cinemark or any of its subsidiaries is or may be
subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or, to the
knowledge of Cinemark, that has been proposed by any governmental
body, and (iii) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of competent
jurisdiction to which Cinemark or any of its subsidiaries is or may be
subject or to which the business, assets, or property of Cinemark or
any of its subsidiaries is or may be subject, that, in the case of
clauses (i), (ii) and (iii) above, (A) is required to be disclosed in
the Offering Memorandum and that will not be so disclosed or (B)
could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(xvii) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any
governmental agency that prevents the issuance of the Securities or
prevents or suspends the use of the Offering Memorandum; no
injunction, restraining order or order of any nature by a federal or
state court of competent jurisdiction has been issued that prevents
the issuance of the Securities or prevents or suspends the sale of the
Securities in any jurisdiction referred to in Section 4(e) hereof; and
every request of any securities authority or agency of any
jurisdiction for additional information has been complied with in all
material respects.
(xviii) There is (i) no significant unfair labor practice
complaint pending against Cinemark or any of its subsidiaries, nor, to
the knowledge of Cinemark, threatened against any of them, before the
National Labor Relations Board, any state or local labor relations
board or any foreign labor relations board, and no significant
grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against
Cinemark or any of its subsidiaries or, to the knowledge of Cinemark,
threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage pending against Cinemark or any of its
subsidiaries nor, to the knowledge of Cinemark, threatened against any
of them and (iii) no union organizing or union representation question
existing with respect to the employees of Cinemark or any of its
subsidiaries. No claim has been filed against Cinemark or any of its
subsidiaries alleging violation of (A) any federal, state or local law
or foreign law relating to discrimination in hiring, promotion or pay
of employees, (B) any applicable wage or hour laws or (C) any
provision of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules and regulations thereunder, except as
could not reasonably be expected to have a Material Adverse Effect.
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(xix) Neither Cinemark nor any of its subsidiaries, nor any
of their respective officers, directors, employees, agents or
affiliates or any other person acting on their behalf has, directly or
indirectly, given or agreed to give any money, gift or similar benefit
to any customer, supplier, employee or agent of a customer or
supplier, official or employee of any governmental agency,
instrumentality of any government or any political party or candidate
for office (domestic or foreign) or other person who was, at the time,
in a position to help or hinder the business of Cinemark or its
subsidiaries (or assist Cinemark or its subsidiaries in connection
with any actual or proposed transaction) which would at the time have
been reasonably likely to subject Cinemark or its subsidiaries to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign) except for such damages or penalties,
either individually or in the aggregate, that could not reasonably be
expected to have a Material Adverse Effect.
(xx) Each of Cinemark and its subsidiaries has (A) good
and indefeasible title to all of the properties and assets material to
the business of Cinemark and its subsidiaries taken as a whole as
owned by it, free and clear of all liens, charges, encumbrances and
restrictions (except (i) liens constituting Permitted Liens under the
Indenture and (ii) liens, charges, encumbrances and restrictions that
do not in the aggregate materially detract from the value of such
properties and assets or materially impair the use thereof in the
operation of the business of Cinemark and its subsidiaries, taken as a
whole), (B) peaceful and undisturbed possession under all material
leases to which any of them is a party as lessee and each of which
lease is valid and binding and no default which would have a Material
Adverse Effect exists thereunder, (C) all licenses, certificates,
permits, authorizations, approvals, franchises and other rights from,
and has made all declarations and filings with, all federal, state and
local authorities, all self-regulatory authorities and all courts and
other tribunals (each, an "Authorization") necessary to engage in the
business conducted by any of them in the manner to be described in the
Offering Memorandum, except as could not reasonably be expected to
have a Material Adverse Effect and (D) no reason to believe that any
governmental body or agency is considering limiting, suspending or
revoking any such Authorization. All such Authorizations are valid
and in full force and effect and each of Cinemark and its subsidiaries
is in compliance in all material respects with the terms and
conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities having jurisdiction with
respect thereto. All leases to which Cinemark or any of its
subsidiaries is a party are valid and binding and no default by
Cinemark or any such subsidiary, as the case may be, has occurred and
is continuing thereunder and no material defaults by the landlord are
existing under any such lease, except in each case as could not
reasonably be expected to have a Material Adverse Effect.
(xxi) All Federal and other material tax returns required
to be filed by Cinemark or any of its subsidiaries in all
jurisdictions have been so filed. All Federal and other material
taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from such
entities or that are due and payable have been paid, other than those
being contested in good faith and for which adequate reserves have
been provided. There are no material proposed additional tax
assessments against Cinemark or any of its subsidiaries, or the assets
or property of Cinemark or any of its subsidiaries which could
reasonably be expected to, if the assessments were made, have a
Material Adverse Effect.
(xxii) To the knowledge of Cinemark and without independent
verification, the properties of Cinemark and its subsidiaries, taken
as a whole, are structurally sound with no known defects which would
have a Material Adverse Effect, are in operating condition and good
repair (reasonable wear and tear excepted) and are adequate for their
uses.
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(xxiii) Neither Cinemark nor any of its subsidiaries is an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), or analogous foreign laws and
regulations.
(xxiv) There are no holders of securities of Cinemark or any
of its subsidiaries who, by reason of the execution by Cinemark of
this Agreement or any other Operative Document or the consummation by
Cinemark of the transactions contemplated hereby and thereby, have the
right to request or demand that Cinemark or any of its subsidiaries
register under the Act or analogous foreign laws and regulations
securities held by them.
(xxv) Cinemark believes that it and each of its
subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect
thereto.
(xxvi) Cinemark and each of its subsidiaries maintains, or
Cinemark maintains on behalf of its subsidiaries, insurance covering
its or their material properties, operations, personnel and
businesses. Cinemark believes that such insurance insures against
such losses and risks as are adequate in accordance with customary
industry practice to protect Cinemark and its subsidiaries and their
respective businesses. Neither Cinemark nor any of its subsidiaries
has received notice from any insurer or agent of such insurer that
substantial capital improvements or other material expenditures will
have to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof and will
be outstanding and duly in force on the terms in effect on the date
hereof on commercially reasonable terms.
(xxvii) Neither Cinemark nor any of its subsidiaries has (i)
taken, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of Cinemark or any of its
subsidiaries to facilitate the sale or resale of the Series C Notes or
(ii) since June 18, 1997 sold, bid for, purchased or paid any person
any compensation for soliciting purchases of the Series C Notes or
paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of Cinemark or any of its
subsidiaries.
(xxviii) No registration under the Act of the Series C Notes
is required for the sale of the Series C Notes to the Initial
Purchaser as contemplated hereby or for the Exempt Resales assuming
(i) that the purchasers who buy the Series C Notes in the Exempt
Resales are QIBs and (ii) the accuracy of the Initial Purchaser's
representations regarding the absence of general solicitation in
connection with the sale of Series C Notes to the Initial Purchaser
and the Exempt Resales contained herein. No form of general
solicitation or general advertising was used by Cinemark or any of its
subsidiaries or any of their representatives (although no
representation or warranty is made as to actions taken by the Initial
Purchaser and its representatives) in connection with the offer and
sale of any of the Series C Notes or in connection with Exempt
Resales, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
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attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Series C Notes
have been issued and sold by Cinemark or any of its subsidiaries
within the six- month period immediately prior to the date hereof.
(xxix) The execution and delivery of this Agreement, the
other Operative Documents and the sale of the Series C Notes to be
purchased by the QIBs will not involve any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986. The representations made in the
preceding sentence are made in reliance upon and subject to the
accuracy of, and compliance with, the representations and covenants
made or deemed made by the QIBs as will be set forth in the Offering
Memorandum under the caption "Notice to Investors."
(xxx) The Offering Memorandum, as of its date, and each
amendment or supplement thereto, as of its date, will contain the
information specified in, and meets the requirements of, Rule
144A(d)(4) under the Act.
(xxxi) Subsequent to the respective dates as of which
information will be given in the Offering Memorandum and up to the
Closing Date, except as will be set forth in the Offering Memorandum,
(A) neither Cinemark nor any of its subsidiaries has incurred any
liabilities or obligations, direct or contingent, which are material,
individually or in the aggregate, to Cinemark and its subsidiaries,
taken as a whole, nor entered into any material transaction not in the
ordinary course of business, (B) there has not been, individually or
in the aggregate, any change or development of which Cinemark is aware
which could reasonably be expected to result in a Material Adverse
Effect of the type described in clause (a) of such definition and (C)
there has been no dividend or distribution of any kind declared, paid
or made by Cinemark or any of its subsidiaries on any class of their
capital stock.
(xxxii) None of the execution, delivery and performance of
this Agreement, the issuance and sale of the Securities, the
application of the proceeds from the issuance and sale of the
Securities and the consummation of the transactions contemplated
thereby as set forth in the Offering Memorandum, will violate
Regulations G, T, U or X promulgated by the Board of Governors of the
Federal Reserve System or analogous foreign laws and regulations.
(xxxiii) The accountants who have certified or will certify
the financial statements included or to be included as part of the
Offering Memorandum are independent accountants. The annual
historical financial statements of Cinemark to be included in the
Offering Memorandum comply as to form in all material respects with
the requirements applicable to registration statements on Form S-1
under the Act and will present fairly in all material respects the
financial position and results of operations of Cinemark at the
respective dates and for the respective periods indicated. Such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods presented. The pro forma adjustments and as
adjusted information to be included in the Offering Memorandum will
give effect to assumptions made on a reasonable basis and will present
fairly in all material respects the historical and proposed
transactions contemplated by the Offering Memorandum and this
Agreement. The other financial and statistical information and data
to be included in the Offering Memorandum, historical, as adjusted and
pro forma, will be accurately presented on a basis consistent with the
financial statements to be included in the Offering Memorandum and the
books and records of Cinemark.
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(xxxiv) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between or among Cinemark or
any of its subsidiaries and any other person that would reasonably be
expected to give rise to a valid claim against Cinemark or any of its
subsidiaries or the Initial Purchaser for a brokerage commission,
finder's fee or like payment in connection with the issuance, purchase
and sale of the Securities.
(xxxv) After giving effect to the transactions contemplated
by the Offering Memorandum, the Company shall be solvent as determined
in accordance with the applicable provisions of the Texas Business
Corporation Act.
(xxxvi) There exist no conditions that would constitute a
default by Cinemark (or an event which with notice or the lapse of
time, or both, would constitute a default) under any of the Operative
Documents.
(xxxvii) Each certificate signed by any officer of Cinemark
and delivered to the Initial Purchaser or counsel for the Initial
Purchaser shall be deemed to be a representation and warranty by
Cinemark to the Initial Purchaser as to the matters covered thereby.
Cinemark acknowledges that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 8 hereof, counsel to Cinemark and counsel to the Initial Purchaser will
rely upon the accuracy and truth of the foregoing representations and hereby
consents to such reliance.
(b) The Initial Purchaser represents, warrants and covenants
to Cinemark and agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge
and experience in financial and business matters as are necessary in
order to evaluate the merits and risks of an investment in the Series
C Notes.
(ii) Such Initial Purchaser (A) is not acquiring the
Series C Notes with a view to any distribution thereof that would
violate the Act or the securities laws of any state of the United
States or any other applicable jurisdiction and (B) will be reoffering
and reselling the Series C Notes only to QIBs in reliance on the
exemption from the registration requirements of the Act provided by
Rule 144A.
(iii) No form of general solicitation or general
advertising has been or will be used by such Initial Purchaser or any
of its representatives in connection with the Exempt Resales,
including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(iv) Such Initial Purchaser agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the Series C
Notes only from, and will offer to sell the Series C Notes only to,
QIBs. Such Initial Purchaser further agrees (A) that it will offer to
sell the Series C Notes only to, and will solicit offers to buy the
Series C Notes only from QIB's who in purchasing such Series C Notes
will be deemed to have represented and agreed that they are purchasing
the Series C Notes for their own accounts or accounts with respect to
which they exercise sole investment discretion and that they or such
accounts are QIBs and (B) that such Series C Notes will not have been
registered under the Act and may be resold, pledged or otherwise
transferred only (x)(I) to a
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person who the seller reasonably believes is a QIB in a transaction
meeting the requirements of Rule 144A, (II) in a transaction meeting
the requirements of Rule 144, (III) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904
under the Act or (IV) in accordance with another exemption from the
registration requirements of the Act (and based upon an opinion of
counsel reasonably acceptable to Cinemark if Cinemark so requests),
(y) to Cinemark, (z) pursuant to an effective registration statement
under the Act and, in each case, in accordance with any applicable
securities laws of any state of the United States or any other
applicable jurisdiction and (C) that the holder will, and each
subsequent holder is required to, notify any purchaser from it of the
security evidenced thereby of the resale restrictions set forth in (B)
above.
Such Initial Purchaser understands that Cinemark and, for
purposes of the opinions to be delivered to the Initial Purchaser
pursuant to Section 8 hereof, counsel to Cinemark and counsel to the
Initial Purchaser will rely upon the accuracy and truth of the
foregoing representations and hereby consents to such reliance.
6. INDEMNIFICATION.
(a) Cinemark agrees to indemnify and hold harmless, to the
fullest extent permitted by applicable law, the Initial Purchaser,
each person, if any, who controls the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and the respective officers, directors, partners, employees,
representatives and agents of the Initial Purchaser or any controlling
persons, against any and all losses, liabilities, claims, damages and
expenses whatsoever (including but not limited to reasonable
attorneys' fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any
and all amounts paid in settlement of any claim or litigation
(collectively, "Losses")), joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Offering Memorandum, or in any supplement thereto or amendment
thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided, however, that Cinemark will not be liable in any such case
to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in the Offering Memorandum in reliance upon and in conformity
with written information furnished to Cinemark by or on behalf of the
Initial Purchaser expressly for use therein. This indemnity agreement
will be in addition to any liability which Cinemark may otherwise
have, including under this Agreement.
(b) The Initial Purchaser agrees to indemnify and hold
harmless Cinemark, each person, if any, who controls Cinemark within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act and the respective officers, directors, partners, employees,
representatives and agents of Cinemark or any controlling persons,
against any and all Losses to which they may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum, or in any amendment thereof or supplement thereto, or
arise out of or are based
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upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the extent,
that any such loss, liability, claim, damage or expense arises out of
or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to Cinemark by or on
behalf of the Initial Purchaser expressly for use therein; provided,
however, that in no case shall the Initial Purchaser be liable or
responsible under this subsection (b) for any amount in excess of the
discounts and commissions received by the Initial Purchaser unless
such Losses are a result of the gross negligence or willful misconduct
of the Initial Purchaser. This indemnity will be in addition to any
liability which the Initial Purchaser may otherwise have, including
under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it
may have under this Section 6, except to the extent that it has been
prejudiced in any material respect by such failure, or from any
liability which it may otherwise have). In case any such action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified
party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless
(i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of
such action and the indemnifying party has agreed in writing to pay
the fees and expenses of such counsel, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the
action, or (iii) such indemnified party or parties shall have
concluded, upon the advice of counsel, that there may be defenses
available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which
case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties),
in any of which events such fees and expenses of counsel shall be
borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above, shall only be
liable for the legal expenses of one counsel (in addition to any local
counsel) for all indemnified parties in each jurisdiction in which any
claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable
for any settlement of any claim or action effected without its prior
written consent; provided, however, that such consent was not
unreasonably withheld.
7. CONTRIBUTION.
In order to provide for contribution in circumstances in which
the indemnification provided for in Section 6 is for any reason held to be
unavailable or is insufficient to hold harmless a party indemnified thereunder,
Cinemark, on the
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one hand, and the Initial Purchaser, on the other hand, shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by Cinemark, any contribution received by Cinemark from persons, other
than the Initial Purchaser, who may also be liable for contribution, including
persons who control Cinemark within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) to which Cinemark and the Initial Purchaser
may be subject, in such proportion as is appropriate to reflect the relative
benefits received by Cinemark, on the one hand, and the Initial Purchaser, on
the other hand, from the offering of the Series C Notes or, if such allocation
is not permitted by applicable law or indemnification is not available as a
result of the indemnifying party not having received notice as provided in
Section 6, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of Cinemark, on
the one hand, and the Initial Purchaser, on the other hand, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by Cinemark, on the one hand,
and the Initial Purchaser, on the other hand, shall be deemed to be in the same
proportion as (x) the total proceeds from the offering of Series C Notes (net
of discounts and commissions but before deducting expenses) received by
Cinemark, and (y) the discounts and commissions received by the Initial
Purchaser, respectively. The relative fault of Cinemark, on the one hand, and
of the Initial Purchaser, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by Cinemark, on the one hand, or the Initial
Purchaser, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. Cinemark and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7, (i) in no case shall the Initial Purchaser be
required to contribute any amount in excess of the amount by which the
discounts and commissions applicable to the Series C Notes purchased by the
Initial Purchaser pursuant to this Agreement exceeds the amount of any damages
which the Initial Purchaser have otherwise been required to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 7,
each person, if any, who controls the Initial Purchaser within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and the respective
officers, directors, partners, employees, representatives and agents of the
Initial Purchaser or any controlling persons shall have the same rights to
contribution as the Initial Purchaser, and each person, if any, who controls
Cinemark, within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and the respective officers, directors, partners, employees,
representatives and agents of Cinemark or any controlling persons shall have
the same rights to contribution as Cinemark, subject in each case to clauses
(i) and (ii) of this Section 7. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 7, notify such
party or parties from whom contribution may be sought, but the failure to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 7 or otherwise.
8. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS.
The obligations of the Initial Purchaser to purchase and pay
for the Series C Notes, as provided herein, shall be subject to the following
conditions:
(a) All of the representations and warranties of Cinemark
contained in this Agreement shall be true and correct on the date
hereof and on the Closing Date with the same force and effect as if
made on and as of the date hereof and the Closing Date, respectively.
Cinemark shall have performed or complied with all of the agreements
herein contained and required to be performed or complied with by it
at or prior to the Closing Date.
(b) The Offering Memorandum shall have been prepared in form
and substance satisfactory to the Initial Purchaser and shall have
been printed and copies distributed to the Initial Purchaser in New
York as soon as practicable after the date of this Agreement but not
later than 12:00 p.m., New York City time, on June 24, 1997 or at such
later date and time as to which the Initial Purchaser may agree, and
no stop order suspending the qualification or exemption from
qualification of the Series C Notes in any jurisdiction referred to in
Section 4(e) shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(c) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which could, as of the Closing Date,
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reasonably be expected to have a Material Adverse Effect; no action,
suit or proceeding shall have been commenced and be pending against or
affecting or threatened against, Cinemark or any of its subsidiaries
before any court or arbitrator or any governmental body, agency or
official that, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect; and no stop order shall have
been issued preventing the use of the Offering Memorandum, or any
amendment or supplement thereto, or which could reasonably be expected
to have a Material Adverse Effect.
(d) Since the dates as of which information is given in the
Offering Memorandum and other than as set forth in the Offering
Memorandum, (i) there shall not have been any material and adverse
change or any development that is reasonably likely to result in a
material and adverse change in the long-term debt, or material
increase in the short-term debt, of Cinemark or any of its
subsidiaries from that set forth in the Offering Memorandum, (ii) no
dividend or distribution of any kind shall have been declared, paid or
made by Cinemark or any of its subsidiaries on any class of its
capital stock, and (iii) neither Cinemark nor any of its subsidiaries
shall have incurred any liabilities or obligations other than
contracts entered into in the ordinary course of business, direct or
contingent, that individually or in the aggregate could have a
Material Adverse Effect and that are required to be disclosed on a
balance sheet or notes thereto in accordance with generally accepted
accounting principles and are not disclosed on the latest balance
sheet or notes thereto included in the Offering Memorandum. Since the
date hereof and since the dates as of which information is given in
the Offering Memorandum, there shall not have occurred any material
adverse change in the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of Cinemark
and its subsidiaries taken as a whole.
(e) The Initial Purchaser shall have received a certificate,
dated the Closing Date, signed on behalf of Cinemark by its president
and chief operating officer and its chief financial officer (i)
confirming as of the Closing Date, the matters set forth in paragraphs
(a), (b), (c) and (d) of this Section 8, (ii) stating that on the
Closing Date, Cinemark will use the proceeds of the offering and sale
of the Series C Notes as set forth in the Offering Memorandum, and
(iii) stating that as of the Closing Date, no facts have come to such
officers' attention that would cause such officers to believe that the
Offering Memorandum, as of its date or the Closing Date, contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(f) The Initial Purchaser shall have received on the Closing
Date (i) the opinion, dated the Closing Date, of ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇, L.L.P., Dallas, Texas, counsel to Cinemark,
substantially to the effect set forth in Exhibit B hereto and (ii) a
statement of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Associate General Counsel of
Cinemark, to the effect set forth in Exhibit C hereto. In providing
such opinion, ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., shall opine
as to the federal laws of the United States, the laws of the State of
Texas and, to the extent set forth therein, the laws of the State of
New York.
(g) The Initial Purchaser shall have received on the Closing
Date the opinion, dated the Closing Date, of ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel
to the Trustee, to the effect that (i) the Trustee is a national
banking association or state chartered bank or trust company and is
duly incorporated and validly existing in good standing under the laws
of the jurisdiction in which it is incorporated, (ii) the Trustee has
the corporate power and authority necessary to enter into the
Indenture and authenticate the Securities as Trustee thereunder, (iii)
the Indenture has been duly and validly
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authorized, executed and delivered by the Trustee and is the legal,
valid and binding agreement of the Trustee enforceable against the
Trustee in accordance with its terms and (iv) the Series C Notes have
been duly authenticated and delivered by the Trustee pursuant to the
terms of this Agreement and the Indenture.
(h) The Initial Purchaser shall have received on the Closing
Date the opinion, dated the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ (a partnership which includes professional corporations),
counsel to the Initial Purchaser, covering such matters as are
customarily covered in such opinions.
(i) Prior to the printing of the Offering Memorandum and at
the Closing Date the Initial Purchaser shall have received from
Deloitte & Touche, L.L.P., independent public accountants for
Cinemark, dated as of the date of this Agreement and as of the Closing
Date, customary comfort letters addressed to the Initial Purchaser and
in form and substance previously agreed upon by the Initial Purchaser
and counsel to the Initial Purchaser with respect to the financial
statements and certain financial information of Cinemark and its
subsidiaries contained in the Offering Memorandum.
(j) Cinemark and the Trustee shall have entered into the
Indenture and the Initial Purchaser shall have received counterparts,
conformed as executed, thereof.
(k) Cinemark shall have entered into the Registration Rights
Agreement and the Initial Purchaser shall have received counterparts,
conformed as executed, thereof.
(l) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall have been furnished with
such documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 8 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions
herein contained.
(m) Prior to the Closing Date, Cinemark shall have furnished
to the Initial Purchaser such further information, certificates and
documents as the Initial Purchaser may reasonably request.
All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by Cinemark will be in compliance
with the provisions hereof only if they are reasonably satisfactory in form and
substance to the Initial Purchaser and its counsel. Cinemark will furnish the
Initial Purchaser with such conformed copies of such opinions, certificates,
letters and other documents as it shall reasonably request.
9. INITIAL PURCHASER'S INFORMATION.
Cinemark and the Initial Purchaser severally acknowledge that
the statements with respect to the offering of the Series C Notes to be set
forth in (i) the last paragraph of the cover page, (ii) the first paragraph,
the third paragraph, the fifth and sixth sentences of the fourth paragraph and
the fifth paragraph under the caption "Plan of Distribution" and (iii) the
second sentence under the caption "Legal Matters" will constitute the only
information furnished in writing by the Initial Purchaser expressly for use in
the Offering Memorandum.
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10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS.
All representations and warranties, covenants and agreements
of the Initial Purchaser and Cinemark contained in this Agreement, including
without limitation, the agreements contained in Sections 11(d) and 13, the
indemnity agreements contained in Section 6 and the contribution agreements
contained in Section 7, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Initial Purchaser,
any controlling person thereof or by or on behalf of Cinemark or any
controlling person thereof, and shall survive delivery of and payment for the
Series C Notes to and by the Initial Purchaser. The representations contained
in Section 5 and the agreements contained in Sections 6, 7 and 11(d) and 12
shall survive the termination of this Agreement, including any termination
pursuant to Section 11.
11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchaser shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to Cinemark from
the Initial Purchaser, without liability (other than with respect to Sections 6
and 7) on the Initial Purchaser's part to Cinemark if, on or prior to such
date, (i) Cinemark shall have failed, refused or been unable to perform in any
material respect any agreement on its part to be performed hereunder, (ii) any
other condition to the obligations of the Initial Purchaser hereunder as
provided in Section 8 is not fulfilled when and as required in any material
respect, (iii) in the reasonable judgment of the Initial Purchaser, any
material adverse change shall have occurred since the respective dates as of
which information is given in the Offering Memorandum in the condition
(financial or otherwise), business, properties, assets, liabilities, prospects,
net worth, results of operations or cash flows of Cinemark and its
subsidiaries, taken as a whole, other than as set forth in the Offering
Memorandum, or (iv)(A) any domestic or international event or act or occurrence
has materially disrupted, or in the reasonable opinion of the Initial Purchaser
will in the immediate future materially disrupt, the market for Cinemark's
securities or for securities in general; or (B) trading in securities generally
on either of the New York or American Stock Exchanges shall have been suspended
or materially limited, or minimum or maximum prices for trading shall have been
established, or maximum ranges for prices for securities shall have been
required, on such exchange, or by such exchange or other regulatory body or
governmental authority having jurisdiction; or (C) a banking moratorium shall
have been declared by federal or state authorities, or a moratorium in foreign
exchange trading by major international banks or persons shall have been
declared; or (D) there is an outbreak or escalation of armed hostilities
involving the United States on or after the date hereof, or if there has been a
declaration by the United States of a national emergency or war, the effect of
which shall be, in the Initial Purchaser's judgment, to make it inadvisable or
impracticable to proceed with the offering or delivery of the Series C Notes on
the terms and in the manner contemplated in the Offering Memorandum; or (E)
there shall have been such a material adverse change in general economic,
political or financial conditions or if the effect of international conditions
on the financial markets in the United States shall be such as, in the Initial
Purchaser's judgment, makes it inadvisable or impracticable to proceed with the
offering or delivery of the Series C Notes as contemplated thereby; or (F) (1)
there shall have occurred a downgrading in the rating accorded the Series C
Notes by any "nationally recognized statistical rating organization" as that
term is defined by the Commission for purposes of Rule 436(g)(2) of the rules
and regulations of the Commission under the Act or (2) any such organization
shall have publicly announced that it has under surveillance or review (other
than an announcement with positive implications of a possible upgrading), its
rating of the Series C Notes.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, telephonic facsimile, or telegraph, confirmed in
writing by letter within three days thereof.
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(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (other than a termination pursuant to Section 11(b)(iv))
or if the sale of the Series C Notes provided for herein is not consummated
because any condition to the obligations of the Initial Purchaser set forth
herein is not satisfied or because of any refusal, inability or failure on the
part of Cinemark to perform any agreement herein or comply with any provision
hereof, Cinemark will, subject to demand by the Initial Purchaser, reimburse
the Initial Purchaser for all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of Initial Purchaser's counsel), incurred by the
Initial Purchaser in connection herewith.
12. FEES AND EXPENSES.
(a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
Cinemark agrees to pay all costs, expenses, fees and taxes in connection with
this Agreement and the transactions contemplated hereby and by the other
Operative Documents, including without limitation all costs, expenses, fees and
taxes relating to: (i) the preparation, printing, filing and distribution of
the Offering Memorandum (including, without limitation, financial statements)
and all amendments and supplements thereto required pursuant hereto, (ii) the
preparation (including, without limitation, duplication costs) and delivery of
this Agreement, the other Operative Documents, all preliminary and final Blue
Sky memoranda and all other agreements, memoranda, correspondence and other
documents prepared and delivered in connection herewith and with the Exempt
Resales, (iii) the issuance, transfer and delivery by Cinemark of the
Securities to the Initial Purchaser, (iv) the qualification or registration of
the Securities for offer and sale under the securities or Blue Sky laws of the
jurisdictions referred to in paragraph (e) above (including, without
limitation, the cost of printing and mailing a preliminary and final Blue Sky
Memorandum and the reasonable fees and disbursements of counsel to the Initial
Purchaser relating thereto), (v) furnishing such copies of the Offering
Memorandum, and all amendments and supplements thereto, as may be reasonably
requested for use in connection with Exempt Resales, (vi) the preparation of
certificates for the Securities (including, without limitation, printing and
engraving thereof), (vii) the fees, disbursements and expenses of counsel to
Cinemark and its independent public accountants, (viii) all expenses and
listing fees in connection with the application for quotation of the Series C
Notes in the PORTAL market, (ix) all fees and expenses (including fees and
expenses of counsel to Cinemark) of Cinemark in connection with the approval of
the Securities by DTC for "book-entry" transfer, (x) rating the Securities by
rating agencies, (xi) the fees and expenses of the Trustee and its counsel in
connection with the Indenture and the Securities, (xii) the performance by
Cinemark of its other obligations under this Agreement and the other Operative
Documents and (xiii) other expenses incurred by Cinemark in connection with the
marketing and sale of the Securities.
(b) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
and except as otherwise provided in Section 11(d), the Initial Purchaser agrees
to pay all of its out-of-pocket expenses not specifically provided for in
Section 12(a) hereof, including the fees and expenses of Initial Purchaser's
counsel.
13. NOTICE.
All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Initial
Purchaser shall be mailed, delivered, or telexed, telegraphed or telecopied and
confirmed in writing to Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Finance Department, telecopy number:
(▇▇▇) ▇▇▇-▇▇▇▇; and if sent to Cinemark, shall be mailed, delivered or telexed,
telegraphed or telecopied and confirmed in writing to Cinemark USA, Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to
▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇,
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▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C., telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇; provided,
however, that any notice pursuant to Sections 6 or 7 shall be mailed, delivered
or telexed, telegraphed or telecopied and confirmed in writing within three
days thereof.
14. PARTIES.
This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Initial Purchaser, Cinemark and the controlling persons
and agents referred to in Sections 6 and 7, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. The term "successors and assigns"
shall not include a purchaser, in its capacity as such, of Series C Notes from
the Initial Purchaser.
15. CONSTRUCTION.
This Agreement shall be construed in accordance with the
internal laws of the State of New York. Time is of the essence in this
Agreement.
16. CAPTIONS.
The captions included in this Agreement are included solely
for convenience of reference and are not to be considered a part of this
Agreement.
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17. COUNTERPARTS.
This Agreement may be executed in various counterparts which
together shall constitute one and the same instrument.
Very truly yours,
CINEMARK USA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Accepted and agreed to as of
the date first above written:
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Managing Director
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SCHEDULE I
Aggregate Principal
Initial Purchaser Amount of Series C Notes
----------------- ------------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc. $75,000,000
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Total $75,000,000
S-1
