EXHIBIT 10.12
November 28, 1997
Xx. Xxxxx Xxxx
President and Chief Executive Officer
Cineplex Odeon Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Xx. Xxxx:
This Agreement is being entered into with you in contemplation of the proposed
merger (the "Merger") of the business operations of Cineplex Odeon Corporation
("Cineplex") and LTM Holdings Inc. ("LTM") which will result in Cineplex
becoming a wholly-owned subsidiary of the merged corporation (to be renamed
Loews Cineplex Entertainment Corporation) ("Loews Cineplex"). In connection
therewith, Cineplex considers the continuance of a sound and vital management to
be essential to protecting and enhancing the best interests of Cineplex, Loews
Cineplex and the shareholders of Loews Cineplex (the "Company"). Accordingly,
the Board of Directors of Cineplex (the "Board") has determined that appropriate
steps should be taken to reinforce and encourage you to continue employment with
Cineplex.
This Agreement further amends, with effect from and after completion of the
Merger, and again restates the restated agreement dated July 4, 1996 (as
subsequently amended) and which was accepted by you on July 4, 1996, governing
your employment with Cineplex. If, however, the Merger is not completed for any
reason, the aforesaid restated agreement (as subsequently amended) shall
continue in full force and effect without reference to this Agreement (except
the first sentence of paragraph 4(b)(ii) hereof). If the Merger is completed,
Loews Cineplex shall assume this Agreement and agree to cause Cineplex to employ
you as contemplated herein and agree to cause Cineplex to pay to you the amounts
contemplated herein and Cineplex hereby agrees with you to use its best efforts
to cause Loews Cineplex to assume this Agreement as aforesaid.
With the foregoing background, you and Cineplex agree as follows:
1. Employment and Services
Cineplex will continue to employ you and you will continue to perform your full-
time services as Chairman and Chief Executive Officer of Cineplex upon the terms
and conditions hereinafter set forth.
It is expressly understood and agreed that it shall not be a violation of this
Agreement for you to (a) serve on corporate, civic or charitable boards or
committees approved by the Chairman of the Compensation Committee of the Board
(such approval not to be unreasonably withheld); (b) deliver lectures, fulfil
speaking engagements or teach at educational institutions; and (c) manage
personal investments; so long as such activities do not materially and adversely
affect the performance by you of your responsibilities as an executive of the
Company in accordance with this Agreement and do not reflect adversely on the
Company to a material extent. It is further understood and agreed that to the
extent that any such activities have been conducted by you prior to the
Effective Date (as hereinafter defined) and have been notified to the current
Chairman of the Compensation Committee of the Board in writing prior to the date
hereof, the continued conduct of such activities subsequent to the Effective
Date shall thereafter be deemed not to materially and adversely affect your
ability to perform your responsibilities hereunder or to reflect adversely on
the Company.
You will perform such services as required from time to time by the Board;
provided, however, that without your prior consent you shall not be required to
perform services other than those comparable in scope and dignity to those
typically performed by a Chief Executive Officer of a company which is a wholly-
owned subsidiary of a U.S. parent and which carries on a business similar in
size and scope to that to be carried on by Cineplex after the Merger. Without
limiting the generality of the foregoing, services to be performed by you shall
be deemed to be not comparable in scope and dignity as aforesaid if there shall
occur a material adverse change in your status, position or salary group or
scope of responsibility as an executive in effect as at the Effective Date
including, without limitation, (i) a material diminution of the scope of your
duties or responsibilities; (ii) the addition to Cineplex of new executive
positions with equal or greater title, status or responsibility; (iii) any
material change in your reporting responsibility as a result of which you no
longer report directly and solely to the Chief Executive Officer of Loews
Cineplex; (iv) the assignment to you of any duties or areas of responsibilities
which are materially inconsistent with such status or position(s) or
responsibilities undertaken as at the Effective Date; or (v) any removal of you
from, or any failure to reappoint or re-elect you to, the offices referred to in
the first paragraph of this Section 1 (except in connection with the termination
of your employment pursuant to Section 7); provided, however, that in the event
of any such occurrence, Cineplex shall have ten Business Days following receipt
of notice (given in accordance with Section 12) from you to cure such
occurrence. For greater certainty, it shall be a material adverse change in your
status and position if you shall cease to be a member of the Board or of the
Board of Directors of Loews Cineplex, unless such change results from your
voluntary resignation or refusal to stand for re-election or unless your
appointment to the Board or to the Board of Directors of Loews Cineplex is
contrary to applicable laws. In this Agreement, "Business Day" means a day other
than a Saturday or Sunday on which banks are open for business during normal
business hours in the City of Toronto.
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2. Results and Proceeds
As your employer, Cineplex shall own all rights in and to the results and
proceeds connected with or arising out of, directly or indirectly, your services
hereunder.
3. Term
The term of this Agreement shall commence on the date of completion of the
Merger (the "Effective Date") and, subject to Sections 7, 8 and 9A, continue
until the third (3rd) anniversary of the Effective Date (the "Expiry Date"),
unless extended pursuant to the provisions of this Section 3.
Cineplex and you agree and acknowledge that neither Cineplex nor you has any
obligation to renew this Agreement or to continue your employment after
expiration of the term hereunder, and Cineplex and you expressly acknowledge
that no promises or understandings to the contrary have been made or reached.
Subject to Subsection 8(a) and Sections 9A and 10 hereof:
(a) if you determine not to renew this Agreement upon its expiry, you shall
notify Cineplex in writing on or before the date which is one year prior to
the Expiry Date (or one year prior to the expiry of any extension of this
Agreement provided for herein) (provided that if such date is not a
Business Day, on or before the immediately preceding Business Day) (such
date one year prior to expiry without adjustment if not a Business Day
being herein called the "One Year Notice Date"); or
(b) if Cineplex determines not to renew this Agreement upon its expiry,
Cineplex shall notify you in writing after the date which is six (6) months
prior to the One Year Notice Date but on or before the One Year Notice
Date, or thereafter on any Business Day during the first six (6) months of
the last year of the term hereof (or during the first six (6) months of any
extension thereof provided for herein) (such six (6) month period being
herein called the "Six-Month Notice Period"), provided that Cineplex may,
instead of providing notice of non-renewal on or before the One Year Notice
Date, be entitled to deliver written notice to you on or before the One
Year Notice Date electing not to renew this Agreement upon its expiry and
terminating your employment hereunder effective on the One Year Notice
Date. For greater certainty, if Cineplex determines not to renew this
Agreement upon its expiry after the One Year Notice Date but during the
Six-Month Notice Period, it may not, except as permitted pursuant to
Subsection 7(a), deliver to you notice of immediate termination during that
period, but only notice of non-renewal as aforesaid.
Failing such notice by either party, the term of this Agreement shall be deemed
to have been extended by a period of one year from the date upon which it would
otherwise have expired and the "Expiry Date" shall mean the last day of such
year. Failure to give such notices from time to time shall again operate to
extend the term for further periods of one year each; provided that any
extension which would otherwise extend the term beyond your normal retirement
age (applicable to employees generally under Company policy) shall only extend
the term to your normal retirement age. The parties acknowledge that the normal
retirement age is presently 65.
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You and Cineplex hereby agree that the provisions of Section 2 of the Employers
and Employees Act (Ontario) shall not apply to this Agreement.
4. Compensation
(a) Base Salary
For your services rendered under this Agreement, Cineplex shall pay you an
annual base salary of U.S. Five Hundred and Fifty Thousand Dollars (U.S.
$550,000), or such higher salary as may be determined by the Board at a
review to be held annually or more frequently if the Board so determines
("Base Salary"). Base Salary shall be converted into Canadian dollars as
hereinafter provided and shall be paid in equal installments on Cineplex's
regular paydays during the term, subject to usual and required payroll
deductions and withholdings.
For the period January 1 to June 30 of each year, Base Salary shall be
converted into Canadian dollars at the Bank of Canada noon rate on November
15 of the prior year or, if such date is not a Business Day, on the
immediately preceding Business Day. For the period July 1 to December 31 of
each year, Base Salary shall be converted into Canadian dollars at the Bank
of Canada noon rate on May 15 of such year provided that if such date is
not a Business Day, on the immediately preceding Business Day. You and
Cineplex agree to review the manner in which Base Salary is converted into
Canadian dollars in the event of significant changes in the U.S./Canadian
exchange rate.
(b) Bonus
(i) You shall be entitled in respect of each year of the term of this
Agreement to a bonus ("Minimum Bonus"), paid in cash, of at least U.S.
One and Hundred and Fifty-five Thousand Dollars (U.S.$155,000) (pro-
rated where appropriate in respect of part years, if any). You
acknowledge that the payment of additional bonuses in any year is a
matter in the sole discretion of the Board. Cineplex confirms to you
its existing policy that the question of bonus payments will be
considered by the Board at least annually; that additional bonuses, if
any, may be in amounts equal to up to 100% of Base Salary minus
Minimum Bonus and may be paid in cash, Loews Cineplex common shares or
a combination of the two; and that the decision as to payment and
amount will take into account primarily individual performance and
corporate performance and may take into account such other secondary
factors as the Board deems appropriate. Any decision of the Board with
respect to the amount or form of an additional bonus, if any, shall be
final and binding upon you. Bonus payments shall be converted into
Canadian dollars at the Bank of Canada noon rate on either November 15
or May 15 (or if such date is not a Business Day, the immediately
preceding Business Day) depending on the period in which they are paid
as provided in Subsection 4(a).
(ii) You acknowledge receipt of a special one-time non-refundable cash
bonus of U.S. Five Hundred Thousand Dollars (U.S.$500,000) paid to you
upon the
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execution of the agreement providing for the Merger. If the Merger is
completed, Cineplex agrees to pay you an additional special one-time
cash bonus of an additional U.S. Five Hundred Thousand Dollars
(U.S.$500,000) within ninety (90) days following the Effective Date.
(c) Stock Options
(i) You acknowledge that the issuance of stock options will be a
matter in the sole discretion of the Board of Directors of Loews
Cineplex. Subject to the terms of Loews Cineplex's stock option plan,
as from time to time in effect, any decision of the Loews Cineplex
Board of Directors with respect to the quantity or terms of a stock
option grant, if any, will be final and binding on you.
(ii) Notwithstanding the foregoing, it is acknowledged that, either
prior to or contemporaneously with completion of the Merger, or
shortly following its completion, but subject to completion of the
Merger, it is intended that there will be a grant of options to
certain employees of LTM and/or Cineplex (and, depending upon the
timing thereof, in respect of shares of Cineplex or shares of Loews
Cineplex). Cineplex hereby agrees with you that, upon such grant, you
shall receive a grant of options in an amount which is the equivalent
of One Million (1,000,000) options in respect of shares of Cineplex if
such options had been granted as at the date of this Agreement, which
grant shall be priced at the same price as all other options then
being granted as aforesaid. Notwithstanding anything to the contrary
contained herein or in any stock option plan, all of the options to be
granted pursuant to this paragraph 4(c)(ii) shall be fully vested upon
their grant to you as aforesaid.
5. Place and Condition of Employment
You shall not be required, without your consent, to perform your primary duties
under this Agreement in a location other than in the Municipality of
Metropolitan Toronto, nor shall you be required to travel to a materially
greater extent than you were prior to the Effective Date. You agree that you
will make yourself available, on a reasonable basis, in New York City from time
to time as required by the Chief Executive Officer of Loews Cineplex or by the
Board of Directors of Loews Cineplex.
6. Vacation
You shall be entitled to vacations with pay during the term of this Agreement,
which shall in no event be less than four weeks per annum.
7. Termination by Cineplex
Cineplex may terminate your employment hereunder:
(a) subject as hereinafter provided, without notice for such cause as would
entitle Cineplex at law to terminate your employment without notice;
provided such termination
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occurs within one month of the circumstances providing a basis for such
termination first coming to the attention of either the Chief Executive
Officer of Loews Cineplex or the Chairman of the Compensation Committee of
the Board;
(b) on not less than 90 days' notice to you in either of the following
events:
(i) you engage in activities outside the scope of your employment
which do not meet the requirements for such activities set forth in
the second paragraph of Section 1 of this Agreement; or
(ii) you engage in conduct which constitutes a material breach of the
Cineplex Code of Conduct and Confidentiality (a copy of which is
attached hereto) as amended from time to time; and
you fail to desist from such activities or conduct within ten Business Days
of being requested to do so in writing by a notice signed by the Chairman
of the Compensation Committee of the Board which describes such activity or
conduct with reasonable particularity and states the basis on which the
Board has determined that such activities or conduct is inconsistent with
this Agreement or the Cineplex Code of Conduct and Confidentiality;
provided that in the case of any such event referred to in paragraph (ii)
which has (to an extent or in a manner which cannot be remedied) materially
and adversely affected your ability to perform your responsibilities as an
executive of the Company and does reflect adversely on the Company to a
material extent, no such request to desist by the Chairman of the
Compensation Committee of the Board and ten Business Days cure period shall
be required. Notwithstanding the foregoing, Cineplex shall not be entitled
to terminate your employment hereunder pursuant to paragraph 7(b)(ii) above
if the conduct complained of is the same as, or is substantially similar
to, conduct engaged in by other executives of Cineplex which has not given
rise to complaint by Cineplex;
(c) if you have suffered a disability which makes you eligible to receive
the maximum benefit payable under Cineplex's long term disability insurance
plan; but in no case shall such right be exercised until six months from
the date of the commencement of such disability or until the date the first
payment is received under the plan, whichever is later;
(d) on not less than six months' notice to you (or immediate notice
together with payment by Cineplex to you of six months' Base Salary and
Minimum Bonus) given at any time during the term of this Agreement; or
(e) as provided in Section 3 of this Agreement.
The rights of Cineplex under this Section 7 shall not be affected by the
provisions of Section 9A of this Agreement.
8. Termination by You
In addition to your rights under Section 9A of this Agreement, you may terminate
your employment hereunder:
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(a) at any time on not less than 90 days' written notice in the event that
Cineplex gives you notice of non-renewal of this Agreement pursuant to
Section 3 hereof (as opposed to notice of non-renewal and termination of
your employment pursuant to Section 3); or
(b) at any time on not less than 60 days' written notice in the event that
Cineplex fails in any material respect to perform its obligations hereunder
or otherwise does or fails to do anything which at law would constitute
constructive dismissal; provided that, without limiting the generality of
the foregoing, Cineplex shall be deemed to have failed to perform its
obligations hereunder in a material respect in the event of:
(i) a reduction by Cineplex in your Base Salary and/or Minimum Bonus
as in effect from time to time;
(ii) failure by Cineplex to pay or cause to be paid to you any amounts
awarded and due to you by way of bonus in accordance with Subsection
4(b) of this Agreement; or
(iii) the failure by Cineplex to continue in effect any benefit plan
listed in Schedule I hereto, special benefit listed in Schedule II
hereto, or other similar employee benefit plan introduced by the Board
after the Effective Date (which subsequently introduced plan has not
been discontinued by resolution of the Board pursuant to a power to do
so provided for in the terms of the plan when first introduced)
(collectively, "Benefit Plans") in which you are participating from
time to time (unless you are otherwise provided with at least
substantially similar benefits as evidenced by the written opinion of
a nationally recognized employee benefits consulting firm, a copy of
which is provided to you), or the taking of any action, or the failure
to act, by Cineplex which would adversely affect your continued
participation in any of such Benefit Plans (or other substantially
similar benefit arrangements) on at least as favourable a basis to you
as is the case immediately prior to the Effective Date or which would
materially reduce your benefit in the future under any of such Benefit
Plans (or other substantially similar benefit arrangements);
provided that Cineplex shall have ten Business Days following receipt of
written notice from you to cure any such occurrence. Your rights under this
Section 8 shall not be affected by the provisions of Section 9A hereof.
9. Benefits
During the term of your employment hereunder:
(a) Cineplex shall reimburse you for your reasonable and necessary business
expenses in accordance with its then prevailing policy (which shall include
appropriate itemization and substantiation of expenses incurred);
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(b) You shall be entitled to participate in the Benefit Plans referred to
in paragraph 8(b)(iii) hereof (or other substantially similar benefit
arrangements referred to in paragraph 8(b)(iii)); and
(c) You shall be entitled to secretarial, transportation and other
facilities commensurate with that which you receive at present.
You further expressly agree and acknowledge that after termination of your
employment you are entitled to no additional benefits not expressly set forth in
Section 10 of this Agreement and Schedule II hereto, except as specifically
provided under the Benefit Plans (or other substantially similar benefit
arrangements referred to in paragraph 8(b)(iii) hereof) and subject in all cases
to the terms and conditions of each such plan.
9A. Optional Early Termination by You Following Completion of Merger
At any time following the Effective Date and until the first anniversary of the
Effective Date, you may voluntarily and at your sole option terminate your
employment hereunder without giving any reason, provided that your employment
has not been otherwise terminated by Cineplex pursuant to Section 7 of this
Agreement or by you pursuant to Section 8 of this Agreement. You may exercise
the foregoing option to terminate this Agreement by a Notice of Termination (as
defined in Section 12 hereof) to Cineplex received not later than the first
anniversary of the Effective Date. Such Notice of Termination shall specify an
effective date of termination which is 90 days after the Notice of Termination
is given.
10. (A) Compensation Due to You Upon Termination
(a) If your employment shall be terminated by you pursuant to Subsection
8(a) hereof, Cineplex shall pay to you in a lump sum in cash on the
Employment Termination Date (as defined in Section 12 hereof), the
aggregate of the following amounts:
(i) an amount equal to the aggregate of the Minimum Bonus plus the
Base Salary then being paid to you, which aggregate would have
otherwise been paid to you from the Employment Termination Date to the
Expiry Date; and
(ii) in the case of compensation, if any, previously deferred, all
amounts of such compensation previously deferred and not yet paid by
Cineplex.
(b) If Cineplex shall give notice of non-renewal of this Agreement pursuant
to Section 3 hereof on or before the One Year Notice Date (as opposed to
notice of non-renewal and termination of your employment pursuant to
Section 3) and you do not terminate your employment pursuant to Subsection
8(a) hereof, Cineplex shall pay to you in a lump sum in cash on the Expiry
Date, the aggregate of the following amounts:
(i) an amount equal to one times the aggregate of the Minimum Bonus
plus the Base Salary then being paid to you; and
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(ii) in the case of compensation, if any, previously deferred, all
amounts of such compensation previously deferred and not yet paid by
Cineplex.
(c) If Cineplex shall give notice of non-renewal and termination of your
employment pursuant to Section 3 hereof on or before the One Year Notice
Date (as opposed to notice of non-renewal of this Agreement pursuant to
Section 3), Cineplex shall pay to you in a lump sum in cash on the
Employment Termination Date, the aggregate of the following amounts:
(i) an amount equal to two times your Average Compensation (as
defined in Subsection 10(A)(e) hereof); and
(ii) in the case of compensation, if any, previously deferred, all
amounts of such compensation previously deferred and not yet paid by
Cineplex.
(d) If Cineplex shall give notice of non-renewal of this Agreement
pursuant to Section 3 hereof within the Six-Month Notice Period and you do
not terminate your employment pursuant to Subsection 8(a) hereof, Cineplex
shall pay to you in a lump sum in cash on the Expiry Date, the aggregate of
the following amounts:
(i) an amount equal to two times your Average Compensation, less the
aggregate of the Minimum Bonus plus the Base Salary paid to you from
the date of your receipt of such notice of non-renewal to the Expiry
Date; and
(ii) in the case of compensation, if any, previously deferred, all
amounts of such compensation previously deferred and not yet paid by
Cineplex.
(e) For the purposes of paragraphs 10(A)(c)(i) and 10(A)(d)(i) of this
Agreement, "Average Compensation" means the sum of the Base Salary and any
bonus (including, without limitation, Minimum Bonus), in both cases, paid
or payable to you for, or in respect of, the three (3) calendar years
immediately preceding the year in question, all divided by 3. For these
purposes, the year in question means:
(i) for the purposes of paragraph 10(A)(c)(i) hereof, the year in
which the One Year Notice Date occurs; or
(ii) for the purposes of paragraph 10(A)(d)(i) hereof, the year in
which the Expiry Date occurs.
In any such case, the amounts in question shall be as reported on Revenue
Canada Taxation Form T-4 and, if applicable, T-4A issued by Cineplex. For
the purposes of determining Average Compensation, any bonus which was
awarded otherwise than in cash shall be valued at the fair market value
thereof which, in the case of common shares of Cineplex and/or Loews
Cineplex, shall be deemed to be the closing price on The Toronto Stock
Exchange on the trading day immediately preceding the date on which the
bonus was paid or became payable.
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(f) If your employment shall be terminated by you pursuant to Subsection
8(b) hereof, Cineplex shall pay to you in a lump sum in cash on the
Employment Termination Date, the greater of:
(i) the aggregate of the following amounts:
(1) an amount equal to the greater of:
(x) an amount equal to the amount, if any, by which the most
recent annual bonus awarded to you exceeded the Minimum
Bonus, plus an amount equal to the aggregate of the Minimum
Bonus plus the Base Salary (prior to any reduction thereof
as provided in paragraph 8(b)(i) hereof) then being paid to
you which would have otherwise been paid to you from the
Employment Termination Date to the Expiry Date, or
(y) two times the sum of (1) the amount, if any, by which
the most recent bonus awarded to you exceeded the Minimum
Bonus, (2) the Base Salary (prior to any reduction thereof
as provided in paragraph 8(b)(i) hereof) then being paid to
you, and (3) the Minimum Bonus (prior to any reduction
thereof as provided in paragraph 8(b)(i) hereof) then being
paid to you; and
(2) in the case of compensation, if any, previously deferred,
all amounts of such compensation previously deferred and not yet
paid by Cineplex; or
(ii) the aggregate of the following amounts:
(1) an amount equal to the Aggregate Compensation which would
have otherwise been paid to you from the Employment Termination
Date to the Expiry Date;
(2) an amount equal to one times your Aggregate Compensation;
and
(3) in the case of compensation, if any, previously deferred,
all amounts of such compensation previously deferred and not yet
paid by Cineplex.
For the purposes of this Subsection 10(A)(f), "Aggregate Compensation"
means the sum of the Base Salary and any bonus (including, without
limitation, Minimum Bonus), in both cases, paid or payable to you for, or
in respect of, the three (3) calendar years immediately preceding the year
in which the notice in question is given by you, all divided by 3. In any
such case, the amounts in question shall be as reported on Revenue Canada
Taxation Form T-4 and, if applicable, T-4A issued by Cineplex. For the
purposes of determining aggregate compensation, any bonus which was awarded
otherwise than in cash shall be valued at the fair market value thereof
which, in the case of common shares of Cineplex and/or Loews Cineplex,
shall be deemed to be the closing price on The Toronto Stock
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Exchange on the trading day immediately preceding the date on which the
bonus was paid or became payable.
(g) If your employment shall be terminated by you pursuant to Section 9A
of this Agreement, Cineplex shall, at your option, pay to you in a lump sum
in cash on the Employment Termination Date:
(i) an amount calculated pursuant to Subsection 10(A)(f) of this
Agreement as if your Employment Termination Date was the Effective
Date (and notwithstanding that you are also entitled to be paid your
Base Salary and Minimum Bonus for the period between the Effective
Date and your actual Employment Termination Date); or
(ii) an amount equal to the greater of:
(1) the aggregate of:
(x) an amount equal to the aggregate of the Minimum Bonus
plus the Base Salary then being paid to you, which would
have otherwise been paid to you from the Employment
Termination Date to the Expiry Date; and
(y) in the case of compensation, if any, previously
deferred, all amounts of such compensation previously
deferred and not yet paid by Cineplex; or
(2) the aggregate of:
(x) if not theretofore paid, your Aggregate Compensation
(as hereinafter defined) for a period equal to the greater
of: (1) the period from the Effective Date to the Employment
Termination Date; and (2) six months;
(y) an amount equal to two times your Aggregate
Compensation; and
(z) in the case of compensation, if any, previously
deferred, all amounts of such compensation previously
deferred and not yet paid by Cineplex.
For the purposes of this paragraph 10(A)(g)(ii)(2), "Aggregate
Compensation" means the sum of the Base Salary and bonus (including,
without limitation, Minimum Bonus) paid or payable to you for, or in
respect, of the period of one year immediately preceding the Effective
Date, provided that if no bonus other than Minimum Bonus was paid or
payable to you for, or in respect of, such period, there shall be
added to the said Base Salary the amount of the then most recent bonus
(including, without limitation, Minimum Bonus) paid or payable to
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you for, or in respect of, a period of one year. For the purposes of
determining Aggregate Compensation, any bonus which was awarded
otherwise than in cash shall be valued at the fair market value
thereof which, in the case of common shares of Cineplex and/or Loews
Cineplex, shall be deemed to be the closing price on The Toronto Stock
Exchange on the trading day immediately preceding the date on which
the bonus was paid or became payable.
In each such case, the calculations in question shall be made as if your
Employment Termination Date was the Effective Date (and notwithstanding
that you are also entitled to be paid your Base Salary and Minimum Bonus
for the period between the Effective Date and your actual Employment
Termination Date).
(h) If your employment shall be terminated by Cineplex pursuant to
Subsection 7(d) of this Agreement, Cineplex shall pay to you in a lump sum
in cash on the Employment Termination Date, the aggregate of the following
amounts:
(i) an amount equal to the Aggregate Compensation which would have
otherwise been paid to you from the Employment Termination Date to the
Expiry Date;
(ii) an amount equal to one times your Aggregate Compensation; and
(iii) in the case of compensation, if any, previously deferred, all
amounts of such compensation previously deferred and not yet paid by
Cineplex.
For the purposes of this Paragraph 10(A)(h), "Aggregate Compensation" means
the sum of the Base Salary and any bonus (including, without limitation,
Minimum Bonus), in both cases, paid or payable to you for, or in respect
of, the three (3) calendar years immediately preceding the year in which
the Employment Termination Date occurs, all divided by 3. In any such case,
the amounts in question shall be as reported on Revenue Canada Taxation
Form T-4 and, if applicable, T-4A issued by Cineplex. For the purposes of
determining aggregate compensation, any bonus which was awarded otherwise
than in cash shall be valued at the fair market value thereof which, in the
case of common shares of Cineplex and/or Loews Cineplex, shall be deemed to
be the closing price on the Toronto Stock Exchange on the trading date
immediately preceding the date on which the bonus was paid or became
payable. Notwithstanding the foregoing, if your employment shall be
terminated by Cineplex pursuant to Subsection 7(d) of this Agreement at any
time following the Effective Date and until the first anniversary of the
Effective Date, Cineplex shall pay to you the greater of the amount to
which you would be entitled pursuant to this Subsection 10(A)(h) or
pursuant to Subsection 10(A)(g) of this Agreement.
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(B) Benefits Due to You Upon Termination
(a) Benefits
If your employment shall be terminated by you pursuant to Sections 8 or 9A
or if Cineplex shall give a notice pursuant to Subsection 7(d) or Section 3
of this Agreement:
(i) Subject as hereinafter provided, for a period of two and one-
half years following the Employment Termination Date Cineplex shall
continue benefits to you and/or your family under the Benefit Plans
(or other substantially similar arrangements referred to in paragraph
8(b)(iii) hereof) at least equal to those which would have been
provided to them if your employment had not terminated, if and as in
effect at any time during the 90 day period immediately preceding the
Employment Termination Date or, if more favourable to you, as in
effect at any time thereafter during such two and one-half year period
with respect to other key executives and their families.
(ii) Cineplex shall use its best efforts to make such arrangements
with you (at no material additional net cost to itself) as may be
necessary to permit continuation of benefits as contemplated by
paragraph 10(B)(a)(i)(1) hereof. If under the terms of any Benefit
Plan (or other substantially similar benefit arrangements referred to
in paragraph 8(b)(iii) hereof) it is not possible to continue as
aforesaid the benefit of such Benefit Plan (or other such
arrangements) following termination of your employment, Cineplex shall
provide at least substantially similar benefits (as evidenced by the
written opinion of a nationally recognized employee benefits
consulting firm, a copy of which will be provided to you) unless such
replacement benefit exceeds in its cost that of the original benefit,
in which event Cineplex shall be obliged only to provide a replacement
benefit to the extent of its cost of the original Benefit Plan (or
other such similar arrangements).
(iii) Cineplex shall provide to you a lifetime courtesy admission
pass for you and one guest.
(b) Stock Option Arrangements
Notwithstanding any other provisions relating to the acceleration of the
vesting of options in any Cineplex or Loews Cineplex stock option plan or
agreement, subject to regulatory approval, in the event you terminate your
employment pursuant to Subsection 8(b) or Section 9A or Cineplex terminates
your employment for any reason, then all stock options previously granted
to you shall immediately vest upon the Employment Termination Date.
In addition, subject to regulatory approval, you (or your personal
representative) shall remain entitled to exercise any stock options
previously granted to you and then exercisable at any time until the
expiration of the full term of the exercise period relating to each of such
vested stock options. In connection with the termination of your
employment, Cineplex shall use its best efforts to make such arrangements
with you (at no material cost to Cineplex) or to obtain necessary
regulatory clearances (at no
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material inconvenience to Cineplex) as may be necessary to permit the
accelerated vesting and continuation of such vested stock options as
aforesaid. Your rights under this Subsection (b) are in addition to your
rights under any stock option plans and agreements.
(C) General Provisions Re: Amounts Due to You Upon Termination
(a) No set-off
Except as provided in Schedule II hereto and except for claims for monies
actually due and payable to Cineplex by you, Cineplex's obligation to make
the payments provided for in this Section 10 and otherwise to perform its
obligations hereunder shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment,
defense or other claim (based on termination by Cineplex or otherwise),
right or action which Cineplex may have against you or others.
(b) Withholdings
All payments made to you pursuant to this Section 10 shall be subject to
any withholding of (or in respect of) tax required by law provided that
such withholding shall be at the lowest amount permitted by law.
(c) US/Canadian conversions
All cash payments pursuant to Section 10(A) shall be converted to Canadian
dollars at the Bank of Canada noon rate on either November 15 or May 15 (or
if such date is not a Business Day, the immediately preceding Business Day)
depending on the period in which they are paid as provided in Subsection
4(a) of this Agreement.
(d) Tax Planning
Provided that there is no additional cost to Cineplex, Cineplex will
cooperate with you to structure payments provided for in this Section 10 in
a manner which will be most tax effective for you.
(e) Calculations of bonuses
In any of the calculations carried out pursuant to this Section 10, the
bonus paid or payable to you with respect to 1997 shall be deemed to have
been U.S. One Hundred and Fifty-Five Thousand Dollars ($155,000) and the
special one-time bonuses referred to in paragraph 4(b)(ii) of this
Agreement shall be ignored.
10A. Non-Competition
If you terminate your employment pursuant to Section 9A of this Agreement and if
you opt to be paid the amount contemplated in paragraph 10(A)(g)(ii) of this
Agreement, then you covenant and agree that you will not, for a period of one
(1) year from the Employment Termination Date,
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directly or incorrectly, in any manner whatsoever, including, without
limitation, either individually or in partnership or jointly, or in conjunction
with any other person or persons, firm, association, syndicate, company or
corporation, as principal, agent, shareholder, consultant, employee or in any
other manner whatsoever, carry on or be engaged in the business of exhibiting
motion pictures within North America.
You acknowledge and agree that all restrictions contained in this Section and in
Section 10B of this Agreement are reasonable and valid and all defenses to the
strict enforcement thereof by Cineplex are hereby waived by you. If any covenant
contained in this Section or in Section 10B or any portion of either or both of
such Sections shall be held to be unreasonable for any reason, then such
covenant shall be given effect to in such reduced form as may be decided by any
court of competent jurisdiction, the intent being that such covenant shall have
effect to the maximum extent permitted by law. If, notwithstanding the
foregoing, any covenant or any portion of any such covenant should be held to be
unenforceable or be declared invalid for any reason, such unenforceability or
invalidity shall not affect the enforceability or validity of the remaining
portions of this Section or Section 10B and such enforceable or invalid covenant
or portion thereof shall be severable from the remainder of this Section or
Section 10B.
Notwithstanding the restrictions contained in this Section, nothing herein shall
restrict you from, directly or indirectly, acquiring or holding share
investments in a public company whose shares are listed on a recognized stock
exchange or on an over-the-counter market, where such share investment does not
in the aggregate exceed 5% of any class of shares of such company and where you
are only a passive investor in such company.
For purposes of clarity, it is hereby acknowledged that:
(a) if you terminate your employment pursuant to Section 9A of this
Agreement and if you opt to be paid the amount contemplated in paragraph
l0(A)(g)(i) of this Agreement, or
(b) if Cineplex terminates your employment pursuant to Section 7 of this
Agreement or you terminate your employment pursuant to Section 8 hereof,
you shall, subject to the provisions of Section 10B of this Agreement, be
entitled to, directly or indirectly, in any manner whatsoever, including,
without limitation, either individually or in partnership or jointly, or in
conjunction with any other person or persons, firm, association, syndicate,
company or corporation, as principal, agent, shareholder, consultant, employee
or in any other manner whatsoever, carry on or be engaged in the business of
exhibiting motion pictures within North America.
10B. Confidentiality
All confidential records, material and information and copies thereof, and all
trade secrets concerning the business or affairs of Cineplex obtained by you in
the course of your employment shall remain the exclusive property of Cineplex.
During your employment, you shall not reveal, divulge or make known the contents
of such confidential records or any of such confidential
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information or trade secrets to any person or entity other than to Cineplex,
Cineplex's qualified employees, Cineplex's professional advisors and other
persons on a "need to know" basis in connection with matters directly relating
to Cineplex, and you shall not, following the termination of your employment
hereunder for any reason, reveal, divulge or make known the contents of such
confidential records or any of such confidential information or trade secrets to
any person or entity for any purpose whatsoever or make use thereof for your own
or any other person's or entity's benefit. For the purposes hereof, confidential
records, material and information include information known or used by Cineplex
in connection with its business including, but not limited to, any design,
prototype, compilation of information, data, program, code, method, technique or
process, information relating to any product device, equipment or machine,
information about or relating to Cineplex's customers and suppliers and
Cineplex's markets and marketing plans, present and future, information about or
relating to Cineplex's potential business ventures and locations, financial
information of all kinds relating to Cineplex and its activities, all
inventions, ideas, and related material but does not include any of the
foregoing which is or becomes a matter of public knowledge.
11. Legal Costs
Cineplex agrees to pay (as incurred by you) to the full extent permitted by law,
all legal fees and expenses which you may reasonably incur as a result of any
contest by Cineplex or others relating to this Agreement in which you are
substantially successful on the merits.
12. Notices
All notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to you: Xx. Xxxxx Xxxx
Cineplex Odeon Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
with a copy to: Xx. Xxxxx Xxxx
00X Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
If to Cineplex: Cineplex Odeon Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Chairman of the Compensation Committee
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with a copy to: Loews Cineplex Entertainment Corporation
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
Any termination by either party pursuant to this Agreement shall be communicated
by Notice of Termination to the other given in accordance with this Section 12.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which:
(a) states the specific provision of this Agreement relied upon;
(b) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
stated; and
(c) if the termination date is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
15 days after the giving of such notice, except as otherwise may be
provided in this Agreement) (the "Employment Termination Date").
13. No Mitigation
You shall not be obligated to seek other employment or otherwise mitigate the
amounts payable to you under any of the provisions of this Agreement, nor shall
any amounts payable to you hereunder be reduced by any compensation earned by
you as a result of employment by another employer after the Employment
Termination Date, or otherwise.
14. Successors
This Agreement shall inure to the benefit of and be binding upon Cineplex and
its successor by way of merger, amalgamation, reorganization or otherwise.
Cineplex shall not take any action or enter into any contract as a result of
which Cineplex would not be able to make the payments herein provided for in the
event of your termination of employment.
15. Severability; Entire Agreement; Amendments
This Agreement has been fully authorized by all necessary corporate action on
the part of Cineplex; constitutes a valid and legally binding obligation of
Cineplex; and sets forth the entire understanding between us. There are no
terms, conditions, representations, warranties or covenants other than those
contained herein. No terms or provision of this Agreement may be amended,
waived, released, discharged or modified in any respect except in writing,
signed by the appropriate party(s). No waiver of any
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breach or default shall constitute a waiver of any other breach or default
whether of the same or any other covenant or condition. A delay or failure to
assert rights or a breach of this Agreement shall not be deemed to be a waiver
of such rights either with respect to that breach or any subsequent breach. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
16. Cineplex Code of Conduct and Confidentiality
Attached hereto and made a part of this Agreement is a copy of the Cineplex Code
of Conduct and Confidentiality. You confirm that you have read, understand and
will comply with such Code of Conduct and Confidentiality, and any amendments
thereto which you receive, such amendments to be consistent with the tenor of
the current Code of Conduct and Confidentiality and not in violation of public
policy.
17. Governing Law
This agreement shall be governed by and construed in accordance with the laws of
the Province of Ontario.
Yours very truly,
CINEPLEX ODEON CORPORATION
By: /s/ Xxxxxx Xxxxxxxxxxx
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XXXXXX XXXXXXXXXXX
AGREED this 28th day of November, 1997.
/s/ Xxxxx Xxxx
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XXXXX XXXX
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