EXHIBIT 10.6
FORM OF INDEMNIFICATION AGREEMENT
BETWEEN CINEMARK, INC. AND
A DIRECTOR OF CINEMARK, INC.
THIS INDEMNIFICATION AGREEMENT (this "Agreement") dated as of May ___,
2002 is by and between Cinemark, Inc., a Delaware corporation (the "Company"),
and _____________________ ("Director").
RECITALS
The Company's Certificate of Incorporation (the "Certificate of
Incorporation") provides for the indemnification of the directors, officers,
employees and agents of the Company to the extent set forth in Article IX of the
Certificate of Incorporation.
The Company's Bylaws (the "Bylaws") provide for the indemnification of
the directors, officers, employees and agents of the Company to the extent set
forth in Article VIII of the Bylaws.
The Delaware General Corporation Law (the "Corporation Law") provides
that indemnification and advancement of expenses provided in such statute shall
not be exclusive of any other rights under any agreement, and thereby
contemplates that agreements may be entered into between the Company and members
of the board of directors of the Company with respect to the indemnification of
such directors.
WHEREAS, the Company has purchased and presently maintains a policy or
policies of directors' and officers' liabilities insurance ("D&O INSURANCE")
covering certain liabilities that may be incurred by the Company's directors and
officers in the performance of their services to the Company.
WHEREAS, the general availability of D&O Insurance covering certain
liabilities that may be incurred by the Company's directors and officers in the
performance of their services to the Company and the applicability, amendment
and enforcement of statutory provisions and provisions of the Certificate of
Incorporation and Bylaws have raised questions concerning the adequacy and
reliability of the protection afforded directors and officers.
WHEREAS, it is reasonable, prudent and necessary for the Company to
obligate itself contractually to indemnify Director so that Director will serve
or continue to serve the Company free from undue concern that Director will not
be adequately protected.
WHEREAS, Director is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on condition that Director be
so indemnified.
NOW, THEREFORE, in consideration of Director's agreement to serve as a
member of the board of directors of the Company after the date hereof, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
a. Change in Control. A "Change in Control" shall be deemed to have
occurred if (i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Act"), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, is or becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the outstanding securities
of the Company, or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the board of
directors of the Company and any new director whose election by the
board of directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve (x)
a merger or consolidation of the Company with any other entity (other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80%
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation), (y) a plan of complete liquidation of the Company or
(z) an agreement or agreements for the sale or disposition, in a single
transaction or series of related transactions, by the Company of all or
substantially all of the property and assets of the Company.
Notwithstanding the foregoing, events otherwise constituting a Change
in Control in accordance with the foregoing shall not constitute a
Change in Control if such events are solicited by the Company and are
approved, recommended or supported by the board of directors of the
Company in actions taken prior to, and with respect to, such events.
b. Reviewing Party. A "Reviewing Party" means (i) the directors who
are not parties to such action, suit or proceeding, even though less
than a quorum; (ii) a committee of such directors designated by
majority vote of such directors, even though less than a quorum; (iii)
if there are no such disinterested directors or if such directors so
direct, by independent legal counsel in a written opinion; or (iv) the
stockholders.
2. Indemnification of Director. The Company hereby agrees that it shall
hold harmless and indemnify Director to the fullest extent authorized and
permitted by the provisions of the Certificate of Incorporation and Bylaws and
the provisions of the Corporation Law, or by any amendment thereof, but in the
case of any such amendment, only to the extent that such amendment permits the
Company to provide broader indemnification rights than the Certificate of
Incorporation, Bylaws or Corporation Law permitted the Company to provide prior
to such amendment, or other statutory provisions authorizing or permitting such
indemnification which are adopted after the date hereof.
3. Limitations on Indemnification. No indemnification pursuant to this
Agreement shall be paid by the Company unless required conditions set forth in
Section 145 of the Corporation Law (or any similar provisions of any successor
statute) are present, as determined by the Reviewing Party or a court having
jurisdiction in the matter.
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4. Advancement of Expenses. In the event of any threatened or pending
action, suit or proceeding in which Director is a party or is involved and which
may give rise to a right of indemnification under this Agreement, following
written request to the Company by Director, the Company shall promptly pay to
Director amounts to cover expenses incurred by Director in such proceeding in
advance of its final disposition upon the receipt by the Company of certain
written undertakings as required by Section 145(e) of the Corporation Law (or
any similar provisions of any successor statute). The advancement of expenses by
the Company shall include the payment of an advance retainer if required by
counsel to Director in connection with the investigation or defense of any
matter for which indemnification is provided hereunder. The Company further
agrees that statements for fees and expenses of counsel or other costs incurred
by a Director for which indemnification is provided hereunder may be rendered
directly to the Company for payment.
5. Determination of Indemnification; Burden of Proof. With respect to
all matters concerning the rights of Director to indemnification and payment of
expenses under this Agreement or under the provisions of the Certificate of
Incorporation and Bylaws now or hereafter in effect, the Company shall appoint a
Reviewing Party and any determination by the Reviewing Party shall be conclusive
and binding on the Company and Director. If under applicable law, the
entitlement of Director to be indemnified under this Agreement depends on
whether a standard of conduct has been met, the burden of proof of establishing
that Director did not act in accordance with such standard of conduct shall rest
with the Company. Director shall be presumed to have acted in accordance with
such standard and entitled to indemnification or advancement of expenses
hereunder, as the case may be, unless, based upon a preponderance of the
evidence, it shall be determined by the Reviewing Party that Director did not
meet such standard. For purposes of this Agreement, unless otherwise expressly
stated herein, the termination of any action, suit or proceeding by judgment,
order, settlement, whether with or without court approval, or conviction, or
upon a plea of nolo contendere or its equivalent shall not create a presumption
that Director did not meet any particular standard of conduct or have any
particular belief or that a court has determined that indemnification is not
permitted by applicable law.
6. Effect of Change in Control. If there has not been a Change in
Control after the date of this Agreement, the determination of (i) the rights of
Director to indemnification and payment of expenses under this Agreement or
under the provisions of the Certificate of Incorporation and the Bylaws, (ii)
standard of conduct and (iii) evaluation of the reasonableness of amounts
claimed by Director shall be made by the Reviewing Party or such other body or
persons as may be permitted by the Corporation Law. If there has been a Change
in Control after the date of this Agreement, such determination and evaluation
shall be made by a special, independent counsel who is selected by Director and
approved by the Company, which approval shall not be unreasonably withheld, and
who has not otherwise performed services for Director or the Company within the
previous three years (other than with respect to matters concerning the rights
of Director under this Agreement, or of other directors under similar indemnity
agreements).
7. Continuation of Indemnification. All agreements and obligations of
the Company contained herein shall continue during the period that Director is a
director, officer,
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employee or agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, and shall continue
thereafter so long as Director shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Director
was a director of the Company or serving in any other capacity referred to
herein.
8. Notification and Defense of Claim. Promptly after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director shall, if a claim in respect hereof is to be made against the Company
under this Agreement, notify the Company of the commencement thereof; provided,
however, that delay in so notifying the Company shall not constitute a waiver or
release by Director of rights hereunder and that omission by Director to so
notify the Company shall not relieve the Company from any liability which it may
have to Director otherwise than under this Agreement. With respect to any such
action, suit or proceeding as to which Director notifies the Company of the
commencement thereof:
a. The Company shall be entitled to participate therein at its own
expense;
b. Except as otherwise provided below, to the extent that it may
wish, the Company, jointly with any other indemnifying party similarly
notified, shall be entitled to assume the defense thereof and to employ
counsel reasonably satisfactory to Director. After notice from the
Company to Director of its election to so assume the defense thereof,
the Company shall not be liable to Director under this Agreement for
any legal or other expenses subsequently incurred by Director in
connection with the defense thereof other than reasonable costs of
investigation, expenses payable pursuant to Section 4 of this Agreement
or as otherwise provided below. Director shall have the right to employ
counsel of his or her own choosing in such action, suit or proceeding
but the fees and expenses of such counsel incurred after notice from
the Company of assumption by the Company of the defense thereof shall
be at the expense of Director unless (i) the employment of counsel by
Director has been specifically authorized by the Company, such
authorization to be conclusively established by action by disinterested
members of the board of directors though less than a quorum; (ii)
representation by the same counsel of both Director and the Company
would, in the reasonable judgment of Director and the Company, be
inappropriate due to an actual or potential conflict of interest
between the Company and Director in the conduct of the defense of such
action, such conflict of interest to be conclusively established by an
opinion of counsel to the Company to such effect; (iii) the counsel
employed by the Company and reasonably satisfactory to Director has
advised Director in writing that such counsel's representation of
Director would likely involve such counsel in representing differing
interests which could adversely affect the judgment or loyalty of such
counsel to Director, whether it be a conflicting, inconsistent, diverse
or other interest; or (iv) the Company shall not in fact have employed
counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel shall be paid by the Company. The
Company shall not be entitled to assume the defense of any action, suit
or proceeding brought by or on behalf of the Company or as to which a
conflict of interest has been established as provided in (ii) hereof.
Notwithstanding the foregoing, if an insurance company has supplied
directors' and officers' liability insurance covering an action, suit
or proceeding, then such insurance company shall employ counsel to
conduct the defense of such action, suit or
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proceeding unless Director and the Company reasonably concur in writing
that such counsel is unacceptable; and
c. The Company shall not be liable to indemnify Director under this
Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any
action or claim in any manner which would impose any liability or
penalty on Director without Director's written consent. Neither the
Company nor Director shall unreasonably withhold consent to any
proposed settlement.
9. Enforcement.
a. The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on the Company
hereby in order to induce Director to serve as a director of the
Company and acknowledges that Director is relying upon this Agreement
in continuing in such capacity.
b. If a claim for indemnification or advancement of expenses is not
paid in full by the Company within thirty (30) days after a written
claim by Director (accompanied by substantiating documentation) has
been received by the Company, Director may at any time assert the claim
and bring suit against the Company to recover the unpaid amount of the
claim. In the event Director is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful
in such action, the Company shall reimburse Director for all of
Director's reasonable attorneys' fees and expenses in bringing and
pursuing such action.
10. Proceedings by Director. The Company shall not be liable to make
any payment under this Agreement in connection with any action, suit or
proceeding, or any part thereof, initiated by Director unless such action, suit
or proceeding, or part thereof, (i) was authorized by the Company, such
authorization to be conclusively established by action by disinterested members
of the Board of Directors though less than a quorum or (ii) was brought by
Director pursuant to Section 9(b) hereof.
11. Effectiveness. This Agreement is effective for, and shall apply to,
(i) any claim which is asserted or threatened before, on or after the date of
this Agreement but for which no action, suit or proceeding has been brought
prior to the date hereof and (ii) any action, suit or proceeding which is
threatened before, on or after the date of this Agreement but which is not
pending prior to the date hereof. This Agreement shall not apply to any action,
suit or proceeding which was brought before the date of this Agreement. So long
as the foregoing is satisfied, this Agreement shall be effective for, and be
applicable to, acts or omissions occurring prior to, on or after the date
hereof.
12. Non-exclusivity. The rights of Director under this Agreement shall
not be deemed exclusive, or in limitation of, any rights to which Director may
be entitled under any applicable common or statutory law, or pursuant to the
Certificate of Incorporation, the Bylaws, vote of stockholders or otherwise.
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13. Other Payments. The Company shall not be liable to make any payment
under this Agreement in connection with any action, suit or proceeding against
Director to the extent Director has otherwise received payment of the amounts
otherwise payable by the Company hereunder.
14. Subrogation. In the event the Company makes any payment under this
Agreement, the Company shall be subrogated, to the extent of such payment, to
all rights of recovery of Director with respect thereto, and Director shall
execute all agreements, instruments, certificates or other documents and do or
cause to be done all things necessary or appropriate to secure such recovery
rights to the Company including, without limitation, executing such documents as
shall enable the Company to bring an action or suit to enforce such recovery
rights.
15. Survival; Continuation. The rights of Director under this Agreement
shall inure to the benefit of Director, his or her heirs, executors,
administrators, personal representatives and assigns, and this Agreement shall
be binding upon the Company, its successors and assigns. The rights of Director
under this Agreement shall continue so long as Director may be subject to any
action, suit or proceeding because of the fact that Director is or was a
director, officer, employee or agent of the Company or is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. If the
Company, in a single transaction or series of related transactions, sells,
leases, exchanges, or otherwise disposes of all or substantially all of its
property and assets, the Company shall, as a condition precedent to any such
transaction, cause effective provision to be made so that the persons or
entities acquiring such property and assets shall become bound by and replace
the Company under this Agreement.
16. Representations and Warranties of the Company. The Company hereby
represents and warrants to Director as follows:
(a) Authority. The Company has all necessary power and authority to
enter into, and be bound by the terms of, this Agreement, and the
execution, delivery and performance of the undertakings contemplated by
this Agreement have been duly authorized by the Company.
(b) Enforceability. This Agreement, when executed and delivered by
the Company in accordance with the provisions hereof, shall be a legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the enforcement of creditors'
rights generally.
17. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless made in writing
signed by both parties hereto.
18. Headings. Section headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
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19. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed by certified mail (return receipt requested) or sent by overnight
delivery service, cable, telegram, facsimile transmission or telex to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
a. if to the Company:
Cinemark, Inc.
0000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx, P.C.
Fax: (000) 000-0000
b. if to the Director to the address of such director set forth
on the signature page hereof.
Notice so given shall, in the case of notice so given by mail, be deemed to be
given and received on the fourth calendar day after posting, in the case of
notice so given by overnight delivery service, on the date of actual delivery
and, in the case of notice so given by cable, telegram, facsimile transmission,
telex or personal delivery, on the date of actual transmission or, as the case
may be, personal delivery.
20. Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render it legal,
valid and enforceable, then this Agreement shall be construed as if not
containing the provision held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
21. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
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22. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
23. GOVERNING LAW. CHOICE OF LAW. THIS AGREEMENT WILL BE GOVERNED BY
THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
CINEMARK, INC.
By:
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Name:
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Title:
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DIRECTOR:
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ADDRESS:
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