December 6, 1996
Xx. Xxxxx Xxxx
President and Chief Executive Officer
Cineplex Odeon Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Xx. Xxxx:
Reference is made to the employment agreement between you and
Cineplex Odeon Corporation dated July 4, 1996. This letter amends
(with effect from and after July 4, 1996) the said letter agreement
as follows:
1. The semicolon at the end of Subsection 7(b) is hereby deleted
and replaced by a period and the following is added thereafter:
"Notwithstanding the foregoing, Cineplex shall not be entitled to
terminate your employment hereunder pursuant to Subparagraph
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;".
2. The words ("except those contemplated in your Performance-
Based Option Agreement)" appearing in the 9th and 10th lines of
Paragraph 10(B)(ii) are hereby deleted.
In all other respects, the terms and provisions of the said letter
agreement are hereby ratified and confirmed and shall remain
unamended.
Yours very truly,
CINEPLEX ODEON CORPORATION
Xxxxxx Xxxxxxxxxxx
By:______________________________
AGREED this 6th day of December, 1996.
Xxxxx Xxxx
_______________________________________
Xxxxx Xxxx
July 4, 1996
Xx. Xxxxx Xxxx
President and Chief Executive Officer
Cineplex Odeon Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Xx. Xxxx:
Cineplex Odeon Corporation ("Cineplex") considers the establishment
and maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of Cineplex and its
shareholders. 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
and its subsidiaries (collectively, the "Company"). At the same
time, you wish to have the term of your current employment
agreement with Cineplex extended with a view to both you and
Cineplex confirming the long term nature of our relationship.
This Agreement amends (with effect from and after July 4, 1996) and
restates the agreement dated December 1, 1994 which was accepted by
you on December 19, 1994, governing your employment with Cineplex.
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 President and Chief Executive
Officer of Cineplex and President and Chief Executive Officer and
director of its material subsidiaries upon the terms and conditions
hereinafter set forth. Cineplex's obligation to cause your
appointment or election as President and Chief Executive Officer
and director of any material subsidiary shall be subject to the
provision that such election or appointment be in accordance with
applicable laws. Notwithstanding the foregoing if in relation to
any material subsidiary the Board of Directors so resolves and you
agree, Cineplex shall not be obligated to cause your appointment as
President and Chief Executive Officer of such material subsidiary
provided that the individual appointed to that office reports (for
all management purposes) solely and directly to you.
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 you were performing as at July 4, 1996.
Without limiting the generality of the foregoing, services to be
performed by you shall be deemed to be not comparable in scope and
dignity to those you were performing as at July 4, 1996, if there
shall occur a material adverse change in your status, position or
salary group or scope of responsibility as an executive in effect
immediately prior to the Effective Date including, without
limitation, (i) a material diminution of the scope of your duties
or responsibilities; (ii) the addition to Cineplex or any
subsidiary of new executive positions with equal or greater title,
status or responsibility; (iii) any material change in your
reporting responsibility; (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
immediately prior to 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, unless such change results from your
voluntary resignation or refusal to stand for re-election or unless
your appointment to the Board 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 for normal business
hours in the City of Toronto.
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 January 1, 1995 (the
"Effective Date") and, subject to Sections 7, 8 and 9A, continue
until January 1, 2001 (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 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 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.
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 a base salary of U.S. Five Hundred and Fifty
Thousand Dollars (U.S. $550,000) commencing January 1, 1995,
or at 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 (the "Base Salary"). The Base Salary shall be
converted into Canadian dollars as hereinafter provided and
shall be paid in equal instalments 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, the 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, the 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 the Base Salary is converted into
Canadian dollars in the event of significant changes in the
exchange rate.
(b) Bonus
You acknowledge that the payment of 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
bonuses, if any, may be in amounts equal to up to 100% of Base
Salary and may be paid in cash, 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 a 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).
(c) Stock Options
You acknowledge that the issuance of stock options is a matter
in the sole discretion of the Board. Cineplex confirms to you
its existing policy that the question of issuance of stock
options will be considered by the Board at least annually.
Subject to the terms of Cineplex's stock option plan, as from
time to time in effect, any decision of the Board with respect
to the quantity or terms of a stock option grant, if any, will
be final and binding on you.
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 at the
Effective Date.
6. Vacation
You shall be entitled to vacation with pay during the term of this
Agreement in accordance with Cineplex vacation policy which was
current at the Effective Date, 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 occurs
within one month of the circumstances providing a basis for
such termination first coming to the attention of 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; 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;
(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) given at any time during the term of this
Agreement; or
(e) as provided in Section 3.
The rights of Cineplex under this Section 7 shall not be affected
by the occurrence of a Material Change.
8. Termination by You
In addition to your rights under Section 9A, you may terminate your
employment hereunder:
(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 (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; provided that 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 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); or
(iii) the failure by Cineplex to continue in effect any
benefit plan listed in Schedule I, special benefit
listed in Schedule II, 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 participating 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 at 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. Provided further that if a Material Change (as
defined in Section 9A hereof) shall occur and, thereafter but
prior to the termination of your employment consequent upon
such Material Change, Cineplex shall fail in any material
respect to perform its obligations under the third paragraph
of Section 1, you shall not, during the period of 180 days
following the date on which you become aware that the Material
Change has occurred, rely on your right to terminate your
employment under this Section 8 to effect a termination at an
earlier date than would have been permitted under Section 9A.
Except as provided in the immediately preceding sentence,
your rights under this Section 8 shall not be affected by the
occurrence of a Material Change.
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);
(b) You shall be entitled to participate in the Benefit
Plans referred to in paragraph 8(b)(iii) (or other
substantially similar benefit arrangements refereed 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 and Schedule II, except as
specifically provided under the Benefit Plans (or other
substantially similar benefit arrangements referred to in paragraph
8(b)(iii)) and subject in all cases to the terms and conditions of
each such plan.
9A. Material Change
(a) No Modification of Other Rights
Cineplex, on behalf of itself and its shareholders, wishes to
assure itself of continuity of management in the event of any
Material Change (as defined in Subsection (b) of this
Section 9A). The rights provided under this Section 9A will
only take effect in the event of a Material Change and
Cineplex is not obligated to continue your employment after
the expiration of the term under Section 3 of this Agreement,
and this Section 9A does not otherwise modify any of
Cineplex's rights or obligations under the other provisions of
this Agreement.
(b) Definition of Material Change
For the purposes of this Agreement, a "Material Change" shall
mean any one of the following events:
(i) either MCA INC. or the Claridge Group (as
hereinafter defined) shall dispose of all or
substantially all of its direct or indirect shareholding
in Cineplex;
(ii) either MCA INC. or the Claridge Group nominates, in
fact, a majority of the directors to be elected at any
meeting of shareholders at which directors are to be
elected and such nominees are elected;
(iii) Cineplex ceases in fact to be the manager, directly
or indirectly, of all or substantially all of the assets
employed from time to time in carrying on the business
of any Principal Business Unit (as hereinafter defined)
or Cineplex, directly or indirectly, discontinues or
disposes of all or substantially all the business of any
Principal Business Unit without retaining management of
such business as aforesaid and, in either case, as a
consequence, the scope and dignity of your services
cease to be comparable to the scope and dignity of the
services which you were performing as at July 4, 1996
including, without limitation, in any particular respect
referred to in the third paragraph of Section 1. In
this Agreement, "Principal Business Unit" means each of
Cineplex's Canadian Theatre Division and U.S. Theatre
Division;
(iv) any person or group of persons acting jointly or in
concert (including any persons deemed to be an "offeror"
or "beneficial owner" of securities of Cineplex for the
purposes of the Securities Act (Ontario) or the
Securities Exchange Act, 1934) (hereinafter, a "Person
or Group") acquire or are deemed (by or under applicable
legislation) to acquire a number of common shares of
Cineplex greater than the number of common shares held
by the Claridge Group and, at any meeting of
shareholders at which directors are elected held within
three years of such event, any of the nominees for
election to the Board named by the Board in the
management proxy circular are not elected to the Board;
(v) Cineplex's head office activities shall be
relocated to a place other than the Municipality of
Metropolitan Toronto; and/or
(vi) a Person or Group acquires or are deemed (by or
under applicable legislation) to acquire shares of
Cineplex entitled to 20% or more of the then outstanding
votes and, as a consequence thereof, the scope and
dignity of your services cease to be comparable to the
scope and dignity of the services which you were
performing as at July 4, 1996, including, without
limitation, in any particular respect referred to in the
third paragraph of Section 1.
In this Section 9A, "Claridge Group" means, collectively,
Xxxxxxx X. Xxxxxxxx, E. Xxx Xxxxxx and The Xxxxxxx X. Xxxxxxxx
Trust and their respective associates (as defined in the
Securities Act (Ontario)).
(c) Optional Early Termination by Executive Following
Material Change
In consideration of the mutual covenants and obligations of
the parties under this Agreement, Cineplex agrees that
following the occurrence of a Material Change, 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 or by you pursuant to Section 8. You
may exercise the foregoing option to terminate this Agreement
by a "Notice of Termination" (as defined in Section 12) to
Cineplex received not later than the 270th day following the
date on which you become aware that such Material Change has
occurred. Such Notice of Termination shall specify an
effective date of termination which is not earlier than either
90 days after the Notice of Termination is given or 180 days
after the date on which you become aware that the Material
Change has occurred.
10. (A) Compensation Due Executive Upon Termination
(a) If your employment shall be terminated by you pursuant
to Subsection 8(a), Cineplex shall pay to you in a lump sum in
cash on the Employment Termination Date (as defined in Section
12), the aggregate of the following amounts:
(i) an amount equal to 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
(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 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),
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 the annual Base Salary then
being paid to you; and
(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 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)); 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 within the Six-Month Notice
Period and you do not terminate your employment pursuant to
Subsection 8(a), 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 amount of 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), "Average Compensation" means the sum of the Base
Salary and any 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:
(1) for the purposes of paragraph 10(A)(c)(i), the year
in which the One Year Notice Date occurs; or
(2) for the purposes of paragraph 10(A)(d)(i), 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, 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.
(f) If your employment shall be terminated by you pursuant
to Subsection 8(b), Cineplex shall pay to you in a lump sum in
cash on the Employment Termination Date, the greater of:
(x) the aggregate of the following amounts:
(i) an amount equal to the greater of (a) an
amount equal to the most recent bonus awarded to
you, plus the Base Salary (prior to any reduction
thereof as provided in Subsection 8(b)(i)) then
being paid to you which would have otherwise been
paid to you from the Employment Termination Date to
the Expiry Date, and (b) two times the sum of the
most recent bonus awarded to you and the annual
Base Salary (prior to any reduction thereof as
provided in Subsection 8(b)(i)) then being paid to
you; and
(ii) in the case of compensation, if any,
previously deferred, all amounts of such
compensation previously deferred and not yet paid
by Cineplex; and
(y) 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;
and
(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)(f), "Aggregate
Compensation" means the sum of the Base Salary and any 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
three. 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 this paragraph 10(A)(f), 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, 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.
(g) If your employment shall be terminated by you pursuant
to Section 9A, Cineplex shall pay to you in a lump sum in cash
on the Employment Termination Date, an amount equal to the
greater of:
(i) 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
(ii) the aggregate of:
(1) if not theretofore paid, the Aggregate
Compensation (as hereinafter defined) for a period
equal to the greater of: (x) the period from the
date of the Material Change to the Employment
Termination Date; and (y) six months;
(2) an amount equal to two times the 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 paragraph 10(A)(g)(ii),
"Aggregate Compensation" means the Base Salary and the
most recent bonus due or paid to you in or in respect of
the period of one year immediately preceding the date of
the Material Change, provided that if no bonus was paid
or due to you in or in respect of such period, there
shall be added to the said Base Salary the amount of the
then most recent bonus paid or due to you in respect of
the 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, 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.
(h) If your employment shall be terminated by Cineplex
pursuant to Subsection 7(d), 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; and
(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,
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 to you, all divided by
three. 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, 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.
(B) Benefits Due Executive Upon Termination
(i) 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:
(a) 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)) 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.
(b) 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)(i)(a). If under the terms of any
Benefit Plan (or other substantially similar
benefit arrangements referred to in paragraph
8(b)(iii)) 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).
(ii) Stock Option Arrangements
Notwithstanding any other provisions relating to the
acceleration of the vesting of options in any Cineplex stock
option plan or agreement, subject to regulatory approval, in
the event you terminate your employment pursuant to Subsection
9A(c) or Cineplex terminates your employment for any reason,
then all stock options previously granted to you (except those
contemplated in your Performance-Based Option Agreement) shall
immediately vest upon the Employment Termination Date. In
addition, subject to regulatory approval and subject to
Section 6.06 of the Cineplex Stock Option Plan, as amended
from time to time, you (or your personal representative) shall
remain entitled to exercise any stock options previously
granted to you (except those contemplated in your Performance-
Based Option Agreement) 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 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 paragraph (ii) are in addition to your
rights under any stock option plans and agreements.
(C) General Provisions Re: Amounts Due Executive Upon
Termination
Except as provided in Schedule II and except for claims for
monies actually due and payable to Cineplex by you, Cineplex's
obligation to make the payment 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.
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. 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). Further, provided that there
is no additional cost to Cineplex, Cineplex will co-operate
with you to structure payments provided in this Section 10 in
a manner which will be most tax effective for you.
10A. Non-Competition
If a Material Change occurs and you terminate your employment
pursuant to Section 9A, then, unless you refuse the payment
otherwise payable to you pursuant to Subsection 10(A)(g) and
release Cineplex from any liability or obligation in respect
thereof, you covenant and agree that you will not, for a period of
one (1) year from the Employment Termination Date, 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.
You acknowledge and agree that all restrictions contained in this
Section and in Section 10B are reasonable and valid and all
defences 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 a Material Change occurs and you terminate your
employment pursuant to Section 9A and if you refuse the
payment otherwise payable to you pursuant to Subsection
10(A)(g) and release Cineplex from any liability or obligation
in respect thereof, or
(b) if Cineplex terminates your employment pursuant to
Section 7 or you terminate your employment pursuant to Section
8,
you shall, subject to the provisions of Section 10B, 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 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 (regardless of the
outcome thereof) by Cineplex or others of the occurrence of a
Material Change (other than one described in paragraphs 9A(b)(iii)
or (vi)) or any liability of Cineplex flowing from the occurrence
of such a Material Change plus, in each case, interest compounded
quarterly, on the total unpaid amount determined to be payable
under this Section 11, such interest to be calculated at a rate
equal to 1% in excess of the Canadian Prime Rate in effect from
time to time during the period of such non-payment. 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 and not covered by the immediately preceding sentence in
which you are substantially successful on the merits. For the
purposes of this Section 11, "Canadian Prime Rate" means the
commercial lending rate of interest, expressed as an annual rate,
which Cineplex's bankers quote in Toronto as the reference rate of
interest (commonly known as "prime") for the purpose of determining
the rate of interest that it charges to its commercial customers
for loans in Canadian funds.
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 Board or
Chairman of the Executive
Committee
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 consequent upon a Material Change.
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
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
Xxxxxx Xxxxxxxxxxx
By:_______________________________
AGREED this 4th day of July, 1996.
Xxxxx Xxxx
______________________________
XXXXX XXXX
SCHEDULE II
ADDITIONAL BENEFIT
1. Cineplex shall provide at no cost to you, term life insurance
in an amount equal to twice the amount of your annual base
salary, providing, and to the extent that, such insurance is
obtainable at an annual cost to Cineplex of not more than
$10,000 in Canadian funds.
