def14c
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
and Exchange Act of 1934
Check the appropriate box:
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Preliminary Information Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) |
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Definitive Information Statement |
Cinemark Holdings, Inc.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check Appropriate Box):
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No fee required |
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Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11 |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transactions applies: |
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Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials |
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Filing Party: |
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Date Filed: |
CINEMARK HOLDINGS, INC.
3900 DALLAS PARKWAY, SUITE 500
PLANO, TEXAS 75093
NOTICE OF ACTION WITHOUT A MEETING
To the Stockholders of Cinemark Holdings, Inc.:
This
Information Statement is being furnished on or about October 18, 2007, by Cinemark
Holdings, Inc., a Delaware corporation (the Company), to holders of the Companys outstanding
common stock, par value $0.001 per share (Common Stock), as of the close of business on October
15, 2007 (the Record Date), pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended (the Exchange Act). The purpose of this Information Statement is:
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to inform holders of Common Stock that the Company has obtained the written
consent of the requisite holders of Common Stock as of the close of business on the
Record Date approving the First Amendment to the Companys 2006 Long Term Incentive
Plan (the Plan Amendment), the form of which is attached hereto as Exhibit A; and |
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to serve as notice of the foregoing actions in accordance with Section 228(e)
of the Delaware General Corporation Law. |
The Company had 106,464,898 shares of Common Stock issued and outstanding as of the close of
business on the Record Date. Each share of Common Stock entitles the holder thereof to one vote on
the matter submitted to the common stockholders.
Under Delaware law, the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock as of the close of business on the Record Date is required to approve the
Plan Amendment. On October 15, 2007, in accordance with Delaware law, the holders of a majority of
the outstanding shares of Common Stock executed a written consent approving the Plan Amendment.
ACCORDINGLY, WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
The approximate date on which this Information Statement is being sent by the Company to the
holders of Common Stock as of the close of business on the Record
Date is October 18, 2007.
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Sincerely,
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Alan W. Stock |
October 15, 2007
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Chief Executive Officer |
CINEMARK HOLDINGS, INC.
3900 DALLAS PARKWAY, SUITE 500
PLANO, TEXAS 75093
INFORMATION STATEMENT
Background
This
Information Statement is being furnished on or about October 18, 2007, by the Company to
holders of Common Stock as of the close of business on the Record Date pursuant to Rule 14c-2 under
the Exchange Act. The purpose of this Information Statement is:
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to inform holders of Common Stock that the Company has obtained the written
consent of the requisite holders of Common Stock as of the close of business on the
Record Date approving the Plan Amendment; and |
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to serve as notice of the foregoing action in accordance with Section 228(e) of
the Delaware General Corporation Law. |
Section 228(a) of the Delaware General Corporation Law states that, unless otherwise provided
in the certificate of incorporation, any action that may be taken at any annual or special meeting
of stockholders may be taken without a meeting, without prior notice and without a vote, if
consents in writing, setting forth the action so taken, are signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were present and voted, and
those consents are delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. The Companys Amended and
Restated Certificate of Incorporation provides that any action required or permitted to be taken by
the stockholders must be effected at a duly called annual or special meeting of the stockholders,
unless the board of directors approves in advance the taking of such action by means of a written
consent of the stockholders. The Companys board of directors approved in advance the approval of
the Plan Amendment by the stockholders by written consent.
As a result, on October 15, 2007, holders of more than a majority of the outstanding shares of
Common Stock executed a written consent approving the Plan Amendment. This written consent was
executed following the approval of the Plan Amendment by the Companys board of directors as of
October 9, 2007. Because the Plan Amendment has been approved by the holders of the requisite
number of outstanding shares of Common Stock that are entitled to cast votes, no other stockholder
approval of the Plan Amendment is necessary. This Information Statement will also serve as notice
of actions taken without a meeting as required by Section 228(e) of the Delaware General
Corporation Law. No further notice of the actions described herein will be given to you.
This Information Statement is provided to the Companys stockholders for informational
purposes only, and you need not take any further action in connection with this Information
Statement. The Company will bear all costs of preparing and delivering this Information Statement.
Outstanding Shares and Voting Rights
Pursuant to the Companys Amended and Restated Certificate of Incorporation, the Company
currently has authorized the issuance of 300,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock, par value $0.001 per share. As of the close of business on the Record Date, the
Company had 106,464,898 shares of Common Stock issued and outstanding and no shares of preferred
stock issued and outstanding. Each share of Common Stock outstanding as of the close of business
on the Record Date is entitled to one vote on the matter submitted to a vote of the common
stockholders.
1
This
Information Statement is being mailed on or about October 18, 2007 to the holders of
record of Common Stock as of the close of business on the Record Date which is October 15 2007.
Section 213(b) of the Delaware General Corporation Law sets forth the rules for ascertaining the
record date to determine which stockholders of a corporation are eligible to consent to action by
written consent pursuant to Section 228 of the Delaware General Corporation Law. Pursuant to
Section 213(b), as of October 9, 2007, the Companys board of directors approved the Plan
Amendment and, therefore, holders of record of the Common Stock as of the close of business on
October 15, 2007 were entitled to consent to the actions described in this Information Statement.
The October 15, 2007 written consent of common stockholders referenced above and described in
this Information Statement was executed by stockholders holding approximately 72% of the shares of
Common Stock eligible to vote on those matters on such date. ACCORDINGLY, WE ARE NOT ASKING YOU
FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Dissenters Rights of Appraisal
The Delaware General Corporation Law does not provide dissenters rights of appraisal to the
Companys stockholders in connection with the matters approved by the written consent of common
stockholders referenced above.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of the
Common Stock as of the Record Date by (1) each director, (2) each named executive officer, (3) each
person known or believed by the Company to own beneficially five percent or more of the Common
Stock and (4) all directors and executive officers as a group.
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Beneficial Ownership (1) |
Names Beneficial Owner |
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Shares |
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Percentage |
5% Stockholders |
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Madison Dearborn Capital Partners IV, L.P.
(2)(9) |
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50,019,886 |
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47.0 |
% |
Syufy Enterprises LP (3) |
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8,174,596 |
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7.7 |
% |
Quadrangle Capital Partners LP (4)(10) |
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5,341,206 |
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5.0 |
% |
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Directors and Named Executive Officers |
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Lee Roy Mitchell (5) |
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13,100,295 |
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12.3 |
% |
Alan W. Stock (6) |
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920,564 |
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* |
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Timothy Warner (7) |
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918,688 |
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* |
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Robert Copple (8) |
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893,186 |
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* |
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Robert Carmony (9) |
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437,743 |
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* |
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Benjamin D. Chereskin (11) |
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50,019,886 |
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47.0 |
% |
Vahe A. Dombalagian (11) |
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50,019,886 |
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47.0 |
% |
Enrique F. Senior |
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Peter R. Ezersky (12) |
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5,341,206 |
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5.0 |
% |
Raymond W. Syufy (13) |
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8,174,596 |
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7.7 |
% |
Carlos M. Sepulveda |
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Donald G. Soderquist |
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Roger T. Staubach |
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All directors and executive officers as a
group (19 persons) (14) |
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80,968,791 |
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73.7 |
% |
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* |
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Represents less than one percent |
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Beneficial ownership is determined in accordance with Securities and Exchange Commission, or
SEC, rules. In computing percentage ownership of each person, shares of Common Stock subject
to options held by that person that are currently exercisable, or exercisable within 60 days
of the date hereof, are deemed to be beneficially owned. These shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of each other person.
The percentage of shares beneficially owned is based on 106,464,898 shares of Common Stock
outstanding as of the date hereof. Unless otherwise indicated, all amounts exclude shares
issuable upon the exercise of outstanding options that are not exercisable as of the date
hereof or exercisable within 60 days of the date hereof. |
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Includes 5,341 shares owned by Northwestern University, 26,706 shares owned by John W.
Madigan and 106,825 shares owned by K&E Investment Partners, L.P. 2004-B DIF. Madison
Dearborn Capital Partners IV, LP, or MDCP IV, has an irrevocable proxy to vote these shares in
all matters subject to stockholder approval. The address of MDCP IV is Three First National
Plaza, Suite 3800, 70 West Madison Street, Chicago, Illinois 60602. |
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The shares owned by Syufy Enterprises LP were acquired in connection with the Century
acquisition. The Company acquired Century Theatres, Inc. from Syufy Enterprises LP. The
address of Syufy Enterprises LP is 150 Pelican Way, San Rafael, California 94901. |
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The shares beneficially owned by Quadrangle Capital Partners LP were acquired by Quadrangle
Capital Partners LP from MDCP IV in December 2004. Includes 195,377 shares owned by
Quadrangle Select Partners LP, 1,368,036 shares owned by Quadrangle Capital Partners A LP and
393,293 shares owned by Quadrangle (Cinemark) Capital Partners LP. Quadrangle GP Investors
LLC is the general partner of Quadrangle GP Investors LP. Quadrangle GP Investors LP is the
general partner of Quadrangle Capital Partners LP, Quadrangle Select Partners LP, Quadrangle
Capital Partners A LP and Quadrangle (Cinemark) Capital Partners LP. Quadrangle Capital
Partners LP disclaims beneficial ownership of all shares held by Quadrangle Select Partners
LP, Quadrangle Capital Partners A LP and Quadrangle (Cinemark) Capital Partners LP. |
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The address of Quadrangle Capital Partners LP is c/o Quadrangle Group LLC, 375 Park Avenue, New
York, New York 10152. |
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Includes 6,419,095 shares of Common Stock owned by the Mitchell Special Trust. Mr. Mitchell
is the co-trustee of the Mitchell Special Trust. Mr. Mitchell expressly disclaims beneficial
ownership of all shares held by the Mitchell Special Trust. Mr. Mitchells address is
c/o Cinemark, Inc., 3900 Dallas Parkway, Suite 500, Plano, Texas 75093. |
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Includes 673,453 shares of Common Stock issuable upon the exercise of options that may be
exercised within 60 days of the Record Date. |
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(7) |
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Includes 673,453 shares of Common Stock issuable upon the exercise of options that may be
exercised within 60 days of the Record Date. |
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(8) |
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Includes 673,453 shares of Common Stock issuable upon the exercise of options that may be
exercised within 60 days of the Record Date. |
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(9) |
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Includes 437,743 shares of Common Stock issuable upon the exercise of options that may be
exercised within 60 days of the Record Date. |
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The shares beneficially owned by each of Quadrangle Capital Partners LP, Quadrangle Select
Partners LP and Quadrangle Capital Partners A LP were acquired by each such stockholder from
MDCP IV in December 2004. The shares beneficially owned by Quadrangle (Cinemark) Capital
Partners LP were transferred by Quadrangle Capital Partners LP effective February 2005. |
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The shares beneficially owned by MDCP IV were acquired by MDCP IV in connection with the MDP
Merger. The MDP Merger refers to the transaction on April 2, 2004 pursuant to which an
affiliate of Madison Dearborn Partners, LLC, or MDP, acquired approximately 83% of the capital
stock of Cinemark, Inc. In the transaction, a newly formed subsidiary owned by an affiliate
of MDP was merged with and into Cinemark, Inc. with Cinemark, Inc. continuing as the surviving
corporation. On August 2, 2006, the Company was formed in connection with the planned
acquisition pursuant to a stock purchase agreement, dated August 7, 2006, of Century by
Cinemark USA, Inc. The Century acquisition was completed on October 5, 2006. On October 5,
2006, pursuant a Contribution and Exchange Agreement, dated August 7, 2006, among the then
stockholders of Cinemark, Inc., the parties exchanged their shares of Class A common stock of
Cinemark, Inc. for shares of Common Stock of the Company. The shares beneficially owned by
MDCP IV may be deemed to be beneficially owned by Madison Dearborn Partners IV, L.P. (or MDP
IV), the sole general partner of MDCP IV. John A. Canning, Jr., Paul J. Finnegan and Samuel M.
Mencoff are the sole members of a limited partner committee of MDP IV that has the power,
acting by majority vote, to vote or dispose of the shares beneficially held by MDCP IV.
Mr. Chereskin is a limited partner of MDP IV, Managing Director and Member of Madison Dearborn
Partners, LLC (the general partner of MDP IV), and therefore may be deemed to share beneficial
ownership of the shares beneficially owned by MDCP IV. Mr. Dombalagian is a limited partner of
MDP IV and a Director of Madison Dearborn Partners, LLC, and therefore may be deemed to share
beneficial ownership of the shares beneficially owned by MDCP IV. Messrs. Canning, Finnegan,
Mencoff, Chereskin and Dombalagian and MDP IV each hereby disclaims any beneficial ownership
of any shares beneficially owned by MDCP IV. The address for each person named in this
footnote is Three First National Plaza, Suite 3800, 70 West Madison Street, Chicago, Illinois
60602. |
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Mr. Ezersky is a Managing Member of Quadrangle GP Investors LLC, which is the general partner
of Quadrangle GP Investors LP. Quadrangle GP Investors LP is the general partner of Quadrangle
Capital Partners LP, Quadrangle Select Partners LP, Quadrangle Capital Partners A LP and
Quadrangle (Cinemark) Capital Partners LP, and he may therefore be deemed to share beneficial
ownership of the 3,384,500 shares owned by Quadrangle Capital Partners LP, the 195,377 shares
owned by Quadrangle Select Partners LP, the 1,368,036 shares owned by Quadrangle Capital
Partners A LP and the 393,293 shares owned by Quadrangle (Cinemark) Capital Partners LP.
Mr. Ezersky expressly disclaims beneficial ownership of the shares owned by Quadrangle Capital
Partners LP, Quadrangle Select Partners LP, Quadrangle Capital Partners A LP and Quadrangle
(Cinemark) Capital Partners LP. |
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Mr. Syufy is an executive officer of the general partner of Syufy Enterprises LP and he may
therefore be deemed to share beneficial ownership of the 8,174,596 shares owned by Syufy
Enterprises LP. Mr. Syufy expressly disclaims beneficial ownership of the shares owned by
Syufy Enterprises LP. |
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(14) |
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Includes 3,448,074 shares of Common Stock issuable upon the exercise of options that may be
exercised within 60 days of the Record Date. |
4
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Companys compensation committee is responsible for establishing the compensation for the
Companys chief executive officer and other senior executives, including all executive vice
presidents. The compensation committee also establishes executive compensation policies, incentive
compensation policies, employee benefit plans and determines cash and equity awards thereunder. In
so doing, the compensation committee has the responsibility to develop, implement, and manage
compensation policies and programs that seek to enhance the Companys long term competitive
advantage and sustainable profitability, thereby contributing to the value of the Companys
stockholders investment. The Companys board of directors has adopted a written charter for the
compensation committee setting forth the compensation committees purpose and responsibilities.
Overview of Compensation Program
The Companys compensation programs are designed to attract, retain, and motivate key
executive personnel who possess the skills and qualities necessary to successfully perform in the
Companys industry. Elements of compensation for the Companys executives include: annual salary,
stock option awards and cash bonus awards. In making compensation decisions with respect to each of
these elements, the compensation committee considers the competitive market for executives and
compensation levels provided by comparable companies. The compensation committee intends to review
the compensation practices of companies in the Companys peer group and companies of comparable
size and financial performance with whom the Company competes for talent.
Components of Compensation
Base Salary
The compensation committee seeks to keep base salary competitive. Base salaries for the chief
executive officer and the other executive officers are determined by the compensation committee
based on a variety of factors. These factors include the nature and responsibility of the position,
the expertise of the individual executive, the competitiveness of the market for the executives
services and, except in the case of his own compensation, the recommendations of the chief
executive officer.
Annual Performance-Based Cash Incentive Compensation
In setting compensation, the compensation committee considers annual cash incentives based on
Company performance to be an important tool in motivating and rewarding the performance of the
Companys executive officers. Performance-based cash incentive compensation is paid to the
Companys executive officers pursuant to its incentive bonus program.
Performance-based cash incentive compensation payouts to participants under the Companys
incentive bonus program are dependent upon its performance relative to Adjusted EBITDA target
levels which are established at the beginning of each year. This plan provides named executive
officers with a bonus of 20% of the executives annual base salary if the minimum Adjusted EBITDA
threshold is met and up to 80% of the executives annual base salary if Adjusted EBITDA reaches the
stretch goal. If the Companys performance is between the minimum and maximum Adjusted EBITDA
targets, such executives will receive a prorated bonus between 20% and 80% of his annual base
salary. In 2005, the minimum Adjusted EBITDA target was not met and no plan participant received a
bonus under the Companys incentive bonus program. In 2006, the minimum Adjusted EBITDA target was
met and plan participants qualified for a bonus paid in 2007.
Long Term Equity Incentive Compensation
The Company believes that long-term performance is achieved through an ownership culture that
encourages such performance by its executive officers through the use of stock and stock-based
awards. In November 2006, the Companys board of directors and the majority of its stockholders
approved the 2006 Long Term Incentive Plan, or 2006 Plan, under which 9,097,360 shares of Common
Stock were available for issuance to its selected employees, directors and consultants. The
following awards may be granted under the 2006 Plan: (1) options intended to qualify as incentive
stock options under Section 422 of the Code, (2) non-qualified stock options not specifically
authorized or qualified for favorable federal income tax consequences, and (3) restricted stock
awards consisting of shares of Common Stock that are subject to a substantial risk of forfeiture
(vesting) restriction for some period of time. The 2006 Plan was established to provide certain of
the Companys employees, including its executive officers, with
incentives to help align those employees interests with the interests of its stockholders.
The compensation
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committee believes that the use of stock and stock-based awards offers the best
approach to achieving the Companys compensation goals.
The 2006 Plan is substantially similar to the 2004 Long Term Incentive Plan, or 2004 Plan,
created by Cinemark, Inc. The 2004 Plan was approved by Cinemark, Inc.s board of directors and the
majority of its stockholders on September 30, 2004. Under the 2004 Plan, Cinemark, Inc. made grants
of options on two occasions. On September 30, 2004, options to purchase 6,986,731 shares were
granted with 9.9% vesting on the grant date and the remainder vesting daily on a pro rata basis
through April 2, 2009. On January 28, 2005, more options to purchase 12,055 shares were granted,
which vest daily on a pro rata basis over five years. All options expire ten years after the date
granted. On August 2, 2006, the Company was formed in connection with the planned acquisition
pursuant to a stock purchase agreement, dated August 7, 2006, of Century by Cinemark USA, Inc. The
Century acquisition was completed on October 5, 2006. On October 5, 2006, pursuant a Contribution
and Exchange Agreement, dated August 7, 2006, among the then stockholders of Cinemark, Inc., the
parties exchanged their shares of Class A common stock of Cinemark, Inc. for shares of Common Stock
of the Company. In connection with the Century acquisition, the Company assumed the obligations of
Cinemark, Inc. under the 2004 Plan to assure that stock acquired on exercise of an option issued
under the 2004 Plan will be Common Stock of Cinemark Holdings, Inc. The terms of the option
agreements entered into under the 2004 Plan will continue to govern the options. The option will
otherwise be subject to the provisions in the 2006 Plan.
Perquisites
With limited exceptions, the compensation committees policy is to provide benefits and
perquisites to the Companys executives that are substantially the same as those offered to its
other employees at or above the level of vice president. The benefits and perquisites that may be
available in addition to those available to its other employees include life insurance premiums and
long term disability.
Summary of Compensation for the Companys Named Executive Officers
Lee Roy Mitchell
For his service as the Chairman of the Board of Directors and Chief Executive Officer,
Mr. Mitchell received a base salary of $763,958 during 2006. Mr. Mitchells base salary is subject
to annual review for increase (but not decrease) each year by the board of directors or committee
or delegate thereof. In addition, Mr. Mitchell is eligible to receive an annual cash incentive
bonus upon the Companys meeting of certain performance targets established by the board of
directors or the compensation committee, as described above. Mr. Mitchell qualifies for the
Companys 401(k) matching program, pursuant to which he received $11,550 in Company contributions
in 2006. Mr. Mitchell is also entitled to additional fringe benefits including life insurance
benefits of not less than $5 million, disability benefits of not less than 66% of base salary, a
luxury automobile and a membership at a country club. Upon Mr. Mitchells termination of
employment, he is entitled to severance payments, the amount of which depends upon the reason for
the termination of employment. In any case, Mr. Mitchell will receive all accrued compensation and
benefits as well as any vested stock options. If his employment is terminated without cause or he
resigns for good reason, Mr. Mitchell will also receive his annual base salary for a period of
twelve months and an amount equal to the most recent annual bonus he received prior to the date of
termination.
Alan W. Stock, Timothy Warner, Robert Copple and Robert Carmony
For their service as officers, Alan W. Stock, Timothy Warner, Robert Copple and Robert Carmony
received a base salary during 2006 of $452,097, $366,616, $330,118 and $318,247, respectively. The
base salary of each of Messrs. Stock, Warner, Copple and Carmony is subject to annual review for
increase (but not decrease) each year by the board of directors or committee or delegate thereof.
In addition, each of these employees is eligible to receive an annual cash incentive bonus upon the
Companys meeting of certain performance targets established by the board of directors or the
compensation committee, as described above. Messrs. Stock, Warner, Copple and Carmony each qualify
for the Companys 401(k) matching program, pursuant to which they each received $11,550 in company
contributions in 2006. Each of Messrs. Stock, Warner, Copple and Carmony is also entitled to
certain additional benefits including life insurance and disability benefits.
Compensation Committee
The compensation committee consists of Benjamin D. Chereskin, who serves as the chairman of
the compensation committee, and Vahe A. Dombalagian. The principal responsibilities of the
compensation committee are to review and approve corporate goals and objectives relevant to the
compensation of the executive officers,
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evaluate their performance in light of these goals, determine and approve the executive officers
compensation based on such evaluation and establish policies including with respect to the
following:
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the allocation between long-term and currently paid out compensation; |
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the allocation between cash and non-cash compensation, and among different forms of non-cash
compensation; |
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the allocation among each different form of long-term award; |
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how the determination is made as to when awards are granted, including awards of equity-based
compensation such as options; and |
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stock ownership guidelines and any policies regarding hedging the economic risk of such
ownership. |
Summary Compensation
The following table contains summary information concerning the total compensation earned
during 2006 by the Companys chief executive officer, chief financial officer and its three other
most highly compensated executive officers serving in this capacity as of December 31, 2006, whose
total compensation exceeded $100,000 for the fiscal year ended December 31, 2006.
Summary Compensation Table for the Fiscal Year Ended December 31, 2006
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Non-Equity |
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Option |
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Incentive Plan |
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All Other |
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Name and Principal |
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Salary |
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Awards |
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Compensation |
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Compensation |
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Total |
Position |
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Year |
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($) |
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($)(1) |
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($)(2) |
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($) |
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($) |
Lee Roy Mitchell |
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2006 |
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$ |
763,958 |
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$ |
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$ |
385,773 |
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$ |
24,701 |
(4) |
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$ |
1,174,432 |
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Chairman of the |
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Board(3) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan W. Stock |
|
|
2006 |
|
|
|
452,097 |
|
|
|
415,761 |
|
|
|
227,698 |
|
|
|
634,180 |
(5) |
|
|
1,729,736 |
|
Chief Executive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy Warner |
|
|
2006 |
|
|
|
366,616 |
|
|
|
415,761 |
|
|
|
184,645 |
|
|
|
14,772 |
(6) |
|
|
981,794 |
|
President and Chief |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Officer(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Copple |
|
|
2006 |
|
|
|
330,118 |
|
|
|
415,761 |
|
|
|
166,263 |
|
|
|
16,631 |
(7) |
|
|
928,773 |
|
Executive Vice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Carmony |
|
|
2006 |
|
|
|
318,247 |
|
|
|
270,244 |
|
|
|
160,284 |
|
|
|
15,578 |
(8) |
|
|
764,353 |
|
Senior Vice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These amounts represent the dollar amount of compensation cost the Company recognized during
2006 for awards granted during 2004 based on the grant date fair value of the named executive
officers option awards in accordance with SFAS 123(R). |
|
(2) |
|
Bonuses were earned in 2006 and paid in March 2007. |
|
(3) |
|
Effective December 12, 2006, Mr. Mitchell stepped down as Chief Executive Officer.
Mr. Stock was elected to replace Mr. Mitchell as Chief Executive Officer. Mr. Mitchell
will continue to serve as Chairman of the Board of Directors. Mr. Stock had previously
served as President since March 1993 and as Chief Operating Officer since March 1992.
Effective December 12, 2006, Mr. Warner was elected to replace Mr. Stock as President and
Chief Operating Officer. Mr. Warner had previously served as Senior Vice President since
May 2002 and President of Cinemark International, L.L.C. since August 1996. |
|
(4) |
|
Represents an $11,550 annual matching contribution to Mr. Mitchells
401(k) savings plan, $10,250 representing the value of the use of a
company vehicle for one year and $2,901 of life insurance premiums and
disability insurance |
7
|
|
|
|
|
paid by the Company for the benefit of
Mr. Mitchell. |
|
(5) |
|
Represents an $11,550 annual matching contribution to Mr. Stocks
401(k) savings plan, $3,793 of life insurance premiums and disability
insurance paid by the Company for the benefit of Mr. Stock and
payments of $618,837 under Mr. Stocks profit participation agreement
for certain of the Companys theatres. |
|
(6) |
|
Represents an $11,550 annual matching contribution to Mr. Warners
401(k) savings plan and $3,222 of life insurance premiums and
disability insurance paid by the Company for the benefit of
Mr. Warner. |
|
(7) |
|
Represents an $11,550 annual matching contribution to Mr. Copples
401(k) savings plan and $5,081 of life insurance premiums and
disability insurance paid by the Company for the benefit of
Mr. Copple. |
|
(8) |
|
Represents an $11,550 annual matching contribution to Mr. Carmonys
401(k) savings plan and $4,028 of life insurance premiums and
disability insurance paid by the Company for the benefit of
Mr. Carmony. |
Grants of Plan-Based Awards
There were no stock option grants or awards to the named executive officers during the fiscal
year ended December 31, 2006.
Employment Agreements
Lee Roy Mitchell
The Company entered into an employment agreement with Lee Roy Mitchell pursuant to which
Mr. Mitchell served as the Companys Chief Executive Officer. The employment agreement became
effective upon the consummation of the MDP Merger. Effective December 12, 2006, Mr. Mitchell
stepped down as Chief Executive Officer and will continue to serve as Chairman of the Board of
Directors, and his employment agreement was amended to reflect the change in duties. The initial
term of the employment agreement was three years, ending on April 2, 2007, which was automatically
extended for a one-year period. Mr. Mitchell received a base salary of $763,958 during 2006, which
is subject to annual review for increase (but not decrease) each year by the board of directors or
committee or delegate thereof. In addition, Mr. Mitchell is eligible to receive an annual cash
incentive bonus upon the Company meeting certain performance targets established by the board of
directors or the compensation committee for the fiscal year. Mr. Mitchell is also entitled to
additional fringe benefits including life insurance benefits of not less than $5 million,
disability benefits of not less than 66% of base salary, a luxury automobile and a membership at a
country club. The employment agreement provides for severance payments upon termination of
employment, the amount and nature of which depends upon the reason for the termination of
employment. If Mr. Mitchell resigns for good reason or is terminated by the Company without cause
(as defined in the agreement), Mr. Mitchell will receive: accrued compensation (which includes base
salary and a pro rata bonus) through the date of termination; any previously vested stock options
and accrued benefits, such as retirement benefits, in accordance with the terms of the plan or
agreement pursuant to which such options or benefits were granted; his annual base salary as in
effect at the time of termination for a period of twelve months following such termination; and an
amount equal to the most recent annual bonus he received prior to the date of termination.
Mr. Mitchells equity-based or performance-based awards will become fully vested and exercisable
upon such termination or resignation. Mr. Mitchell may choose to continue to participate in the
Companys benefit plans and insurance programs on the same terms as other actively employed senior
executives for a one-year period.
In the event Mr. Mitchells employment is terminated due to his death or disability,
Mr. Mitchell or his estate will receive: accrued compensation (which includes base salary and a pro
rata bonus) through the date of termination; any previously vested stock options and accrued
benefits, such as retirement benefits, in accordance with the terms of the plan or agreement
pursuant to which such options or benefits were granted; his annual base salary as in effect at the
time of termination for a period of six months following such termination; a lump sum payment equal
to an additional six months of base salary payable six months after the date of termination; and
any benefits payable to Mr. Mitchell and/or his beneficiaries in accordance with the terms of any
applicable benefit plan.
In the event Mr. Mitchells employment is terminated by the Company for cause or under a
voluntary termination (as defined in the agreement), Mr. Mitchell will receive accrued base salary
through the date of
termination and any previously vested rights under a stock option or similar incentive
compensation plan in accordance with the terms of such plan.
Mr. Mitchell will also be entitled, for a period of five years, to tax preparation assistance
upon termination of his employment for any reason other than for cause or under a voluntary
termination. The employment agreement
8
contains various covenants, including covenants related to
confidentiality, non-competition (other than certain permitted activities as defined therein) and
non-solicitation.
Tandy Mitchell, Alan Stock, Robert Copple, Timothy Warner, Robert Carmony, John Lundin and Michael
Cavalier
The Company entered into executive employment agreements with each of Alan Stock, Timothy
Warner, Tandy Mitchell, Robert Copple, Robert Carmony, Michael Cavalier and John Lundin pursuant to
which Mr. Stock, Mr. Warner, Mrs. Mitchell and Messrs. Copple, Carmony, Cavalier and Lundin serve,
respectively, as the Companys Chief Executive Officer, President, Executive Vice President, Senior
Vice President and Chief Financial Officer, Senior Vice President of Operations, Senior Vice
President-General Counsel and Vice President of Film Licensing. The employment agreements became
effective upon the consummation of the MDP Merger. Effective December 12, 2006, Mr. Stock was
elected to replace Mr. Mitchell as the Companys Chief Executive Officer, Mr. Warner was elected to
replace Mr. Stock as the Companys President and Chief Operating Officer and their employment
agreements were amended to reflect the change in duties. Effective January 25, 2006, Mr. Copple was
promoted to Executive Vice President and his employment agreement was amended to reflect this
change. The initial term of each employment agreement was three years, ending on April 2, 2007, and
each was automatically extended for a one-year period. Pursuant to the employment agreements, each
of these individuals receives a base salary, which is subject to annual review for increase (but
not decrease) each year by the board of directors or committee or delegate thereof. In addition,
each of these executives is eligible to receive an annual cash incentive bonus upon the Company
meeting certain performance targets established by the board of directors or the compensation
committee for the fiscal year.
The board of directors has adopted a stock option plan and granted each executive stock
options to acquire such number of shares as set forth in that executives employment agreement. The
executives stock options vest and become exercisable twenty percent per year on a daily pro rata
basis and shall be fully vested and exercisable five years after the date of the grant, as long as
the executive remains continuously employed by the Company. Upon consummation of a sale of the
Company, the executives stock options will accelerate and become fully vested.
The employment agreement with each executive provides for severance payments on substantially
the same terms as the employment agreement for Mr. Mitchell and an amount equal to the most recent
annual bonus he or she received prior to the date of termination and a pro rata portion of any
annual bonus earned during the fiscal year in which termination occurred based upon the number of
days worked in such year.
Each executive will also be entitled to office space and support services for a period of not
more than three months following the date of any termination except for termination for cause. The
employment agreements contain various covenants, including covenants related to confidentiality,
non-competition and non-solicitation.
401(k) Plan
The Company sponsors a defined contribution savings plan, or 401(k) Plan, whereby certain
employees may elect to contribute, in whole percentages between 1% and 50% of such employees
compensation, provided no employees elective contribution shall exceed the amount permitted under
Section 402(g) of the Code ($15,000 in 2006 and $15,500 for 2007). the Company may make an annual
discretionary matching contribution. For plan years beginning in 2002, the Companys discretionary
matching contributions immediately vest.
2006 Long Term Incentive Plan
Cinemark Holdings, Inc. was formed on August 2, 2006 in connection with the planned
acquisition pursuant to a stock purchase agreement, dated August 7, 2006, of Century by Cinemark
USA, Inc. The Century acquisition was completed on October 5, 2006. On October 5, 2006, pursuant a
Contribution and Exchange Agreement, dated August 7, 2006, among the then stockholders of Cinemark,
Inc., the parties exchanged their shares of Class A common stock of Cinemark, Inc. for shares of
Common Stock of the Company. In connection with the Century acquisition, the Company assumed the
obligations of Cinemark, Inc. under the 2004 Plan to assure that stock acquired on exercise of an
option issued under the 2004 Plan will be Common Stock of the Company. The terms of the option
agreements entered into under the 2004 Plan will continue to govern the options. The options will
otherwise be subject to the provisions in the 2006 Plan described below.
In November 2006, the board of directors and the majority of the stockholders approved the
2006 Plan under which 9,097,360 shares of Common Stock were available for issuance to the Companys
selected employees, directors and consultants. There are currently options to purchase 6,852,790
shares of Common Stock outstanding under the 2006 Plan with a weighted average exercise price of
$7.63 per share. The board of Cinemark, Inc. has
9
amended the 2004 Plan to provide that no
additional awards may be granted under the 2004 Plan. The 2006 Plan is substantially similar to the
2004 Plan.
Types of Awards. The following awards may be granted under the 2006 Plan: (1) options
intended to qualify as incentive stock options under Section 422 of the Code, (2) non-qualified
stock options not specifically authorized or qualified for favorable federal income tax
consequences, and (3) restricted stock awards consisting of shares of Common Stock that are subject
to a substantial risk of forfeiture (vesting) restriction for some period of time.
Administration. The 2006 Plan was initially administered by the board of directors, who
delegated the administration responsibilities to the compensation committee, which has full and
final authority to make awards, establish the terms thereof, and administer and interpret the 2006
Plan in its sole discretion unless authority is specifically reserved to the board of directors
under the 2006 Plan, the Companys Amended and Restated Certificate of Incorporation or Bylaws, or
applicable law. The administrator may delegate duties to one or more of the member of the board of
directors, including the ability to make awards within designated parameters that do not involve
Covered Employees within the meaning of Section 162(m) of the Code or insiders within the
meaning of Section 16 of the Exchange Act. The 2006 Plan administrator has exclusive authority to
determine employees to whom awards will be granted, the timing and manner of the grant of awards,
the number of shares to be subject to any award, the purchase price or exercise price and medium of
payment, vesting provisions and repurchase provisions and to specify the provisions of any
agreement relating to such grant or sale, the duration and purpose of leaves of absence which may
be granted to optionees and grantees without constituting termination of employment for purposes of
the 2006 Plan and all other discretionary determinations necessary or advisable for administration
of the 2006 Plan.
Eligibility. Any employee, director or consultant of the Company or any of its subsidiaries
who is designated by the administrator is eligible to receive an award under the 2006 Plan.
Incentive stock options may only be granted to a person employed by the Company or by one of its
subsidiaries.
Shares Subject to the 2006 Plan. The aggregate number of shares which may be issued under
the 2006 Plan consists of 9,097,360 shares of Common Stock, subject to certain adjustments.
Terms and Conditions of Options. The exercise price for the shares subject to any option
granted under the 2006 Plan may not be less than 100% of the fair market value of the shares of
Common Stock on the date the option is granted. However, the options issued under the 2004 Plan
will continue to have the fair market value exercise price originally determined under the 2004
Plan on the original grant date of such options.
The purchase price for any shares purchased pursuant to exercise of an option must be paid in
full upon exercise of the option in cash or, at the sole discretion of the administrator, upon such
terms and conditions as it may approve, by transferring to the Company for redemption shares of
previously acquired Common Stock at the fair market value or, provided the Common Stock is publicly
traded, by a broker assisted cashless exercise procedure.
Incentive stock options are non-transferable, except as permitted by the administrator in its
sole discretion. If an incentive stock option is granted to an employee who owns 10% or more of the
Common Stock, the exercise price of that option may not be less than 110% of the fair market value
of the Common Stock on the option grant date and the option is not exercisable after the expiration
of five years from such option grant date. The 2006 Plan also provides for grants of nonqualified
stock options to any employees, directors or consultants performing services for the Company or its
subsidiaries. The exercise price for nonqualified stock options granted under the 2006 Plan may not
be less than 100% of the fair market value of the Common Stock on the option grant date. Under the
2006 Plan, options vest according to the provisions of the applicable option agreement, and
terminate on the tenth anniversary of the date of grant. Upon the sale of the Company, all
outstanding options become fully vested and exercisable.
No option is exercisable after the earliest of the following: (1) the expiration of ten years
after the date the option is granted; (2) three months after the date the optionees continuous
service as an employee, director or consultant with the Company and its subsidiaries terminates if
termination is for any reason other than permanent disability, death, or cause; (3) the date the
optionees continuous service terminates if termination is for cause; (4) one year after the date
the optionees continuous service terminates if termination is a result of death; or (5) six months
after the date the optionees continuous service terminates if termination is a result of permanent
disability.
To the extent the aggregate fair market value (determined as of the time the option is
granted) of stock with respect to which incentive stock options are exercisable by any employee for
the first time during any calendar year exceeds $100,000, the options or portions thereof will be
treated as nonstatutory options and will not be treated as incentive stock options.
10
Restricted Stock Awards. The administrator may award (or sell at a purchase price determined
by the administrator) restricted shares of Common Stock to the Companys employees, directors and
consultants. The restricted stock may not be sold, assigned, transferred or otherwise disposed of
for such period as the administrator shall determine. The vesting of an award of restricted stock
will be determined by the administrator for each grant. In the event a recipients continuous
service to the Company terminates, the Company may reacquire that unvested shares acquired in
consideration of past services and all unvested shares of restricted stock as of the date of
termination will be forfeited. If restricted stock is acquired for consideration other than prior
services, the forfeiture will be accomplished by repurchasing the shares at the original purchase
price. Until all restrictions upon restricted stock awarded to a participant have lapsed, the
participant may not have rights to receive dividends and voting rights with respect to the
restricted stock. The agreement evidencing the award of restricted stock will set forth any such
terms and conditions. Upon a change of control of the Company, all outstanding shares of restricted
stock become fully vested.
Effect of the Sale of the Company. Upon the sale of the Company, all outstanding options
become fully vested and exercisable and all outstanding shares of restricted stock become fully
vested. At the time of a sale of the Company, the administrator will cancel any or all outstanding
options in exchange for a payment to the option holder in an amount equal to the value of the
option under the terms of the sale of the Company, minus any required withholding tax. In addition,
the administrator will cause the Company to purchase all restricted shares at a price determined
according to the terms of the sale of the Company. The payment of the applicable amounts described
above may be made in cash or, if the transaction resulting in the sale of the Company includes
consideration in the form of securities, in a combination of cash and publicly traded securities,
in the administrators discretion.
Effect of Mergers, Reorganizations and Consolidations on Awards. In the event of the
Companys liquidation or merger, reorganization or consolidation with any other corporation in
which the Company is not the surviving corporation or the Company becomes a subsidiary of another
corporation, the maximum number of shares of Common Stock subject to options or awards under the
2006 Plan and the number of shares and exercise price per share subject to outstanding options or
awards under the 2006 Plan will be appropriately adjusted by the administrator to reflect any
increase or decrease in the number of outstanding shares of Common Stock. Any outstanding awards
previously granted under the 2006 Plan may either (1) be assumed or replaced by substitute awards
by the surviving corporation or (2) continued in accordance with their terms.
Plan Amendments. The 2006 Plan may be terminated or amended by the board of directors.
Without the authorization and approval of the stockholders, however, the board of directors may not
make any amendments which would (1) increase the total number of shares covered by the 2006 Plan,
(2) change the class of persons eligible to participate, or (3) extend the term of the 2006 Plan
beyond ten years from the date of adoption.
Term of 2006 Plan. Unless sooner terminated by the board of directors in its sole
discretion, the 2006 Plan, as amended, will expire on September 29, 2014.
Outstanding Equity Awards
The following table sets forth certain information concerning unexercised options for each
named executive officer outstanding as of December 31, 2006. There were no outstanding stock awards
as of December 31, 2006.
Outstanding Equity Awards at December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
Unexercised Options |
|
Unexercised Options |
|
Option |
|
|
|
|
(#) |
|
(#) |
|
Exercise Price |
|
Option Expiration |
Name |
|
Exercisable |
|
Unexercisable |
|
($) |
|
Date |
Lee Roy Mitchell |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan W. Stock(1) |
|
|
499,980 |
|
|
|
409,755 |
|
|
$ |
7.63 |
|
|
September 29, 2014 |
Timothy Warner(1) |
|
|
499,980 |
|
|
|
409,755 |
|
|
$ |
7.63 |
|
|
September 29, 2014 |
Robert Copple(1) |
|
|
499,980 |
|
|
|
409,755 |
|
|
$ |
7.63 |
|
|
September 29, 2014 |
Robert Carmony(1) |
|
|
324,985 |
|
|
|
266,342 |
|
|
$ |
7.63 |
|
|
September 29, 2014 |
|
|
|
(1) |
|
Gives effect to a 2.9585-for-one stock split with respect to the Common Stock effected on
April 9, 2007. |
11
Option Exercises
There were no exercises of stock options by the named executive officers during the year ended
December 31, 2006.
Potential Payments upon Termination or Change-in-Control
The employment agreements with the named executive officers will require the Company to
provide compensation to named executive officers in the event of a termination of employment by the
Company without cause or by the named executive officer for good reason. The amount of compensation
payable to each named executive officer upon such termination is listed in the table below assuming
such triggering event occurred on December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Most Recent |
|
Medical / |
|
Other |
|
Group |
|
|
|
|
Salary |
|
Bonus(1) |
|
Dental |
|
Life |
|
Life |
|
Disability(2) |
|
Total |
Lee Roy Mitchell |
|
$ |
763,958 |
|
|
$ |
385,773 |
|
|
$ |
4,864 |
|
|
$ |
|
|
|
$ |
648 |
|
|
$ |
2,253 |
|
|
$ |
1,157,496 |
|
Alan W. Stock |
|
|
452,097 |
|
|
|
227,698 |
|
|
|
11,549 |
|
|
|
|
|
|
|
1,080 |
|
|
|
2,713 |
|
|
|
695,137 |
|
Timothy Warner |
|
|
366,616 |
|
|
|
184,645 |
|
|
|
9,753 |
|
|
|
|
|
|
|
1,092 |
|
|
|
2,130 |
|
|
|
564,236 |
|
Robert Copple |
|
|
330,118 |
|
|
|
166,263 |
|
|
|
11,549 |
|
|
|
890 |
|
|
|
1,071 |
|
|
|
3,120 |
|
|
|
513,011 |
|
Robert Carmony |
|
|
318,247 |
|
|
|
160,284 |
|
|
|
4,864 |
|
|
|
|
|
|
|
1,080 |
|
|
|
2,948 |
|
|
|
487,423 |
|
|
|
|
(1) |
|
Bonuses were earned in 2006 and paid in March 2007. |
|
(2) |
|
Amounts for disability include long-term disability, individual disability income
protection insurance and short-term disability. |
In addition, upon a change of control, through the sale of the Companys capital stock or a
sale of substantially all of the Companys assets, all outstanding options will become fully vested
and exercisable.
Compensation of Directors
The following table sets forth certain information concerning the compensation of the
Companys directors for year ended December 31, 2006.
Director Compensation Table for the Fiscal Year Ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
Fees |
|
|
|
|
Earned or |
|
|
|
|
Paid in Cash |
|
Total |
Name |
|
($) |
|
($) |
Benjamin D. Chereskin |
|
|
|
|
|
|
|
|
James N. Perry, Jr. (1) |
|
|
|
|
|
|
|
|
Robin P. Selati (1) |
|
|
|
|
|
|
|
|
Vahe A. Dombalagian |
|
|
|
|
|
|
|
|
Peter R. Ezersky |
|
|
|
|
|
|
|
|
Enrique F. Senior(2) |
|
$ |
219,746 |
|
|
$ |
219,746 |
|
Raymond W. Syufy(3) |
|
|
|
|
|
|
|
|
Joseph E. Syufy(1)(3) |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Effective June 29, 2007, James N. Perry, Robin P. Selati and Joseph E. Syufy resigned from the
Companys board of directors. |
|
(2) |
|
On January 19, 2007, the Company made a cash payment of $219,746 to Mr. Senior for his
services on the board of directors from July 26, 2004 through December 31, 2006. |
|
(3) |
|
Effective upon completion of the Century acquisition on October 5, 2006, the Company appointed
Raymond W. Syufy and Joseph E. Syufy to the board of directors. |
The Companys directors are reimbursed for expenses actually incurred for each board of
directors meeting which they attend. In addition, the Companys non-employee directors may receive
a fee for each meeting of the
12
board of directors attended. The Company may grant non-employee
directors non-qualified stock options to purchase shares of Common Stock on a periodic basis in an
amount and with a vesting schedule to be determined by the board of directors. The Company has agreed to make quarterly payments to Mr. Senior in the amount of $20,844 for services on the board
of directors. The Company also anticipates that the chairperson of the audit committee, the
compensation committee and the nominating and corporate governance committee, if any, will receive
reasonable and customary additional annual retainers. Members of the board of directors who are
also officers or employees of the Company will not receive compensation for their services as
director.
Limitations of Liability and Indemnification of Directors and Officers
Amended and Restated Certificate of Incorporation and Bylaws
The Companys Amended and Restated Certificate of Incorporation will provide that no director
shall be personally liable to the Company or any of its stockholders for monetary damages resulting
from breaches of their fiduciary duty as directors, except to the extent such limitation on or
exemption from liability is not permitted under the Delaware General Corporation Law. The effect of
this provision of the Companys Amended and Restated Certificate of Incorporation is to eliminate
the Companys rights and those of its stockholders (through stockholders derivative suits on the
Companys behalf) to recover monetary damages against a director for breach of the fiduciary duty
of care as a director, including breaches resulting from negligent or grossly negligent behavior,
except, as restricted by the Delaware General Corporation Law:
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for any breach of the directors duty of loyalty to the Company or its stockholders; |
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for acts or omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; |
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in respect of certain unlawful dividend payments or stock redemptions or repurchases; and
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for any transaction from which the director derives an improper personal benefit. |
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This provision does not limit or eliminate the Companys rights or the rights of any
stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a
breach of a directors duty of care.
The Companys Amended and Restated Certificate of Incorporation also provides that the Company
will, to the fullest extent permitted by Delaware law, indemnify the Companys directors and
officers against losses that they may incur in investigations and legal proceedings resulting from
their service.
The Companys Bylaws include provisions relating to advancement of expenses and
indemnification rights consistent with those provided in the Companys Amended and Restated
Certificate of Incorporation. In addition, the Bylaws provide:
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for a right of indemnitee to bring a suit in the event a claim for indemnification or
advancement of expenses is not paid in full by the Company within a specified period of time; and |
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permit the Company to purchase and maintain insurance, at the Companys expense, to protect the
Company and any of its directors, officers and employees against any loss, whether or not the
Company would have the power to indemnify that person against that loss under Delaware law. |
Liability Insurance
The Company provides liability insurance for its current directors and officers.
At present, there is no pending litigation or proceeding involving any of the Companys
directors, officers or employees for which indemnification from the Company is sought. The Company
is not aware of any threatened litigation that may result in claims for indemnification from the
Company.
Compensation Committee Interlocks and Insider Participation
None of the Companys executive officers served as a member of the board of directors or the
compensation committee of any entity that has one or more executive officers serving on the board
of directors or on the compensation committee of the board of directors. Mr. Chereskin served as
the only member of the compensation committee during the last completed fiscal year.
Compensation Committee Report
The compensation committee reviewed and discussed the Compensation Discussion and Analysis
contained in this Information Statement with the Companys management. Based on its review and
discussions, the
13
Compensation Committee has recommended to the board of directors that the
Compensation Discussion and Analysis be included in this Information Statement.
Submitted by the Compensation Committee
Benjamin D. Chereskin, Chairman
Vahe A. Dombalagian
14
ADOPTION OF THE FIRST AMENDMENT TO THE 2006 LONG TERM INCENTIVE PLAN OF
CINEMARK HOLDINGS, INC.
FIRST AMENDMENT TO THE 2006 LONG TERM INCENTIVE PLAN
The board of directors and a majority of the stockholders of the Company have approved the
Plan Amendment. The purpose of the Plan Amendment is to add a provision to the 2006 Plan whereby
an option holder, at the discretion of the administrator, may exercise his or her option to
purchase the Common Stock by directing the Company to retain a number of shares that would
otherwise be delivered by the Company upon the exercise of such option having a fair market value
equal to all or part of the exercise price of such option. With the exception of the amendment
described in the preceding sentence, the Plan Amendment does not materially amend the 2006 Plan, as
described in the section titled Executive Compensation, above. The full text of the Plan
Amendment is attached to this Information Statement as Exhibit A. Please refer to Exhibit A for a
more complete description of the terms of the Plan Amendment.
New Plan Benefits
Employees, directors and consultants of the Company or any of its subsidiaries who will
participate in the 2006 Plan, as amended, in the future, and the amounts of their awards, are to be
determined by the board of directors. Although the board of directors intends to make grants of
restricted stock and/or options to eligible persons from time to time, the amount of restricted
shares and stock options to be granted has not yet been determined. As no additional determinations
have yet been made, it is not possible to state the terms of any individual awards which may be
issued under the 2006 Plan, as amended, or the names or positions of, or respective amounts payable
or allocable to any participants in the 2006 Plan, as amended.
Equity Compensation Plan Information
The following table provides certain information as of December 31, 2006 with respect to the
Companys existing equity compensation plans.
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Number of securities |
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Number of securities |
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remaining available for |
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to be issued |
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Weighted-average |
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future issuance under |
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upon exercise of |
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exercise price of |
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equity compensation plans |
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outstanding options, |
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outstanding options, |
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(excluding securities |
Plan category |
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warrants and rights |
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warrants and rights |
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reflected in column (a)) |
Equity compensation
plans approved by security holders |
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2,359,515 |
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$ |
22.58 |
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713,920 |
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Equity compensation
plans not approved by security holders |
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Total |
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2,359,515 |
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$ |
22.58 |
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713,920 |
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15
ADDITIONAL INFORMATION
The Company files annual, quarterly and current reports, proxy statements and other
information with the SEC. The Companys SEC filings are available over the Internet at the SECs
web site at http://www.sec.gov. You may also read and copy any document we file at the SECs Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for more information on the Public Reference Room.
You may request a copy of each of the Companys filings at no cost, by writing or telephoning
the following address or telephone number:
Cinemark Holdings, Inc.
3900 Dallas Parkway, Suite 500
Plano, Texas 75093
Phone: (972) 665-1000
By the Order of the Board of Directors
/s/ Michael Cavalier
Michael Cavalier
Secretary
October 15, 2007
Plano, Texas
16
EXHIBIT A
FIRST AMENDMENT TO THE 2006 LONG TERM INCENTIVE PLAN
FIRST AMENDMENT
TO THE
CINEMARK HOLDINGS, INC.
2006 LONG TERM INCENTIVE PLAN
This First Amendment (the Amendment), dated November ___, 2007 (the Effective Date), is made
by Cinemark Holdings, Inc., a Delaware corporation (the Company), to the Cinemark Holdings, Inc.
2006 Long Term Incentive Plan (herein referred to as the 2006 Plan), pursuant to the
authorization of the Companys board of directors (the Board) and stockholders. All capitalized
terms not defined herein shall have the meaning ascribed to them in the 2006 Plan.
WHEREAS, the Company maintains the 2006 Plan to retain the services of the Companys officers,
other employees, directors and consultants and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its affiliates; and
WHEREAS, the Board deems it to be in the best interest of the Company to amend the 2006 Plan
to, among other things, (1) provide for the ability to exercise an option on a cashless basis, by
decreasing the number of shares deliverable upon the exercise of such option by an amount equal to
the number of shares having an aggregate fair market value equal to the aggregate exercise price of
such option (Stock Withholding) and (2) apply the provision of Stock Withholding to all awards
granted but yet to be exercised under the 2006 Plan.
NOW, THEREFORE, pursuant to the authority to amend, reserved in Section 8.1 of the 2006 Plan,
the 2006 Plan is hereby amended as follows:
1. Section 5.4(f) is amended and restated to read in its entirety as follows:
(f) Payment of Exercise Price and Delivery of Shares. The entire
exercise price of shares of Common Stock purchased upon exercise of Options shall,
at the time of purchase, be paid for in full (the Exercise Price). To the
extent that the right to purchase shares has become exercisable in accordance with
the terms of the Plan and the applicable Option Agreement, Options may be
exercised from time to time by written notice to the Administrator, stating the
full number of shares with respect to which the Option is being exercised and the
proposed time of delivery thereof (which shall be at least five (5) days after the
giving of such notice, unless an earlier date shall have been mutually agreed upon
by the Optionholder (or other person entitled to exercise the Option) and the
Administrator), accompanied by payment to the Company of the Exercise Price in
full . Such payment shall be effected (i) by certified or official bank check,
(ii) if so permitted by the Administrator, by the delivery of a number of shares
of Common Stock owned by the Participant for at least six months (or such other
period as may be established from time to time by the Administrator or required by
generally accepted accounting principles) (the Requisite Holding Period) duly
endorsed for transfer to the Company (plus cash if necessary) having a Fair Market
Value equal to the amount of such Exercise Price, (iii) if so permitted by the
Administrator, by payment with financial assistance from the Company in accordance
with the provisions of Section 7.4(f) hereof, (iv) in the case of an Option,
during any period for which the Common Stock is publicly traded (i.e., the Common
Stock is listed on any established stock exchange or readily tradable on a
recognized securities market or any similar system whereby the stock is
regularly quoted by a recognized securities dealer), by a copy of
instructions to a broker directing such broker to sell the Common Stock for which
such Option is exercised, and to remit to the Company the aggregate Exercise Price
of such Options (a Cashless Exercise); provided, however, a Cashless Exercise by
a Director or executive officer that involves or may involve a direct or indirect
extension of credit or arrangement of an extension of credit by the Company or a
Subsidiary in violation of Section 402(a) of the Sarbanes-Oxley Act (codified as
Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(k)) shall be
prohibited or (v) in the case of an Option, subject to the discretion of the
Administrator, upon such terms as the Administrator shall approve, by notice of
exercise including a statement directing the Company to retain such
number of shares of Common Stock from any transfer to the Optionholder (Stock Withholding)
that otherwise would have been delivered by the Company upon exercise of the
Option having a Fair Market Value equal to all or part of the Exercise Price of
such Option exercise. In the event the Exercise Price requires retention of a
fractional share, the number of shares subject to Stock Withholding shall be
rounded down and the Optionholder shall be required to pay the remainder of the
Exercise Price by certified or official bank check. Any shares retained for the
purpose of satisfying the Stock Withholding shall not again be available for
issuance under the Plan. In addition to payment of the Exercise Price, the
Optionholder shall be required to include payment of the amount of all federal,
state, local or other income, excise or employment taxes subject to withholding
(if any) by the Company or a Subsidiary as a result of the exercise of an Option.
The Optionholder may pay all or a portion of the tax withholding by cash or check
payable to the Company, or, at the discretion of the Administrator, upon such
terms as the Administrator shall approve, by (i) certified or official bank check
(ii) Cashless Exercise, if the Stock is publicly traded and the Cashless Exercise
does not violate Section 402(a) of the Sarbanes-Oxley Act; (iii) tendering Common
Stock owned by the Optionholder meeting the Requisite Holding Period, duly
endorsed for transfer to the Company, with a Fair Market Value on the date of
delivery equal to the withholding due for the number of shares being exercised or
purchased; (iv) in the case of an Option, by paying all or a portion of the tax
withholding for the number of shares being purchased by withholding shares from
any transfer or payment to the Optionholder (Stock Withholding); or (v) a
combination of one or more of the foregoing payment methods. Any shares issued
pursuant to the exercise of an Option and transferred by the Optionholder to the
Company for the purpose of satisfying any withholding obligation shall not again
be available for issuance under the Plan. The Administrator will, as soon as
reasonably possible, notify the Optionholder (or such Optionholders
representative) of the amount of employment tax and other withholding tax that
must be paid under federal, state and local law due to the exercise of the Option.
At the time of delivery, the Company shall, without transfer or issue tax to the
Optionholder (or other person entitled to exercise the Option), deliver to the
Optionholder (or to such other person) at the principal office of the Company, or
such other place as shall be mutually agreed upon, a certificate or certificates
for the Option Shares after the Exercise Price and all federal, state, local or
other income, excise or employment taxes subject to withholding have been paid;
provided, however, that the time of delivery may be postponed by the Administrator
for such period as may be required for it with reasonable diligence to comply with
any requirements of law.
2. A new Section 9.10 is added as follows:
9.10 Prior Option Agreements. Each Option Agreement entered into
prior to the Effective Date of this Amendment is hereby amended to conform to the
provisions of Section 5.4(f) of the Plan that govern the payment of the Exercise
Price.
3. Except as provided above, the 2006 Plan shall remain unchanged and in full force and effect.
Signature Page Follows
IN WITNESS WHEREOF, upon authorization of the Board and the stockholders of the Company, the
undersigned has caused this Amendment to the Cinemark Holdings, Inc. 2006 Long Term Incentive Plan
to be executed on this day of , 2007.
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CINEMARK HOLDINGS, INC.
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By: |
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Alan W. Stock, Chief Executive Officer |
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Signature Page
to
First Amendment to 2006 Long Term Incentive Plan