EXHIBIT 10.20
AUSTRALIA CINEMA MANAGEMENT PTY LIMITED
AND
JOHN ROCHESTER
SERVICE DEED
SERVICE DEED
DEED dated May 7, 1996 between:
1. AUSTRALIA CINEMA MANAGEMENT PTY LIMITED (ACN 071 110 097) incorporated in
New South Wales of Level 17, Chifley Tower, 2 Chifley Square, Sydney, New
South Wales ("Company"); and
2. JOHN ROCHESTER of 71 Mimosa Road, Turramurra, New South Wales ("Employee").
RECITALS
A. The Company has agreed to employ the Employee and the Employee has agreed
to serve the Company on the terms of this Deed.
B. The Employee has agreed that he will at the request of the Company work for
and perform service on behalf of any Group Member.
IT IS AGREED as follows.
I. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
The following definitions apply unless the context requires
otherwise.
BURGUNDY means Burgundy Two Pty Limited.
GROUP means:
(a) Ward Cinemas;
(b) Burgundy; and
(c) the Company and any Related Body Corporate from time to
time.
GROUP MEMBER means any member of the Group.
INCENTIVE PAYMENT means the payment by the Company to the
Employee under Clause 5.7 and Schedule 1.
OPERATIVE DATE means 1 January 1996.
RELATED BODY CORPORATE means, in relation to a body corporate, a
body corporate which is:
(a) a holding company of the first-mentioned body;
(b) a subsidiary of the first-mentioned body; or
(c) a subsidiary of a holding company of the first-mentioned
body.
RELEVANT GROUP MEMBER means each Group Member for whom the
Employee may work or perform services from time to time.
SHAREHOLDERS' AGREEMENT means the proposed agreement between
Burgundy, Ward Cinemas, the Company, Robert Ward and Andrew Ward relating
to Ward Cinemas and the Company.
SUPERANNUATION FUND means a superannuation fund which is
established by the Company and which is a COMPLYING SUPERANNUATION FUND as
defined by the Superannuation Industry (Supervision) Act or any other
relevant legislation.
TERM means the period during which this Deed and the Employee's
employment with the Company whether under Clause 8 or otherwise.
TERMINATION DATE means the date of termination of the Employee's
employment with the Company whether under Clause 8 or otherwise.
TOTAL REMUNERATION means the amount of remuneration paid by the
Company in respect of the Employee, being the amount set out in Clause
5.1(a), as adjusted from time to time under Clause 5.1(c).
WARD CINEMAS means the proposed proprietary limited company to be
established for the purpose of owning, developing and operating cinemas in
areas other than the urban and suburban areas of Adelaide, Sydney,
Brisbane, Melbourne, Perth and the Gold Coast.
1.2 INTERPRETATION
Headings are for convenience only and do not affect
interpretation. The following rules of interpretation apply unless the
context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) Where a word or phrase is defined, its other grammatical
forms have a corresponding meaning.
(d) A reference to a Clause or Schedule is to a clause of or
schedule to this Deed.
(e) A reference to any party to this Deed or any other
agreement or document includes the party's successors and permitted
assigns.
(f) A reference to conduct includes, without limitation, any
omission, statement or undertaking, whether or not in writing.
(g) A reference to currency is to Australian currency.
(h) A reference to any legislation or to any provision of
any legislation includes any modification or re-enactment of it, any
legislative provision substituted for it and all regulations and
statutory instruments issued under it.
2. TERM OF EMPLOYMENT
2.1 ENGAGEMENT
The Company shall employ the Employee as Chief Executive Officer
and the Employee shall serve the Company (or, if directed by the Company,
one or more Group Members) in accordance with this Agreement during the
Term.
2.2 TERM
This Agreement, and the Employees' employment with the Company,
will continue from the Operative Date for a period of 2 years after which
it will be automatically renewed from year to year unless it is terminated
by either party under Clause 8.
3. EMPLOYEE'S OBLIGATIONS
3.1 POSITION
The Employee shall perform the duties of Chief Executive Officer
or any other position that may be agreed in writing between the Company and
the Employee from time to time.
3.2 DUTIES OF EMPLOYEE
The Employee shall, as Chief Executive Officer, during the Term,
report to the Chairman of the Board and the Board of Directors of the
Company and shall do the following:
(a) Give the whole of his time, ability and attention in
normal working hours, or when reasonably required outside those hours,
to the business and affairs of the Company and any Relevant Group
Member. The Employee will not be entitled to receive any remuneration
for work performed outside ordinary business hours.
(b) Faithfully and diligently perform the duties and
exercise the powers consistent with his office that may be assigned to
him by the Company or any Relevant Group Member from time to time.
(c) Comply with all reasonable directions given to him by
the Company or any Relevant Group Member.
(d) Observe and comply with the provisions set out in any
written policy, practice or procedure circulated by the Company or any
Relevant Group Member from time to time.
(e) Use his best endeavours to promote the interests of the
Group.
(f) Protect the property of the Group from theft, loss,
damage or neglect and without delay give notice immediately to the
Company or any Relevant Group Member or its responsible
representatives of any theft, loss, damage or neglect of such property
which may come to his knowledge.
4. COMPETITION AND CONFIDENTIALITY DURING EMPLOYMENT
4.1 NO COMPETITION
During the Term, the Employee shall not directly or indirectly be
concerned or interested whether as principal, agent, partner, shareholder,
director, employee or otherwise in any firm, corporation or entity
involving the conduct of, or preparation for, any business in competition
with, or of a similar nature to, any business for the time being carried on
by the Company or any Group Member.
4.2 CONFIDENTIALITY
During the Term, the Employee shall not, without the prior
written consent of the Company or any Relevant Group Member, disclose or
use any confidential information of any kind including, without limitation,
any formula, process, method of manufacture, trade secret, record, data or
any information concerning the business, affairs or customers of the Group
which may come to his knowledge, except:
(i) disclosure or use in the proper course of the Employee's duties;
(ii) for information which is freely available to the public; or
(iii) to the extent the Employee is required to disclose information by
law or requirement of any regulatory body.
4.3 NO LIMITATION ON DUTIES OF EMPLOYEE
Nothing in this Clause 4 limits the generality of the Employee's duties
arising either in Clause 3 or otherwise.
5. REMUNERATION AND BENEFITS
5.1 TOTAL REMUNERATION
(a) The Employee's Total Remuneration will be $200,000.00 per annum which
will comprise the following:
(i) superannuation contributions by the Company or a Relevant Group
Member under Clause 5.5;
(ii) payment by the Company or a Relevant Group Member for any
benefits (whether subject to fringe benefits tax or otherwise)
which the Employee receives under Clause 5.2;
(iii) payment of fringe benefits tax by the Company or a Relevant
Group Member under Clause 5.6; and
(iv) payment of the balance of the Remuneration to the Employee in
equal monthly installments on or about the 15th day of each
month (the PAYMENT DATE).
(b) The Total Remuneration shall be inclusive of all payments made to or
for the benefit of the Employee other than any payments made under
Clauses 5.3, 5.4 or 5.7 which shall be in addition to the Total
Remuneration.
(c) The Company shall undertake a review of the Total Remuneration on each
anniversary of the Operative Date. The amount of any increase in the
Total Remuneration resulting from such review will be in the sole and
absolute discretion of the Company. The Company shall not reduce the
Total Remuneration on any such review.
5.2 APPLICATION OF TOTAL REMUNERATION
The Employee may elect by notice to the Company to substitute any
benefits which may be lawfully provided by the Company to the Employee for
any part of the Total Remuneration and on receipt of a request from the
Employee the company shall apply a part of the Total Remuneration to the
provision of the requested benefits.
5.3 BONUS PAYMENTS
In its sole and absolute discretion, the Company may make bonus payments
to the Employee throughout the term of the Employee's employment.
5.4 TRAVEL AND EXPENSES
The Company or any Relevant Group Member shall reimburse the Employee for
all travelling and other out of pocket expenses properly incurred by the
employee in or about its business. Those expenses must be evidenced in the
manner that the company or the Relevant Group Member reasonably requires.
5.5 SUPERANNUATION
The Employee shall be entitled to be a member of the Superannuation Fund.
The Company or Relevant Group Member shall provide for contributions in
respect of the Employee to the Superannuation Fund in accordance with the
rules of that fund. The Company or a Relevant Group Member shall
contribute the minimum level contribution required to satisfy the
requirements of any relevant legislation.
5.6 FRINGE BENEFITS TAX
The Company shall deduct from the Employee's remuneration by way of
reimbursement all fringe benefits taxes associated with the provision of
payments and reimbursements to the Employee, other than any fringe benefits
tax payable in respect of a single car parking space in Sydney which will
be paid by the Company.
5.7 INCENTIVE PAYMENT
The Company shall pay the Employee the Incentive Payment under terms set
out in Schedule 1.
6. LEAVE ENTITLEMENTS
6.1 ANNUAL LEAVE
The Company shall allow the Employee annual leave in accordance with the
relevant legislative requirements.
6.2 SICK LEAVE
The Company shall allow the Employee long service leave in accordance
with the relevant legislative requirements.
6.3 LONG SERVICE LEAVE
The Company shall allow the Employee long service leave in accordance
with the relevant legislative requirements.
7. IRREVOCABLE OFFER
This Deed constitutes an irrevocable offer by the Employee to any Group
Member to become a party to this Deed. A Group Member shall be taken to
have accepted the offer and to be a
party to this Deed if the Employee works for, or performs services on
behalf of, that Group Member.
8. TERMINATION
8.1 TERMINATION FOR BREACH BY EMPLOYEE
The Company may immediately terminate this Deed by notice to the Employee
in writing if the Employee at any time:
(a) commits any serious breach or persistently breaches this Deed
including, without limitation, intentional disobedience, dishonesty,
serious or persistent breach of duty or serious or persistent neglect;
(b) materially breaches this Deed and does not remedy that breach within
two days after receiving notice from the Company specifying the
breach;
(c) commits an act of bankruptcy, is declared bankrupt or enters into any
composition or arrangement with or makes any assignment of his
property in favor of his creditors generally.
(d) becomes of unsound mind or a person whose person or estate is liable
to be dealt with in any way under laws relating to mental health;
(e) is convicted of a criminal offence which, in the reasonable opinion of
the Company, will detrimentally affect any Group Member; or
(f) has conducted himself in a manner which, in the reasonable opinion of
the Company, will detrimentally affect any Group Member.
8.2 PAYMENT ON TERMINATION
If the Employee's employment is terminated under Clause 8.1, the Company
shall not be obliged to pay the Employee any moneys other than the
following.
(a) Any accrued remuneration to which the Employee is entitled to on
Termination Date.
(b) Any contributions to the Superannuation Fund due as at the Termination
Date.
(c) Any amount to which the Employee is entitled in lieu of unused annual
leave.
(d) Any amount to which the Employee is entitled under the relevant
legislation relating to long service leave.
8.3 GENERAL TERMINATION
(a) The Company may at any time and for any reason terminate the
Employee's employment by giving one month's notice to the Employee.
(b) If the Company terminates the Employee's employment under paragraph
(a), the Company shall pay the Employee the entitlements and the
severance payment specified in paragraphs (c) and (d) respectively in
accordance with those paragraphs.
(c) On the expiry of the relevant notice period, the Company shall pay the
Employee the following entitlements:
(A) any payments or reimbursements which are owed to the Employee
under this Deed; and
(B) any amounts which are owed to the Employee under the relevant
legislative requirements relating to annual leave and long
service leave.
(d) Commencing on the date which is one month after the date of expiry of
the relevant notice period and monthly thereafter, the Company shall
pay the Employee a termination payment as follows:
(i) if the Company terminates the Employee's employment under
paragraph (a) before the second anniversary of the Operative
Date, the Company shall pay in 17 equal monthly installments the
amount of $283,334.00 less:
(A) any payments made to the Employee for long service
leave; and
(B) any additional payments which the Company is or becomes
obliged to make to the Employee under any order or
direction of any court, tribunal or other judicial or
administrative body; or
(ii) if the Company terminates the Employee's employment under
paragraph (a) after the second anniversary of the Operative Date,
the Company shall pay in 11 equal monthly installments the amount
$183,334.00 less:
(A) any payments made to the Employee for long service
leave; and
(B) any additional payments which the Company is or becomes
obliged to make to
the Employee under any order or direction of any court,
tribunal or other judicial or administrative body.
(e) Any outstanding entitlements under paragraph (d) will be accelerated
and become immediately due and payable by the Company to the Employee
if both of the following events occur:
(i) both Reading Company and Craig Corporation withdraw from any
material investment or involvement in the operations of all Group
Members and their respective Relevant Body Corporates in
Australia; and
(ii) the Employee does not receive an offer of employment on terms no
less favorable than those contained in this Deed from the
purchaser (if any) of any Group Member.
(f) The parties acknowledge that any payments made by the Company under
this clause 8.3 are in the nature of additional consideration by the
Company to the Employee for the Employee's covenants in clause 10.2.
(g) The Employee may at any time and for any reason resign as Chief
Executive Officer by giving four (4) months' notice to the Company.
8.4 SUSPENSION OF EMPLOYEE
The Company may suspend the Employee on full pay for any period if the
Company considers it in the best interests of the Company to do so.
8.5 NO CLAIM FOR COMPENSATION
(a) If this Deed is terminated by the Company under Clause 8, the Employee
will not be entitled to claim any amounts by way of retirement
allowance or liquidated damages or any other payments as a consequence
of termination except for the payments set out in Clauses 8.2 and
8.3.
(b) Any payments by the Company under this Clause 8 shall be without
prejudice to any rights or remedies the Company may have against the
Employee and shall not constitute any admission of fact or liability.
8.6 TRANSFER OF SUPERANNUATION
After termination of this Deed, subject to the terms of the trust deed
and rules of the Superannuation Fund, the Company shall cause that the
trustee of the Superannuation Fund transfers the Employee's entitlements
under the
Superannuation Fund to another superannuation fund nominated by
the Employee or deals with then otherwise in accordance with relevant
legislation.
8.7 SURVIVAL OF EMPLOYEE'S OBLIGATIONS ON TERMINATION
Clause 8.5, 8.8, 8.9, 9 and 10 survive the termination of this Deed.
8.8 RETURN OF COMPANY PROPERTY
(a) On termination of this Deed, the Employee shall immediately deliver to
the Company all books, documents, papers, materials, credit cards,
motor vehicles and other property of the Group which may then be in
the Employee's possession or under his power or control.
(b) At the request of the Company, the Employee shall sign a statutory
declaration to the effect that:
(i) he has complied with paragraph (a); and
(ii) he does not have in his possession or under his power or control
any property of the Group.
(c) If the Company requests a statutory declaration under paragraph (b),
the Company may withhold any payments due to the Employee under this
Clause until the Employee has complied with that paragraph.
8.9 RESIGNATION AS DIRECTOR
Subject to the Shareholders' Agreement and at the request of the Company,
the Employee shall resign from any office held by him on the board of any
Group Member on the termination of his employment.
9. AMALGAMATION OR RECONSTRUCTION
The Employee will have no claim against the Company in respect of the
termination of this Deed and shall not be entitled to any payment under
Clause 8.3(d) if:
(a) the Employee is terminated because of the liquidation of the Company
for the purposes of amalgamation or reconstruction of the Group; and
(b) the Employee is offered employment with any business of the Company or
Group resulting from that amalgamation or reconstruction on terms not
less favourable than the terms of the Deed.
10. OBLIGATIONS OF EMPLOYEE AFTER EMPLOYMENT CEASES
10.1 CONFIDENTIALITY
(a) Subject to paragraph (b), the Employee undertakes to the Company and
each Relevant Group Member that her will not, at any time after his
employment cease, in any manner directly or indirectly disclose or use
any confidential information of any kind, including, without
limitation, any formula, process, method of manufacture, trade secret,
record, data or any information concerning the business, affairs or
customers of the Company acquired by the Employee in the course of or
in consequence of his employment whether before or after the date of
this Deed.
(b) Paragraph (a) does not apply to the disclosure of information which is
freely available to the public, or disclosures required of the
Employee by any applicable law or requirement of any regulatory body.
10.2 COVENANT NOT TO COMPETE
The Employee covenants with the Company that, neither:
(a) the Employee, whether:
(i) directly or indirectly;
(ii) on hid own account;
(iii) jointly with or on behalf of any other person or
corporation as an officer, employee, independent contractor,
partner, joint venturer or agent; or
(iv) as principal, employee, partner, agent, director, or otherwise
on any account or pretence;
(b) any agent, independent contractor or employee while employed or
engaged by him or by any firm or corporation in which he has a
substantial interest whether that interest is legally enforceable or
not; nor
(c) any firm or corporation in which he may be interested as an employee,
director, shareholder, beneficial owner or controller (whether that
control can be legally enforced or not) of shares, lender or adviser
or otherwise,
shall:
(1) carry on or be engaged or concerned in, any business in competition
with, or of a similar nature to, any
business being carried on by any Group Member as at the Termination
Date: or
(2) either on his own account or for any person, firm, company,
organization, or entity solicit or endeavour to solicit or entice
away from the Group any director or employee or any customer or
supplier of the Group,
for a period of 2 years after the Termination Date in any Australian
state or territory in which any Group Member carries on business as at the
Termination Date.
10.3 EXCEPTION
Clause 10.2 shall not prevent the Employee from holding less than 5% of
the issued capital of any company whose shares are listed on the Australian
Stock Exchange Limited.
10.4 REMEDIES
The Employee acknowledges that the remedy at law for breach of Clause
10.1 or 10.2 would be inadequate and that temporary and permanent relief by
way of injunction against him may be granted in any proceedings which the
Company or any Relevant Group Member or any persons on its behalf may bring
to enforce any of the provisions of that Clause without the necessity of
proof of actual damage suffered by the Company or any Relevant Group Member
as the case may be.
10.5 PROTECTION OF GOODWILL
The Employee acknowledges that having regard to his duties with the
Group, his undertakings in Clauses 10.1, 10.2 and 10.3 are reasonable and
necessary for the protection of the goodwill of the Group.
11. SET-OFF
On termination of his employment, the Employee authorizes each Relevant
Group Member to set-off against and deduct from all or any amounts payable
to the Employee, any amount owing by the Employee to that Group Member on
any account.
12. GOVERNING LAW
This Deed is governed by the laws of New South Wales. The parties submit
to the non-exclusive jurisdiction of courts exercising jurisdiction there.
13. NO WAIVER
No failure to exercise and no delay in exercising any right, power or
remedy under this Deed will operate as a waiver. Nor will any single or
partial exercise of any right, power
or remedy preclude any other or
further exercise of hat or any other right, power or remedy.
14. NOTICES
Any notice required to be given under this Deed by any party to another
shall be in writing addressed to the intended recipient at the address last
notified by the intended recipient to the party giving notice.
15. SEVERANCE
Any provision of this Deed which is prohibited or unenforceable in any
jurisdiction will be ineffective in that jurisdiction to the extent of the
prohibition or enforceability of that provision in any other jurisdiction.
16. ASSIGNMENT
The rights and obligations of each party under this Deed are personal.
They cannot be assigned, charged or otherwise dealt with and no party shall
attempt or purport to do so, without the prior written consent of the
parties.
17. AMENDMENT
This Deed may be amended only by an instrument in writing executed by or
on behalf of both parties.
18. ENTIRE DEED
This Deed contains the entire agreement of the parties with respect to
its subject matter. It sets out the only conduct relied on by the parties
and superseded all earlier conduct by the parties with respect to its
subject matter.
EXECUTED AS A DEED IN SYDNEY
EXECUTED FOR AND ON BEHALF
OF AUSTRALIA CINEMA MANAGEMENT
PTY LIMITED BY /s/ James J. Cotter
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Signature
Director
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Office held
/s/ S. Craig Tompkins
- --------------------------------
Witness
S. Craig Tompkins Corporate Seal
- -------------------------------
Print name
SIGNED SEALED and DELIVERED )
by JOHN ROCHESTER /s/ B. John Rochester
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in the presence of: ) Signature
/s/ C. S. Ward
- --------------------------------
Witness
C. S. Ward
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Print name
SCHEDULE 1
INCENTIVE PAYMENT (CLAUSE 5.7)
1. OBLIGATION TO PAY THE INCENTIVE PAYMENT
(a) As long as this Deed has not been terminated earlier, on or at any time
after the fourth anniversary of the Operative Date, the Employee may elect
by notice to the company to receive the Incentive Payment. On the
Company's receipt of that notice, the Employee will be entitled to payment
of the Incentive Payment within one hundred and twenty (120) days after the
end of the applicable Calculation Period.
(b) If the Company terminated the Employee's engagement under Clause 8.3 before
the fourth anniversary of the Operative Date for any reason other than for
cause the Employee will still be entitled to payment of the Incentive
Payment within one hundred and twenty (120) days after the end of the
applicable Calculation Period.
(c) The Incentive Payment shall be calculated in accordance with the formula
set out in Clause 2 of this Schedule 1.
2. INCENTIVE PAYMENT FORMULA
The formula for calculating the Incentive Payment is:
IP = 1.0% X [(6 X CF) - (C + D)]
where:
IP means Incentive Payment;
CF means the operating income of all Included Burgundy Cinemas during
Calculation Period less that part of the Company's general and administrative
expenses which are Allocable to the Included Burgundy Cinemas;
C means the value of that part of the shareholder's funds of the Burgundy Two as
at the end of the Calculation Period which is Allocable to Included Burgundy
Cinemas;
D means the value of that part of the net debt incurred by Burgundy Two during
the Calculation Period which is Allocable to Included Burgundy Cinemas;
ALLOCABLE means that prorata portion determined by multiplying the amount to be
allocated by a fraction, expressed as a percentage, the numerator of which is
the average number of screens in Included Burgundy Cinemas and the denominator
of which is the total average number of screens in all cinemas owned, directly
or indirectly, by Burgundy Two during the Calculation
Period. In the case of less than wholly owned Affiliates, the number of screens
owned by such Affiliates multiplied by the percentage ownership held by Burgundy
Two, or by one or more of its wholly owned Affiliates. For the purpose of
determining the average number of screens, no screen will be included with
respect to any time period during which it is not open for business. In the case
of determining as appropriate allocation of debt:
(a) the entirety of any debt and all of the screens of any Affiliate will be
included, whether or not such Affiliate is less than wholly owned by
Burgundy Two, to the extent that Burgundy Two or any of its parents or
Affiliates are liable for such debt;
(b) guarantees will be treated the same as debt to the extent of the amount
guaranteed; and
(c) intercompany debt will be treated in a manner which avoids double counting
of such indebtedness.
BURGUNDY TWO means Burgundy Two Pty Limited of Level 17, The Chifley Square,
Sydney NSW 2000.
CALCULATION PERIOD means the twelve (12) month period ending on either:
(a) if the Employee notifies the Company under Clause 1(a) of this Schedule 1,
the last day of the fiscal year in which the Company receives such notice;
or
(b) if the Company terminates the Employee's employment under Clause 8.3 before
the fourth anniversary of the Operative Date, then, at the Employee's
election (such election to be given in writing to the Company within sixty
(60) days after the Employee has been given notice under Clause 8.3 by the
Company), either:
(i) the last day of the fiscal year in which the Company's
termination of the Employee's employment is effective; or
(ii) the last day of the fiscal year in which the fourth anniversary
of the Operative Date would have fallen.
INCLUDED BURGUNDY CINEMAS means the cinemas in which Burgundy Two holds,
directly or indirectly through one or more Affiliates, a freehold or leasehold
interest at any time during the Calculation Period, other than cinemas which
were acquired as a part of a chain of 15 or more screens.