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EXHIBIT 10.1
CinemaStar Luxury Theaters, Inc.
11230 El Camino Real #320
San Diego, CA 92130
Mr. Don Harnois
2108 Clayton Dr.
Flower Mound, TX 75028
Dear Mr. Harnois:
This Employment Agreement ("Agreement") is made and entered into as of the 3rd
day of January, 2000 (the "Commencement Date"), by and between you ("Employee")
and CinemaStar Luxury Theaters, Inc., a Delaware corporation, as employer
(hereinafter referred to as "CinemaStar"). We have agreed as follows:
1. EMPLOYMENT AND SERVICES:
CinemaStar shall employ Employee and Employee agrees to be employed and perform
his exclusive services for CinemaStar or one of its subsidiaries or related
companies upon the terms and conditions hereinafter set forth. Employee will
serve hereunder as Chief Financial Officer of CinemaStar. In his capacity as
Chief Financial Officer of CinemaStar, Employee shall do and perform all
services, acts or things necessary, advisable or customary to manage and conduct
the business of CinemaStar, and also will perform such services as requested,
from time to time, by the Chief Executive Officer of CinemaStar (the "Chief
Executive Officer").
Employee shall devote his best efforts, energies and abilities and his full
business time, skill and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of CinemaStar. Employee shall perform the duties and carry out the
responsibilities assigned to him by the Chief Executive Officer to the best of
his ability, in a diligent, trustworthy, businesslike and efficient manner for
the purpose of advancing the business of CinemaStar. Employee agrees not to
perform services of any kind or nature which would interfere with the
performance of Employee's services hereunder for any third party, or render
services for Employee's own account, in either case which would interfere with
the performance of Employee's services hereunder, and in each case, unless
specifically permitted to do so in writing by the Board or the Chief Executive
Officer.
2. TERM:
The term of this Agreement shall commence on the date hereof and continue for
three (3) years from the date hereof (the "Employment Period"). Notwithstanding
anything to the contrary contained herein, the Employment Period is subject to
termination pursuant to Paragraph 5 below.
EMPLOYEE AGREES AND ACKNOWLEDGES THAT CINEMASTAR HAS NO OBLIGATION TO RENEW THIS
AGREEMENT OR TO CONTINUE EMPLOYEE'S EMPLOYMENT AFTER EXPIRATION OF THE TERM
HEREUNDER, and Employee expressly acknowledges that no promises or
understandings to the contrary have been made or reached.
3. COMPENSATION:
3.1 BASE COMPENSATION:
For all services rendered under this Agreement, CinemaStar shall pay Employee a
base salary at an annual rate of One Hundred Twenty Thousand Dollars ($120,000)
during the Employment Period or at such higher rate as may be determined by the
Board in its sole discretion (the "Base Salary"). The Base Salary shall be
payable in accordance with CinemaStar's policy for regular salaried employees.
CinemaStar is not
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obligated to actually utilize Employee's services hereunder, and payment of the
Base Salary will discharge all of CinemaStar's obligations hereunder.
3.2 BONUS COMPENSATION:
Employee shall be eligible to receive bonus compensation, to be determined by
the Board at its sole discretion.
3.3 SIGNING BONUS
Employee shall receive the amount of $10,000 as an unrevocable advance on his
first year bonus, payable upon signing of this agreement.
3.4 WITHHOLDING:
All compensation payable to Employee hereunder is stated in gross amount and
shall be subject to all applicable withholding taxes, other normal payroll
deductions and any other amounts required by law to be withheld.
4. VACATION:
Employee shall be entitled to three (3) weeks paid vacation each fiscal year
with salary, consistent with CinemaStar's policy for all employees of similar
stature and provided that unused vacation time shall not be carried over to
subsequent years.
5. TERMINATION:
Subject to Paragraph 5.2 below, the Employment Period may be terminated by
CinemaStar at any time, with or without cause. No amounts shall be paid or
benefits provided upon any termination of the Employment Period, whether as
liquidated damages, or otherwise, except as specifically provided in Section 5.2
below or under any benefit plan or agreement in which Employee participates or
to which Employee is a party. Employee shall not be entitled to participate in
any severance plan of CinemaStar, except as required by law.
5.1 TERMINATION FOR CAUSE:
CinemaStar may terminate the Employment Period for "cause" (as defined in this
Paragraph 5.1) at any time upon written notice to Employee. In the event of a
termination for cause, CinemaStar shall have no further obligations to Employee
under this Agreement, except payment of the Base Salary and vacation pay accrued
through the date of termination, and CinemaStar shall continue to have all other
rights available hereunder at law or in equity. As used herein, the term "cause"
shall mean any one or combination of the following:
a. The willful failure of Employee to perform his duties or comply with
reasonable directions of the Board that continues after the Board has given
written notice to Employee specifying in reasonable detail the manner in which
Employee has failed to perform such duties or comply with such directions;
b. A material breach by Employee of any of the terms and conditions of this
Agreement;
c. Employee's gross negligence in the performance of his duties hereunder;
d. Employee's conviction of any crime (whether or not involving CinemaStar)
which constitutes a crime of moral turpitude or is punishable by imprisonment of
thirty (30) days or more, PROVIDED, HOWEVER, nothing in this Agreement shall
obligate CinemaStar to pay the Base Salary during any period that Employee is
unable to perform his duties hereunder due to any incarceration;
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e. Employee's violation of any rule or regulation of Cinemastar applicable to
other employees of similar stature;
f. Employee's omission or act constituting fraud, dishonesty or
misrepresentation, occurring subsequent to the date hereof;
g. Subject to any applicable federal and state laws, Employee's failure,
inability (including any disability which prevents Employee from performing the
essential functions of his position with reasonable accommodation), or refusal
to perform Employee's duties on an exclusive and full time basis, but in no case
shall such right be exercised until six (6) months from the date of the
commencement of any physical or mental disability. Employee shall be deemed to
be disabled, for purposes of this Agreement, if he is unable to perform, by
reason of physical or mental incapacity, his essential duties or obligations
under this Agreement, for a total period of Twelve (12) weeks in Three Hundred
Sixty (360) days; or
h. Employee's death.
5.2 TERMINATION WITHOUT CAUSE:
If the Employment Period is terminated by CinemaStar without cause (as "cause"
is defined in Paragraph 5.1 above), CinemaStar shall pay to Employee the Base
Salary for the balance of the Employment Period. CinemaStar acknowledges and
agrees that Employee's employment with CinemaStar shall be deemed to have been
terminated by CinemaStar without cause in the event that substantially all of
the assets of CinemaStar are sold, or if there is a change in the control of
CinemaStar, AND the Employee's duties and responsibilities hereunder are
materially altered at any time during the 6-month period following such sale or
change in control. For purposes of this Agreement, "change in control" shall
mean any event whereby any party (or group of affiliated parties), other than
CinemaStar Acquisition, L.L.C. or any of its affiliates, shall have votes
sufficient to elect more than fifty percent (50%) of the Board.
5.3 TERMINATION BY EMPLOYEE:
Employee has the right to terminate the Agreement for any reason, upon sixty
(60) days prior written notice to CinemaStar.
6. BENEFITS:
During the Employment Period, and so long as Employee is not in breach of this
Agreement:
a. CinemaStar shall reimburse Employee for his reasonable and necessary
out-of-pocket business expenses in accordance with its then prevailing policy
for employees of similar stature (which shall include appropriate itemization
and substantiation of expenses incurred). This shall also include any moving
expenses incurred of not more than Seven Thousand Dollars ($7,000).
b. Employee and his dependents shall be entitled to participate in CinemaStar's
basic medical and other benefit plans generally available to employees of
CinemaStar in accordance with the terms of such plans, excluding severance
benefits; and
c. Employee shall be given an automobile allowance of $450.00 per month.
d. Employee shall be entitled to participate in all other benefits afforded to
all other employees, including a 401K program wherein the employer matches the
employee's contribution at the rate of 25% of the first 6% of employee's
contribution to the plan.
e. Employee shall be entitled to purchase 15,000 shares of LUXY stock per year
(at a price quoted as the average closing price of the previous 20 days of LUXY
stock prior to signing this agreement) for a total of 45,000 shares for the term
of this agreement.
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Employee further expressly agrees and acknowledges that after termination of the
Employment Period (by CinemaStar with or without cause or by Employee) Employee
shall be entitled to no benefits, except as specifically provided under the
benefit plans referred to herein, subject in all cases to the terms and
conditions of each such plan, and except as required by law.
7. CONFORMITY WITH THE IMMIGRATION REFORM AND CONTROL ACT OF 1986:
As a condition to Employee's employment with CinemaStar, Employee shall furnish,
and will continue to furnish, to CinemaStar all documentation legally sufficient
to establish satisfy the requirements of the Immigration Reform and Control Act
of 1986, with respect to Employee. If Employee fails to provide the required
documentation within the legally-prescribed time limits, Employee's employment
and all contractual obligations hereunder will terminate immediately.
8. CONFIDENTIALITY AND NONCOMPETITION:
a. Employee shall hold in a fiduciary capacity, for the benefit of CinemaStar,
all confidential or proprietary information, knowledge and data of CinemaStar
which Employee may acquire, learn, obtain or develop during his employment by
CinemaStar. Further, Employee shall not, during the Employment Period or after
the termination of such Employment Period, directly or indirectly use,
communicate or divulge for his own benefit or for the benefit of another any
such information, knowledge or data. Employee makes the same commitment with
respect to the secret, confidential or proprietary information, knowledge and
data of affiliates, customers, contractors and others with whom CinemaStar has a
business relationship. The information covered by this protection includes, but
is not limited to matters of a business nature such as trade secrets,
information about finances, costs and profits, business plans, marketing and
advertising plans and strategies, sales results or projections, plans of
CinemaStar to expand its business, personnel information, records, customer
lists, contact persons, customer data, software, sales data, information
regarding any form of product produced, distributed or acquired by CinemaStar,
and/or other confidential or proprietary information belonging to CinemaStar
relating to CinemaStar's business and enterprise (collectively, the
"Confidential Information").
Employee agrees to hold and safeguard the Confidential Information in trust for
CinemaStar, and agrees that he will not, without the prior written consent of
CinemaStar, misappropriate or disclose or make available to anyone for use
outside of CinemaStar, at any time, any of the Confidential Information.
Notwithstanding the foregoing, Employee may disclose Confidential Information if
such information becomes publicly known without fault of Employee, or where
Employee is obligated to disclose such information by operation of law;
provided, however, that if Employee receives a subpoena or other legal process,
or otherwise receives a legally-binding request (whether voluntary or
involuntary) from a third party, the response to which reasonably could result
in the disclosure of Confidential Information, he shall provide notice thereof
to CinemaStar within three (3) business days of such subpoena, legal process or
request. Employee's obligations under this Paragraph 8 with respect to the
Confidential Information will survive expiration or termination of the
Employment Period.
b. Employee shall not at any time during the Employment Period be or become (i)
interested or engaged in any manner, directly or indirectly, either alone or
with any person, firm or corporation now existing or hereafter created, in any
business which is or may be competitive with the business of CinemaStar or (ii)
directly or indirectly a stockholder or officer, director or employee of, or in
any manner associated with, or aid or abet or give information or financial
assistance to, any such business. Employee hereby acknowledges that the
provisions of this subparagraph b. are reasonable and necessary to protect the
legitimate interests of CinemaStar and that any violation of such provisions
would result in irreparable injury to CinemaStar. The provisions of this
subparagraph b. shall not be deemed to prohibit Employee's purchase or
ownership, as a passive investment, of not more than five percent (5%) of the
outstanding capital stock of any corporation whose stock is publicly traded.
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c. All records, files, lists, drawings, documents, models, equipment, software
or intellectual property relating to CinemaStar's business shall be returned to
CinemaStar upon the termination of the Employment Period, whether such
termination is at Employee's or CinemaStar's request.
9. NO SOLICITATION OF EMPLOYEES AND CONTRACTORS:
Employee shall not during the Employment Period or for one (1) year thereafter
induce or attempt to induce any employees, contractors or representatives of
CinemaStar (or those of any of its affiliates) to stop working for, contracting
with or representing CinemaStar or any of its affiliates or work for, contract
with or represent any of CinemaStar's competitors.
Employee hereby acknowledges that the provisions of this Paragraph 9 are
reasonable and necessary to protect the legitimate interests of CinemaStar and
that any violation of such provisions would result in irreparable injury to
CinemaStar. In the event of a violation of the provisions of this Paragraph 9,
Employee further agrees that CinemaStar shall, in addition to all other remedies
available to it, be entitled to equitable relief by way of injunction and any
other legal or equitable remedies.
10. RESULTS AND PROCEEDS:
As Employee's employer, CinemaStar shall own all rights in and to the results
and proceeds connected with or arising out of, directly or indirectly,
Employee's services hereunder.
11. OWNERSHIP OF INTELLECTUAL PROPERTY:
a. CinemaStar shall own, and Employee hereby transfers and assigns to it, all
rights, of every kind and character throughout the world, in perpetuity, in and
to any material or ideas and all results and proceeds of Employee's services
hereunder, or conceived of or produced during the term of Employee's employment,
whether the same consists of plans, methods, slogans, product names, ideas or
copyrightable or patentable subject matter.
b. Employee agrees to execute and deliver to CinemaStar such assignments,
certificates of authorship, or other instruments in accordance with standard
industry practice as CinemaStar may require from time to time to evidence
ownership of the results and proceeds of Employee's services. Employee's
agreement to assign to CinemaStar any of Employee's rights as set forth in this
Paragraph 11 does not apply to any invention which qualifies fully as Employee's
invention under the provisions of Section 2870 of the California Labor Code,
where no equipment, supplies, facility, or trade secret information of
CinemaStar was used and which was developed entirely upon Employee's own time,
and which (i) does not relate to the business of CinemaStar or to its actual or
demonstrably anticipated research or development, or (ii) which does not result
from any work performed by Employee for CinemaStar.
c. Employee represents and warrants that except as previously disclosed to
CinemaStar in writing, Employee neither owns nor controls any copyrights or
copyrightable product.
d. Employee agrees that CinemaStar shall have the right, but not the obligation,
to use Employee's name, voice and likeness in connection with any use or
exploitation of the results and proceeds of Employee's services hereunder, and
in connection with advertising, publicity, exhibition, distribution and/or other
exploitation of any of the foregoing. Employee agrees that CinemaStar shall have
the sole and exclusive right to issue publicity concerning Employee with respect
to Employee's employment hereunder and the results and proceeds of Employee's
services hereunder, except neither Employee nor CinemaStar shall issue any press
release or other public announcement with respect to the execution or the terms
of this Agreement without the consent of the other.
12. MISCELLANEOUS:
a. Any notice provided for in this Agreement must be in writing and must be
either (i) personally delivered, (ii) mailed by registered or certified first
class mail, prepaid with return receipt requested,
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(iii) sent by a recognized overnight courier service or (iv) sent by facsimile
with a machine generated confirmation, to the recipient at the address indicated
below:
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IF TO EMPLOYEE:
The address first written above.
IF TO CINEMASTAR:
CinemaStar Luxury Theaters, Inc.
11230 El Camino Real #320
San Diego, CA 92130
Attention: Board of Directors
Telephone:858/509-2777
Facsimile:858/509-9426
with a copy to:
Katten Muchin & Zavis
525 West Monroe
Suite 1600
Chicago, Illinois 60661-3693
Attention:Julie A. Kunetka
Telephone:312/902-5200
Facsimile:312/902-1061
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given (a) on the date
such notice is personally delivered, (b) three (3) days after the date of
mailing if sent by certified or registered mail, (c) one (1) day after the date
such notice is delivered to the overnight courier service if sent by overnight
courier, or (d) the next business day following transmission by facsimile.
b. Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or enforcement in any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
c. This Agreement, those documents expressly referred to herein and other
documents of even date herewith embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
d. This Agreement may be executed on separate counterparts, each of which is
deemed to be an original and all of which taken together constitute one and the
same agreement and shall become effective when one or more counterparts have
been executed by each of the parties hereto and delivered to the other.
e. This Agreement is intended to bind and inure to the benefit of and be
enforceable by Employee and CinemaStar and their respective successors and
permitted assigns. Employee may not assign any of his rights or obligations
hereunder without the written consent of CinemaStar.
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f. The language used in this Agreement will be deemed to be the language chosen
by the parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto.
g. Any provision of this Agreement may be amended or waived only with the prior
written consent of the parties hereto. The waiver by CinemaStar of any breach of
this Agreement by Employee shall not operate or be construed as a waiver of any
subsequent breach by Employee.
h. This Agreement shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance
of this Agreement shall be governed by, the laws of the State of California,
without giving effect to provisions thereof regarding conflict of laws.
i. The headings and other captions in this Agreement are included solely for
convenience of reference and shall not control the meaning and the
interpretation of any provision of this Agreement.
j. Each of the parties to this Agreement shall execute and deliver any and all
additional papers, documents, and other assurances, and shall do any and all
acts and things reasonably necessary in connection with the performance of their
obligations hereunder and to carry out the intent of the parties to this
Agreement.
k. If CinemaStar or Employee should terminate the Employment Period pursuant to
Paragraph 5 above for any reason, then, notwithstanding such termination, those
provisions contained in Paragraphs 3.3, 5, 6, 8, 9, 10, 11, 12, 13, and 14
hereof shall remain in full force and effect.
13. ALTERNATIVE DISPUTE RESOLUTION:
a. Except for CinemaStar's right to seek immediate injunctive and equitable
relief in accordance with the provisions of Paragraphs 8, 9, and 11 of this
Agreement, the parties agree that all disputes, claims and other matters in
controversy arising out of or relating to this Agreement, or the performance or
breach thereof, shall be submitted to binding arbitration in accordance with the
provisions and procedures of this Paragraph 13. This arbitration requirement
shall include, without limitation, the agreement by Employee to submit to
arbitration any and all claims arising out of any alleged discrimination or
harassment, including, but not limited to, those covered by the California Fair
Employment and Housing Act, the 1961 Civil Rights Act, 42 U.S.C. Section 2000e
("Title VII"), the Age Discrimination in Employment Act, and the Americans With
Disabilities Act.
b. The arbitration provided for in this paragraph shall take place in Los
Angeles County, California, in accordance with the provisions of Title 9,
Sections 1280 ETSEQ. of the California Code of Civil Procedure, except as
provided to the contrary hereunder. The arbitration shall be held before and
decided by a single neutral arbitrator. The single neutral arbitrator shall be
selected in accordance with the Labor Arbitration Rules of the American
Arbitration Association, as amended and effective on January 1, 1996, or by a
process mutually agreed upon by the parties. If no agreement can be reached as
to the process for selecting the arbitrator or if the agreed method fails, the
arbitrator shall be appointed in accordance with the provisions of California
Code of Civil Procedure Section 1281.6.
c. The parties shall mutually agree upon the date and location of the
arbitration, subject to the availability of the arbitrator. If no agreement can
be reached as to the date and location of the arbitration, the arbitrator shall
appoint a time and place in accordance with the provisions of California Code of
Civil Procedure Section 1282.2(a)(1), except that the arbitrator shall give not
less than 30 days notice of the hearing unless the parties mutually agree to
shorten time for notice.
d. The parties shall be entitled to undertake discovery in the arbitration in
accordance with the provisions of subsections (a) through (d) of California Code
of Civil Procedure Section 1283.05. In conjunction with these procedures, the
parties shall be entitled to request and obtain production of documents in
discovery in the arbitration in accordance with the same rights, remedies and
procedures, and shall be subject to all of the same duties, liabilities and
obligations as if the subject matter of the arbitration were pending in a civil
action before a Superior Court of the State of California. The parties hereby
agree that any discovery taken
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hereunder shall be permitted without first securing leave of the arbitrator and
shall be kept to a reasonable minimum.
e. The decision of the arbitrator may be confirmed pursuant to the provisions of
California Code of Civil Procedure Section 1285, and shall not be appealable for
any reason, it being understood that a petition to vacate an award for any of
the reasons set forth in California Code of Civil Procedure Section 1286.2 shall
not be permitted.
14. CINEMASTAR CONSULTING SERVICES:
The parties acknowledge that on occasion certain entities affiliated with
CinemaStar may engage CinemaStar as a consultant with respect to certain
activities similar to CinemaStar's business, and Employee's services may be
required in connection therewith. CinemaStar hereby agrees with Employee that
any services requested of Employee by the Board in connection with such
consulting services shall not be deemed a breach under any of the provisions of
this Agreement.
Please indicate your agreement to be bound by the terms of this Agreement by
executing where indicated below.
Very truly yours,
CINEMASTAR LUXURY THEATERS, INC.,
a Delaware corporation
By:
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Paul W. Hobby,
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED TO AS OF
THIS DAY OF , 1999:
/s/
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DON HARNOIS