CinemaStar Luxury Theaters, Inc.
431 College Boulevard
Oceanside, California 92057
Frank Moreno
CinemaStar Luxury Theaters, Inc.
431 College Boulevard
Oceanside, California 92057
Dear Mr. Moreno:
This Employment Agreement ("Agreement") is made and entered into as of
the 29th day of April, 1998 (the "Commencement Date"), by and between you
("Employee") and CinemaStar Luxury Theaters, Inc., a California 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 President and Chief Operating Officer of
CinemaStar. In his capacity as President and Chief Operating 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 or the Board of Directors of
CinemaStar, or any compensation committee thereof (the "Board").
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 or the
Board 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 Chief Executive Officer or the Board.
Simultaneous with the execution hereof, the Board will appoint Employee to
serve as a director of CinemaStar, filling a current vacancy. Thereafter,
for so long as Employee shall serve as the Chief Operating Officer of
CinemaStar, he shall be nominated to serve as a director of CinemaStar, and
subject only to the annual shareholder vote electing directors, shall so
serve as a director. Immediately upon any termination of the
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Employment Period, for any reason, Employee shall be deemed to have
resigned from any and all positions he may hold on the Board, without
any further action by any party.
2. TERM:
The term of this Agreement shall commence on the date hereof and continue
until the third anniversary of 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 Two Hundred Fifty Thousand
Dollars ($250,000.00), 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 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 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.
3.4 OPTIONS:
Employee has been granted options to acquire Five Hundred Thousand
(500,000) shares of CinemaStar's common stock at an exercise price of $.875
per share, which options shall vest over a 3-year period (one-third on each
of the first three anniversaries of the date hereof) and shall be subject
to the other terms and conditions of the Stock Option Plan of CinemaStar
dated as of December 16, 1997.
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4. VACATION:
Employee shall be entitled to up 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 Chief Executive Officer or the Board that
continues after the Chief Executive Officer or 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;
e. Employee's violation of any rule or regulation of Cinemastar
applicable to other employees of similar stature;
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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);
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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 entitled to receive a monthly car allowance of Six
Hundred Fifty Dollars ($650), or shall be provided with an automobile
of comparable quality to that currently provided to Employee by
CinemaStar.
d. CinemaStar shall reimburse Employee for his reasonable out-of-pocket
moving expenses incurred to relocate Employee and his family to
Southern California.
e. In connection with the above-described relocation and the related sale
of Employee's residence, CinemaStar shall pay Employee an amount equal
to the lesser of (i) fifty percent (50%) of the excess, if any, of the
original purchase price of Employee's current residential home and the
actual final sales price of such home (less any broker commissions),
or (ii) $20,000, in either case within 30 days of Employee's request
therefore and upon Employee providing reasonably acceptable
documentation of such original purchase price and such final sales
price.
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
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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.
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.
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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.
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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. SERVICES UNIQUE:
Employee recognizes that due to his status as an experienced senior
executive of the movie theater industry, his services hereunder are of a
special, unique, unusual, extraordinary and intellectual character, giving
them a peculiar value, the loss of which CinemaStar cannot be reasonably or
adequately compensated for in damages. In the event of a breach of this
Agreement by Employee (particularly, but without limitation, with respect
to the provisions hereof relating to the exclusivity of Employee's
services), 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. This provision shall not be construed as a
waiver of the rights which CinemaStar may have for damages under this
Agreement or otherwise, and all of CinemaStar's rights and remedies shall
be unrestricted.
13. 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,
(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:
IF TO EMPLOYEE:
The address first written above.
Telephone: 760/630-2011
Facsimile: 760/630-8593
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IF TO CINEMASTAR:
CinemaStar Luxury Theaters, Inc.
431 College boulevard
Oceanside, CA 92057
Attention: Board of Directors
Telephone: 760/630-2011
Facsimile: 760/630-8593
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
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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.
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, 14 and 15 hereof shall remain in full force and
effect.
14. 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,
11 and 12 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 14. 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
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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 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.
15. 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 Chief Executive Officer or
the Board in connection with such consulting services shall not be deemed a
breach under any of the provisions of this Agreement.
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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 California corporation
By: /s/ Jack R. Crosby
-------------------------------------
Jack R. Crosby,
Chairman and Chief Executive Officer
ACKNOWLEDGED AND AGREED TO AS OF
THIS 29th DAY OF APRIL, 1998:
/s/ Frank Moreno
- -----------------------------------
FRANK MORENO
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