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This excerpt taken from the CNK DEF 14A filed Apr 15, 2008. Awards
and Terms
Terms and Conditions of Options. The exercise
price for the shares subject to any option granted under the
Restated Incentive Plan may not be less than 100% of the fair
market value of the shares of our Common Stock on the date the
option is granted. The terms of the option agreements entered
into under the 2004 Cinemark, Inc. Long Term Equity Incentive
Plan (the “2004 Plan”) will continue to
govern the options granted under the 2004 Plan. The options will
otherwise be subject to the provisions in our Restated Incentive
Plan. 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 us for redemption shares of previously acquired
Common Stock at the fair market value, by a broker assisted
cashless exercise procedure, or by decreasing the number of
shares deliverable upon the exercise of an option on a cashless
basis by an amount equal to the number of shares having an
aggregate fair market value equal to the aggregate exercise
price of such option. Under the Restated Incentive Plan, options
vest according to the provisions of the applicable option
agreement, and terminate as set forth in the applicable option
agreement, but no later than the tenth anniversary of the date
of grant. Upon the sale of our 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 optionee’s continuous service as
an employee, director or consultant with us and our subsidiaries
terminates if termination is for any reason other than permanent
disability, death, or cause; (3) the date the
optionee’s continuous service terminates if termination is
for cause; (4) one year after the date the optionee’s
continuous service terminates if termination is a result of
death; or (5) six months after the date the optionee’s
continuous service terminates if termination is a result of
permanent disability.
Incentive Stock Options. 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 our
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. 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 non-qualified
stock options and will not be treated as incentive stock options.
Non-qualified Stock Options. The Restated
Incentive Plan also provides for grants of non-qualified stock
options to any employees, directors or consultants performing
services for us or our subsidiaries. The exercise price for
non-qualified stock options granted under the Restated Incentive
Plan may not be less than 100% of the fair market value of the
Common Stock on the option grant date.
Restricted Share Awards. The administrator may
award (or sell at a purchase price determined by the
administrator) restricted shares of our Common Stock to our
employees, directors and consultants. The restricted shares 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 shares will be determined by the
administrator for each grant. Vesting requirements may be based
on the continued service of the participant for a specified time
period or may be granted as performance awards based on the
attainment of specified business performance goals established
by the administrator or both. In the event a recipient’s
continuous service to us terminates, we may reacquire the
unvested shares acquired in consideration of services and all
unvested restricted shares as of the date of termination will be
forfeited. If restricted shares are acquired as consideration
other than for prior or future services, the forfeiture will be
accomplished by repurchasing the shares at the original purchase
price. The administrator, in its sole discretion, may impose
additional restrictions as well as waive any or all restrictions
with respect to restricted shares. The agreement evidencing the
award of restricted shares will set forth any such terms and
conditions. Upon a change of control of our Company, all
outstanding restricted shares become fully vested. Restricted
shares will be held by the Company during the period that the
shares are subject to vesting and transfer restrictions, but the
participant will have voting and dividend rights during this
time.
Restricted Stock Units. An award of restricted
stock units is an award of hypothetical Common Stock units
having a value equal to the fair market value of an identical
number of shares of Company Common Stock. Each restricted stock
unit represents a right to receive one share of Common Stock
from the Company at the payment date set forth in the award
agreement. Each restricted stock unit may be subject to such
vesting requirements, restrictions on transfer and conditions to
payment (the “Restriction Period”) as
the Compensation Committee determines are appropriate. Until the
restricted stock units awarded shall have vested and become
payable on the payment date specified in the award agreement,
the restricted stock units and any related securities, cash
dividends or other property nominally credited to a restricted
stock unit account may not be sold, transferred, or otherwise
disposed of and may not be pledged or otherwise hypothecated
during the Restriction Period. Vesting requirements may be based
on the continued service of the participant for a specified time
period or may be granted as Performance Awards based on the
attainment of specified business performance goals established
by the administrator. Restricted stock units may be payable at
the end of the Restriction Period or on a deferred settlement
date. Payment will be in the form of Company Common Stock.
Restricted stock units also may be granted with dividend
equivalent rights that become payable if and when the restricted
stock units become payable. A participant receiving a restricted
stock unit award (denominated in hypothetical Common Stock
units) shall have the rights of a stockholder only as to shares
of Common Stock actually received by the participant under the
Restated Incentive Plan and not with respect to shares of Common
Stock subject to the award but not actually received by the
participant.
Performance Awards. A Performance Award is an
award entitling the recipient to vest in or acquire shares of
Common Stock or hypothetical Common Stock units having a value
equal to the Fair Market Value of an identical number of shares
of Common Stock that will be settled in the form of shares of
Common Stock upon the attainment of specified performance goals.
Performance Awards may be granted in the form of restricted
shares or restricted stock units. The administrator in its sole
discretion shall determine the performance goals applicable to
each award and the periods during which the performance is to be
measured. Performance goals shall be based on a pre-established
objective formula or standard that specifies the manner of
determining the amount of cash or the number of shares under the
performance award that will be granted or will vest if the
performance goal is attained. Performance goals will be
determined by the administrator prior to the time 25% of the
performance period has elapsed (but not later than 90 days
after the beginning of the performance period) and may be based
on one or more business criteria that apply to a participant, a
business unit or the Company and its affiliates. Such business
criteria may include revenue, sales, earnings before interest,
taxes, depreciation and amortization (EBITDA), funds from
operations, funds from operations per share, operating income,
pre-tax or after-tax income, cash available for distribution,
cash available for distribution per share, net earnings,
earnings per share, return on equity, return on assets, return
on capital, Implied Equity Value or other formula measure of
enterprise value or economic value added, share price
performance, improvements in the Company’s attainment of
expense levels, and implementing or completion of critical
projects, improvement in cash-flow (before or after tax) or the
occurrence of a Sale of the Company. Performance goals shall be
objective and, during the period the Company is required to be
registered
under Section 12 of the Exchange Act, performance goals
must meet the requirements of Section 162(m) of the Code.
Effect of the Sale of Our Company. Upon the
sale of our 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 our 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 our
Company, minus any required withholding tax. In addition, the
administrator will cause our Company to purchase all restricted
shares and restricted share units at a price determined
according to the terms of the sale of our Company. The payment
of the applicable amounts described above may be made in cash
or, if the transaction resulting in the sale of our Company
includes consideration in the form of securities, in a
combination of cash and publicly traded securities, in the
administrator’s discretion.
Effect of Mergers, Reorganizations and Consolidations on
Awards. In the event of our liquidation or
merger, reorganization or consolidation with any other
corporation in which we are not the surviving corporation or we
become a subsidiary of another corporation, or of a stock split
or stock dividend, the maximum number of shares of Common Stock
subject to options or awards under the Restated Incentive Plan
and the number of shares and exercise price per share subject to
outstanding options or awards under the Restated Incentive 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 Restated Incentive 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 Restated Incentive Plan
may be terminated or amended by our Board. Without the
authorization and approval of the stockholders, however, our
Board may not make any amendments which would (1) increase
the total number of shares covered by the Restated Incentive
Plan, (2) change the class of persons eligible to
participate, or (3) extend the term of the Restated
Incentive Plan beyond ten years from the date of adoption.
Term of Restated Incentive Plan. Unless
earlier terminated by our Board in its sole discretion, the
Restated Incentive Plan will expire on March 26, 2018.
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