Document:

imax-ex105_94.htm

 

EXHIBIT 10.5

 

IMAX CORPORATION 

AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
FORM OF PERFORMANCE STOCK UNIT AWARD AGREEMENT 

THIS PERFORMANCE STOCK UNIT AGREEMENT (the “Agreement”) is made effective as of _________ (the “Date of Grant”) between IMAX Corporation, a Canadian corporation (the “Company”), and _________ (the “Participant”).  

This Agreement sets forth the general terms and conditions of performance stock units that vest upon the achievement of performance criteria (“PSUs”).  By accepting the PSUs, the Participant agrees to the terms and conditions set forth in this Agreement and the IMAX Corporation Amended and Restated Long-Term Incentive Plan (the “IMAX LTIP”) as well as the Employment Agreement between _________ and the Company, dated as of _________ (the “Employment Agreement”).

Capitalized terms not otherwise defined herein shall have the same meanings as in the IMAX LTIP.

1.Grant of the PSUs.  Subject to the provisions of this Agreement and the IMAX LTIP, the Company hereby grants to the Participant a target award comprised of _________ PSUs subject to the performance measure or performance measures detailed in Exhibit A (collectively, the “Target Award”), subject to adjustment as set forth in the IMAX LTIP.  The number of PSUs to which the Participant will be entitled as of the Scheduled Vesting Date (defined below) (the “Earned PSUs”) will be based on (i) the Target Award and (ii) the Company’s performance against the performance measures set forth on Exhibit A over a three-year performance period extending from January 1 of the year of grant to December 31 of the second year following the year of grant (the “Performance Period”), as well as other terms and conditions of this Agreement.  Each Earned PSU gives the Participant the unsecured right to receive, subject to the terms and conditions of the IMAX LTIP and this Agreement, one Common Share.  The Participant shall not be required to pay any additional consideration for the issuance of the Common Shares upon settlement of the Earned PSUs.

2.Vesting Schedule.  Subject to the terms and conditions hereof, the Earned PSUs shall vest in full promptly following the public disclosure of the Company’s financial results for the second year following the year of grant (the “Scheduled Vesting Date”), unless previously cancelled or forfeited in accordance with the provisions of the IMAX LTIP or this Agreement.

3.Settlement.  Each Earned PSU shall be settled by delivery of one Common Share within thirty (30) days following the Scheduled Vesting Date (the “Settlement Date”); provided, however, that in no event shall settlement occur later than March 15th of the year following the Scheduled Vesting Date.

4.Termination of Employment Generally.  In the event that the Participant’s employment with the Company terminates for any reason, including termination with or without Cause, resignation with or without Good Reason, death, Disability or retirement (each term as defined in the Employment Agreement), the Target Award shall be treated as set forth in the Employment Agreement.   

 

5.Termination upon Achievement of Service Factor.  If the Participant’s employment with the Company terminates prior to the Scheduled Vesting Date as a result of the Participant’s resignation after the achievement of the 

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Service Factor, the PSUs shall continue to vest in accordance with the Scheduled Vesting Dates.  For purposes of this Agreement, “Service Factor” shall mean the Participant’s resignation (i) at or after attaining age 55 and (ii) following the Participant’s continuous service with the Company or any of its Subsidiaries and Affiliates for at least ten (10) years, or such other resignation by the Participant that is deemed by the Committee to be an achievement of the Service Factor, provided that the Participant provides the Company a six (6)-month written notice of the Participant’s intent to resign.

6.Change of Control.  In the event of a Change of Control, the Target Award shall be treated as set forth in the Employment Agreement or the IMAX LTIP, as applicable. 

7.Nontransferability of PSUs.  Unless otherwise determined by the Committee pursuant to the terms of the IMAX LTIP, the PSUs may not be transferred, pledged, alienated, assigned or otherwise attorned other than by last will and testament or by the laws of descent and distribution or pursuant to a domestic relations order, as the case may be.

8.Rights as a Shareholder.  The Participant shall have no rights as a shareholder with respect to the Common Shares underlying the PSUs.  Upon settlement, the Participant shall have all rights as a shareholder with respect to the Common Shares delivered to the Participant, if any, including, without limitation, voting rights and the right to receive dividends.  

9.Dividend Equivalents.  If, after the Date of Grant and prior to the applicable Settlement Date, dividends with respect to the Common Shares are declared or paid by the Company, the Participant, upon settlement of Earned PSUs in accordance with Section 3, shall be entitled to receive dividend equivalents in an amount, without interest, equal to the cumulative dividends declared or paid on a Common Share, if any, during such period multiplied by the number of Earned PSUs.  Dividend equivalents will be subject to the same terms and conditions of this Agreement applicable to the Earned PSUs.  The dividend equivalents will be paid on the applicable Settlement Date for the underlying Earned PSUs in cash or Common Shares, as determined by the Company in its discretion.  If the underlying Earned PSUs are cancelled prior to the applicable Settlement Date for any reason, any accrued and unpaid dividend equivalents shall be cancelled.

10.No Entitlements.

(a)No Right to Continued Employment.  This Agreement does not constitute an employment agreement and nothing in the IMAX LTIP or this Agreement shall modify the terms of the Participant’s employment, including, without limitation, the Participant’s status as an “at will” employee of the Company, if applicable.  None of the IMAX LTIP, the Agreement, the grant of the PSUs, nor any action taken or omitted to be taken shall be construed (i) to create or confer on the Participant any right to be retained in the employ of the Company, (ii) to interfere with or limit in any way the right of the Company to terminate the Participant’s employment at any time and for any reason or (iii) to give the Participant any right to be reemployed by the Company following a termination of employment for any reason.  

(b)No Right to Future Awards.  This award of PSUs and all other equity‐based awards under the IMAX LTIP are discretionary.  This award does not confer on the Participant any right or entitlement to receive another award of PSUs or any other equity-based award at any time in the future or in respect of any future period.

11.Taxes and Withholding.  The Participant must satisfy any federal, state, provincial, local or foreign tax withholding requirements applicable with respect to the settlement of the Earned PSUs. The Company may require or permit the Participant to satisfy such tax withholding obligations through the Company withholding Common Shares that would otherwise be received by such individual upon settlement of the Earned PSUs.  The obligations of the Company to deliver the Common Shares under this Agreement shall be conditioned upon the Participant’s payment of all applicable taxes and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. 

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12.Breach of Restrictive Covenants.  If the Participant materially breaches any of the restrictive covenants set forth in the Employment Agreement or any other agreement with the Company or any of its Subsidiaries or Affiliates (including, without limitation, any restrictive covenants relating to non-competition, non-solicitation or confidentiality), then all of the PSUs (whether or not vested) shall terminate and be cancelled without consideration being paid therefor.

13.Securities Laws.  The Company shall not be required to issue Common Shares in settlement of or otherwise pursuant to the Earned PSUs unless and until (i) the Common Shares have been duly listed upon each stock exchange on which the Common Shares are then registered; (ii) a registration statement under the Securities Act of 1933, as amended, with respect to such Common Shares is then effective; and (iii) the issuance of the Common Shares would comply with such legal or regulatory provisions of such countries or jurisdictions outside the United States as may be applicable in respect of the Earned PSUs. In connection with the grant of the PSUs or vesting of the Earned PSUs, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement. 

14.Miscellaneous Provisions.

(a)Notices.  Any notice necessary under this Agreement shall be addressed to the Company in care of its Corporate Secretary at the principal executive office of the Company and to the Participant at the address appearing in the records of the Company for the Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other.  Notwithstanding the foregoing, the Company may deliver notices to the Participant by means of email or other electronic means that are generally used for employee communications.  Any such notice shall be deemed effective upon receipt thereof by the addressee.

(b)Headings.  The headings of sections and subsections are included solely for convenience of reference and shall not affect the meaning of the provisions of this Agreement.

(c)Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

(d)Incorporation of IMAX LTIP; Entire Agreement.  This Agreement, the Target Award and the Earned PSUs shall be subject to the IMAX LTIP, the terms of which are incorporated herein by reference, and in the event of any conflict or inconsistency between the IMAX LTIP and this Agreement or the Employment Agreement, the IMAX LTIP shall govern.  This Agreement, the Employment Agreement and the IMAX LTIP constitute the entire agreement between the parties hereto with regard to the subject matter hereof.  They supersede all other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.  The Participant acknowledges receipt of the IMAX LTIP, and represents that the Participant is familiar with its terms and provisions.  

(e)Amendments.  Subject to all applicable laws, rules and regulations, the Committee shall have the power to amend this Agreement at any time provided that such amendment does not adversely affect, in any material respect, the Participant’s rights under this Agreement without the Participant’s consent.  Notwithstanding the foregoing, the Company shall have broad authority to alter or amend this Agreement and the terms and conditions applicable to the PSUs without the consent of the Participant to the extent it deems necessary or desirable in its sole discretion (i) to comply with or take into account changes in, or rescissions or interpretations of, applicable tax laws, securities laws, employment laws, accounting rules or standards and other applicable laws, rules, regulations, guidance, ruling, judicial decision or legal requirement, (ii) to ensure that the Earned PSUs are not subject to taxes, interest and penalties under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), (iii) to take into account unusual or nonrecurring events or market conditions, or (iv) in any other manner set forth in Section 15 of the IMAX LTIP.  Any amendment, modification or termination shall, upon adoption, become and be binding on all persons affected thereby without requirement for consent or other action with respect thereto by any such person.  The Committee shall give written notice to the Participant in accordance with Section 13(a) of any such amendment, modification or termination as promptly as practicable after the adoption thereof.  The foregoing shall not restrict the ability of the Participant and 

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the Company by mutual consent to alter or amend the terms of the PSUs in any manner that is consistent with the IMAX LTIP and approved by the Committee.  

(f)Section 409A.

(i)The PSUs are intended to constitute “short-term deferrals” for purposes of Section 409A of the Code and the regulations and guidance promulgated thereunder (“Section 409A”).  If any provision of the IMAX LTIP or this Agreement would, in the reasonable good faith judgment of the Committee, result or likely result in the imposition on the Participant, a beneficiary or any other person of a penalty tax under Section 409A, the Committee may modify the terms of the IMAX LTIP or this Agreement, without the consent of the Participant, beneficiary or such other person, in the manner that the Committee may reasonably and in good faith determine to be necessary or advisable to avoid the imposition of such penalty tax.  This Section 13(f) does not create an obligation on the part of the Company to modify the IMAX LTIP or this Agreement and does not guarantee that the Earned PSUs will not be subject to taxes, interest and penalties under Section 409A.  

(ii)Notwithstanding anything to the contrary in the IMAX LTIP or this Agreement, to the extent that the PSUs constitute deferred compensation for purposes of Section 409A and Participant is a “Specified Employee” (within the meaning of the Committee’s established methodology for determining “Specified Employees” for purposes of Section 409A), no payment or distribution of any amounts with respect to the Earned PSUs that are subject to Section 409A may be made before the first business day following the six (6) month anniversary from the Participant’s Separation from Service from the Company Group (as defined in Section 409A) or, if earlier, the date of the Participant’s death.

(g)Successor.  Except as otherwise provided herein, this Agreement shall be binding upon and shall inure to the benefit of any successor or successors of the Company, and to any Permitted Transferee pursuant to Section 7.

(h)Choice of Law.  Except as to matters of federal law, this Agreement and all actions taken thereunder shall be governed by and construed in accordance with the laws of the State of New York (other than its conflict of law rules).

(i)Clawback. Any awards made pursuant to the IMAX LTIP shall be subject to clawback or recoupment as permitted or mandated in the Employment Agreement and by applicable law, rules, regulations or any Company policy as enacted, adopted or modified from time to time.

 

[Signatures on Following Page]

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IMAX CORPORATION

	
 
	
 
	
 
	
 

	
 
	
By:
	
 
	
 

	
 
	
Name:
	
 
	
Robert Lister

	
 
	
Title:
	
 
	
Chief Legal Officer and Senior Executive Vice President

 

	
 
	
By:
	
 
	
 

	
 
	
Name:
	
 
	
Kenneth Weissman

	
 
	
Title:
	
 
	
Senior Vice President, Legal Affairs & Corporate Secretary

 

The undersigned hereby acknowledges having read the IMAX LTIP and this Agreement, and hereby agrees to be bound by all the provisions set forth in the IMAX LTIP and this Agreement.

 

	
Name (Printed):
	
 
	
 

	
Signature:
	
 
	
 

	
Date:  
	
 
	
 

 

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Exhibit A: Performance Vesting Criteria

[Note: To be included separately]

6imax-ex1026_97.htm

EXHIBIT 10.26

Execution Version

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This agreement (this “Amendment”) amends, effective as of January 1, 2020 (the Effective Date”), the employment agreement between Richard L. Gelfond (the “Executive”) and IMAX Corporation (the “Company”), dated November 8, 2016 (the “Agreement”), in accordance with the provisions of Section 15 of the Agreement.  Except as otherwise expressly set forth below in this Amendment from and after the Effective Date, the Agreement shall continue in full force and effect on the same terms and conditions.  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement.

 

	
1.
	
Term.  Section 2 of the Agreement shall be amended to replace references to “December 31, 2019” with references to “December 31, 2022”.

 

	
2.
	
Base Salary.  Section 3(a) of the Agreement shall be deleted in its entirety and replaced with the following:  

 

“During the Term, the Company shall pay to the Executive an annual salary (the “Base Salary”) at the rate of no less than $1,200,000, subject to increases at the discretion of the Board, payable in substantially equal installments in accordance with the Company’s ordinary payroll practices as established from time to time.  

 

	
3.
	
Annual Bonus.  Section 3(b) of the Agreement shall be deleted in its entirety and replaced with the below:

 

(b)  Bonus. The Executive shall be eligible to receive an incentive bonus of up to 200% of his Base Salary for each calendar year during the Term (the “Bonus”). The Executive’s target bonus shall be 100% of his Base Salary (“Target Bonus”).  For each year of the Term, as well as for 2019, 80% of Executive’s Bonus shall be calculated based on achievement of non-discretionary criteria (the “Formula Bonus”) established by the Compensation Committee of the Board (the “Compensation Committee”) for the applicable year and 20% shall be determined at the end of the applicable year in the discretion of the Compensation Committee. The discretionary component of the Bonus will be a judgment-based assessment by the Compensation Committee looking at performance in non-quantifiable areas of performance that are clearly connected to the business strategy and strategic drivers of Company performance.  The Formula Bonus shall be comprised of goals in quantifiable areas that are either financial metrics or drivers of financial performance, and shall be established and developed reasonably and in good faith by the Compensation Committee after meaningful consultation with Executive and communicated to Executive within the first quarter of each calendar year.  The Executive’s performance against each such goal shall be measured on a sliding scale basis using linear interpolation, with performance ranges developed for each such measure; provided, that (i) 0% of the applicable portion of the Formula Bonus will be paid for performance below threshold; (ii) 50% of the applicable portion of the Formula Bonus will be paid for performance at threshold; (iii) 100% of the applicable portion 

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Execution Version

of the Formula Bonus will be paid for performance at target; and (iv) a maximum of 200% of the applicable portion of the Formula Bonus will be paid for performance at or above maximum.  Schedule A of the Amendment contains the performance criteria that the Compensation Committee has developed for Executive for 2019. The Bonus (if any) shall be paid on the date on which the Company pays out bonuses to Company management (but not later than March 15th of the year following the year in respect of which the Bonus is earned), subject to the Executive’s continued employment through such date except otherwise provided herein; provided, that the Bonus, if any is earned, for calendar year 2022 shall be subject to the Executive’s continued employment only through December 31, 2022.  

 

	
4.
	
Prior Grants.  Exhibit A of the Agreement is amended to read as attached hereto, effective as of the date hereof.

 

	
5.
	
SERP.  Section 3(g)(i) shall be deleted in its entirety and replaced with the following:

 

The Executive shall continue to participate in the Company’s Supplemental Executive Retirement Plan (the “SERP”) in accordance with the terms and conditions set forth therein, as amended from time to time.  Notwithstanding anything herein or in the SERP or otherwise to the contrary, the Company and the Executive agree that the total amount of benefit payable to Executive under the SERP shall be fixed at $$20,298,168. 

 

	
6.
	
Annual Long-Term Incentive Compensation.  A new Section 3(l) shall be added to the Agreement as follows:

 

(l)  As soon as practicable after each of January 1, 2020, January 1, 2021 and January 1, 2022, Executive shall be granted a total of $5,500,000 worth of stock-based awards, as follows:

 

(i)  Time-Based RSUs: The Executive shall be granted RSUs having a grant date value of $2,750,000 (the “Time-Based RSUs”).  The number of Time-Based RSUs granted shall be determined by dividing (i) $2,750,000 by (ii) the closing price of the Company’s common stock on the New York Stock Exchange on the date thereof.  The Time-Based RSU’s shall vest in three (3) equal installments on each of the first, second and third anniversaries of the grant date, subject to Executive’s employment with the Company on each such date, except as otherwise provided in this Agreement.  The Time-Based RSUs shall be granted on the terms and conditions set forth in the LTIP, the grant agreement to be entered into between the Company and the Executive and otherwise in accordance with this Section 3(l)(i).

 

(ii)  PSUs: The Executive shall be granted RSUs that vest based upon the achievement of performance criteria (the “PSUs”) having a grant date value of $2,750,000.  60% of the PSUs, or $1,650,000 in value, shall be subject to the “EBITDA Performance Condition” and 40% of the PSUs, or $1,100,000 in grant date value, shall be subject to the “Relative TSR Performance Condition” (both as defined in Schedule B).  The performance shall be measured as set forth on Schedule B on a sliding scale basis using linear 

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Execution Version

interpolation and based upon a three-year performance period extending from January 1 of the year of grant to December 31 of the second year following the year of grant, except as otherwise provided in this Agreement, the LTIP or the grant agreement to be entered into.  The number of EBITDA Performance Condition PSUs granted shall be determined by dividing (i) $1,650,000 by (ii) the closing price of the Company’s common stock on the New York Stock Exchange on the date thereof.  For determining the number of Relative TSR Performance Condition PSUs to be granted pursuant to this section, the Company shall value the PSUs in manner consistent with the Company’s financial statement reporting and, specifically, pursuant to a “Monte Carlo” simulation.

 

	
7.
	
Treatment of Equity Awards Upon Termination Without Cause; Resignation for Good Reason. The first paragraph of Section 4(c)(iii) of the Agreement shall be deleted in its entirety and replaced with the following:

 

(iii)  The Executive’s outstanding equity awards will be treated as follows:  (1) with respect to outstanding Unvested Equity Awards that are subject to time-based vesting only (including without limitation RSUs and stock options), the portion of each such Unvested Equity Award that shall vest upon the Executive’s Separation from Service under this Section 4(c) shall be with respect to a number of Common Shares underlying such award equal to the excess of (A) over (B), where (A) is the total number of Common Shares underlying the original award multiplied by a fraction, the numerator of which is the number of calendar days of the entire vesting period applicable to the award in which the Executive was employed by the Company and the denominator of which is the total number of days in such period (such fraction, the “Pro Rata Fraction”), and (B) is the number of Common Shares underlying the portion of the award that has already vested as of the Executive’s Separation from Service; and (2) with respect to outstanding Unvested Equity Awards that are subject to performance-based vesting criteria (including without limitation the PSUs), the percentage of each such Unvested Equity Award that shall vest at the end of the applicable performance period shall equal the Pro Rata Fraction multiplied by the percentage corresponding to the achievement of the performance conditions enumerated in Schedule B, measured at the dates designated thereon. Any Unvested Equity Awards that do not vest in accordance with the foregoing shall be forfeited and cancelled and the Executive shall have no further rights with respect thereto.  All outstanding stock options granted to the Executive prior to Executive’s Separation from Service shall remain exercisable as follows:

 

	
8.
	
Severance Upon Termination Without Cause; Resignation for Good Reason. Section 4(c)(iv) of the Agreement shall be deleted in its entirety and replaced with the following:

 

(iv)  The Company shall pay the Executive an amount equal to 200% of Base Salary for each remaining year or partial year of the Term, if any, but not to exceed two years (the “Severance Amount”) for the period (the “Severance Period”) beginning on the day following the Executive’s Separation from Service and continuing until the later of (x) December 31, 2022 and (y) the first anniversary of the Executive’s Separation from Service, payable on the following schedule:  (1) 50% of the Severance Amount shall be 

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Execution Version

paid in equal installments over the Severance Period, in accordance with the Company’s ordinary payroll practices in effect from time to time, and (2) the remaining 50% of the Severance Amount will be payable as follows:  (A)  if the Executive’s Separation from Service occurs in the 2020 calendar year, one-sixth (1/6th) of the Severance Amount will be payable on each of March 1, 2021, March 1, 2022 and March 1, 2023; (B) if the Executive’s Separation from Service occurs in the 2021 calendar year, one-fourth (1/4th) of the Severance Amount will be payable on each of March 1, 2022 and March 1, 2023; or (3) if the Executive’s Separation from Service occurs in the 2022 calendar year, one-half (1/2) of the Severance Amount will be payable on March 1, 2023.

 

	
9.
	
Other Terminations. Section 4(d) of the Agreement shall be deleted in its entirety and replaced with the following:

 

(d)  Resignation without Good Reason; Death or Disability.  If, prior to the expiration of the Term, the Executive incurs a Separation from Service by reason of the Executive’s resignation other than for Good Reason, or as the result of the Executive’s death or “disability,” as such term is defined in the Company’s long-term disability policy applicable to the Executive, the following provisions shall apply:  (i) the Executive will receive the Other Accrued Compensation and Benefits, payable in accordance with Company policies and practices and in no event later than thirty (30) days after the Executive’s Separation from Service, unless otherwise expressly set forth in the applicable plan, program or agreement; (ii)  (A) in the case of a Separation from Service resulting from the Executive’s resignation other than for Good Reason, all then outstanding Unvested Equity Awards shall be cancelled immediately, and the Executive will cease to have any further right thereto, and (B) in the case of a Separation from Service resulting from the Executive’s death or disability, 100% of the outstanding Unvested Equity Awards shall immediately vest (it being understood that with respect to any PSUs, vesting shall be at target and the Executive will forfeit any right to additional vesting based on actual performance), and in either case all vested Options shall remain exercisable until the shorter of (x) their original term and (y) two (2) years from Executive’s Separation from Service; (iii) in the case of a Separation from Service resulting from the Executive’s death or disability, the Target Bonus, paid when bonuses are otherwise paid to Company management; and (iv) other than pursuant to those provisions that survive termination of this Agreement, the Executive shall have no further right to receive any other compensation or benefits following his termination of employment pursuant to this Section 4(d).

 

	
10.
	
Retirement. The first paragraph of Section 4(e) of the Agreement shall be deleted in its entirety and replaced with the following:

 

(e)    Non-Renewal of Agreement; Retirement.  If, upon the expiration of the Term, the Company does not offer to continue the Executive’s employment on substantially similar terms to those set forth herein, or if the Executive elects to retire from employment with the Company following expiration of the Term, and in either such case upon the expiration of the Term the Executive incurs a Separation from Service, the Executive shall be entitled to a pro-rated bonus, based on the number of calendar days of such year 

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Execution Version

that have elapsed as of the Separation from Service, under the Company's annual bonus plan for the year in which the termination occurs, to the extent not already paid, based upon actual performance and paid when annual bonuses are otherwise paid to Company management, and the Executive’s outstanding equity awards will be treated as follows:  (1) with respect to outstanding Unvested Equity Awards that are subject to time-based vesting only (including without limitation RSUs and stock options), the percentage of each such Unvested Equity Award that shall vest upon the Executive’s Separation from Service shall equal 100%; and (2) with respect to outstanding Unvested Equity Awards that are subject to performance-based vesting criteria (including without limitation the PSUs), the percentage of each such Unvested Equity Awards that shall vest upon the end of the applicable performance period shall equal the Pro Rata Fraction multiplied by the percentage corresponding to the achievement of the performance conditions enumerated in Schedule B, measured at the dates designated thereon, and the remainder shall be forfeited and cancelled.  All outstanding stock options granted to the Executive prior to Executive’s Separation from Service shall remain exercisable as follows:

 

	
11.
	
Consultancy. Section 4(g) of the Agreement shall be deleted in its entirety and replaced with the following:

 

(g)    Consultancy.  At the end of Executive’s employment (for whatever reason), Executive agrees to consult with the Company on such issues and items as requested by the Company including, but not limited to, theatre signings, management issues, film strategy issues, technological issues and/or issues with respect to management transition, subject to the Executive’s other commitments and the parties entering into a written agreement on terms to be negotiated by the Company and the Executive in good faith; provided, that notwithstanding the foregoing, the parties agree that if Executive incurs a Separation of Service by reason of the Company’s termination of the Executive’s employment without Cause or the Executive’s Resignation for Good Reason, then the above-referenced consultancy shall be for a period of one (1) year from the date of such Separation of Service at a total compensation for such year of $1,000,000, payable in accordance with the Company’s ordinary payroll practices as established from time to time.

 

	
12.
	
Change of Control.  New Sections 5(e) and 5(f) shall be added to the Agreement as follows:

 

(e)  (i) Notwithstanding anything to the contrary in Section 4(c)(iii) or 4(e) of the Agreement, which shall be superseded, to the extent necessary, by this Section 5(e)(i), with respect to outstanding Unvested Equity Awards that are subject to time-based vesting only (including, without limitation, RSUs and stock options), 100% of each such Unvested Equity Award shall vest and be settled upon the Executive’s Separation from Service by reason of the Company’s termination of the Executive’s employment without Cause or the Executive’s resignation for Good Reason, in either case within two years following a Change of Control; and (ii) with respect to outstanding Unvested Equity Awards that are subject to performance-based vesting (including, without limitation, PSUs), the number of each such Unvested Equity Award that may become vested and 

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Execution Version

settled in accordance with the terms thereof at the end of the applicable performance period shall be, with respect to each of the EBITDA Performance Condition and the Relative TSR Performance Condition, the greater of performance (x) as of the last trading day immediately preceding the date upon which the Change of Control is consummated or (y) to the extent the EBITDA Performance Condition and/or the Relative TSR Condition remains applicable to the Company following the Change of Control, as determined in good faith by the Board, actual performance as of the end of the applicable performance period (it being understood that if the EBITDA Performance Condition or the Relative TSR Performance Condition does not remain applicable following the Change of Control, then clause (x) shall determine the number of EBITDA Performance Condition PSUs or Relative TSR Performance Condition PSUs, as applicable, that may vest); provided, that, with respect to clause (ii), in the event Executive’s Separation from Service pursuant to either Sections 4(c) or 4(e) is within two years following a Change of Control that constitutes a “change in control event” under Section 409A of the Code, the vesting and settlement of a number of PSUs as determined in clause (ii) hereof shall occur upon such Separation from Service and the references to “performance period” in this clause (ii) shall instead be a reference to the date upon which the Separation from Service occurs.  Any Unvested Equity Awards that do not vest in accordance with the foregoing shall be forfeited and cancelled and the Executive shall have no further rights with respect thereto

 

(f) Any Bonus payable with respect to the year in which a Change of Control occurs shall be paid based on achievement of the applicable metrics as of the consummation of such Change of Control, annualized over the full year, and excluding any costs incurred in connection with or otherwise attributable to such Change of Control.

 

	
13.
	
Clawback; Stock Ownership Guidelines. Section 9 of the Agreement shall be deleted in its entirety and replaced with the following:

 

(a)  Recovery of Compensation.  All payments and benefits provided under this Agreement shall be subject to any compensation recovery, clawback or similar policy as required under law and which is thereafter adopted by the Company from time to time. Notwithstanding the foregoing, (a) if the Company is required to file a material adverse restatement of its financials (regardless of whether such restatement is due to actions taken by the Executive or actions the Executive knew or should have known) and (b) the original reporting of such financials resulted in compensation to the Executive with respect to his Bonus or the vesting of his equity awards that otherwise would not have been earned, vested or paid, then the Company’s Board may require the Executive to repay (or may withhold from future payments to Executive to the maximum extent permitted by Section 409A, as defined below) the amount by which his Bonus or equity award vesting or payment would have been reduced had the original financial statements not been reported. 

 

(b) Stock Ownership Guidelines.  The Executive’s required share ownership under the Company’s share ownership requirement shall equal or exceed (i) 400% of Base Salary, following the grant pursuant to this Agreement of RSUs and PSUs in 2020, and (ii) 500% 

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Execution Version

of Base Salary, following the grant pursuant to this Agreement of RSUs and PSUs in 2021.   

 

	
14.
	
The entering into this Amendment shall not prejudice any rights or waive any obligations under the Agreement or any other agreement between the Executive and the Company.

 

DATED as of November 1, 2019.

 

	
 
	
AGREED AND ACCEPTED:

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
/s/ Richard L. Gelfond

	
 
	
Richard L. Gelfond
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
IMAX CORPORATION

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
Per:  
	
/s/ Darren Throop

	
 
	
 
	
Name:
	
Darren Throop
	
 

	
 
	
 
	
Title:  
	
Director
	
 

 

 

 

7

 

Schedule A

 

2019 Formula Bonus Criteria

 

						
	
I.
	
Financial
	
Weighting
	
Target
	
Threshold
	
Max

	
 
	
a. EPS (up 26% from 2018)
	
25%
	
$1.16
	
down 15%
	
Up 20%

	
 
	
b. EBITDA (up 20% from 2018)
	
25%
	
$150MM
	
down 15%
	
Up 20%

	
 
	
c. Free Cash Flow (Budget)
	
10%
	
$50MM
	
down 10%
	
Up 20%

	
 

II.
	
 

Backlog
	
 
	
 
	
 
	
 

	
 
	
a. Signings of 125
	
10%
	
125
	
down 10%
	
Up 20%

	
III.
	
GBO
	
 
	
 
	
 
	
 

	
 
	
a. GBO (up 7% from 2018)
	
10%
	
$1.lB
	
down 15%
	
Up 25%

 

 

 

Schedule B

 

EBITDA and TSR Performance Conditions

 

	
 
	
•
	
EBITDA (Applies to 60% of PSUs)

 

	
Average Annual

EBITDA Growth Over

Performance Period
	
# PSUs Earned as %

of Target at end of

Performance Cycle

	
< 5%
	
0%

	
5%
	
50%

	
10%
	
75%

	
12.5%
	
100%

	
15.0%
	
125%

	
17.5%
	
150%

	
> 20%
	
175%

 

	
 
	
•
	
Relative TSR vs. Russell 2000 (Applies to 40% of PSUs)

 

	
3-Year Relative TSR vs.

Russell 2000 Over

Performance Period
	
# PSUs Earned as %

of Target at end of

Performance Cycle

	
< 40th Percentile
	
0%

	
40th Percentile
	
37.5%

	
50th Percentile
	
50%

	
60th Percentile
	
75%

	
70th Percentile
	
100%

	
80th Percentile
	
125%

	
> 90th Percentile
	
175%

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00304-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00304-of-00352.parquet"}]]