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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 27, 2007
CINEMARK HOLDINGS, INC.
(Exact name of registrant as specified in charter)
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DELAWARE
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001-33401
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20-5490327 |
(State or Other Jurisdiction
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(Commission
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(IRS Employer |
of Incorporation)
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File Number)
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Identification No.) |
3900 DALLAS PARKWAY, SUITE 500
PLANO, TEXAS 75093
(Address and Zip Code of Principal Executive Offices)
972-665-1000
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 4a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
Item 1.01 Entry into a Material Definitive Agreement
In connection with the completion of the initial public offering of our common stock and the
termination of our stockholders agreement, we entered into a director nomination agreement with
certain of our investors. The director nomination agreement became effective on April 27, 2007
upon the completion of the initial public offering and gives certain investors that are party
thereto the right to designate certain nominees for election to our Board of Directors. In
particular, an affiliate of Madison Dearborn Partners, LLC, or MDP, will have the right to
designate up to five nominees for election to our Board of Directors, the Mitchell investors will
have the right to designate two nominees for election to our Board of Directors, Quadrangle Capital
Partners LP, or Quadrangle, will have the right to designate one nominee for election to our Board
of Directors and Syufy Enterprises LP, or Syufy, will have the right to designate one nominee for
election to our Board of Directors. The rights of a party to nominate directors terminates if such
party no longer beneficially owns a specified percentage of our common stock although certain
parties may continue to have certain board observer rights so long as such party continues to hold
a minimum percentage of our common stock. Under the director nomination agreement, at least one
nominee of the Mitchell investors, at least three nominees of MDP, and the nominee of Quadrangle is
required to be an independent director so long as a majority of our Board of Directors are required
to be independent directors under the rules of the New York Stock Exchange.
Each person designated pursuant to the director nomination agreement shall be nominated or
appointed, as the case may be, to serve as either a Class I, Class II, or Class III director.
Under the director nomination agreement, we agree to use our best efforts to assure that each
representative nominated or appointed (i) is included in the slate of director nominees submitted
to our stockholders in connection with each election of directors and (ii) is included in the proxy
statement prepared in connection with the solicitation of proxies for every meeting of our
stockholders called with respect to the election of the members of our Board of Directors, and at
every adjournment or postponement thereof, and on every action or approval by written consent of
our stockholders or the Board of Directors with respect to the election of members of our Board
of Directors.
Our initial Class I, Class II, and Class III directors are as follows: Class I shall
initially consist of James N. Perry Jr., Robin P. Selati and Enrique F. Senior; Class II shall
initially consist of Peter R. Ezersky, Vahe A. Dombalagian and a yet to be designated nominee of
Lee Roy Mitchell; and Class III shall initially consist of Lee Roy Mitchell, Benjamin D. Chereskin
and Raymond W. Syufy.
The foregoing is intended to be a summary of the terms of the director nomination agreement
and is qualified in its entirety by reference to the director nomination agreement, attached to
this Current Report on Form 8-K as Exhibit 10.1 and incorporated by reference as if fully set forth
herein.
Item 1.02 Termination of a Material Definitive Agreement
(a) On August 7, 2006, the following stockholders entered into a stockholders agreement with
us: MDP, Lee Roy Mitchell, the Mitchell investors, Quadrangle, Syufy, Century Theatres Holdings,
LLC, Alan W. Stock, Timothy Warner, Robert Copple, Michael Cavalier, Northwestern University, K&E
Investment Partners, L.P.-2004-B DIF, Piola Investments, Ltd. and John W. Madigan. In connection with the completion
of the initial public offering, the parties to the stockholders agreement agreed to terminate the
stockholders agreement as of April 27, 2007 in connection with the director nomination agreement
disclosed in Item 1.01 that was entered into by certain of our investors.
Under the stockholders agreement, the size of our Board of Directors was set at fourteen. MDP
had the right to designate up to nine of the nominees for election to our Board of Directors as
long as it continued to beneficially own at least 5% of our common stock. The Mitchell investors
had the right to designate up to two nominees for election to our Board of Directors as long as
they continued to beneficially own at least 9% of our common stock and continued to have the right
to designate one nominee for election to our Board of Directors if they beneficially owned less
than 9% but more than 3% of our common stock. If the Mitchell investors beneficially owned less
than 3% of our common stock but more than 2% of our common stock, they would have continued to have
certain board observer rights. Quadrangle had the right to designate one nominee for election to
our Board of Directors as long as they continued to beneficially own at least 3% of our common
stock provided that at the time Quadrangle no longer
had rights to designate the director, the number of designees nominated by MDP would have
increased by one. If Quadrangle beneficially owned less than 3% of our common stock but more than
2% of our common stock, it would have continued to have certain board observer rights. Syufy had
the right to designate up to two nominees for election to our Board of Directors as long as it
continued to beneficially own at least 7% of our common stock and continued to have the right to
designate one nominee for election to our Board of Directors if it beneficially owned less than 7%
but more than 3% of our common stock. If Syufy beneficially owned less than 3% of our common stock
but more than 2% of our common stock, it would have continued to have certain board observer
rights.
Parties to the stockholders agreement could not transfer shares, other than in an
exempt transfer, which included transfers to affiliates, transfers to family members in the case of
a natural person, transfers in connection with certain sales of our company approved by our Board
of Directors or by MDP, transfers by MDP to Quadrangle and transfers by the management investors to
us. We and MDP were granted certain rights of first refusal in connection with certain sales of
our shares by any of the other stockholders or their permitted assigns. In addition, certain
stockholders were granted certain tag along rights and preemptive rights under the stockholders
agreement.
(b) On May 3, 2007, Cinemark USA, Inc., or Cinemark USA and Alan Stock, our Chief
Executive Officer, agreed to terminate the Amended and Restated Agreement to Participate in Profits
and Losses, or the Amended Profit Participation Agreement, dated March 12, 2004. Pursuant to the
Amended Profit Participation Agreement, Alan Stock participated with Cinemark USA in the profits
and losses of the Holiday Village 4 theatre in Park City, Utah and Kentucky Oaks Mall (II) theatre
in Paducah, Kentucky. Alan Stock received a profit interest in the two theatres once Cinemark USA
recovered its capital investments in these theatres plus the borrowing costs. Operating losses and
disposition losses for these theatres were allocated 100% to Cinemark USA. Operating profits and
disposition profits were allocated first to Cinemark USA to the extent of total operating losses
and losses from any disposition of these theatres. Thereafter, net cash from operations from these
theatres or from any disposition of these theatres was paid first to Cinemark USA until such
payments were equal to Cinemark USAs investment in these theatres, plus interest, and then 51% to
Cinemark USA and 49% to Alan Stock.
In the Amended Profit Participation Agreement, Alan Stock provided to Cinemark USA a call option to
purchase his profit participation interest within 30 days of Cinemark USA filing a registration
statement with the SEC in a public offering on its own behalf or on behalf of any other security
holder of Cinemark USA or Cinemark USAs affiliates, registering the capital stock of Cinemark USA
under the Securities Act of 1933, as amended. We filed a registration statement with the SEC in
connection with the initial public offering of our common stock which became effective on April 23,
2007 and Cinemark USA exercised its call option on May 1, 2007.
Under the Amended Profit Participation Agreement, the purchase price of Alan Stocks profit
participation interest was equal to the greater of (1) $8,705,678 reduced by any payments received
by Alan Stock during the term and (2) 49% of adjusted theatre level cash flow multiplied by seven,
plus cash and value of inventory associated with the two theatres, minus necessary reserves,
accrued liabilities and accounts payable associated with the two theatres. Accordingly, the
purchase price was determined to be $6,853,060. Upon payment and receipt of the purchase price, the
Amended Profit Participation Agreement between Cinemark USA and Alan Stock was terminated.
The foregoing is intended to be a summary of the terms of the termination agreement between
Cinemark USA and Alan Stock and is qualified in its entirety by reference to the termination
agreement, attached to this Current Report on Form 8-K as Exhibit 10.2 and incorporated by
reference as if fully set forth herein.
Item 8.01 Other Events
On March 20, 2007, Cinemark USA repurchased approximately $332.0 million aggregate principal
amount of 9% senior subordinated notes. In connection with such repurchase, it executed a fourth
supplemental indenture, which removed substantially all of the restrictive covenants and certain
events of default contained in the indenture. As a result, the remaining holders of the 9% senior
subordinated notes will no longer be entitled to the benefits of such covenants and events of
default, and Cinemark USA will be permitted to take certain actions that were previously prohibited
by the indenture.
The foregoing is intended to be a summary of the terms of the fourth supplemental indenture
and is qualified in its entirety by reference to the fourth supplemental indenture, filed with this
Current Report on Form 8-K as Exhibit 4.1 and incorporated by reference as if fully set forth
herein.
Item 9.01 Financial Statements and Exhibits
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Exhibit |
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Description |
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4.1
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Fourth Supplemental Indenture, dated March
20, 2007, among Cinemark USA, Inc. and the
subsidiaries of Cinemark USA, Inc. named
therein, and The Bank of New York Trust
Company, N.A. (incorporated by
reference to Exhibit 4.1 to the Current Report on
Form 8-K, File No. 033-47040, filed by
Cinemark USA, Inc. with the SEC on March 26,
2007). |
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10.1
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Director Nomination Agreement,
effective as of April 27, 2007, among Cinemark
Holdings, Inc. and the stockholders party
thereto. |
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10.2
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Termination Agreement between Cinemark USA,
Inc. and Alan Stock, dated May 3, 2007. |
[SIGNATURE PAGE FOLLOWS]
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CINEMARK HOLDINGS, INC. |
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Date: May 3, 2007 |
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By: |
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/s/ Michael Cavalier |
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Name: Michael Cavalier |
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Title: Senior Vice President - General Counsel |