EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of June 16, 2008, by
and between Cinemark Holdings, Inc., a Delaware corporation (the “Company”), and Xxxx X. Stock
(“Executive”).
WITNESSETH:
WHEREAS, Cinemark, Inc., a wholly owned subsidiary of the Company, and Executive are parties
to an Employment Agreement dated as of March 12, 2004, as amended to the date hereof relating to
Executive, which arrangement sets forth the terms and conditions of Executive’s employment with
Cinemark, Inc. (the “Original Agreement”); and
WHEREAS, the parties desire to enter into this Agreement to replace and supersede the Original
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the
parties hereto agree as follows:
1. Employment.
1.1 Title and Duties. The Company hereby employs Executive as Chief Executive Officer of the Company. Executive’s duties, responsibilities and
authority shall be consistent with Executive’s position and titles and shall include serving in a
similar capacity with certain of the Company’s Subsidiaries (as hereinafter defined) and such other
duties, responsibilities and authority as may be assigned to Executive by the Board of Directors of
the Company (the “Board”). Executive shall report directly to the Chief Executive Officer of the
Company.
1.2 Services and Exclusivity of Services. The Company and Executive recognize that
the services to be rendered by Executive are of such a nature as to be peculiarly rendered by
Executive, encompass the individual ability, managerial skills and business experience of Executive
and cannot be measured exclusively in terms of hours or services rendered in any particular period.
Executive shall devote Executive’s full business time and shall use Executive’s best efforts,
energy and ability exclusively toward advancing the business, affairs and interests of the Company
and its Subsidiaries, and matters related thereto. Nothing in this Agreement shall preclude
Executive from serving on boards of directors of up to one other company which is not competitive
to the Company upon the Board’s approval not to be unreasonably withheld or participating on a
board of or in trade organizations, charitable, community, school or religious activities that do
not substantially interfere with his duties and responsibilities hereunder or conflict with the
interests of the Company.
1.3 Location of Office. The Company shall make available to Executive an office and
support services at the Company’s headquarters in Dallas/Plano, Texas area. Executive’s main
office shall be at such location.
1.4 Subsidiaries; Person. For purposes of this Agreement, “Subsidiary” or
“Subsidiaries” means, as to any Person, any other Person (i) of which such Person or any other
Subsidiary of such Person is a general partner, (ii) of which such Person, any one or more of
its other Subsidiaries of such Person, or such Person and any one or more of its other
Subsidiaries, directly or indirectly owns or controls securities or other equity interests
representing more than fifty percent (50%) of the aggregate voting power, or (iii) of which such
Person, any one or more of its other Subsidiaries of such Person, or such Person and any one or
more its other Subsidiaries, possesses the right to elect more than fifty percent (50%) of the
board of directors or Persons holding similar positions; and “Person” means any individual,
corporation, partnership, limited liability company, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, or other entity or group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended).
2. Term. The term of Executive’s employment under this Agreement (the “Term”) shall
commence on the Effective Date (as defined in Section 19) and shall continue for a period of three
(3) years thereafter; provided, however, that at the end of each year of the Term, the Term shall
be extended for an additional one-year period unless Executive’s employment with the Company is
terminated in accordance with Section 5. References in this Agreement to the “balance of the Term”
shall mean the period of time remaining on the scheduled Term after giving effect to the most
recent extension of the Term occurring prior to any termination of the Term.
3. Compensation.
3.1 Base Salary. During the Term, the Company will pay to Executive a base salary at
the rate of $603,200 per year, payable in accordance with the Company’s practices in effect from
time to time (“Base Salary”). Amounts payable shall be reduced by standard withholding and other
authorized deductions. Such Base Salary shall be reviewed during the Term for increase (but not
decrease) in the sole discretion of the Board, or such individual, group or committee that the
Board may select as its delegate, not less frequently than annually during the Term. In conducting
any such review, the Board or such delegate shall consider and take into account, among other
things, any change in Executive’s responsibilities, performance of Executive, the compensation of
other similarly situated executives of comparable companies and other pertinent factors. Once
increased, Executive’s Base Salary shall not be decreased except upon mutual agreement between the
parties, and, as so increased, shall constitute Base Salary hereunder.
3.2 Bonuses; Incentive, Savings and Retirement Plans; Welfare Benefit Plans.
(a) Executive shall be entitled to participate in all annual and long-term bonuses and
incentive, savings and retirement plans generally available to other similarly situated executive
employees of the Company. Executive, and Executive’s family as the case may be, shall be eligible
to participate in and receive all benefits under welfare benefit plans, practices, programs and
policies provided to the Chief Executive Officer, the President, other Executive Vice Presidents
and other Senior Vice Presidents of the Company, including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life, accidental death
and travel accident insurance plans and programs. The Company reserves the right to modify,
suspend or discontinue any and all of its benefits referred to in this
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Section 3.2 at any time without recourse by Executive so long as such action is taken
generally with respect to other executives and does not single out Executive.
(b) In addition to his Base Salary, for each fiscal year ending during the Term, Executive
will be entitled to participate in the Cinemark Holdings, Inc. Performance Bonus Plan (the “Annual
Bonus Plan”), as such Annual Bonus Plan may be amended from time to time, or pursuant to the terms
of any successor plan. If the performance targets specified by the Compensation Committee of the
Board are satisfied, Executive will receive an annual incentive cash bonus (the “Annual Bonus”)
based upon the award opportunity parameters and performance targets established by the Compensation
Committee of the Board pursuant to the terms of the Annual Bonus Plan. The amount of the Annual
Bonus award opportunity and the performance targets that must be satisfied to receive such Annual
Bonus award will be established by the Compensation Committee, in its sole discretion, each fiscal
year pursuant to the terms of the Annual Bonus Plan. All such Annual Bonus award payments will be
payable as specified pursuant to the terms of the Annual Bonus Plan and will be reduced by standard
withholding and other authorized deductions.
(c) Equity Awards. Executive will be eligible to participate in and receive grants of
equity incentive awards (“Equity Awards”) under the Company’s Amended and Restated 2006 Long Term
Incentive Plan (the “Equity Incentive Plan”), as such Equity Incentive Plan may be amended from
time to time, or pursuant to the terms of any successor plan. Equity Awards to Executive may be
granted at such times and subject to such terms and conditions as the Equity Incentive Plan
administrator shall determine. Executive has received prior grants of Stock Options which shall
continue to be subject to the terms of this Agreement provided herein. Upon the consummation of a
Sale of the Company, Executive’s Equity Awards will accelerate and become fully vested (assuming
Executive is then, and has been continuously, employed by the Company or any of its Subsidiaries).
For purposes hereof, “Sale of the Company” is defined and has the meaning specified in the Equity
Incentive Plan.
3.3 Fringe Benefits. Executive shall be entitled to receive fringe benefits
consistent with Executive’s duties and position, and in accordance with the benefits provided to
other similarly situated executive employees of the Company. The Company reserves the right to
modify, suspend or discontinue any and all of its fringe benefits referred to in this Section 3.3
at any time without recourse by Executive so long as such action is taken generally with respect to
other similarly situated peer executives and does not single out Executive.
3.4 Travel and Expenses. Executive shall be entitled to reimbursement for expenses
incurred in the furtherance of the business of the Company in accordance with the Company’s
practices and procedures, as they may exist from time to time. Executive may, in his discretion,
elect to purchase, and be reimbursed for, business class tickets on any international flights for
which scheduled flight time exceeds five hours. Executive shall keep complete and accurate records
of all expenditures such that Executive may substantiate and fully account for such expenses
according to the Company’s practices and procedures.
3.5 Vacation. Executive shall be entitled to no less than twenty (20) days paid
vacation and other absences from work in accordance with the Company’s vacation and absence
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policy in effect at the time of such vacations or absences which shall be taken at such times
as are consistent with Executive’s responsibilities hereunder.
3.6 Payment of Compensation and Benefits. Executive acknowledges and agrees that all
payments required to be paid to Executive and benefits to be provided to Executive may be paid or
provided by the Company, its successor or any other Subsidiary of the Company.
4. Confidential Information; Non-Competition; Non-Solicitation.
4.1 General. Executive acknowledges that during his employment and as a result of his
relationship with the Company and its affiliates, Executive has obtained and will obtain knowledge
of, and has been given and will be given access to, information, including, but not limited to,
information regarding the business, operations, services, proposed services, business processes,
advertising, marketing and promotional plans and materials, price lists, pricing policies, ticket
sales, film licensing, purchasing, real estate acquisition and leasing, other financial information
and other trade secrets, confidential information and proprietary material of the Company and its
affiliates or designated as being confidential by the Company or its affiliates which are not
generally known to non-Company personnel, including information and material originated, discovered
or developed in whole or in part by Executive (collectively referred to herein as “Confidential
Information”). The term “Confidential Information” does not include any information which (i) at
the time of disclosure is generally available to the public (other than as a result of a disclosure
by Executive in breach of this Agreement), or (ii) was available to Executive on a non-confidential
basis from a source (other than the Company or its Affiliates or their representatives) that is not
and was not prohibited from disclosing such information to Executive by a contractual, legal or
fiduciary obligation. Executive agrees that during the Term and, to the fullest extent permitted
by law, thereafter, Executive will, in a fiduciary capacity for the benefit of the Company and its
affiliates, hold all Confidential Information strictly in confidence and will not directly or
indirectly reveal, report, disclose, publish or transfer any of such Confidential Information to
any Person, or utilize any of the Confidential Information for any purpose, except in furtherance
of Executive’s employment under this Agreement and except to the extent that Executive may be
required by law to disclose any Confidential Information. Executive acknowledges that the Company
and its affiliates are providing Executive additional Confidential Information that Executive was
not given prior to execution of this Agreement, as further consideration to Executive for executing
this Agreement, including the promises and covenants made by Executive in this Section 4.
4.2 Non-Competition. In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that during the course of his employment with the
Company and its Subsidiaries, he has, and will, become familiar with the trade secrets of the
Company and its Subsidiaries and with other Confidential Information concerning the Company and its
Subsidiaries and that his services have been and shall continue to be of special, unique and
extraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, during
Executive’s employment hereunder and for one year after the date of termination of employment (the
“Non-compete Period”), he shall not directly or indirectly own any interest in, manage, control,
participate in, consult with, render services for, be employed in an executive, managerial or
administrative capacity by, or in any manner engage in, any Competing Business.
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For purposes hereof, “Competing Business” means any business that owns, operates or manages
any movie theatre within a 25-mile radius (if such theatre is outside of a Major DMA) or a 10-mile
radius (if such theatre is within a Major DMA) of any theatre (i) being operated by the Company or
any of its Subsidiaries during Executive’s employment hereunder (but excluding any theatres which
the Company and its Subsidiaries have ceased to operate as of the date of the termination of
Executive’s employment hereunder), or (ii) under consideration by the Company or any of its
Subsidiaries for opening as of the date of termination of employment; “Major DMA” means a
Designated Market Area with a number of households in excess of 700,000; “Designated Market Area”
means each of those certain geographic market areas for the United States designated as such by
Xxxxxxx Media Research, Inc. (“Nielsen”), as modified from time to time by Nielsen, whereby Nielsen
divides the United States into non-overlapping geography for planning, buying and evaluating
television audiences across various markets and whereby a county in the United States is
exclusively assigned, on the basis of the television viewing habits of the people residing in the
county, to one and only one Designated Market Area; and all theatres operated by the Company and
its Subsidiaries in Canada shall be treated as being outside of a Major DMA. Nothing herein shall
prohibit Executive from (i) being a passive owner of not more than five percent (5%) of the
outstanding stock of any class of a corporation which is publicly traded, so long as Executive has
no active participation in the business of such corporation, or (ii) during the one year period
following the termination of Executive’s employment, owning, operating or investing in up to five
(5) movie theatres, so long as each such theatre is outside of a 25-mile radius of the theatres
being operated by the Company or any of its Subsidiaries or under consideration by the Company or
any of its Subsidiaries for opening, in each case, as of the time of termination of Executive’s
employment. During the one-year period following the termination of Executive’s employment for any
reason, Executive shall provide reasonable notice to the Company of his plans for acquiring
ownership in, commencing operations of, or investing in, any movie theatre prior to any such event.
Notwithstanding the foregoing, Executive’s obligations under this Section 4.2 shall terminate and
become null and void if Executive terminates his employment with Good Reason.
4.3 Proprietary Interest. All inventions, designs, improvements, patents, copyrights
and discoveries conceived by Executive during Executive’s employment by the Company or its
affiliates that are useful in or directly or indirectly related to the business of the Company and
its affiliates or to any experimental work carried on by the Company or its affiliates, shall be
the property of the Company and its affiliates. Executive will promptly and fully disclose to the
Company or its affiliates all such inventions, designs, improvements, patents, copyrights and
discoveries (whether developed individually or with other persons) and shall take all steps
necessary and reasonably required to assure the Company’s or such affiliate’s ownership thereof and
to assist the Company and its affiliates in protecting or defending the Company’s or such
affiliate’s proprietary rights therein.
4.4 Return of Materials. Executive expressly acknowledges that all data, books,
records and other Confidential Information of the Company and its affiliates obtained in connection
with the Company’s business is the exclusive property of the Company or its affiliates and that
upon the termination of Executive’s employment by the Company or its affiliates, Executive will
immediately surrender and return to the Company or its affiliates all such items and all other
property belonging to the Company or its affiliates then in the possession of Executive, and
Executive shall not make or retain any copies thereof.
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4.5 Property of the Company. Executive acknowledges that from time to time in the
course of providing services pursuant to this Agreement, Executive shall have the opportunity to
inspect and use certain property, both tangible and intangible, of the Company and its affiliates
and Executive hereby agrees that such property shall remain the exclusive property of the Company
and its affiliates. Executive shall have no right or proprietary interest in such property, whether
tangible or intangible, including, without limitation, Executive’s customer and supplier lists,
contract forms, books of account, computer programs and similar property.
4.6 Reasonable in Scope and Duration; Consideration. Executive agrees and
acknowledges that the restrictions contained in this Section 4 are reasonable in scope and duration
and are necessary to protect the business interests and Confidential Information of the Company and
its affiliates after the Effective Date of this Agreement, and Executive further agrees and
acknowledges that he has reviewed the provisions of this Agreement with his legal counsel.
Executive acknowledges and agrees that Executive will receive substantial, valuable consideration
from the Company for the covenants contained in this Section 4, including without limitation,
compensation and other benefits.
5. Termination.
5.1 Termination Prior to Expiration of Term. Notwithstanding anything to the contrary
contained in Section 2, Executive’s employment may be terminated prior to the expiration of the
Term only as provided in this Section 5.
5.2 Death or Disability.
(a) The Company may terminate Executive’s employment hereunder due to death or Disability (as
defined below). If Executive’s employment hereunder is terminated as a result of death or
Disability, Executive (or Executive’s estate or personal representative in the event of death)
shall be entitled to receive (i) all Base Salary due to Executive through the date of termination,
(ii) the actual bonus, if any, he would have received in respect of the fiscal year in which his
termination occurs, prorated by a fraction, the numerator of which is the number of days in such
fiscal year prior to the date of Executive’s termination and the denominator of which is 365,
payable at the same time as any Annual Bonus payments are made to other similarly situated active
executives pursuant to the terms of the Annual Bonus Plan and subject to satisfaction of the
performance targets for such fiscal year, (iii) any previously vested Equity Awards and benefits,
such as retirement benefits and vacation pay, in accordance with the terms of the plan or agreement
pursuant to which such Equity Awards or benefits were granted to Executive (items (i) through (iii)
above collectively referred to as “Accrued Employment Entitlements”), (iv) a lump sum payment equal
to twelve (12) months of Executive’s full Base Salary, which shall be payable as soon as
practicable following the date of termination but not later than March 15 of the first calendar
year following the year of such termination; provided, that in the case of Disability such payment
shall be offset by the amount of Base Salary paid by the Company to Executive or Executive’s
personal representative from the date on which Executive was first unable substantially to perform
Executive’s duties through the date of such termination, and (v) any benefits payable to Executive
or Executive’s beneficiaries, as applicable, in accordance with the terms of the applicable benefit
plan. At the Company’s expense, Executive and/or Executive’s dependents shall be entitled to
continue to
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participate in the Company’s welfare benefit plans and programs on the same terms as similarly
situated actively-employed executives for a period of twelve (12) months from the date of such
termination. Executive and/or Executive’s dependents shall thereafter be entitled to any
continuation of such benefits provided under such benefit plans or by applicable law. Following
the death or Disability of Executive, Executive’s participation under any Equity Award or other
incentive compensation plan (other than Annual Bonuses included in the definition of Accrued
Employment Entitlements) shall be governed by the terms of such plans.
(b) “Disability” shall mean if, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, Executive is either (i) unable to engage in any
substantial gainful activity; or (ii) receiving income replacement benefits for a period of not
less than three (3) months under an accident and health plan covering Company employees.
Executive’s Disability shall be determined by the Company, in good faith, based upon information
supplied by Executive and the physician mutually agreed upon by the Company and Executive.
Executive agrees to submit to physical exams and diagnostic tests reasonably recommended by such
physician.
5.3 Termination by the Company for Cause or by Executive because of a Voluntary
Termination.
(a) Executive’s employment hereunder may be terminated by the Company for Cause (as
hereinafter defined) or by Executive under a Voluntary Termination (as hereinafter defined). If
Executive’s employment hereunder is terminated under this Section 5.3, Executive shall be
entitled to receive all Base Salary due to Executive through the date of termination. Furthermore,
all previously vested rights of Executive under an Equity Award or similar incentive compensation
plan or program shall be treated in accordance with the terms of such plan or program. Except as
specifically set forth in this Section 5.3, the Company shall have no further obligations
to Executive following a termination for Cause, or a Voluntary Termination.
(b) “Cause” shall mean (i) subject to clause (ii) below, a felony which results in a
conviction, a guilty plea or a plea of nolo contendere, (ii) engaging in conduct involving moral
turpitude that causes the Company and its affiliates material and demonstrable public disrepute or
material and demonstrable economic harm; (iii) a willful material breach of this Agreement by
Executive and/or Executive’s gross neglect of Executive’s duties hereunder which is not cured to
the Board’s reasonable satisfaction within fifteen (15) days after notice thereof is given to
Executive by the Board; or (iv) the intentional wrongful damage to or misappropriation or
conversion of material property of the Company or its affiliates. No act or failure to act by the
Executive shall be deemed “willful” or “intentional” if done, or omitted to be done, by him in good
faith and with the reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Company shall not be entitled to terminate Executive
for Cause under clause (ii) above, unless (A) the Board shall have made a good faith investigation
and can produce demonstrable evidence of the existence of the commission of the fraud, embezzlement
or theft which would serve as the basis of Executive’s termination for Cause under clause (ii)
above, during which investigation the Company may place Executive on a paid administrative leave of
absence and (B) no less than 2/3 of the
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members of the Board (excluding Executive if Executive is then a member of the Board) shall
have made a good faith determination that the Company is entitled to terminate Executive for Cause
under clause (ii) above.
(c) “Voluntary Termination” shall mean a termination of employment by Executive on Executive’s
own initiative other than (i) a termination due to Disability or (ii) a termination for Good
Reason.
5.4 Termination by the Company without Cause or by Executive for Good Reason. The
Company may terminate Executive’s employment hereunder without Cause, and Executive shall be
permitted to terminate Executive’s employment hereunder for Good Reason (as hereinafter defined).
If the Company terminates Executive’s employment hereunder without Cause, other than due to death
or Disability, or if Executive effects a termination for Good Reason, Executive shall be entitled
to receive the payments and benefits set forth in this Section 5.4.
(a) If Executive’s employment hereunder is terminated by the Company without Cause, so long as
Executive has not breached any of the terms contained in Section 4, Executive shall be
entitled to each of the following:
(i) Executive’s Accrued Employment Entitlements;
(ii) two times Executive’s annual Base Salary in effect as of the date of such
termination, payable in accordance with the Company’s normal payroll practices for a period
of twenty-four (24) months following any such termination; provided, however, that if
Executive is, as of the date of such termination, a “specified employee” within the meaning
of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any amount
that is (1) not treated as a short-term deferral within the meaning of Treas. Regs.
§1.409A-1(b)(4), and (2) exceeds the separation pay limit under Treas. Regs.
§1.409A-1(b)(9)(iii)(A) (two times the lesser of (A) the sum of Executive’s annualized
compensation based on Executive’s annual Base Salary for the calendar year preceding the
calendar year in which termination occurs (adjusted for any increase during that year that
was expected to continue indefinitely if Executive’s employment had not been terminated), or
(B) the maximum amount that may be taken into account under a qualified plan pursuant to
Code Section 401(a)(17) for the year in which such termination occurs), will not be paid
before the date that is six (6) months after such date of termination, or if earlier, the
date of Executive’s death. Any payments or benefits to which Executive would otherwise be
entitled during such non-payment period will be accumulated and paid or otherwise provided
to Executive on the first day of the seventh month following such date of termination, or if
earlier, within 30 days of Executive’s death to his surviving spouse (or to his estate if
Executive’s spouse does not survive him). For purposes of this Section 5.4(a)(ii) and
Section 5.4(b), any amount that is paid as a short-term deferral within the meaning of
Treas. Regs. §1.409A-1(b)(4), or within the separation pay limit under Treas. Regs.
§1.409A-1(b)(9)(iii)(A) shall be treated as a separate payment, provided the aggregate of
the separate payments under this Section 5.4(a)(ii) shall not exceed an amount equal to two
times the Executive’s annual
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Base Salary in effect as of the date of such termination or for a period in excess of
twenty-four (24) months following any such termination.
(iii) an amount equal to the most recent Annual Bonus received by Executive for any
fiscal year ended prior to the date of such termination (determined without regard to any
performance goals), payable in a lump sum within thirty (30) days following such termination
of employment; provided further, that if such termination or resignation occurs within
thirty (30) days prior to the calendar year end, the payment, without interest, of the
amount paid for a termination by the Company without Cause shall be paid no earlier than
January 1 of the next year; and
(iv) Executive and Executive’s dependents shall be entitled to continue to participate
in the Company’s welfare benefit plans and insurance programs on the same terms as similarly
situated active employees for a period of twenty-four months from the termination date.
Following the expiration of such period, Executive and/or Executive’s dependents shall be
entitled to any continuation of benefits as are provided under such benefit plans by the
Company or as are required to be provided in accordance with applicable law.
(b) If Executive’s employment hereunder is terminated by the Executive for Good Reason, so
long as Executive has not breached any of the terms contained in Section 4, Executive shall be
entitled to the benefits provided in Section 5.4(a), except the severance benefit specified in
Section 5.4(a)(ii) (the “Regular Severance Benefit”) shall be payable in a lump sum (the “Permitted
Lump Sum Benefit”) to the extent it is (1) treated as a short-term deferral within the meaning of
Treas. Regs. §1.409A-1(b)(4), or (2) does not exceed the separation pay limit under Treas. Regs.
§1.409A-1(b)(9)(iii)(A) (two times the lesser of (A) the sum of Executive’s annualized compensation
based on Executive’s annual Base Salary for the calendar year preceding the calendar year in which
termination occurs (adjusted for any increase during that year that was expected to continue
indefinitely if Executive’s employment had not been terminated), or (B) the maximum amount that may
be taken into account under a qualified plan pursuant to Code Section 401(a)(17) for the year in
which such termination occurs), as described in Section 5.4(a)(ii). The Permitted Lump Sum Benefit
shall be payable within thirty (30) days following such termination of employment; provided
further, that if such termination or resignation occurs within thirty (30) days prior to the
calendar year end, the payment, without interest, of the Permitted Lump Sum Benefit paid for a
termination by Executive for Good Reason shall be paid no earlier than January 1 of the next year
and any remaining amount shall be payable in installments in accordance with the Regular Severance
Benefit provisions of Section 5.4(a)(ii).
(c) Any outstanding stock options granted to Executive shall be vested and/or exercisable for
the period through the date of such termination of employment, and shall remain exercisable, in
accordance with the terms contained in the plan and the agreement pursuant to which such option
awards were granted. Any outstanding Equity Award (other than stock options) with time based
vesting provisions granted to Executive shall be vested on a prorata basis based on the percentage
determined by dividing (i) the number of days from and including the grant date of such Equity
Award through the termination date of Executive’s employment, by (ii) the number of days from the
grant date of such Equity Award to the full
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vesting date of such Equity Awards. Any Equity Awards with performance based vesting
provisions shall remain outstanding through the remainder of the applicable performance period
(without regard to any continued employment requirement) and if or to the extent the performance
provisions are attained shall become vested without regard to any continued employment requirement
on a prorata basis based upon the percentage determined by dividing (i) the number of days from and
including the grant date of such Equity Award through the termination date of Executive’s
employment, by (ii) the number of days from the grant date to the end of the applicable performance
period without regard to any continued employment requirement.
(d) For purposes of the calculation of Executive’s benefits under any supplemental defined
benefit plan in which Executive participates, Executive shall be credited with one additional year
of service as a result of termination pursuant to this Section 5.4.
(e) “Good
Reason” means and shall be deemed to exist if, without the prior written consent of Executive, (i) Executive suffers a significant reduction in duties,
responsibilities or effective authority associated with Executive’s titles and
positions as set forth and described in this Agreement or is assigned any duties or
responsibilities inconsistent in any material respect therewith (other than in connection
with a termination for Cause); (ii) the Company fails to pay Executive any amounts or
provide any benefits required to be paid or provided under this Agreement or is otherwise
in material breach of this Agreement; (iii) the Company adversely changes
Executive’s titles or reporting requirements; (iv) Executive’s compensation
(other than Base Salary, which is governed by Section 3.1) or benefits provided for
hereunder are decreased other than as part of reductions affecting the Company’s
executives generally; (v) without the approval of Executive, the Board authorizes or
otherwise directs the exhibition at any theatres owned or managed by the Company or its
Subsidiaries films that are either not rated or rated NC-17, “X” or other rating
more restrictive than an “R” rating by The Motion Picture Association of America
or any successor industry organization that regularly publishes film ratings or the sale of
alcoholic beverages to patrons at any theatres owned or managed by the Company or its
Subsidiaries; or (vi) the Company transfers Executive’s primary workplace from the
Company’s headquarters in Dallas/Plano, Texas area. No termination by Executive shall be
for “Good Reason” unless written notice of such termination setting forth in particular
the event(s) constituting Good Reason is delivered to the Company within thirty (30) days
following the date on which the event constituting Good Reason occurs and the Company fails
to cure or remedy the event(s) identified in the notice within fifteen (15) days after
receipt of such notice; provided, however, violations of (v) above may not be cured by the
Company, and Executive’s termination for Good Reason upon such violation shall be final
and binding.
5.5 Termination During a Change of Control. Notwithstanding Section 5.4, if within one
year after a Change of Control (as defined below), executive’s employment is terminated by the
Company (other than for Disability, death or Cause) or Executive resigns for Good Reason, Executive
shall receive the payments and benefits set forth in this Section 5.5:
(a) Executive’s Accrued Employment Entitlements; plus
(b) An amount (the “Section 5.5 Termination Amount”) in addition to any other cash
compensation beyond that provided in (a) above, which amount shall be equal to
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the sum of two times Executive’s annual Base Salary; plus an amount equal to one and one half times the most recent Annual Bonus received by Executive for any fiscal year ended prior to the date of such termination (determined without regard to any performance goals), payable in a lump sum within thirty (30) days following such termination of employment provided further, that if such termination or resignation
occurs within thirty (30) days prior to the calendar year end, the payment, without interest, the amount shall be paid no earlier than January 1 of the next year; and
(c) Executive and Executive’s dependents shall be entitled to continue to participate in the
Company’s, a successor’s or acquiror’s welfare benefit plans and insurance programs on the same
terms as similarly situated active employees for a period of thirty (30) months from the
termination date. Following the expiration of such thirty (30) month period, Executive and/or
Executive’s dependents shall be entitled to any continuation of benefits as are provided under such
benefit plans by the Company or as are required to be provided in accordance with applicable law.
(d) Any outstanding Equity Awards granted to Executive shall be fully vested and/or
exercisable as of the date of such termination of employment and shall remain exercisable, in each
case, in accordance with the terms contained in the plan and the agreement pursuant to which such
compensation awards were granted, but in no event shall Executive’s rights under any such Equity
Awards be less favorable than the terms applicable to a Sale of the Company or other change in
control contained in the plan and the agreement pursuant to which such Equity Awards were granted.
(e) For purposes of the calculation of Executive’s benefits under any supplemental defined
benefit plan in which Executive participates, Executive shall be credited with one additional year
of service as a result of termination pursuant to this Section 5.5.
(f) A “Change of Control” shall be deemed to have occurred upon (i) the date that (A) any
individual, entity or group (within the meaning both of Section 1.409A-3(i)(5)(vi)(D) of the
Treasury Regulations and of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), other than Madison Dearborn Capital Partners or any entity or
organization controlled by Madison Dearborn Capital Partners (collectively, the “MDP Entities”) or
the Xxxxxxxx Family (as defined below), acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such individual, entity or group), beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent
(30%) or more of the total combined voting power of the voting securities of the Company entitled
to vote generally in the election of directors (“Voting Power”); and (B) such beneficial ownership
(as so defined) by such individual, entity or group of more than thirty percent (30%) of the Voting
Power then exceeds the combined beneficial ownership (as so defined) of Voting Power of the MDP
Entities and the Xxxxxxxx Family, (ii) a majority of the members of the Company’s Board of
Directors shall not be Continuing Directors (as defined below) or (iii) the sale of all or
substantially all of the Company’s assets.
(g) “Continuing Director” shall mean with respect to any 12-month period, individuals that at
the beginning of such period constituted the Board of Directors of the
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Company (together with any
new directors whose election by such board or whose nomination for election by the stockholders of
the Company was approved by a vote of at least a majority of the directors of the Company then
still in office who were either directors at the beginning of such period or whose election or
nomination was previously so approved).
(h) “Xxxxxxxx Family” shall mean (a) Xxx Xxx or Xxxxx Xxxxxxxx, or the estate of Xxx Xxx
Xxxxxxxx or Xxxxx Xxxxxxxx and (b) any trust or other arrangement for the benefit of a Xxxxxxxx.
5.6 General Release. Except where the termination is the result of Executive’s death
and notwithstanding the foregoing, no payment shall be made by the Company to Executive under this
Section 5 unless otherwise required by state, local or federal law, until Executive executes a
general release of all claims in a form reasonably approved by the Company. The terms of any such
general release will not, without the written consent of the Executive, terminate any continuing
payment or benefit obligations hereunder by the Company to the Executive. Notwithstanding the
foregoing, if the Company fails to deliver a form of general release to the Executive by the
forty-fifth (45th) day following the date of termination, the Executive will be deemed to have
satisfied the condition of this Section 5.6(a) without being required to execute a general release.
5.7 Office Support. Upon the termination of Executive’s employment hereunder for any
reason except for Cause, the Company shall make available to Executive, at the Company’s expense,
an office and support services, (including, without limitation, telephone, telefax and internet
access), at the Company’s election, either at the Company’s main office or at another suitable
office space in the Dallas/Plano area, for a period not to exceed three (3) months following the
date of such termination.
6. Arbitration.
6.1 General. Any dispute, controversy or claim arising out of or relating to this
Agreement, the breach hereof or the coverage or enforceability of this arbitration provision shall
be settled by arbitration in Dallas, Texas (or such other location as the Company and Executive may
mutually agree), conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, as such rules are in effect in Dallas/Fort Worth, Texas on the date of
delivery of demand for arbitration. The arbitration of any such issue, including the determination
of the amount of any damages suffered by either party hereto by reason of the acts or omissions of
the other, shall be to the exclusion of any court of law. Notwithstanding the foregoing, either
party hereto may seek any equitable remedy in a court to enforce the provisions of this Agreement,
including but not limited to an action for injunctive relief or attachment, without waiving the
right to arbitration.
6.2 Procedure.
(a) Either party may demand such arbitration by giving notice of that demand to the other
party. The party demanding such arbitration is referred to herein as the “Demanding Party,” and
the party adverse to the Demanding Party is referred to herein as the
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“Responding Party.” The
notice shall state (x) the matter in controversy, and (y) the name of the arbitrator selected by
the party giving the notice.
(b) Not more than fifteen (15) days after such notice is given, the Responding Party shall
give notice to the Demanding Party of the name of the arbitrator selected by the Responding Party.
If the Responding Party shall fail to timely give such notice, the arbitrator that the Responding
Party was entitled to select shall be named by the Arbitration Committee of the American
Arbitration Association. Not more than fifteen (15) days after the second arbitrator is so named;
the two arbitrators shall select a third arbitrator. If the two
arbitrators shall fail to timely select a third arbitrator, the third arbitrator shall be
named by the Arbitration Committee of the American Arbitration Association.
(c) The dispute shall be arbitrated at a hearing that shall be concluded within ten days
immediately following the date the dispute is submitted to arbitration unless a majority of the
arbitrators shall elect to extend the period of arbitration. Any award made by a majority of the
arbitrators (x) shall be made within ten days following the conclusion of the arbitration hearing,
(y) shall be conclusive and binding on the parties, and (z) may be made the subject of a judgment
of any court having jurisdiction.
(d) Any amount to which Executive is entitled under this Agreement (including any disputed
amount) which is not paid when due shall bear interest from the date due but not paid at a rate
equal to the lesser of eight percent (8%) per annum and the maximum lawful rate.
6.3 Costs and Expenses. All administrative and arbitration fees, costs and expenses
shall be borne by the Company.
7. Indemnification. To the fullest extent permitted by the indemnification provisions
of the certificate of incorporation and bylaws of the Company in effect as of the date of this
Agreement and the indemnification provisions of the corporation statute of the jurisdiction of the
Company’s incorporation in effect from time to time (collectively, the “Indemnification
Provisions”), and in each case subject to the conditions thereof, the Company shall (i) indemnify
Executive, as a director and/or officer of the Company or a subsidiary of the company or a trustee
or fiduciary of an employee benefit plan of the Company or a subsidiary of the Company, or, if
Executive shall be serving in such capacity at the Company’s written request, as a director or
officer of any other corporation (other than a subsidiary of the company) or as a trustee or
fiduciary of an employee benefit plan not sponsored by the Company or a subsidiary of the Company,
against all liabilities and reasonable expenses that may be incurred by Executive in any
threatened, pending, or completed action, suit or proceeding, whether civil, criminal or
administrative, or investigative and whether formal or informal (collectively, “Claims”), because
Executive is or was a director or officer of the Company, a director or officer of such other
corporation or a trustee or fiduciary of such employee benefit plan, and against which Executive
may be indemnified by the Company, and (ii) pay for or reimburse within twenty (20) days after
request by Executive of the reasonable expenses incurred from time to time by Executive in the
defense of any proceeding to which Executive is a party because Executive is or was a director or
officer of the Company, a director or officer of such other corporation or a trustee or fiduciary
of such employee benefit plan. The Company shall have the right to defend Executive against a
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Claim with counsel of its choice reasonably acceptable to Executive so long as (i) the Claim
involves primarily money damages, (ii) the Company conducts the defense of the Claim actively and
diligently and (iii) there are no conflicts of such counsel representing both the Company and the
Executive. So long as the Company is conducting the defense of the Claim, (i) Executive may retain
separate co-counsel at his sole cost and expense and participate in the defense of the Claim, (ii)
the Company shall not consent to the entry of any judgment or enter into any settlement with
respect to the Claim, nor take any voluntary action prejudicial to the determination of the Claim,
without the prior written consent of the Executive, such consent not to be unreasonably withheld
and (iii) the Company will not consent to the entry of any judgment
or enter into any settlement with respect to the Claim unless a written agreement from the
party asserting the Claim is obtained releasing the Executive from all liability thereunder. The
rights of Executive under the Indemnification Provisions and this Section 7 shall survive the
termination of the employment of Executive by the Company.
8. Assignment. This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and successors of the Company, but neither
this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of intestate succession) or
by the Company, except that the Company may assign this Agreement to any successor (whether by
merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of
the Company, if such successor expressly agrees to assume the obligations of the Company hereunder.
9. Remedies. Executive acknowledges that the services Executive is to render under
this Agreement are of a unique and special nature, the loss of which cannot reasonably or
adequately be compensated for in monetary damages, and that irreparable injury and damage will
result to the Company and its Subsidiaries in the event of any default or breach of this Agreement
by Executive. The parties agree and acknowledge that the breach by Executive of any of the terms
of this Agreement will cause irreparable damage to the Company and its affiliates, and upon any
such breach, the Company shall be entitled to injunctive relief, specific performance, or other
equitable relief (without posting a bond or other security); provided, however, that this shall in
no way limit any other remedies which the Company and its affiliates may have (including, without
limitations, the right to seek monetary damages).
10. Survival. The provisions of Sections 4 through 20 shall survive the expiration or
earlier termination of the Term.
11. Taxes. All payments to Executive under this Agreement shall be reduced by all
applicable withholding required by Federal, state or local law.
12. No Obligation to Mitigate; No Rights of Offset.
12.1 No Obligation to Mitigate. Executive shall not be required to mitigate the
amount of any payment or other benefit required to be paid to Executive pursuant to this Agreement,
whether by seeking other employment or otherwise, nor shall the amount of any such payment or other
benefit be reduced on account of any compensation earned by Executive as a result of employment by
another person; provided that Executive and Executive’s
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dependents shall not be entitled to
continue to participate in the welfare benefit plans of the Company and its Subsidiaries if
Executive is covered by the welfare benefit plans of another employer.
12.2 No Rights of Offset. The Company’s obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against Executive or others.
13. Notices. Any notice or other communications relating to this Agreement shall be
in writing and delivered personally or mailed by certified mail, return receipt requested, or sent
by overnight courier, to the party concerned at the address set forth below:
If to Company:
|
0000 Xxxxxx Xxxxxxx, Xxxxx 000 Xxxxx, Xxxxx 00000 Attn: Chief Executive Officer |
|
If to Executive:
|
At Executive’s residence address as maintained by the Company in the regular course of its business for payroll purposes. |
Either party may change the address for the giving of notices at any time by written notice
given to the other party under the provisions of this Section 13. If notice is given by
personal delivery or overnight courier, said notice shall be conclusively deemed given at the time
of such delivery or upon receipt of such couriered notice. If notice is given by mail, such notice
shall be conclusively deemed given upon deposit thereof in the United States mail.
14. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior written and oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. Without limiting the
generality of the foregoing sentence, this Agreement supersedes any prior employment agreement,
oral or written, including the Employment Agreement, dated as of March 12, 2004, between the
Company and Executive, as amended, which shall terminate and be cancelled as of the Effective Date,
except for any breaches thereof by Executive prior to the Effective Date which shall survive such
termination. This Agreement may not be changed orally, but only by an agreement in writing signed
by both parties.
15. Counterparts. This Agreement may be executed in counterparts, each of which shall
be an original, but all of which together shall constitute one agreement.
16. Construction. This Agreement shall be governed under and construed in accordance
with the laws of the State of Texas, without regard to the principles of conflicts of laws. The
paragraph headings and captions contained herein are for reference purposes and convenience only
and shall not in any way affect the meaning or interpretation of this Agreement. It is intended by
the parties that this Agreement be interpreted in accordance with its fair and simple meaning, not
for or against either party, and neither party shall be deemed to be the drafter of this Agreement.
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17. Severability. The parties agree that if any provision of this Agreement as
applied to any party or to any circumstance is adjudged by a court or arbitrator to be invalid or
unenforceable, the same will in no way affect any other circumstance or the validity or
enforceability of this Agreement. Without limiting the generality of the foregoing, in particular,
if any provision in Section 4, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that the court or
arbitrator making such determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced form, such
provision shall then be enforceable and shall be enforced. In addition, in the event of a
breach or violation by Executive of Section 4, the Non-compete Period and the Non-solicitation
Period shall be automatically extended respectively by the amount of time between the initial
occurrence of the breach or violation and when such breach or violation has been duly cured.
18. Binding Effect. Subject to Section 8 hereof, the rights and obligations of the
parties under this Agreement shall be binding upon and inure to the benefit of the permitted
successors, assigns, heirs, administrators, executors and personal representatives of the parties.
19. Effective Date; Effect on Prior Agreement. This Agreement shall become effective
as of the date first above written. This Agreement contains the entire understanding between the
parties hereto and supersedes in all respects any prior or other agreement or understanding between
the Company or any affiliate of the Company and Executive, including, without limitation, the
Employment Agreement, dated as of March 12, 2004, as amended to the date hereof (the “Prior
Agreement”), by and between Cinemark, Inc. and Executive, which agreement shall terminate in all
respects upon the Effective Date.
20. Executive’s Cooperation. During the Term and for five (5) years thereafter,
Executive shall cooperate with the Company and its Subsidiaries in any internal investigation, any
administrative, regulatory or judicial proceeding or investigation or any material dispute with a
third party, in each case as reasonably requested by the Company (including, without limitation,
Executive’s being reasonably available to the Company upon reasonable notice for interviews and
factual investigations, appearing at the Company’s request to give testimony without requiring
service of subpoena or other legal process, volunteering to the Company all pertinent information
and turning over to the Company all relevant documents which are or may come into Executive’s
possession, all at times and on schedules that are reasonably consistent with Executive’s other
activities and commitments), in each case limited to the extent that such cooperation (a) becomes
unduly burdensome for Executive (including in terms of the time commitments required by Executive
in connection with such cooperation), (b) in the event that such cooperation is required after the
Term, unreasonably interferes with Executive’s duties under his then current employment, (c) causes
Executive to breach in any material respect any material agreement by which he is bound, or (d) is
limited to the extent Executive is advised by legal counsel that such cooperation would not be in
Executive’s best interests. In the event that the Company requires Executive’s cooperation in
accordance with this paragraph, the Company shall reimburse Executive solely for: (i) his
reasonable out-of-pocket expenses (including travel, lodging and meals) upon submission of receipts
and (ii) any reasonable attorneys’ fees incurred by Executive to the extent that, after
consultation with the Company, Executive deems it advisable to seek the advice of legal counsel
regarding his obligations hereunder.
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21. Beneficiaries; References. Executive shall be entitled to select (and change, to
the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any
compensation or benefit payable hereunder following Executive’s death, and may change such
election, in either case by giving the Company written notice thereof. In the event of Executive’s
death or a judicial determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal
representative, and the Company shall pay amounts payable under this Agreement, unless otherwise
provided herein, in accordance with the terms of this Agreement, to Executive’s
personal or legal representatives, executors, administrators, heirs, distributees, devisees,
legatees or estate, as the case may be.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement on the day and in the
year first written above.
| COMPANY: CINEMARK HOLDINGS, INC. |
||||
| By: | /s/ Xxx Xxx Xxxxxxxx | |||
| Name: | Xxx Xxx Xxxxxxxx | |||
| Title: | Chairman of the Board | |||
| EXECUTIVE: |
||||
| /s/ Xxxx X. Stock | ||||
| Xxxx X. Stock | ||||
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