EXHIBIT 10.14(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into as
of June 19, 2002, (the "EFFECTIVE DATE") by and between Cinemark, Inc., a
Delaware corporation (the "COMPANY") and Xxx Xxx Xxxxxxxx (the "EXECUTIVE").
WITNESSETH:
WHEREAS, the Company and the Executive desire to enter into an
employment arrangement and this Agreement to assure the Company of the
continuing and exclusive service of the Executive and to set forth the terms and
conditions of the Executive's employment with the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties agree as follows:
1. Employment.
1.1 Title and Duties. The Company hereby employs the Executive
as Chairman and Chief Executive Officer of the Company. The Executive's duties,
responsibilities and authority shall be normal, customary, and consistent with
the Executive's position and shall include serving in a similar capacity with
Cinemark USA, Inc. and such other duties, responsibilities and authority as may
be mutually agreed upon by the Executive and the Board of Directors of the
Company (the "BOARD"). The Executive shall report directly to the Board of
Directors of the Company. Should, commencing with the 2003 annual meeting of
stockholders of the Company and continuing throughout the Term of this
Agreement, Executive not be nominated to serve (or, if nominated, not be elected
to serve) as Chairman of the Board, then Executive may, as provided in Section
4.4 of this Agreement, terminate Executive's employment hereunder, which
termination shall be deemed to be for Good Reason, as defined in Section 4.4.
1.2 Services and Exclusivity of Services. Except as provided
otherwise herein, Executive shall devote Executive's best efforts, skill and
attention to the business and affairs of the Company. Notwithstanding the
foregoing, Executive may engage in other activities including religious,
charitable, or other communities activities, service on other boards of
directors, investment activities and other business activities in any industry
as long as such services and activities do not materially interfere with
Executive's performance of Executive's duties as provided in this Agreement.
1.3 Location of Office. The Company shall make available to
the Executive an office and support services in the Dallas/Plano, Texas area.
The Executive's main office shall be at such Dallas/Plano location.
2. Term. The term of this Agreement (the "TERM") shall commence as of
the Effective Date and shall continue for a period of three (3) years
thereafter; provided, however, that at the end of each year, the Term shall be
extended for an additional one-year period unless the Executive's employment
with the Company is terminated in accordance with Section 4. References in this
Agreement to the "balance of the Term" shall mean the period of time
EMPLOYMENT AGREEMENT Page 1
remaining on the scheduled Term of this Agreement after giving effect to the
most recent extension of the Term occurring prior to any termination of this
Agreement.
3. Compensation.
3.1 Base Salary. During the Term, the Company will pay to the
Executive a base salary at the rate of Six Hundred Fifty Thousand Dollars
($650,000.00) 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 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 the Executive's responsibilities, performance of the
Executive, and compensation of other senior executives of the other comparable
companies and other pertinent factors. The Executive's Base Salary shall not be
decreased except upon mutual agreement between Executive and the Company.
3.2 Bonuses; Incentive, Savings and Retirement Plans; Welfare
Benefit Plans.
(a) The Executive shall be entitled to participate in
all annual and long-term bonuses and incentive, savings and retirement
plans generally available to other senior executive employees of the
Company. The Executive, and the 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
other senior executive employees 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 Section 3.2 at any time without recourse by the Executive so
long as such action is taken generally with respect to other senior
executives and does not single out the Executive.
(b) For each fiscal year during the Term, commencing
with the fiscal year ended December 31, 2002, Executive shall be
entitled to receive an annual incentive cash bonus (the "ANNUAL BONUS")
based upon Company EBITDA targets established by the Board (or such
individual, group or committee that the Board may select as its
delegate) using the criteria set forth on Schedule 3.2(b) attached
hereto. All such annual cash incentive bonus payments shall be payable
within 90 days after the end of the fiscal year during which the
criteria for payment of the Annual Bonus are achieved and shall be
reduced by standard withholding and other authorized deductions.
3.3 Fringe Benefits. The Executive shall be entitled to
receive fringe benefits consistent with the Executive's duties and position, and
in accordance with the benefits provided to other senior 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 the Executive so long as such action is taken generally with
respect to other senior executives and does not single out the Executive.
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3.4 Expenses. The 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. The Executive shall keep complete and accurate records of all
expenditures such that the Executive may fully account according to the
Company's practices and procedures.
3.5 Vacation. The Executive shall be entitled to paid
vacations and other absences from work that are reasonably consistent with the
performance of the Executive's duties as provided in this Agreement; provided,
however, that Executive will be provided a minimum of eight (8) weeks of paid
vacation in each calendar year of the Company. Such vacations and absences shall
be not less than those generally provided to other senior executive employees.
3.6 Country Club Entertainment Benefit. The Company shall, if
Executive so requests, provide Executive with a country club membership at a
country club selected by Executive and pay or reimburse Executive for all
charges for goods and services incurred relating to the Company's business and
for all membership costs and dues incurred with regard thereto by or on behalf
of Executive.
3.7 Automobile Allowance. The Company shall provide Executive
with a company car, which car shall be a full size current model luxury
automobile or other car selected by Executive.
3.8 Life Insurance. The Company shall pay the premiums on, and
maintain, in effect throughout the Term of this Agreement, a whole life
insurance policy on the life of Executive in an amount of not less than Five
Million Dollars ($5,000,000.00). Executive shall have the right to designate the
beneficiary under such policy.
3.9 Disability Insurance. The Company shall pay the premiums
on, and maintain in effect throughout the Term of this Agreement, long-term
disability insurance providing for payment of benefits at rates not less than
sixty-six percent (66%) of Executive's Base Salary.
3.10 Board Service. Executive agrees to serve as the Chairman
of the Board provided he is forever indemnified for serving in such capacities
as set forth in the Indemnification Agreement, which indemnity shall survive the
termination of the Indemnification Agreement and the termination of this
Agreement. The Company will provide appropriate Directors' and Officers'
Insurance naming Executive as a named insured with limits of no less than that
provided to other officers and directors.
4. Termination.
4.1 Termination Prior to Expiration of Term. The Executive's
employment, and Executive's rights under this Agreement, may be terminated prior
to the expiration of the Term of this Agreement only as provided in this Section
4.
EMPLOYMENT AGREEMENT Page 3
4.2 Death or Disability.
(a) The Company may terminate the Executive's
employment hereunder due to death or Disability (as defined below). If
the Executive's employment hereunder is terminated as a result of death
or Disability, the Executive (or the Executive's estate or personal
representative in the event of death) shall be entitled to receive (i)
all Base Salary due to the Executive through the date of termination,
(ii) a pro-rata portion of the Annual Bonus, if any, payable for the
period of Executive's employment during the fiscal year of the Company
prior to Executive's termination of employment, (iii) any previously
vested stock options or benefits, such as retirement benefits (items
(i) through (iii) above collectively referred to as "ACCRUED EMPLOYMENT
ENTITLEMENTS") and (iv) the Executive's full Base Salary until the
expiration of twelve (12) months from the date on which the Executive
was first unable substantially to perform Executive's duties hereunder
and, as of the last day of such twelve-month period, shall be entitled
to receive a lump sum payment equal to an additional twelve (12) months
of Base Salary. Within thirty (30) days following the termination of
Executive's employment due to death or Disability, the Company shall
make a lump sum payment to Executive or Executive's dependents
sufficient for Executive and/or Executive's dependents to continue to
receive the Company's welfare benefit plans and programs, including but
not limited to health, life, disability, and accident insurance plans
on the same terms as senior executive active employees for a period of
three (3) years following the termination of Executive's employment.
The Executive and/or the 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 the Executive, the Executive's participation under any stock option
or other incentive compensation plan (other than bonuses included in
the definition of Accrued Employment Entitlements) shall be governed by
the terms of such plans.
(b) "DISABILITY" shall mean a total and permanent
physical or mental impairment that (a) renders the Executive unable to
perform the essential functions of the Executive's position, even with
reasonable accommodation that does not impose an undue hardship on the
Company, (b) has existed for three consecutive months, and (c) in the
opinion of a physician mutually agreed upon by the Company and the
Executive (which agreement shall not be unreasonably withheld) will
last for a duration of at least nine months. The Executive's Disability
shall be determined by the Company, in good faith, based upon
information supplied by the Executive and the physician mutually agreed
upon by the Company and the Executive.
4.3 Termination by the Company for Cause or by the Executive
because of a Voluntary Termination.
(a) The Executive's employment hereunder may be
terminated by the Company for Cause (as hereinafter defined) or by the
Executive under a Voluntary Termination (as hereinafter defined). If
the Executive's employment hereunder is terminated under this Section
4.3, the Executive shall be entitled to receive the Accrued Employment
Entitlements. Furthermore, the Company shall honor any rights
previously vested in the Executive under a stock option or similar
incentive compensation plan or
EMPLOYMENT AGREEMENT Page 4
program in accordance with the terms of such plan or program. Except as
specifically set forth in this Section 4.3, the Company shall have no
further obligations to the Executive following a termination for Cause,
or a Voluntary Termination.
(b) "CAUSE" shall mean (i) Executive's conviction of
a felony and incarceration, (ii) a material and continuing breach of
this Agreement not cured or ceased within thirty (30) days after notice
of such breach by the Board, or (iii) the intentional wrongful damage
to material property of the Company or its affiliates.
(c) "VOLUNTARY TERMINATION" shall mean a termination
of employment by the Executive on Executive's own initiative other than
(i) a termination due to Disability or (ii) a termination for Good
Reason.
(d) The Company may not terminate the Executive's
employment for Cause unless:
(i) The Company provides the Executive with
written notice (the "NOTICE OF TERMINATION") of its intent to
terminate the Executive's employment for Cause, including a
detailed description of the specific reasons which form the
basis for such termination as well as the effective date of
such termination of employment (which effective date may be
the date of such Notice of Termination);
(ii) for a period of not less than thirty (30)
days after the date Notice of Termination is provided, the
Executive shall have the opportunity to appear before the
Board with or without legal representation, at the Executive's
election, to present arguments and evidence on Executive's own
behalf; and
(iii) following the presentation to the Board as
provided in (ii) above or the Executive's failure to appear
before the Board at a date and time specified in the Notice of
Termination (which date shall not be less than ten (10) days
after the date the Notice of Termination is provided), the
termination for Cause shall become effective as of the
effective date specified in the Notice of Termination if (x)
the Board, by the affirmative vote of all of its members
(excluding the Executive if he is a member of the Board, and
any other member of the Board reasonably believed by the Board
to be involved in the events leading the Board to terminate
the Executive's employment for Cause), determines that the
actions or inactions of the Executive specified in the Notice
of Termination occurred, that such actions or inactions
constitute Cause, and that the Executive's employment should
accordingly be terminated for Cause; and (y) the Board
provides the Executive with a written determination (a
"CONFIRMATION OF TERMINATION FOR CAUSE") setting forth in
specific detail the basis of such termination of employment.
Unless the Company reasonably establishes both (i) its
compliance with the substantive and procedural requirements of
this Section 4.3(d) prior to confirmation of a termination of
the Executive's employment for Cause, and (ii) that the
Executive's action or inaction specified in the Notice of
Termination for Cause did occur and constituted Cause, any
termination of the
EMPLOYMENT AGREEMENT Page 5
Executive's employment with the Company shall be deemed a
Termination without Cause for all purposes of this Agreement.
4.4 Termination by the Company without Cause or by the
Executive for Good Reason. The Company may terminate the Executive's employment
hereunder without Cause, and the Executive shall be permitted to terminate
Executive's employment hereunder for Good Reason (as hereinafter defined). If
the Company terminates the Executive's employment hereunder without Cause, other
than due to death or Disability, or if the Executive effects a termination for
Good Reason, the Executive shall be entitled to receive the payments and
benefits set forth in this Section 4.4.
(a) The Executive shall be entitled to receive,
within ten (10) business days following the effective date of such
termination of employment, the following:
(i) the Executive's Accrued Employment
Entitlements (in accordance with the terms of the benefit
plans providing such benefits, where applicable); plus
(ii) Executive's annual Base Salary in effect as
of the date of such termination, plus an amount equal to the
most recent Annual Bonus received by the Executive prior to
the date of such termination (determined without regard to any
performance goals), multiplied by the number of years
remaining for the balance of the Term; plus
(iii) at the Executive's option, either (x) a
lump sum payment to Executive or Executive's dependents
sufficient for Executive and/or Executive's dependents to
continue to receive the Company's welfare benefit plans and
programs, including but not limited to health, dental, life,
disability, and accident insurance plans on the same terms as
senior active executives for a period of five (5) years
following the termination of Executive's employment; or (y)
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 five (5) years from the
Termination Date. Following the expiration of the five (5)
year 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.
(iv) In addition, the Company shall, for a
period of five (5) years commencing on the date of Executive's
termination, provide Executive, at the Company's expense, with
an office and all reasonable occupancy expenses associated
therewith, and related telephone, telefax facilities, and
internet access expenses, and an assistant, at a location of
Executive's choosing, provided that the office facilities
shall be comparable to Executive's office at the Company on
the date of Executive's termination.
EMPLOYMENT AGREEMENT Page 6
(b) Any outstanding stock-based, equity-based or
performance compensation awards granted to the Executive shall become
fully vested and/or exercisable as of the effective date of such
termination of employment and shall remain exercisable in accordance
with the terms contained in the plan and agreement pursuant to which
such compensation awards were granted.
(c) For purposes of the calculation of the
Executive's benefit under any supplemental defined benefit plan in
which the Executive participates, the Executive shall be credited with
additional years of service equal to the remaining Term hereunder.
(d) "GOOD REASON" means and shall be deemed to exist
if, without the prior written consent of the Executive, (i) the
Executive suffers a 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; (ii)
the Company fails to honor any provision of this Agreement; (iii)
Executive is not nominated to serve (or if nominated, not elected to
serve) as Chairman of the Board of the Company; (iv) the Company
changes the Executive's title or reporting requirements; or (v) the
relocation of the Company's primary offices at which Executive is
principally employed to a location more than ten (10) miles from
Executive's current offices, or the requirement by the Company for
Executive to be based anywhere other than Executive's primary offices
at such current location (or more than ten (10) miles therefrom) on an
extended basis. No termination by the Executive shall be for "Good
Reason" unless notice of such termination setting forth in particular
the event(s) constituting Good Reason is delivered to the Company
thirty (30) days prior to the date Executive terminates this Agreement.
4.5 Continuing Assistance. Regardless of the reason for the
termination of Executive's employment, for a period of five (5) years beginning
on the date of the termination of this Agreement, the Company will provide such
reasonable assistance and support to Executive or Executive's estate as he or
such estate shall reasonably require in connection with the preparation and
filing of tax returns, statements, and forms insofar as such returns,
statements, or forms relate to Executive's employment or other association with
the Company, or any of its predecessors or affiliates. At the Company's
election, such assistance and support shall be provided by either tax personnel
from the Company or certified public accountants selected and compensated by the
Company.
5. Arbitration.
5.1 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 the 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
EMPLOYMENT AGREEMENT Page 7
foregoing, either party hereto may seek any provisional remedy in a court,
including but not limited to an action for injunctive relief or attachment,
without waiving the right to arbitration.
5.2 Procedure.
(a) Either party may demand such arbitration by
giving notice of that demand to the other 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 days after such notice is
given, the other party shall give notice to the party who demanded
arbitration of the name of the arbitrator selected by the other party.
If the other party shall fail to timely give such notice, the
arbitrator that the other party was entitled to select shall be named
by the Arbitration Committee of the American Arbitration Association.
Not more than fifteen 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) The Company agrees that it will pay Executive's
salary and benefits through conclusion of the arbitration.
(e) 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 eighteen percent (18%) per annum or the maximum lawful
rate.
5.3 Costs and Expenses. All administrative and arbitration
fees, costs and expenses shall be borne by the Company.
6. Non-Assignment. This Agreement shall not be assignable nor the
duties hereunder delegable by the Executive. None of the payments hereunder may
be encumbered or in any way anticipated by the Executive (or Executive's estate
or personal representative). The Company shall not assign this Agreement nor
shall it transfer all or any substantial part of its assets without first
obtaining in conjunction with such transfer the express assumption of the
obligations hereof by the assignee or transferee.
7. Survival. The provisions of Sections 4 and 5 shall survive the
expiration or earlier termination of this Agreement.
8. Taxes. All payments to the Executive under this Agreement shall be
reduced by all applicable withholding required by Federal, state or local law.
EMPLOYMENT AGREEMENT Page 8
9. No Obligation to Mitigate; No Rights of Offset.
9.1 The Executive shall not be required to mitigate the amount
of any payment or other benefit required to be paid to the 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 the Executive as a result of employment by another
person.
9.2 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 the Executive or others.
10. 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
Attn: Secretary
If to the Executive: At the 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 notice given to the other party under the provisions of this Section 10.
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 Unite States mail.
11. 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 agreement, oral or written. This
Agreement may not be changed orally, but only by an agreement in writing signed
by both parties.
12. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
agreement.
13. 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.
EMPLOYMENT AGREEMENT Page 9
14. Severability. If any portion or provision of this Agreement is
determined by arbitration or by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining portions or provisions hereof shall not
be affected. The covenants in this Agreement are severable and separate, and the
unenforceability of any specific covenant shall not affect the enforceability of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and this
Agreement shall thereby be reformed.
15. Binding Effect. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and in the year first written above.
COMPANY:
CINEMARK, INC.
By: /s/ XXXX X. STOCK
-----------------------------------------
Name: Xxxx X. Stock
---------------------------------------
Title: President and Chief Operating Officer
--------------------------------------
EXECUTIVE:
/s/ XXX XXX XXXXXXXX
---------------------------------------------
Xxx Xxx Xxxxxxxx
EMPLOYMENT AGREEMENT Page 10
Schedule 3.2(b)
Executive will be entitled to participate in the Company's current
bonus program in effect or as may be amended from time to time during the Term
of this Agreement. Pursuant to the bonus plan as currently in effect as of the
date of this Agreement, Executive is entitled to an Annual Bonus determined as
follows. During December of each fiscal year, the Board (or such individual,
group or committee that the Board may select as its delegate), shall set a
target EBITDA for the Company on a consolidated basis (the "TARGET") for the
next fiscal year. For the 2002 fiscal year the Target is $186.5 million. The
Executive shall receive a cash bonus equal to (i) a minimum of 80% of
Executive's annual Base Salary if the EBITDA of the Company is at least 95% of
the Target, or (ii) 150% of Executive's annual Base Salary if the EBITDA of the
Company is equal to or greater than the Target. The percentage of the
Executive's annual Base Salary shall be adjusted proportionately upward or
downward, as applicable, from the established percentages if the EBITDA of the
Company falls between the threshold percentages specified above. If EBITDA for
any fiscal year is less than 95% of the Target, no Annual Bonus will be paid.
EMPLOYMENT AGREEMENT Page 11
