EXHIBIT 10.14(d)
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into
as of March 12, 2004, by and between Cinemark, Inc., a Delaware corporation (the
"COMPANY"), and Xxxxxx Xxxxxx ("EXECUTIVE").
W I T N E S S E T H:
WHEREAS, the Company and Executive desire to enter into an employment
arrangement and this Agreement to assure the Company of the continuing and
exclusive service of Executive and to set forth the terms and conditions of
Executive's employment with the Company;
WHEREAS, this Agreement is being entered into in connection with the
execution and delivery of the Merger Agreement, dated as of the date hereof,
between the Company and Popcorn Merger Corp., a Delaware corporation (the
"MERGER AGREEMENT"), pursuant to which Popcorn Merger Corp. will merge with and
into the Company, with the Company continuing as the surviving corporation; and
WHEREAS, this Agreement shall become effective between the parties
hereto only upon the consummation of the merger under the Merger Agreement (the
"MERGER") as provided in Section 18 hereof;
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 Senior Vice President and Chief Financial 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 Cinemark USA, Inc. 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.
1.3 Location of Office. The Company shall make available
to Executive an office and support services at the Company's headquarters in the
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 18) 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 $309,664 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. Executive's Base Salary shall not be decreased except upon mutual
agreement between the parties.
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 other similarly situated 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
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benefits referred to in this 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) Executive shall be entitled to receive a
special bonus upon the Effective Date equal to $50,000 (the "SPECIAL BONUS"),
provided that Executive shall not be entitled to receive the Special Bonus if
the Special Bonus has not been approved by such number of stockholders of the
Company as is required by the terms of Section 280G(b)(5)(B) of the Internal
Revenue Code of 1986, as amended (the "CODE"), in a manner which satisfies all
applicable requirements of such Code Section 280G(b)(5)(B) and the Treasury
Regulations promulgated thereunder, including (without limitation) Q&A-7 of
Treas. Regs. Section 1.280G-1 (which approval may, but is not required to,
include any other benefits or payments to which Executive may be entitled in
connection with the closing of the Merger Agreement). In addition to his Base
Salary and Special Bonus, for each fiscal year during the Term, commencing with
the fiscal year ended December 31, 2004, Executive shall be entitled to receive
an annual incentive cash bonus (the "ANNUAL BONUS") based upon reasonable
Company targets established by the Board (or the Compensation Committee of the
Board). The Annual Bonus targets established by the Board for the fiscal year
ended December 31, 2004, are set forth on Exhibit A. All such Annual Bonus
payments shall be payable within ninety (90) days after the end of the fiscal
year during which the criteria for payment of the Annual Bonus are achieved, and
all bonus payments shall be reduced by standard withholding and other authorized
deductions.
3.3 Stock Options. No later than thirty (30) days after
the Effective Date (as defined in Section 18), the Board will adopt a stock
option plan (the "PLAN") and approve the grant to Executive of stock options
("STOCK OPTIONS") under the Plan to acquire 307,499 shares of the Company's
Common Stock which will be subject to all the terms and conditions of the Plan
and the agreement under which such Stock Options are granted to Executive (the
"STOCK OPTION AGREEMENT"). The Company will reserve a number of shares of its
Common Stock equal to ten percent (10%) of its fully diluted Common Stock as
of the Effective Date for issuance pursuant to the Plan. The exercise price
of the Stock Options shall be determined under the Plan based on the fair market
value (as defined in the Plan) of the Common Stock on the date of grant, subject
to adjustment as provided in the Plan, which shall be the same price per share
as paid by Madison Dearborn Capital Partners IV L.P. ("MDCP") for the Company's
Common Stock in connection with the Merger. Subject to the terms and conditions
of the Plan and the Stock Option Agreement (which agreements shall include the
terms described below):
(a) Executive's Stock Options shall vest and
become exercisable twenty percent (20%) per year on a daily pro rata
basis beginning on the date of grant and shall be one hundred percent
(100%) vested and exercisable five (5) years after the date of grant,
in each case so long as Executive is then, and has been continuously,
employed by the Company through the date of termination, except that an
additional twenty percent (20%) of Executive's Stock Options will
accelerate and become exercisable upon a termination of Executive's
employment as a result of death or Disability.
(b) Upon termination for Cause, all of
Executive's Stock Options (whether vested or unvested) shall be
cancelled automatically, and the Company and MDCP shall have the right
to repurchase at cost all shares of Common Stock (if any) which have
been issued upon exercise of Executive's Stock Options.
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(c) Upon termination of Executive's employment
for any reason other than Cause prior to the closing of the initial
public offering of the Company's Common Stock, the Company and MDCP
shall have the right to repurchase Executive's shares of Common Stock
issued or issuable upon exercise of Executive's Stock Options at a
price equal to the fair market value (as determined by the Board in its
good faith judgment) of the shares.
(d) Upon the consummation of a Sale of the
Company, Executive's Stock Options 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" means the sale of the Company to a Person or Persons
pursuant to which such Person or Persons directly or indirectly acquire
(i) capital stock of the Company possessing the voting power under
normal circumstances to elect a majority of the Company's board of
directors or entitling such Person to exercise more than fifty percent
(50%) of the total voting power of the shares of capital stock of the
Company or the surviving entity entitled to vote (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or
(ii) all or substantially all of the Company's assets determined on a
consolidated basis.
3.4 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 3.4
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.
3.5 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 which
scheduled flight time exceeds five hours. Executive shall keep complete and
accurate records of all expenditures such that Executive may fully account
according to the Company's practices and procedures.
3.6 Vacation. Executive shall be entitled to twenty (20)
days paid vacation and other absences from work in accordance with the Company's
vacation and absence policy in effect at the time of such vacations or absences.
3.7 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
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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. 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.
("XXXXXXX"), as modified from time to time by Xxxxxxx, whereby Xxxxxxx divides
the United States into non-overlapping geography for planning, buying and
evaluating television audiences across various markets and whereby a
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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 Non-Solicitation. During the Term and for three (3)
years thereafter (the "NON-SOLICITATION PERIOD"), Executive shall not directly
or indirectly through another Person (i) induce or attempt to induce any
managerial or executive-level employee of the Company or any Subsidiary to leave
the employ of the Company or such Subsidiary, or in any way interfere with the
relationship between the Company or any Subsidiary and any employee thereof,
(ii) without the Company's prior written consent, hire any person who was a
managerial or executive level employee of the Company or any Subsidiary at any
time during the Term or (iii) induce or attempt to induce any customer,
supplier, landlord, developer, licensee, licensor, franchisee or other business
relation of the Company or any Subsidiary to cease doing business with the
Company or such Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any Subsidiary or (iv) make any negative, derogatory or disparaging
statements or communications regarding the Company or its Subsidiaries or any of
their officers, directors or affiliates. Notwithstanding the foregoing, after
Executive's employment is terminated for any reason, Executive may hire any
former employee of the Company or any of its Subsidiaries who were involuntarily
terminated by the Company or any of its Subsidiaries.
4.4 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.
4.5 Return of Materials. Executive expressly acknowledges
that all data, books, records and other Confidential Information of the Company
and its affiliates obtained in
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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.
4.6 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.
4.7 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) 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 and benefits, such as retirement benefits, in accordance with the terms
of the plan or agreement pursuant to which such Stock Options or benefits were
granted to Executive (items (i) through (iii) above collectively referred to as
"ACCRUED EMPLOYMENT ENTITLEMENTS"), (iv) Executive's full Base Salary until the
expiration of six months from the date on which Executive was first unable
substantially to perform Executive's duties hereunder and, as of the last day of
such six-month period, shall be entitled to receive a lump sum payment equal to
an additional six months of Base Salary 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 participate in the
Company's
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welfare benefit plans and programs on the same terms as similarly situated
actively-employed executives for a period of twelve 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 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 physical or mental
impairment that (a) renders Executive unable to perform the essential functions
of Executive's positions, even with reasonable accommodation that does not
impose an undue hardship on the Company or its Subsidiaries, (b) has existed for
at least sixty (60) consecutive days, and (c) in the opinion of a physician
mutually agreed upon by the Company and Executive (which agreement shall not be
unreasonably withheld) will last for a duration of at least one hundred eighty
(180) consecutive days. 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 a
Stock Option 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 or a violation by Executive of federal securities laws
which results in a conviction, a guilty plea or a plea of nolo contendere, (ii)
the commission of fraud, embezzlement or theft by Executive in connection with
Executive's employment hereunder; (iii) engaging in conduct involving moral
turpitude that causes the Company and its affiliates substantial public
disrepute or substantial economic harm; (iv) a 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; (v) the
intentional wrongful damage to material property of the Company or its
affiliates; or (vi) drug or alcohol abuse or other intentional conduct by
Executive which causes the Company and its affiliates substantial public
disrepute or substantial economic harm. 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 into 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
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place Executive on a paid administrative leave of absence and (B) no less than
2/3 of the 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 under this Section 5.4, so long as Executive has not breached any of
the terms contained in Section 4, Executive shall be entitled to the following:
(i) 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, payable in accordance with the
Company's normal payroll practices for a period of twelve (12) months following
any such termination, plus an amount equal to the most recent Annual Bonus
received by Executive prior to the date of such termination (determined without
regard to any performance goals), payable within ninety (90) days after the end
of the Company's then current fiscal year (the "REGULAR SEVERANCE BENEFIT");
provided that if Executive is terminated under this Section 5.4 prior to the
first anniversary of the Effective Date, Executive shall be entitled to receive
his Base Salary in effect as of the date of such termination, payable in
accordance with the Company's normal payroll practices for a period commencing
on the date of such termination and ending on the second anniversary of the
Effective Date (as defined in Section 18), plus an amount equal to the product
of (A) the quotient of (x) the amount of the most recent Annual Bonus received
by Executive prior to the date of such termination (determined without regard to
any performance goals) divided by (y) 365, multiplied by (B) the number of days
between the date of such termination and the second anniversary of the Effective
Date, payable within ninety (90) days after the end of the Company's then
current fiscal year (the "ENHANCED SEVERANCE BENEFIT"); provided that Executive
shall not be entitled to receive the Enhanced Severance Benefit if the Enhanced
Severance Benefit provided by this Agreement has not been approved by such
number of stockholders of the Company as is required by the terms of Section
280G(b)(5)(B) of the Internal Revenue Code of 1986, as amended (the "CODE"), in
a manner which satisfies all applicable requirements of such Code Section
280G(b)(5)(B) and the Treasury Regulations promulgated thereunder, including
(without limitation) Q&A-7 of Treas. Regs. Section 1.280G-1 (which approval may,
but is not required to, include any other benefits or
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payments to which Executive may be entitled in connection with the closing of
the Merger Agreement); and
(iii) 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 twelve months from the Termination Date.
Following the expiration of such twelve-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.
(b) Any outstanding stock-based, equity-based,
Stock Option or performance compensation awards 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 each case, in accordance with the
terms contained in the plan and the agreement pursuant to which such
compensation awards were granted.
(c) 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 as
a result of termination pursuant to this Section 5.4.
(d) "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; or (v) the Company transfers Executive's primary
workplace by more than twenty (20) miles from the current workplace. 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. Notwithstanding the foregoing, the appointment of a new
Chief Executive Officer as a result of the succession plan for Xxx Xxx Xxxxxxxx
as approved by him and the assignment by the Board to such Chief Executive
Officer of such duties, responsibilities and authority as are customarily
associated with the position of chief executive officer of a corporation
comparable to the Company shall not in and of itself serve as the basis for
Executive to terminate his employment with Good Reason under clause (i) above.
5.5 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
EMPLOYMENT AGREEMENT Page 10
Xxxxxx Xxxxxx
Executive executes a general release of all claims in a form reasonably approved
by the Company.
5.6 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 "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.
EMPLOYMENT AGREEMENT Page 11
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(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 fifty percent (50%) by the
Company and fifty percent (50%) by Executive.
7. Non-Assignment. This Agreement shall not be assignable nor the
duties hereunder delegable by Executive. None of the payments hereunder may be
encumbered or in any way anticipated by 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.
8. 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).
9. Survival. The provisions of Sections 4 through 19 shall
survive the expiration or earlier termination of the Term.
10. Taxes. All payments to Executive under this Agreement shall be
reduced by all applicable withholding required by Federal, state or local law.
11. No Obligation to Mitigate; No Rights of Offset.
11.1 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 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.
11.2 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
Executive or others.
EMPLOYMENT AGREEMENT Page 12
Xxxxxx Xxxxxx
12. 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 12. 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.
13. 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 June 19, 2002, 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.
14. Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one agreement.
15. 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.
16. 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
EMPLOYMENT AGREEMENT Page 13
Xxxxxx Xxxxxx
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.
17. Binding Effect. Subject to Section 7 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.
18. Effective Date. This Agreement shall become effective
automatically without any further actions by the Company or Executive
immediately upon the consummation of the Merger (the "EFFECTIVE DATE"). However,
this Agreement shall terminate and shall be of no further force and effect if
the Merger Agreement is terminated prior to the Effective Date in accordance
with its terms.
19. 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.
* * * * *
[SIGNATURE PAGE FOLLOWS]
EMPLOYMENT AGREEMENT Page 14
Xxxxxx Xxxxxx
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the day and in the year first written above.
COMPANY:
CINEMARK, INC.
By: /s/ Xxx Xxx Xxxxxxxx
-----------------------------------
Name: Xxx Xxx Xxxxxxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx
EMPLOYMENT AGREEMENT Page 15
Xxxxxx Xxxxxx
EXHIBIT A
2004 ANNUAL BONUS TARGETS
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.
Targeted EBITDA shall be equal to EBITDA adjusted by adding back advanced and
deferred rent, amortization of stock options and other noncash items and all
costs related to the acquisition and refinancing of the Company in 2004. For the
2004 fiscal year the Target is $228.6 million. The Executive shall receive a
cash bonus equal to (i) a minimum of 20% of Executive's annual Base Salary if
the EBITDA of the Company is at least 96.8% of the Target, (ii) 40% of
Executive's annual Base Salary if the EBITDA of the Company is at least equal to
the Target, (iii) 60% of Executive's annual Base Salary if the EBITDA of the
Company is at least 103.20% of the Target, and (iv) a maximum of 80% of
Executive's annual Base Salary if the EBITDA of the Company is at least 106.4%
of the Target. The percentage of the Executive's annual Base Salary used to
determine the amount of Annual Bonus shall be adjusted proportionately upward or
downward from the threshold percentages specified above, as applicable,
utilizing the percentage difference between actual EBITDA and the Target
relative to the 3.2% increments multiplied by the 20% increments (or 6.25% for
every one percentage difference from the target). For purposes of example if the
adjusted EBITDA is $240.0 million, which is 104.98% (240/228.6) of the Target,
the adjustment would be 4.98% multiplied by 6.25% + 40% (base), resulting in a
bonus equal to 71.125% of annual Base Salary. If EBITDA for fiscal year 2004 is
less than 96.8% of the Target, no Annual Bonus will be paid.
