THIS EMPLOYMENT
AGREEMENT (this “ Agreement ”) is made
and entered into as of December 15, 2008, by and between
Cinemark Holdings, Inc., a Delaware corporation (the “
Company ”), and Lee Roy Mitchell (“
Executive ”).
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:
1.1
Title and Duties . The Company hereby employs Executive as
the Chairman of the Company. Subject to the provisions in the
Company’s Amended and Restated Bylaws, Executive’s
duties, responsibilities and authority shall be normal, customary
and consistent with Executive’s position and title 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 ”); provided that no additional
compensation will be paid for Executive’s service on the
board of directors of any Company Subsidiary. Executive shall
report directly to the Board.
1.2
Services and Exclusivity of Services . Executive shall
devote his reasonable efforts, skill and attention to the business
and affairs of the Company and its Subsidiaries. Notwithstanding
the foregoing, so long as Executive has not breached any of the
terms contained in Section 4 hereof and so long as his
engaging in the following activities does not materially interfere
with Executive’s performance of his duties as provided in
this Agreement, Executive may engage in the following activities:
(a) religious, charitable and other community activities;
(b) service on the boards of directors of other companies;
(c) investment activities and other business activities in any
industry, other than the motion picture exhibition industry (except
to the extent that such activity constitutes a Permitted Activity
as hereafter defined); and (d) participation in a Permitted
Activity as defined below. “ Permitted Activity
” means the investment in, development of, and/or operation
of, one or more combined family restaurant and entertainment
facilities, each of which facilities shall conduct all of the
following activities: (A) the operation of one or more
restaurants, (B) the operation of no more than sixteen
(16) movie screens with no more than an average of 200 seats
per screen, and (C) the operation of one or more game rooms
(which shall include amusement rides, climbing walls, football
passing machines and billiard tables), one or more lounges and one
or more party rooms.
1.3
Location of Office . The Company shall make available to
Executive an office and support services appropriate for
Executive’s position at the Company’s headquarters in
the Dallas/Plano, Texas area. Executive’s principal office
shall be located at the Company’s headquarters in Plano,
Texas.
1.4
Approval Rights . So long as Executive is Chairman of the
Company, the Company shall not sell or otherwise dispose of, or
permit any Subsidiary to sell or otherwise dispose of, in the
aggregate more than $50,000,000 of the assets of the Company and
its Subsidiaries during any twelve-month period (computed on the
basis of fair market value, determined by the Board in its
reasonable good faith judgment), or (B) acquire directly or
indirectly (by merger, consolidation or otherwise) any movie
theatres for an aggregate consideration in excess of $50,000,000
during any twelve-month period without the written consent of
Executive.
1.5
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 the Term, the Term shall be
extended for an additional one-year period unless either party
notifies the other party in writing, at least thirty (30) days
prior to the end of the Term, of such party’s intent not to
extend the Term.
3.1
Base Salary . During the Term, the Company will pay to
Executive a base salary at the rate of $794,516 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
Executive’s responsibilities, performance of Executive, and
compensation of other senior executives of the other 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 senior 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
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 Executive so long as such action is taken generally
with respect to other senior 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.
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
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 Executive
so long as such action is taken generally with respect to other
senior 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
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 paid vacations and
other absences from work that are reasonably consistent with the
performance of 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, reimburse
Executive for all membership costs and dues related thereto, and
reimburse Executive for all charges for goods and services incurred
that relate to the Company’s business. 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.
3.7
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, 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, 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 . So long as Executive serves as a director on
the Board in accordance with the terms of the Stockholders
Agreement, dated as of the date hereof, Executive agrees to serve
as the Chairman of the Board, provided he is indemnified for
serving in such capacity as set forth in the Indemnification
Agreement, which indemnity shall survive the termination of the
Indemnification Agreement and 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 directors and officers of the
Company.
3.11
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 or its successor or any Subsidiary of the
Company or its successor.
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 shall, 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, subject to Section 5.4(c) ,
Executive agrees that, during Executive’s employment
hereunder and for one year after the date of termination of
Executive’s 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 of this Agreement, “
Competing Business ” means any business
(including, to the extent applicable, any Permitted Activity) 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
Executive’s employment; “ Major DMA
” means a Designated Market Area in the United States with a
number of households in excess of 700,000; “ Designated
Market Area ” means each of those certain geographic
market areas in the United States designated as such by Nielsen
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 the
Western Hemisphere (other than the United States) shall be treated
as being outside a Major DMA. Nothing herein shall prohibit
Executive from 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. Notwithstanding
the foregoing, Executive’s obligations under this
Section 4.2 shall terminate and become null and void
upon the consummation of a Sale of the Company to any Person that
directly or indirectly owns, operates or manages theatres with an
aggregate of more than 50 movie screens, each of which movie
screens is used for the primary purpose of exhibiting commercially
distributed full-length motion pictures. 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.
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
any of 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 members
of his family (which members shall be limited to his spouse,
descendants, spouses of his descendants and siblings of his spouse)
who are employed by the Company or any of its Subsidiaries or 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 whether prior to or after the Effective Date (as defined
in Section 18 hereof)(other than with respect to any
Permitted Project) 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. Other than
with respect to any Permitted Projects, 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 connection with the
Company’s business whether prior to or after the Effective
Date (as defined in Section 18 hereof) are 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. Executive shall not make or retain any copies
thereof. The Company expressly acknowledges that all data, books,
records and other information relating to the Permitted Projects
are the exclusive property of Executive and shall not be used or
retained by the Company.
4.6
Property of the Company . Executive acknowledges that from
time to time in the course of providing services to the Company
whether prior to or after the
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