Employment Agreement - Cinemark Inc. and Tandy Mitchell
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 Tandy Mitchell (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 Executive Vice President 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.
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 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.
EMPLOYMENT AGREEMENT Page 1
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3. Compensation.
3.1 Base Salary. During the Term, the Company will pay to the
Executive a base salary at the rate of Two Hundred Fifty Thousand Dollars
($250,000.00) 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
(which may include the Company's Chief Executive Officer) 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 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.
3.7 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 One
Million Dollars ($1,000,000.00). Executive shall have the right to designate the
beneficiary under such policy.
3.8 Additional Benefits Upon a Change in Control.
(a) In the event a Change of Control (defined below)
occurs during the Term, the Executive shall be entitled to receive,
simultaneously with the completion of any event giving rise to a
Change of Control, a cash lump sum amount equal to:
(i) Executive's Accrued Employment Entitlements (in
accordance with the terms of the benefit plans providing such
benefits, where applicable); plus
(ii) Executive's Base Salary for the balance of the
Term, plus an amount equal to the most recent Annual Bonus
received by the Executive prior to the year in which there is
a Change of Control multiplied by the number of years
remaining for the balance of the Term (determined without
regard to any performance goals); plus
(iii) the present value (as determined by a
nationally recognized employee benefits consulting firm agreed
to by Executive and the Company) of the premiums payable by
the Company or the Executive under health, dental, life
insurance, disability and accident insurance plans or programs
covering Executive for the balance of the Term.
(b) In the event of a change of control (as defined in the
Company's Long Term Incentive Plan or similar plan or agreement
adopted by the Company hereafter pursuant to which stock-based,
equity-based or performance compensation is granted to the
Executive), any such outstanding stock-based, equity-based or
performance compensation awards shall become fully vested and/or
exercisable in accordance with the terms of the plan and agreement
pursuant to which such compensation award was granted.
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(c) Notwithstanding any of the provisions of this
Agreement, the amount of all payments to be made pursuant to this
Section 3.7 after a Change of Control shall not exceed one dollar
($1.00) less than that amount that would cause any such payment to be
deemed a "parachute payment" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "CODE"), and as
Section 280G of the Code is then in effect at the time of such
payment.
(d) "CHANGE OF CONTROL" shall mean the occurrence of any
of the following:
(i) the acquisition by any person (including any
syndicate or group deemed to be a "person" under Section
13(d)(3) or 14(d)(2) of the United States Securities Exchange
Ace of 1934, as amended (the "EXCHANGE ACT"), or any successor
provision to either of the foregoing, of "beneficial
ownership" directly or indirectly, of shares of capital stock
of the Company entitling such person to exercise 50% or more
of the total voting power of all "Voting Shares" of the
Company.
(ii) the consummation of any merger or consolidation
of the Company or any sale or other disposition of all or
substantially all of the Company's assets, if the stockholders
of the Company immediately before such transaction own
directly or indirectly, immediately after consummation of such
transaction, equity securities (other than options and other
rights to acquire equity securities) possessing less than 50%
of the voting power of the surviving or acquiring entity; or
(iii) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, unless otherwise determined by
the Company, no Change of Control of the Company shall be
deemed to have occurred if (x) the Executive is a member of a
group which first announces a proposal which, if successful,
would result in a Change of Control, which proposal (including
any modifications thereof) is ultimately successful, (y) the
Executive acquires a one percent or more equity interest in
the entity which ultimately acquires the Company or all or
substantially all of the Company's assets pursuant to the
transaction described in (x) of this paragraph or (z) the
event otherwise constituting a Change of Control is approved
by the stockholders of the Company prior to the occurrence of
a Change of Control and Executive's employment is continued by
the Company or its successor under this Agreement for the
balance of the Term.
(e) "BENEFICIAL OWNERSHIP" shall be determined in
accordance with Rule 13d-3 promulgated under the Exchange Act, except
that a person shall be deemed to be the "beneficial owner" of all
securities that such person has the right to acquire, whether such
right is excisable immediately or only after the passage of time.
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(f) "VOTING SHARE" means all outstanding shares of any
class or classes (however designated) of capital stock of the Company
entitled to vote generally in the election of the Board of Directors
of the Company.
3.9 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 Cinemark USA,
Inc. or its successor.
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.
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 the 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 in accordance with the terms of the plan
or agreement pursuant to which such benefits were granted to
Executive (items (i) through (iii) above collectively referred to as
"ACCRUED EMPLOYMENT ENTITLEMENTS"), (iv) the Executive's full Base
Salary until the expiration of six 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 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
the Executive or Executive's beneficiaries, as applicable, in
accordance with the terms of the applicable benefit plan. At the
Company's expense, the Executive and/or the Executive's dependents
shall be entitled to continue to participate in the Company's welfare
benefit plans and programs on the same terms as similarly situated
active employees for a period of twelve months from the date the
Executive was first unable to substantially perform the Executive's
duties hereunder. 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 sixty days, and (c) in the opinion
of a
EMPLOYMENT AGREEMENT Page 5
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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 one hundred eighty days. 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 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) the Executive's conviction of,
or plea of guilty to, a felony; (ii) the commission of fraud,
embezzlement or theft by the Executive in connection with the
Executive's duties; (iii) a material breach of this Agreement by the
Executive and/or the Executive's gross neglect of Executive's duties
hereunder determined by the Board pursuant to Section 4.3(d) below;
or (iv) the intentional wrongful damage to 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 pursuant to Section 4.3(b)(iii) 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 pursuant to
Section 4.3(b)(iii), 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
EMPLOYMENT AGREEMENT Page 6
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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 pursuant
to Section 4.3(b)(iii) shall become effective as of the
effective date specified in the Notice of Termination if (x)
the Board, by the affirmative vote of two-thirds of its
members (excluding the Executive if Executive 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
pursuant to Section 4.3(b)(iii)), determines that the actions
or inactions of the Executive specified in the Notice of
Termination occurred, that such actions or inactions
constitute Cause pursuant to Section 4.3(b)(iii), and that the
Executive's employment should accordingly be terminated for
Cause pursuant to Section 4.3(b)(iii); 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 pursuant to Section
4.3(b)(iii), and (ii) that the Executive's action or inaction
specified in the Notice of Termination for Cause pursuant to
Section 4.3(b)(iii) did occur and constituted Cause pursuant
to Section 4.3(b)(iii), any termination of the Executive's
employment with the Company shall be deemed a Termination
without Cause pursuant to Section 4.3(b)(iii) 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
business days following the effective date of such termination of
employment, a lump sum in cash equal to:
(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) the
present value (as determined by a nationally recognized
employee benefits consulting or public
EMPLOYMENT AGREEMENT Page 7
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accounting firm agreed to by the Executive and the Company)
for one year of the Company's and the Executive's premiums
payable under health, life insurance, disability and accident
insurance plans or programs covering the Executive; 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 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 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 balance of the 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 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; (ii) the Company fails to pay Executive any amounts or
provide any material benefits required to be paid or provided under
this Agreement; (iii) the Company changes the Executive's title or
reporting requirements; or (iv) the Executive's compensation (other
than Base Salary, which is governed by Section 3.2) or benefits
provided for hereunder are decreased other than as part of reductions
affecting the Company's executives generally. 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 within ninety 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 thirty (30) days after receipt of such notice.
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.
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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
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
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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.
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.
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: 3900 Dallas Parkway
Suite 500
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 United 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.
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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.
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/ ALAN STOCK
-----------------------------------------
Name: Alan Stock
---------------------------------------
Title: President and Chief Operating Officer
--------------------------------------
EXECUTIVE:
/s/ TANDY MITCHELL
--------------------------------------------
Tandy Mitchell
EMPLOYMENT AGREEMENT Page 11
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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 20% of
Executive's annual Base Salary if the EBITDA of the Company is at least 95% of
the Target, (ii) 40% of Executive's annual Base Salary if the EBITDA of the
Company is equal to the Target, (iii) a maximum of 60% of Executive's annual
Base Salary if the EBITDA of the Company is at least 105% of 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.
The following is an example by way of illustration:
CALCULATION OF 2002 BONUS FOR 40% TARGET POOL
If the Company achieves an EBITDA of $190 million (before adjusting
down for the bonus accrual) which would place the Company at 101.88% of the
EBITDA Target of $186.5 million; at 101.88%, the Annual Bonus would be 47.52%.
Bonus % 20.00 <--------------------> 40.0 <--------------------> 60.00
EBITDA $177.18 M <------------> $186.5 M <-------------> $195.83 M
$190 M = 47.52%
EMPLOYMENT AGREEMENT Page 12