Employment Agreement - AMC Entertainment Inc., American Multi-Cinema Inc. and Stanley H. Durwood
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of January 26, 1996
by and between AMC ENTERTAINMENT INC., a Delaware corporation, and its
wholly owned subsidiary, AMERICAN MULTI-CINEMA, INC., a Missouri
corporation (collectively, the "Company"), and STANLEY H. DURWOOD (the
"Employee").
WHEREAS, Employee has demonstrated continued vision, innovation,
knowledge and experience in the development of the motion picture
exhibition industry, which has contributed to the growth and financial
stability of the Company and has caused the Company to become a leader
in the motion picture exhibition industry; and
WHEREAS, the Company desires to provide certain assurances to
Employee in consideration of his willingness to continue to exercise
those capabilities, and the Company does not intend to employ any
employee in a position superior to Employee's current title, status,
duties, functions, power or otherwise without Employee's written
consent, or to effectuate a change in the nature of Employee's duties,
services, terms or conditions of employment without Employee's written
consent; and
WHEREAS, the Company desires to enter into an Employment
Agreement with Employee wherein he will continue to be employed as
Chief Executive Officer of the Company and serve as President and
Chairman of the Board.
In consideration of the mutual promises and covenants contained
herein, the parties hereto agree as follows:
1. Duties of Employee: Certain Covenants of the Company.
(a) Employee shall be employed as Chief Executive Officer of
the Company and, subject to the exercise by the Board of Directors of
its fiduciary duties and powers under the Company's bylaws, will
serve as its President and Chairman of the Board. Employee shall
devote his full time and attention to the business of the Company and
its affiliates, as reasonably directed from time to time by the Board
of Directors of the Company.
(b) Company shall not, without Employee's written consent,
(i) require Employee to perform duties or services other than those
comparable in scope, span, term and dignity to those he is presently
performing; (ii) diminish or reduce the scope or span of Employee's
authority or responsibilities heretofore exercised as Chief Executive
Officer of the Company; (iii) change the location of Employee's office
or of the Company's principal executive offices to a place which is
more than 50 miles from the location of such office at the date of
execution of this Agreement, or change the location of Employee's
office from the location of the Company's principal executive offices;
or (iv) reduce the base salary paid to Employee by Company in any
fiscal year below the highest amount determined by the Compensation
Committee in accordance with Section 3 hereof, or reduce any Employee
Benefits (as defined below) provided to Employee below amounts
generally provided to all other executives of the Company.
2. Term. The term of Employee's employment with the Company
pursuant to this Agreement shall be from January 26, 1996 through
January 26, 1999, subject, however, to termination of Employee's
employment pursuant to Section 4 hereafter. On each January 26
hereafter, commencing in 1997, one year shall be added to the term of
Employee's employment with the Company under this Agreement, so that
as of each January 26 the term of Employer's employment hereunder
shall be three years.
3. Compensation.
(a) Employee shall receive (i) an annual base salary as
determined from time to time by the Compensation Committee of the
Board of Directors pursuant to paragraph 3(b) below, but not less
than Five Hundred Thousand Dollars ($500,000) per annum, payable
bi-weekly during the term of this Agreement, plus (ii) payments and
awards under the Company's Executive Incentive Program, 1994 Stock
Option and Incentive Plan and any other bonus or incentive plan in
effect for executive officers from time to time, at a level reflecting
his position as Chief Executive Officer, as provided in paragraph 3(b)
below, plus (iii) such other awards or amounts as may be made or
paid under any other compensatory arrangement, stock option plan or
employee benefit plan of the Company (other than those provided for in
the last sentence of this paragraph 3(a)), if any, as determined from
time to time in the sole discretion of the Compensation Committee of
the Board of Directors of the Company. All or a portion of any
earned bonus may be deferred for a reasonable period of time
determined by the Compensation Committee of the Board of Directors of
the Company. Employee shall also receive his appropriate share of all
benefits ("Employee Benefits") existing from time to time that inure
to the benefit of all other executives of the Company, as determined
in the sole discretion of the Board of Directors of the Company, such
as group insurance, pension plans, thrift plans, stock purchase plans
and the like.
(b) Not less frequently than annually, and no later than April
30 of each year commencing in 1997, the Compensation Committee of the
Board of Directors will review Employee's compensation package
referred to in clauses 3(a)(i) and (ii) above and make such increase
in Employee's annual base salary, annual incentive cash bonus, stock
incentives and other incentives, if any, as may be required to provide
Employee with compensation that is comparable to that afforded chief
executive officers of comparable companies (which may include
companies in different industries) and not below a level which is
consistent with the Company's compensation policy for the Chief
Executive Officer as it exists on the date of this agreement. Each
such increase shall be effective as of the first day of the fiscal
year in which such April 30 occurs.
(c) The Company shall use its best efforts to provide Employee
at the Company's expense with a life insurance policy on his life in
an amount up to $5,000,000 and pay the premiums thereon, and shall pay
Employee annually, in addition to the other compensation provided for
in this Section 3, an amount equal to the incremental income tax
incurred by Employee as a result of the payment of such premiums,
inclusive of the additional income taxes owed by Employee upon the
Company's payment of such obligation.
4. Termination; Severance.
(a) Termination Without Severance. The employment of Employee
with the Company may be terminated without severance (i) upon
Employee's resignation or voluntary departure from the Company (except
under the circumstances described in paragraph 4(b) below); or (ii)
if, during the term of this Agreement, Employee engages in intentional
misconduct or a knowing violation of law or breaches his duty of
loyalty to the Company.
(b) Termination With Severance.
(i) The employment of Employee with the Company may be
terminated with severance (A) upon the Employee's death, in which
event the severance compensation payment shall be paid to
Employee's estate; (B) upon the Employee's disability which
renders him unable to perform his usual and customary duties for
a period of 180 consecutive days; (C) without cause, by the
Board of Directors of the Company; or (D) by the Employee if the
Company violates any of its covenants herein, including those in
Section 1.
(ii) Upon any termination of Employee's employment
pursuant to this paragraph 4(b), the Company shall elect and pay
to Employee one of the two alternative severance compensation
payments described in clause (A) or (B) below.:
(A) Installment Payments. An amount equal to
three times the sum of annual base salary of Employee in
effect at the time of termination plus the average of all
annual incentive or discretionary cash bonuses paid to
Employee with respect to the three fiscal years preceding
the year in which such termination occurred, payable in
advance at the beginning of each month in equal monthly
installments over the three years immediately following
the date of termination;
OR
(B) Lump-sum Payment. Within 30 days of the
date of termination, Employee shall receive an amount
equal to the net present value of the payments described
in paragraph 4(b)(ii)(A) above.
The discount of such payments to their net present value shall
utilize a discount rate equal to the prime rate of interest published
in The Wall Street Journal on the date of termination (such prime rate
currently defined in The Wall Street Journal as the base rate on
corporate loans posted by at least 75% of the nation's 30 largest
banks) or if such rate is not available, then the prime rate of
interest of Boatmen's Bank of Kansas City in effect on the date of
termination (hereinafter the "Prime Rate").
The Company shall have the right to elect either the severance
compensation described in clause (A) or (B) above, at its sole
discretion.
5. Confidentiality. Employee acknowledges that he knows and in
the future will know information relating to the Company and its
affiliated companies and their respective operations that is confiden-
tial or a trade secret. Such information includes information,
whether obtained in writing, in conversation or otherwise, concerning
corporate strategy, intent and plans, business operations, financing,
pricing, costs, budgets, equipment, potential locations of new
screens, the status, scope and terms of pending negotiations and
transactions, the terms of existing or proposed leases, contracts and
obligations, and corporate and financial reports. Such confidential
or trade secret information does not, however, include information in
the public domain unless Employee has, without authority, made it
public.
Employee agrees: (i) not to disclose such information to anyone
except in confidence and as is necessary to the performance of duties
for the Company; (ii) to keep such information confidential; (iii) to
take appropriate precautions to maintain the confidentiality of such
information; and (iv) not to use such information for personal benefit
or the benefit of any competitor of the Company or any other person.
Upon termination of his employment with the Company, Employee
shall return all materials in his possession or under his control
which were prepared by or relate to the Company or its affiliates.
6. Survival. Upon termination of Employee's employment
with the Company, the respective rights and obligations of the Company
and Employee under Sections 1, 2 and 3 hereof shall cease. However,
the Company's and Employee's obligations under Sections 4 and 5 hereof
shall survive the termination of Employee's employment with the
Company.
7. Assumption. The Company shall obtain the express
written assumption of this Agreement by any successor of the Company
or any assignee of all or substantially all of the Company's assets at
or prior to such succession or assignment. Such assumption shall not
relieve the Company of any liability under this Agreement.
8. Miscellaneous Provisions. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the
parties hereto and their respective heirs, personal representatives,
successors and permitted assigns. This Agreement shall be governed by
the laws of the State of Missouri. This Agreement represents the
entire agreement of the parties hereto with respect to the subject
matter hereof and shall not be amended except by a written agreement
signed by all the parties hereto. This Agreement supersedes any prior
oral or written agreements or understandings between the Company, or
any affiliate of the Company, and Employee concerning Employee's
relationship and employment with the Company or any affiliate of the
Company. This Agreement shall not be assignable by the Company
without prior written consent of the Employee.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day and year first above written.
"COMPANY"
AMC ENTERTAINMENT INC.
By:/s/ Peter C. Brown By: /s/ Philip M. Singleton
Peter C. Brown, Philip M. Singleton,
Executive Vice President Executive Vice President
and Chief Financial Officer and Chief Operating
Officer
AMERICAN MULTI-CINEMA, INC.
By:/s/ Peter C. Brown By: /s/ Philip M. Singleton
Peter C. Brown, Philip M. Singleton,
Executive Vice President Executive Vice President
and Chief Financial Officer and Chief Operating
Officer
"EMPLOYEE"
/s/ Stanley H. Durwood
Stanley H. Durwood