Employment Agreement - AMC Entertainment Inc., American Multi-Cinema Inc. and Richard M. Fay
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of February 1, 1999
by and among AMC ENTERTAINMENT INC., a Delaware corporation ("AMCE"),
AMERICAN MULTI-CINEMA, INC., a Missouri corporation ("AMC" and,
collectively with AMCE, the "Company"), and RICHARD M. FAY
("Employee"). In consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1.Duties. During the Term (as defined in Section 2) of his
employment by the Company under this Agreement, Employee shall devote
his full time and attention to the business of the Company as directed
by AMC's President and Chief Operating Officer or such officer's
designee.
2.Term. The term of this Agreement shall commence as of February
1, 1999 and shall terminate on January 31, 2001 or sooner as provided
in Section 6 below (such period, as it may be extended, the "Term").
On each February 1 hereafter, commencing in 2000, one year shall be
added to the Term of Employee's employment with the Company under this
Agreement, so that as of each February 1 the Term of Employee's
employment hereunder shall be two (2) years.
3.Compensation.
(a)Base Salary. During the Term of his employment by the
Company under this Agreement, Employee shall receive an annual salary
of $285,031.00 ("Base Salary") (less withholding for applicable taxes),
payable in accordance with the Company's payroll procedures for its
salaried employees, subject to such increases as may be approved by
AMC's President and Chief Operating Officer with the approval of any
Co-Chairman of the Board of AMCE.
(b)Bonus. In addition to Base Salary, Employee shall be
eligible to "receive an annual bonus (the "Bonus") as determined from
time to time in the sole discretion of AMC's President and Chief
Operating Officer with the approval of any Co-Chairman of the Board of
AMCE based on the Company's applicable incentive compensation program,
as such may exist from time to time.
(c)Benefits. During the Term of Employee's employment by the
Company under this Agreement, Employee also shall be eligible for the
benefits offered by the Company from time to time to the Company's
other executive officers (such as group insurance, pension plans,
thrift plans, stock purchase plans and the like). Nothing herein shall
be construed so as to prevent the Company from modifying or terminating
any employee benefit plans or programs it may adopt from time to time.
(d)Automobile. During the Term of Employee's employment by the
Company under this Agreement, the Company shall provide Employee with
a Company owned or leased automobile or an equivalent automobile
allowance.
4.Expense Reimbursements. During the Term of Employee's employment
by the Company under this Agreement, the Company shall reimburse
Employee for business travel and entertainment expenses reasonably
incurred by Employee on behalf of the Company in accordance with the
Company's procedures, as such may exist from time to time.
5.Termination. Employee's employment by the Company under this
Agreement shall be terminated upon the earliest to occur of the
following events:
(a)Resignation. Employee's resignation, retirement or other
voluntary departure.
(b)Death. The death of Employee.
(c)Disability. If, as a result of Employee's incapacity due to
physical or mental illness, (i) Employee shall not have been regularly
performing his duties and obligations hereunder for a period of one
hundred twenty (120) consecutive days (a "Disability"), (ii) the
Company has given Employee the written Notice of Termination pursuant
to Section 6(a) hereof, and (iii) within thirty (30) days after the
Company gives Employee written notice of termination (which may occur
before or after the end of such 120 day period), Employee shall not
have returned to the performance of his duties and obligations
hereunder on a regular basis.
(d)Cause. Employee is terminated for Cause. For purposes of
this Agreement, "Cause" is defined as (i) the willful and continued
failure by Employee to perform substantially his duties with the
Company (other than any such failure resulting from his incapacity due
to physical or mental illness), or (ii) the willful engaging by
Employee in misconduct which is materially and demonstrably injurious
to the Company. For purposes of this Agreement, no act, or failure to
act, on the part of Employee shall be considered "willful" unless done,
or omitted to be done, in bad faith and without reasonable belief that
Employee's act or omission was in the best interests of the Company.
(e)Without Cause. The employment of Employee may be terminated
without cause with severance at any time by AMC's President and Chief
Operating Officer with the approval of any Co-Chairman of the Board of
AMCE.
(f)Change of Control. Employee may terminate his employment
hereunder due to the occurrence of any one or more of the events
described in clauses (i), (ii) and (iii) below subsequent to a Change
of Control (as defined below), provided that Employee has given the
Company the written Notice of Termination pursuant to Section 6(a)
hereof within sixty (60) days of the occurrence of any such event:
(i)a substantial adverse alteration in Employee's
responsibilities from those in effect immediately prior to the
Change of Control;
(ii)a reduction in Employee's Base Salary below the rate
that is in effect immediately prior to the Change of Control; or
(iii)a material reduction in the benefits provided to
Employee by the Company prior to the Change of Control.
For purposes of this Agreement a "Change of Control" of the
Company means the occurrence of either of the following events during
the Term: (a) any Person (other than a Permitted Holder) or any Persons
(other than an Permitted Holders) acting together that would constitute
a Group, together with any Affiliates thereof (other than any Permitted
Holders), shall obtain beneficial ownership of at least 50% of the
aggregate voting power of all classes of capital stock of the Company
entitled to vote generally in the election of directors (the
determination of aggregate voting power to recognize that the Company's
Class B Stock currently has ten votes per share and the Company's
Common Stock currently has one vote per share), or (b) any Person
(other than a Permitted Holder) or Group (other than any Permitted
Holders), together with any Affiliates thereof (other than any
Permitted Holders), shall succeed in having a sufficient number of its
nominees (who are not management nominees) elected to the Board of
Directors of the Company such that such nominees, when added to any
existing director(s) remaining on the Board of Directors of the Company
after such election who is an Affiliate (other than a Permitted Holder)
of such Group, will constitute a majority of the Board of Directors of
the Company. Unless otherwise specifically defined in this Section
5(g), all terms used in this Section 5(g) shall have the meaning used
in Section 13(d) of the Securities Exchange Act of 1934 and regulations
promulgated thereunder (or any successor provisions to such law or
regulations).
"Affiliate" means, with respect to any specified Person, (i) any
other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person or
(ii) any other Person that owns, directly or indirectly, ten percent
or more of such Person's Capital Stock or any officer or director of
any such Person or other Person or with respect to any natural Person,
any person having a relationship with such Person by blood, marriage
or adoption not more remote than first cousin. For the purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such
Person's capital stock, any rights (other than debt securities
convertible into capital stock), warrants or options to acquire such
capital stock, whether now outstanding or issued after the date of this
Agreement.
"Permitted Holder" means (i) Stanley H. Durwood, his spouse
(collectively, the "Durwood Family") and any Affiliate of any member of
the Durwood Family (other than any lineal descendant of Stanley H.
Durwood), (ii) Stanley H. Durwood's estate, (iii) the 1992 Durwood,
Inc. Voting Trust dated December 12, 1992 and any successor voting
trust, and (iv) any Subsidiary, any employee benefit plan, stock
purchase plan, stock option plan or other stock incentive plan or
program, retirement plan or automatic reinvestment plan or any
substantially similar plan of the Company or any Subsidiary or any
Person holding securities of the Company for or pursuant to the terms
of any such employee benefit plan; provided that if any lender or other
Person shall foreclose on or otherwise realize upon or exercise any
remedy with respect to any security interest in or lien on any
securities of the Company held by any Person listed in this clause
(iv), then such securities shall no longer be deemed to be held by a
Permitted Holder.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company,
trust, estate, unincorporated organization or government or any agency
or political subdivision thereof.
"Subsidiary" means (i) any corporation of which more than 50% of
the outstanding shares of Capital Stock having ordinary voting power
for the election of directors is owned directly or indirectly by the
Company and (ii) any partnership, limited liability company,
association, joint venture or other entity in which the Company,
directly or indirectly, has more than a 50% equity interest.
6.Termination Procedure.
(a)Notice of Termination. Any termination of Employee by the
Company or by Employee (other than termination pursuant to Section 5(a)
or (b) hereof) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 11. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee
under the provisions so indicated.
(b)Date of Termination. "Date of Termination" shall mean (i) if
Employee's employment by the Company is terminated by Employee's
resignation, retirement or other voluntary departure, the date of such
event, (ii) if Employee's employment by the Company is terminated by
his death, the date of death, (iii) if Employee's employment by the
Company is terminated pursuant to Section 5(c) hereof, thirty (30) days
after Notice of Termination is given (provided that Employee shall not
have again become available for service to the Company on a regular
basis during such thirty (30) day period), (iv) if Employee's
employment by the Company is terminated for Cause, the date specified
in the Notice of Termination, and (v) if Employee's employment by the
Company is terminated for any other reason, the date on which a Notice
of Termination is given.<PAGE>
7.Compensation During Disability or Upon Termination.
(a)Disability. During any period that Employee fails to perform
his duties under this Agreement as a result of incapacity due to
physical or mental illness (a "disability period"), Employee shall
continue to receive his Base Salary at the rate then in effect for such
period until his employment by the Company is terminated pursuant to
Section 5(d) hereof, provided that payments so made to Employee during
the first 180 days of any such disability period shall be reduced by
the sum of the amounts, if any, paid to Employee at or prior to the
time of any such payment under disability benefit plans of the Company
or under the Social Security disability insurance program, and which
amounts were not previously applied to reduce any such payment.
Employee shall also receive a pro rata portion of the Bonus described
in Section 3(b) pursuant to the Company's applicable incentive
compensation program (the amount of such pro rated Bonus to be
determined as though the target level was attained, multiplied by a
fraction, the numerator of which is the number of completed months in
the then current Bonus program year and the denominator of which is
12), as such may exist from time to time.
(b)Termination for Cause, Death or Employee Resignation. If
Employee's employment by the Company should be terminated for Cause,
by Employee's death or by Employee's resignation, retirement or other
voluntary departure, the Company shall pay Employee his accrued but
unpaid Base Salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given, and the Company
shall have no further obligations to Employee under this Agreement.
If Employee's employment by the Company is terminated by Employee's
death, Employee shall also receive a pro rata portion of the Bonus
described in Section 3(b) pursuant to the Company's applicable
incentive compensation program (the amount of such pro rated Bonus to
be determined as though the target level was attained, multiplied by
a fraction, the numerator of which is the number of completed months
in the then current Bonus program year and the denominator of which is
12), as such may exist from time to time.
(c)Termination Without Cause or After a Change of Control. If
Employee's employment by the Company is terminated without Cause or
subsequent to a Change of Control as provided in Section 5(f) of this
Agreement, the Company shall pay to Employee a lump sum amount equal
to two years Base Salary (less withholdings for applicable taxes) of
Employee in effect on the Date of Termination.
8.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 confidential or a
trade secret. Such information includes information, whether obtained
in writing, in conversation or otherwise, concerning corporate
strategy, intent and plans, business operations, pricing, costs,
budgets, equipment, the status, scope and term of pending acquisitions,
negotiations and transactions, the terms of existing or proposed
business arrangements, contracts and obligations, and corporate and
financial reports. Such confidential or trade secret information shall
not, however, include information in the public domain unless Employee
has, without authority, made it public.
Employee shall (a) not disclose such information to anyone except
in confidence and as is necessary to the performance of his duties for
the Company; (b) keep such information confidential; (c) take
appropriate precautions to maintain the confidentiality of such
information; and (d) not use such information for personal benefit or
the benefit of any competitor or any other person.
Upon termination of his employment by the Company under this
Agreement, Employee shall return all materials in his possession or
under his control that were prepared by or relate to the Company or its
affiliates, including, but not limited to, materials containing
confidential information, files, memorandums, price lists, reports,
budgets and handbooks.
Employee's obligation under this Section 8 shall survive the
termination of Employee's employment by the Company under this
Agreement.
9.Equitable Remedies. The parties acknowledge that irreparable
damage will result to the Company from any violation of Section 8 above
by Employee. The parties expressly agree that, in addition to any and
all remedies available to the Company for any such violation, the
Company shall have the remedy of restraining order and injunction and
any such equitable relief as may be declared or issued by a court to
enforce the provisions of Section 8 above and Employee agrees not to
claim in any such equitable proceeding that a remedy at law is
available to the Company. Notwithstanding anything contained herein
to the contrary and if, and only if, any provision of the type
contained in Section 8 above, as the case may be, is enforceable in the
jurisdiction in question, if any one or more of the provisions
contained in such Section shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or
subject, such provision shall be construed by limiting and reducing it
so as to be enforceable to the extent compatible with the applicable
law in such jurisdiction as it shall then appear.
10.Successors: Binding Agreement.
(a)Company Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all the business and/or assets of
the Company, by agreement in form and substance satisfactory to
Employee, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
(b)Employee's Successors. This Agreement and all rights
hereunder shall be binding upon, inure to the benefit of and be
enforceable by Employee's personal or legal representatives, heirs,
successors and permitted assigns.
11.Notices. All notices, requests, demand or other communications
under this Agreement shall be in writing addressed as follows:
(a)If to the Company, to:
Raymond F. Beagle, Jr.
Lathrop & Gage L.C.
2345 Grand Boulevard
Kansas City, Missouri 64108
(b)If to Employee, to:
Richard M. Fay
5481 Collingswood Circle
Calabasas, California 91302
Any such notice, request, demand or other communication shall be
effective as of the date of actual delivery thereof. Either party may
change such notice address by written notice as provided herein.
12.Total Compensation. The compensation to be paid to Employee under
this Agreement shall be in full payment for all services rendered by
Employee in any capacity to the Company or any affiliate of the
Company.
13.Additional Potential Compensation. Nothing in this Agreement
shall prohibit the Company from awarding additional compensation to
Employee if it is determined that such compensation is warranted based
on Employee's performance.
14.Other Provisions. This Agreement shall be governed by the laws
of the State of Missouri. This Agreement represents the entire
agreement of the parties hereto 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. This
Agreement shall not be assignable by one party without the prior
written consent of the other party, except by the Company if it
complies with Section 10 above. In the event one or more of the
provision contained in this Agreement or any application thereof shall
be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provision of this
Agreement or any other application thereof shall not in any way be
affected or impaired thereby. Section headings herein have no legal
significance.
15.Arbitration. Any legal dispute, controversy or claim related to
this Agreement or breach thereof, shall, in lieu of being submitted to
a court of law, be submitted to arbitration, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
The award of the arbitrators shall be final and binding upon the
parties.
The parties hereto agree that (i) three arbitrators shall be
selected pursuant to the rules and procedures of the American
Arbitration Association, (ii) at least one arbitrator shall be a
licensed attorney, (iii) the arbitrators shall have the power to award
injunctive relief or to direct specific performance, (iv) the
arbitrators will not have the authority to award punitive damages, (v)
each of the parties shall bear its own attorneys' fees, costs and
expenses and an equal share of the arbitrators' and administrative fees
of arbitration, (vi) the arbitrators will not have the authority to
award attorneys' fees other than to direct or confirm in the award that
each party shall pay its own fees, and (vii) the arbitrators shall
award to the prevailing party a sum equal to that party's share of the
arbitrators' and administrative fees of arbitration.
Nothing in this Section shall be construed as providing Employee
a cause of action, remedy or procedure that Employee would not
otherwise have under this Agreement or the law.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day and year first above written.
AMC ENTERTAINMENT INC.,
a Delaware corporation
By: /s/ Peter C. Brown
Peter C. Brown, Co-Chairman of the Board
and President
<PAGE>
AMERICAN MULTI-CINEMA, INC.,
a Missouri corporation
By: /s/ Philip M. Singleton
Philip M. Singleton, President
/s/ Richard M. Fay
RICHARD M. FAY, EMPLOYEE