Employment Agreement - AMC Entertainment Inc., American Multi-Cinema Inc. and John D. McDonald
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 JOHN D. MCDONALD ("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 $210,015.00 ("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.
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(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
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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
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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
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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.
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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
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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.
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(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:
John D. McDonald
4417 West 150th Street
Leawood, Kansas 66224
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
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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
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AMERICAN MULTI-CINEMA, INC.,
a Missouri corporation
By:/S/ PHILIP M. SINGLETON
-----------------------------------------
Philip M. Singleton, President
/S/ JOHN D. MCDONALD
-----------------------------------------
JOHN D. MCDONALD, EMPLOYEE
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