Employment Agreement - AMC Entertainment Inc., American Multi-Cinema Inc. and Philip M. Singleton
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of January 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 PHILIP M. SINGLETON ("Employee"). In consideration of the
mutual promises and covenants contained herein, the parties hereto agree as
follows:
1.Position and 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 President and Chief
Operating Officer of AMC as directed by any Co-Chairman of the Board of AMCE
or the Board of Directors of AMC. Notwithstanding the foregoing, Employee
shall be permitted, to the extent that such activities do not substantially
interfere with the performance by Employee of his duties and responsibilities
under this Agreement, (i) to manage Employee's personal financial and legal
affairs and (ii) to serve on corporate, civic or charitable boards or
committees.
2.Term. The term of this Agreement shall commence as of January 1, 1999
and shall terminate on December 31, 2001 or sooner as provided in Section 6
below (such period, as it may be extended, the "Term"). On each January 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 January 1 the Term of Employee's employment hereunder shall be three (3)
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 $375,000.00 ("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 the Compensation Committee of AMC's Board of
Directors.
(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 the Compensation Committee of AMC's Board of Directors
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 such
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 such act was committed, or such failure to act occurred, in bad faith
and without reasonable belief that Employee's act or failure to act was in the
best interests of the Company.
(e)Without Cause. The employment of Employee by the Company under this
Agreement may be terminated without Cause with severance at any time by any
Co-Chairman of the Board of AMCE or the Board of Directors of AMC in such
officer's/its sole discretion.
(f)The Company's Material Breach. Employee terminates his employment
by the Company hereunder for a Material Breach of this Agreement by the
Company. For purposes of this Agreement, a "Material Breach" by the Company
shall be deemed to occur upon (i) a failure by the Company to comply with any
material provisions of this Agreement which has not been cured within thirty
(30) days after written notice of such noncompliance has been given to the
Company by Employee, or (ii) any purported termination of Employee which is
not effected pursuant to a Notice of Termination, as defined in Sections 6 and
11 below (and for purposes of this Agreement no such purported termination
shall be effective). Employee must notify the Company in writing within
thirty (30) days of becoming aware of the occurrence of a Material Breach in
order to receive the payments described in Section 7(c) below.
(g)Change of Control. Employee terminates his employment by the
Company hereunder in the event of a Change of Control. Employee must not be
the Person or part of the Group (or an Affiliate of such Person or Group)
which effected the Change in Control, and must notify the Company in writing
of such termination within sixty (60) days after the occurrence of a Change
of Control, in order to receive the payments described in Section 7(c) below.
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 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.
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(c) 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.
Employee shall also receive the compensation payments described in Section
7(c)(iii) below.
(b)Termination for Cause, Death or Employee Resignation. If Employee's
employment by the Company is 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 (i) 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 months in the current Bonus program year and the
denominator of which is 12), as such may exist from time to time, and (ii) the
compensation payments described in Section 7(c)(iii) below.
(c)Termination without Cause or by Employee for Material Breach or
Change of Control. If Employee's employment by the Company is terminated
without Cause or by Employee following a Material Breach by the Company or
Change of Control, Employee shall be entitled to receive the compensation
payments described in (i), (ii) and (iii) below; provided, that Employee also
must have timely notified the Company as provided in Sections 5(f) and (g),
as applicable, in order to receive such payments. All amounts under this
Section 7(c) shall be reduced by withholding for applicable taxes, if any.
(i)A lump-sum cash payment equal to the lesser of Employee's Base
Amount (as defined below) multiplied by 2.99 or 150% of Employee's current
Base Salary multiplied by 3. "Base Amount" means Employee's average annual
earnings reported on Form W-2 for Employee's last five tax years.
(ii)A lump-sum cash payment equal to the difference between (A) the
value of all vested and unvested stock options granted by AMCE to Employee
which have an exercise price per share less than the closing price per share
of AMCE's Common Stock as reported on the American Stock Exchange or other
stock exchange or automated quotation system (the "Closing Price") on the Date
of Termination and (B) the exercise price of such options. For purposes of
determining the option value, AMCE's stock price as described above as of the
Date of Termination will be used. Upon such payment by the Company to
Employee, all such options will be cancelled.
(iii)If Employee's note dated September 14, 1998 payable to
AMCE in the original principal amount of $3,765,000, the proceeds of which
were used by Employee to purchase shares of AMCE's Common Stock (the "Note"),
is outstanding on the Date of Termination, then one of the following
provisions shall apply:
(A)Stock Redemption and Note Forgiveness. If AMCE is so
permitted under the Delaware General Corporation Law and the terms
of any of its applicable loan agreements, debt covenants or other
agreements, AMCE shall redeem all of the 250,000 shares of AMCE's
Common Stock purchased by Employee with the proceeds of the Note
which Employee owns on the Date of Termination, at a redemption
price per share equal to the Closing Price per share on the Date of
Termination, and the aggregate redemption price shall be applied by
AMCE towards payment of the Note. If the aggregate redemption price
is greater than the amount of unpaid principal and accrued interest
on the Note, AMCE shall pay an amount equal to such excess to
Employee. If the aggregate unpaid principal and accrued interest
on the Note exceeds the redemption price, then AMCE shall forgive
a portion of such excess amount, determined as follows: multiply
(1) the difference (expressed as a positive number) between (x) an
amount equal to the Closing Price per share on the Date of
Termination multiplied by 250,000 and (y) the amount of outstanding
principal and accrued interest on the Note on the Date of
Termination, by (2) a ratio, the numerator of which is the number
of shares of AMCE's Common Stock redeemed by AMCE pursuant to this
paragraph and the denominator of which is 250,000. AMCE shall also
pay to Employee an amount equal to the federal, state and city
income taxes and excise taxes, if any, required to be paid by
Employee based upon the forgiveness of such portion of the Note; or
(B)Note Forgiveness If Stock Redemption Not Permitted. If
AMCE is not permitted under the terms of the Delaware General
Corporation Law or any of its loan agreements, debt covenants or
other agreements to redeem all of the 250,000 shares of AMCE's
Common Stock purchased by Employee with the proceeds of the Note
which Employee owns on the Date of Termination, and if the amount
of unpaid principal and accrued interest on the Note on the Date of
Termination exceeds the value of such shares (determined by the
Closing Price per share on the Date of Termination), then AMCE shall
forgive a portion of such excess amount, determined as follows:
multiply (1) the difference (expressed as a positive number) between
(x) an amount equal to the Closing Price per share on the Date of
Termination multiplied by 250,000 and (y) the amount of outstanding
principal and accrued interest on the Note on the Date of
Termination, by (2) a ratio, the numerator of which is the number
of shares of AMCE's Common Stock purchased by Employee with the
proceeds of the Note which Employee owns on the Date of Termination
and the denominator of which is 250,000. AMCE shall also pay to
Employee an amount equal to the federal, state and city income taxes
and excise taxes, if any, required to be paid by Employee based upon
the forgiveness of such portion of the Note.
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:
Philip M. Singleton
11713 High Drive
Leawood, Kansas 66211
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/ Stanley H. Durwood
Stanley H. Durwood, Co-Chairman of the
Board and Chief Executive Officer
AMERICAN MULTI-CINEMA, INC.,
a Missouri corporation
By: /s/ Stanley H. Durwood
Stanley H. Durwood, Chairman of the Board
and Chief Executive Officer
/s/ Philip M. Singleton
PHILIP M. SINGLETON, EMPLOYEE