Employment Agreement - AMC Entertainment Inc., American Multi-Cinema Inc. and Richard T. Walsh
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 T. WALSH
("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 $230,041.00 ("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 T. Walsh
23 Wrangler Lane
Canoga Park, California 91307
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 T. Walsh
RICHARD T. WALSH, EMPLOYEE