Exhibit 10.3
EMPLOYMENT
AGREEMENT
This Employment
Agreement (the “Agreement”) is entered into as of
December 23, 2004, and is effective immediately following the
Effective Time, by and among MARQUEE HOLDINGS INC. , a Delaware
corporation (“Holdings”), AMC ENTERTAINMENT INC. , a Delaware
corporation (“AMCE”), AMERICAN MULTI-CINEMA, INC. , a
Missouri corporation and wholly-owned subsidiary of AMCE
(“AMC” and, collectively with Holdings and AMCE, the
“Company”), and PHILIP M. SINGLETON
(“Employee”). In consideration of the mutual
promises and covenants contained herein, the parties hereto agree
as follows:
Capitalized terms
not otherwise defined herein shall have the meanings assigned to
such terms in Section 17.
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 the Chairman of the
Board, Chief Executive Officer and President of AMCE.
Notwithstanding the foregoing, Employee shall be permitted, to the
extent 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, (ii) to serve on corporate, civic or charitable
boards or committees, and (iii) to serve in executive positions in
affiliates or entities in which the Company has an interest.
2.
Term. The term
of this Agreement shall commence as of the Effective Date and shall
terminate on the third anniversary thereof or sooner as provided in
Section 6 below (such period, as it may be extended, the
“Term”). On each anniversary of the Effective
Date during the Term, one year shall be added to the Term of
Employee’s employment with the Company under this Agreement,
so that as of each such anniversary 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 $468,200.00
(“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 Holdings’
Board of Directors (the “Compensation Committee”).
(b)
Bonus. In
addition to Base Salary, Employee shall be eligible to receive an
annual bonus (the “Bonus”) as determined from time to
time by the Compensation Committee 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). Following termination of
employment, Employee’s rights to coverage and benefits under
such plans and programs shall be governed by the terms of such
plans as in effect from time to time, except to the extent
expressly provided otherwise herein. 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 and any termination of Employee’s employment as
provided herein shall constitute a termination of his employment
with each of Holdings, AMCE and AMC:
(a)
Resignation .
Employee’s resignation 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 by Holdings’ Board of Directors 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 Holdings’ Board of Directors in its sole
discretion.
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(f)
Good Reason .
Employee terminates his employment by the Company hereunder for
Good Reason. For purposes of this Agreement, “Good
Reason” shall mean (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 Holdings by Employee, (ii) any
purported termination of Employee which is not effected pursuant to
a Notice of Termination, as defined in Sections 6 and 12 below (and
for purposes of this Agreement no such purported termination shall
be effective), (iii) actions by the Company that result in a
material diminution of Employee’s position, authority, duties
or responsibilities, other than an action that is not taken in bad
faith and is remedied by the Company promptly after receipt of
notice thereof from Employee or (iv) any material reduction in
Employee’s Base Salary or benefits or eligibility under Bonus
or benefit plans which is not agreed to by Employee;
provided , however , that the Merger of Marquee Inc.
with and into AMCE as of the Effective Date shall not constitute or
be deemed to constitute grounds for Employee’s resignation
for Good Reason under this Agreement. Employee must notify
Holdings in writing within thirty (30) days of becoming aware of
the occurrence of any of (i) through (iv) above 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 a group (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) which effected the Change of
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.
(h)
Retirement .
The voluntary retirement by Employee at or after age 65.
6.
Termination Procedure
.
(a)
Notice of
Termination . Any termination of the
Company’s employment of Employee, either by the Company or by
Employee (other than termination pursuant to Section 5(b) hereof),
shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 12. 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, where applicable, 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 pursuant
to Section 5(a) or 5(h) hereof, thirty (30) days after Notice of
Termination is given, (ii) if Employee’s employment by the
Company is terminated pursuant to Section 5(b) hereof, 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 pursuant to Section 5(d),
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.
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7.
Compensation During Disability
or Upon Termination of Employment.
(a)
During 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 for such Bonus was attained
(or if there is no target level, to be determined as though the
target level of 65% of the Base Salary at the rate then in effect
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 Employee
Resignation, Cause or Retirement . If
Employee’s employment by the Company is terminated pursuant
to Section 5(a) or (d), 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 (the
“Accrued Payments”), and the Company shall have no
further obligations to Employee under this Agreement. If
Employee’s employment by the Company is terminated pursuant
to Section 5(h), (i) the Company shall pay Employee the Accrued
Payments, (ii) the Company shall pay Employee 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 for such
Bonus was attained (or if there is no target level, to be
determined as though the target level of 65% of the Base Salary at
the rate then in effect 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 and (iii) Employee shall
have the Put Right described in Section 7(c)(ii) and
Employee’s outstanding Employee Options shall be vested as if
the Date of Termination were the fifth anniversary of such date
(i.e., Employee will be credited with an additional five years of
service for purposes of vesting in the Employee Options).
(c)
Termination for Death,
Disability, Without Cause or by Employee for Good Reason or Change
of Control . If Employee’s employment by the
Company is terminated pursuant to Section 5(b), (c), (e), (f) or
(g), the Company shall pay to Employee or his personal
representative the Accrued Payments and the compensation payments
described in Section 7(c)(i), Employee shall have the Put Right in
Section 7(c)(ii) and Employee’s outstanding Employee Options
shall be vested as if the Date of Termination were the fifth
anniversary of such date (i.e., Employee will be credited with an
additional five years of service for purposes of vesting in the
Employee Options); provided , however , 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,
such Employee Option vesting and have such Put Right. All
amounts payable under
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this Section 7(c) shall
be reduced by withholding for applicable taxes, if any.
(i)
A lump-sum cash payment equal to the sum of (A) Employee’s
Base Salary at the rate in effect on the Date of Termination for
the remainder of the Term, plus (B) the Bonus described in Section
3(b) pursuant to the Company’s applicable incentive
compensation program (the amount of such Bonus to be determined as
if the target level for such Bonus was attained (or if there is no
target level, to be determined as though the target level of 65% of
the Base Salary at the rate then in effect was attained)),
multiplied by the number of years remaining in the Term (for
purpose of (A) and (B) any partial year during the remainder of the
Term shall be treated as an entire year). All payments
pursuant to this Section 7(c)(i) shall be paid on the Date of
Termination by wire transfer of immediately available funds in the
appropriate amount to an account designated by Employee or his
estate, as the case may be.
(ii)
Put Right.
(A)
Except as otherwise provided herein, if Employee’s employment
by the Company is terminated pursuant to Section 5(b), (c), (e),
(f), (g) or (h), then Employee or his estate, as the case may be,
shall have the right (the “Put Right”), for six months
following the Date of Termination, (A) to sell to Holdings, and
Holdings shall be required to purchase, on one occasion, all or any
portion, as specified by Employee or his estate, of the shares of
Common Stock then held by Employee or his estate, as the case may
be, at the Put Price and (B) to require Holdings to pay to Employee
or his estate, as the case may be, an amount equal to the Employee
Option Excess Price with respect to the termination of all or any
portion, as specified by Employee, of the outstanding vested
Employee Options then held by Employee or his estate, as the case
may be.
(B)
Employee or his estate, as the case may be, shall send written
notice to Holdings of his or its intention to exercise the Put
Right to sell shares of Common Stock and/or to terminate Employee
Options (the “Redemption Notice”). The completion
of the purchase shall take place on the tenth day after the actual
date of delivery of the Redemption Notice against delivery of
certificates or other instruments representing the Common Stock so
purchased and appropriate documents canceling the Employee Options
so terminated, appropriately endorsed or executed by Employee or
his estate, or his or its duly authorized representative.
Subject to Section 7(c)(ii)(C), payment of the aggregate Put Price
for all Common Stock repurchased pursuant to a Redemption Notice
shall be paid within ten (10) days following the determination of
Fair Market Value by wire transfer of immediately available funds
in the appropriate amount to an account designated by Employee or
his estate, as the case may be. Payments with respect to
Employee Options as described above shall be paid in substantially
equal installments on the first business day of the month over the
180 day period following the determination of Fair Market Value by
wire transfer of immediately available funds in the appropriate
amount to an account designated by Employee or his estate, as the
case may be.
(C)
Notwithstanding anything to the contrary herein, if the Board of
Directors of Holdings in good faith determines that the repurchase
by Holdings of
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Common Stock pursuant
to a Redemption Notice:
(I)
is prohibited by applicable law restricting the purchase by a
corporation of its own shares; or
(II)
prior to the first to occur of an Initial Public Offering or a
Change of Control, would violate or cause a default under any of
Holdings’ or any of Holdings’ Subsidiaries’
material debt agreements, indentures and other agreements or
instruments evidencing material indebtedness of Holdings or any of
its Subsidiaries, as such agreements, indentures and instruments
may be amended or modified from time to time in accordance with
their terms (collectively, “Financing Documents”) (the
events described in (I) and (II) above each constitute a
“Repurchase Disability”),
then Holdings shall
notify Employee in writing (a “Disability
Notice”). The Disability Notice shall specify the
nature of the Repurchase Disability. Holdings shall
thereafter repurchase the Common Stock described in the Redemption
Notice as soon as reasonably practicable after all Repurchase
Disabilities cease to exist (or Holdings may elect, but shall have
no obligation, to cause its nominee to repurchase the Common Stock
while any Repurchase Disabilities continue to exist).
In the event Holdings
or its nominee does not repurchase the Common Stock due to a
Repurchase Disability, (1) Holdings shall provide written
notice to Employee as soon as practicable after all Repurchase
Disabilities cease to exist (the “ Reinstatement
Notice ”); (2) the Fair Market Value shall be determined
as of the date the Reinstatement Notice is delivered to Employee,
which Fair Market Value shall be used to determine the Put Price
and (3) the completion of the repurchase pursuant to the Redemption
Notice shall occur on a date specified by Holdings within 10 days
following the determination of the Fair Market Value of the Common
Stock; provided , however , that the number of shares
of Common Stock subject to repurchase under this Section 7(c)(ii)
shall be that number of shares of Common Stock held by Employee or
his estate, as the case may be, at the effective date of the
Redemption Notice in accordance with this Section
7(c)(ii).
(D)
Notwithstanding the foregoing, to the extent that Holdings’
repurchase of Common Stock pursuant to a Redemption Notice may be
made in part without creating or causing a Repurchase Disability,
Holdings shall make such repurchases to the fullest extent without
creating or causing a Repurchase Disability.
(E)
Notwithstanding anything to the contrary in the Management
Stockholders Agreement, if the Company shall exercise the Call
Right pursuant to Section 2(c) of the Management Stockholders
Agreement, Employee shall have the Put Right specified herein as if
he terminated his employment pursuant to Section 5(g) of this
Agreement as of the date of the Change of Control pursuant to which
such Call Right is exercised.
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8.
Indemnification.
(a)
Holdings shall indemnify Employee to the fullest extent permitted
by Delaware law against all costs, expenses, liabilities and losses
(including, without limitation, attorneys’ fees, judgments,
fines, penalties, ERISA liabilities, excise taxes and amounts paid
in settlement) reasonably incurred by Employee in connection with a
Proceeding. For the purposes of this Section, a
“Proceeding” shall mean any action, suit or proceeding,
whether civil, criminal, administrative or investigative, in which
Employee is made, or is threatened to be made, a party, or a
witness by reason of the fact that he is or was an officer,
director or employee of Holdings or is or was serving as an
officer, director, member, employee, trustee or agent of any other
entity at the request of Holdings.
(b)
Holdings shall advance to Employee all reasonable and necessary
costs and expenses incurred in connection with a Proceeding within
20 days after receipt by Holdings of a written request for such
advance. Such request shall include an i
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