EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of ____________, 1997 by
and between ENTERTAINMENT PROPERTIES TRUST, a Maryland real estate investment
trust (the "Company") and XXXXX X. BRAIN (the "Employee"). In consideration
of the mutual promises and covenants continued 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 chief financial
officer (in such capacity, the "Chief Financial Officer"), as directed by the
Company's President, the Chairman of the Board or the Board of Trustees (the
"Board").
2. TERM. The term of this Agreement shall commence as of November __,
1997, and shall terminate on November __, 1999, or sooner as provided in
Section 5 below (such period as it may be extended, the "Term"). On each
November __ hereafter, commencing in 1998, one year shall be added to the
Term of Employee's employment with the Company under this Agreement, unless
the Company has given written notice to the Employee that the Term will not
be extended.
3. COMPENSATION.
(a) BASE SALARY. During the Term of his employment by the Company
under this Agreement, Employee shall receive an annual salary of $175,000
("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
the Board (the "Compensation Committee").
(b) SIGNING BONUS. Employee shall receive a one-time signing
bonus of Thirty Thousand Dollars ($30,000) payable in a lump sum as soon as
administratively feasible following the Formation Transactions, as described
in the Company's registration statement (File No. 333-35281).
(c) ANNUAL INCENTIVE PROGRAM. In addition to Base Salary, for
each year commencing 1998 Employee shall be eligible to receive a performance
based bonus under the Company's Annual Incentive Program ("Performance
Bonus") if certain pre-established performance objectives are obtained
("Performance Goals"). The Compensation Committee shall establish a range of
Performance Goals by March 31 of each year. The Compensation Committee shall
determine annually within 60 days after completion of the Company's year end
audit whether the Performance Goals for the preceding year have been
achieved. If the Performance Goals for the preceding year have been
achieved, the Compensation Committee
shall certify such fact to the Company, and the Company shall pay such
Performance Bonus to Employee as soon as administratively feasible following
such certification. The Compensation Committee shall establish a maximum
Performance Bonus of 40% of Base Salary, a target Performance Bonus of 20% of
Base Salary, and a threshold Performance Bonus of 10% of Base Salary which
shall be paid to Employee based upon certification that the Performance Goals
have been achieved. No Performance Bonus shall be paid for any year in which
the threshold Performance Goal has not been achieved. No Performance Bonus
may exceed $300,000. The Compensation Committee shall have the sole
authority to administer and make determinations with respect to the
Performance Bonus and Performance Goals.
(d) SHARE INCENTIVE PLAN; SHARE PURCHASE PROGRAM; RESTRICTED SHARE
PROGRAM; SHARE OPTION PROGRAM.
(i) Employee acknowledges that after five (5) years from the
date hereof, future participation in any Company share incentive plan is
contingent upon Employee's ownership of common shares of beneficial
interest, $0.01 par value per share ("Shares"), of the Company with a
fair market value equal to at least two and one-half (2 1/2) times his
then current Base Salary.
(ii) Prior to or concurrent with the public offering of the
Company contemplated in Registration Statement No. 333-35281 (the
"Offering"), Employee will be provided the opportunity to purchase forty
thousand (40,000) Shares of the Company (the "Program Shares") at a
price per share equal to the public Offering price per Share in the
Offering as shown on the cover page of the final prospectus for the
Offering. To finance such purchase by Employee, the Company agrees to
make a five-year recourse loan to Employee equal to his aggregate
purchase price for the Shares.
The Program Shares will be issued to Employee concurrently with closing
of the Offering in exchange for Employee's promissory note (the "Note") in
the form attached hereto, except that if the Offering closes after November,
1997, the Note will bear interest at the applicable federal rate in effect
on the date the Offering closes.
In the event of a Change in Control, as defined in the Company's 1997
Share Incentive Plan, death, Disability (as defined below), retirement at age
65 or termination by the Company without Cause (as defined below), the
Compensation Committee may, in its sole discretion, forgive in whole or in
part any balance of the Note remaining after application of the proceeds from
sale of the Program Shares to payment of the Note.
The Program Shares will be issued to Employee without restriction by the
Company, except that for a period of two years after their date of issue, the
Program Shares may not be sold, transferred, or otherwise disposed of by
Employee, voluntarily or involuntarily, without
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the written consent of the Company, except following a Change in Control of
the Company, as defined in the Company's 1997 Share Incentive Plan, or
Employee's termination by reason of death, Disability or retirement at age
65. Any sale of the Program Shares must comply with the Securities Act of
1933 and the rules promulgated thereunder. The Program Shares will bear a
legend to such effect.
(iii) Employee shall be entitled to receive as incentive
compensation the following share incentive awards:
(A) If the Employee purchases Program Shares
pursuant to Section 3(d)(ii) hereof, then prior to or
concurrent with the closing of the Offering, Employee shall be
granted ten-year options ("Options") to purchase fifty percent
(50%) of the number of Program Shares he purchased pursuant
to Section 3(d)(ii) for an exercise price equal to the public
offering price per share in the Offering as shown on the cover
page of the final prospectus for the Offering. All Options
granted pursuant to the foregoing shall be "incentive stock
options" ("ISOs") as defined under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") to the extent
permitted under Section 422 of the Code. The Company shall
use its best efforts to obtain all necessary shareholder
approvals to ensure the Options qualify as ISOs. Twenty
percent (20%) of such Options shall vest and become
exercisable on each of the first, second, third, fourth and
fifth anniversaries following the date of grant, provided that
Employee remains an employee of the Company following such
respective dates, provided further all unvested Options shall
immediately vest and become exercisable upon any of (1)
Employee's (a) death, (b) separation from service due to a
Disability, (c) termination of employment by the Company
without Cause, or (d) termination of employment by the
Employee following a Material Breach (as defined below), or
(2) a Change in Control of the Company, as defined in the
Company's 1997 Share Incentive Plan. Notwithstanding the
foregoing, Employee agrees that all unvested Options shall be
forfeited if he sells or otherwise disposes of the Program
Shares purchased pursuant to Section 3(d)(ii) within five
years of such purchase without the written consent of the
Board or the Compensation Committee. Such Options shall
otherwise be upon such terms and conditions as are consistent
with the Company's 1997 Share Incentive Plan.
(B) If the Employee purchases Program Shares of
the Company pursuant to Section 3(d)(ii) hereof, then prior to
or concurrent with the closing of the Offering, Employee shall
be
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granted restricted Shares (the "Restricted Shares") equal in
number to fifty percent (50%) of the number of Program Shares
he purchased pursuant to Section 3(d)(ii) hereof.
Except as hereinafter provided, the Restricted Shares will be forfeited
by Employee in the event of any sale, assignment, transfer, hypothecation,
pledge or other alienation of such Restricted Shares, made or attempted,
whether voluntary or involuntary, and if involuntary whether by process of
law in any civil or criminal suit, action or proceeding, whether in the
nature of an insolvency or bankruptcy proceeding or otherwise, without the
written consent of the Board or the Compensation Committee. In addition, the
Restricted Shares will be forfeited if Employee sells or otherwise disposes
of the Program Shares purchased pursuant to Section 3(d)(ii) hereof prior to
the fifth anniversary of the date of their purchase without the written
consent of the Board or the Compensation Committee.
The foregoing restrictions will lapse with respect to one hundred
percent (100%) of the Restricted Shares and such Restricted Shares will
become nonforfeitable on the fifth anniversary of the date of grant, provided
the Employee is serving as Chief Financial Officer on that date. All
restrictions will lapse with respect to 100% of the Restricted Shares upon
any of (1) Employee's (a) death, (b) separation from service due to a
Disability, (c) termination of employment by the Company without Cause, or
(d) termination of employment by the Employee following a Material Breach, or
(2) a Change in Control of the Company as defined in the Company's 1997 Share
Incentive Plan. In addition, the Board or the Compensation Committee may
accelerate the vesting of any or all Restricted Shares in its discretion.
Except for these restrictions, the Employee as owner of the Restricted Shares
shall have all the rights of a shareholder including, but not limited to, the
right to receive all dividends paid on the Restricted Shares and the right to
vote such Shares. Such Restricted Shares will otherwise be upon such terms
and conditions as are consistent with the Company's 1997 Share Incentive Plan.
Each certificate issued in respect of the Restricted Shares shall be
registered in Employee's name and deposited by him, together with a Share
power endorsed in blank, with the Company and shall bear the following (or a
similar) legend:
"The transferability of this certificate and the common
shares represented hereby are subject to the terms and
conditions (including forfeiture) contained in the Agreement
dated as of __________, 1997 entered into between the
registered owner and Entertainment Properties Trust."
At the expiration of the restrictions, the Company shall redeliver to
Employee (or his legal representative, beneficiary or heir) Share
certificates for the Restricted Shares deposited with it without any legend.
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(e) BENEFITS. During the Term of his 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), as determined by the Compensation Committee.
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.
(f) AUTOMOBILE. During the Term of Employee's employment, the
Company shall provide Employee with an automobile allowance.
(g) COMPENSATION DURING DISABILITY. During any disability of
Employee during the Term of his employment by the Company under this
Agreement, Base Salary payable to Employee pursuant to the terms of this
Agreement shall be reduced by any and all disability payments Employee may
receive pursuant to any insurance contract provided by Company for the
benefit of its employees. Notwithstanding any termination of this Agreement
as provided in Section 5, Employee shall thereafter be entitled to the full
benefits of all disability payments to which he may be entitled pursuant to
such insurance contracts.
(h) FULL PAYMENT. The compensation to be paid to Employee under
this Agreement shall be in full payment for (i) all services rendered by
Employee in any capacity to the Company or any affiliate of the Company, and
(ii) all other obligations of Employee under this Agreement.
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 the
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 service as Chief Financial Officer
hereunder shall be terminated upon the earliest of:
(a) EXPIRATION. The expiration of the Term.
(b) DEATH. The death of Employee.
(c) DISABILITY. If, as a result of Employee's incapacity due to
physical or mental illness, Employee shall not have been regularly performing
his duties and obligations hereunder for a period of six consecutive months
(a "Disability") , and within thirty (30) days after written notice of
termination is given by the Chairman of the Board or the Board (which may
occur before or after the end of such six month period) Employee shall not
have returned to the performance of his duties and obligations hereunder on a
regular basis.
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(d) CAUSE. The Chairman of the Board or the Board terminates
Employee for Cause. For purposes of this Agreement, the Chairman of the
Board or the Board shall have "Cause" to terminate Employee upon (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) after a written demand for substantial
performance is delivered to Employee by the Chairman of the Board or the
Board which specifically identifies the manner in which the Chairman of the
Board or the Board believes that Employee has not substantially performed
his duties, 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. Notwithstanding the foregoing, Employee shall not
be deemed to have been terminated for Cause without (1) reasonable notice to
Employee setting forth the reason for the Chairman of the Board's or the
Board 's intention to terminate for Cause, (2) an opportunity for Employee,
together with his counsel, to be heard before the Chairman of the Board or
the Board, and (3) delivery to Employee of a Notice of Termination, as
defined below, from the Chairman of the Board or the Board finding that in
the good faith opinion of the Chairman of the Board or the Board , Employee
was guilty of conduct set forth above, and specifying the particulars thereof
in detail.
(e) MATERIAL BREACH. Employee terminates his service hereunder
for a material breach of this Agreement by the Company. For purposes of this
Agreement, a "material breach" 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 by Employee to the Chairman of the Board or the
Board, or (ii) any purported termination of Employee which is not effected
pursuant to a Notice of Termination, as defined below (and for purposes of
this Agreement no such purported termination shall be effective.
(f) NOTICE. The date specified in written notice given by the
Company or Employee at least thirty (30) days in advance.
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, unless such termination is pursuant to paragraph
(f) hereof.
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"Date of Termination" shall mean (i) if Employee's service is terminated
by the expiration of this Agreement, the date of expiration, (ii) if
Employee's service is terminated by his death, the date of his death, (iii)
if Employee's service 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 as the Chief Financial Officer on
a regular basis during such thirty (30) day period), (iv) if Employee's
service is terminated for Cause, the date specified in the Notice of
Termination, (v) if Employee's service is terminated pursuant to Section 5(f)
hereof, the expiration of the thirty (30) day notice period, and (vi) if
Employee's service is terminated for any other reason, the date on which a
Notice of Termination is given.
6. AMOUNTS DUE UPON TERMINATION OR DURING DISABILITY.
(a) During any period that Employee fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), Employee shall continue to receive his Base Salary at
the rate then in effect for such period until his service is terminated
pursuant to Section 5(c) hereof, provided that payments so made to Employee
during the first 180 days of the disability period shall be reduced by the
sum of the amounts, if any, paid to the 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.
(b) If Employee's service should be terminated by the Chairman of
the Board or the Board for Cause, by Employee's death or by Employee absent
a Material Breach, 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.
(c) If Employee's service is terminated by the Chairman of the
Board or the Board without Cause or by the Employee following a Material
Breach, Employee shall be entitled to receive, in addition to all other
amounts, one of the two alternative compensation payments described in (i) or
(ii) below.
(i) INSTALLMENT PAYMENTS. An amount equal to Base Salary of
Employee in effect at the time of termination plus his target
performance bonus of 20% of Base Salary (total payment equal to 120% of
Base Salary) (less withholdings or applicable taxes), payable over the
unexpired Term of this Agreement remaining at the Date of Termination
of Employee's employment under this Agreement, payable in advance at the
beginning of each month in equal monthly installments over such
unexpired Term; or
(ii) LUMP-SUM PAYMENT. An amount equal to the net present
value of the payments described in Section 6(c)(i) above, payable
within 30 days
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after the Date of Termination of Employee's employment under this
Agreement. The discount of such payments to their net present value
shall utilize a discount rate equal to the prime rate of interest
published in THE WALL STREET JOURNAL on the Date of Termination (such
prime rate currently defined in THE WALL STREET JOURNAL as the base rate
on corporate loans posted by at least 75% of the nation's 30 largest
banks) or if such rate is not available, then the prime rate of interest
of NationsBank, N.A. in effect on the Date of Termination.
The Company shall have the right to elect the severance compensation
described in either clause (i) or clause (ii) above, at its sole discretion.
7. 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 terms 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, 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.
Except as otherwise required by law, Company and Employee agree that all
provisions of this Agreement and all other elements of Employee's terms of
employment, compensation, and separation from employment (when such may
occur) shall remain confidential and shall not be disclosed to any party
other than the Employee and the members of the Board.
8. NONCOMPETITION. During the Term of Employee's employment by the
Company under any arrangement or nature whatsoever, and for a period equal to
(i) the period during or with respect to which the Employee receives a
continuation of his Base Salary under Section 6(c) or (ii) if the Employee's
termination is for Cause or the Employee quits absent a Material Breach, then
for the remainder of the Term as the Term would have been determined under
Section 2 of this Agreement on the date prior to the Employee's
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separation from employment, Employee shall not, directly or indirectly,
either individually or jointly or on behalf of or in concert with any other
person or entity, as a proprietor, partner, shareholder, director, officer,
employee, agent, consultant or in any other capacity or manner whatsoever
engage in any business activity competitive with the business of the Company
or its affiliates as constituted during the Term of Employee's employment by
the Company and on the date of the termination of such employment.
9. NONSOLICITATION. Employee agrees that during the Term of
Employee's employment by the Company under any arrangement or nature
whatsoever, and for a period of two years after the termination of such
employment, Employee will not (a) solicit, entice or otherwise induce any
professional or executive employee of the Company or its affiliates to leave
the employ of the Company or its affiliates for any reason whatsoever; (b)
directly or indirectly aid, assist or abet any other person or entity into
soliciting, enticing or inducing any employee of the Company or its
affiliates to leave their employ or in hiring any employee of the Company or
its affiliates; or (c) interfere with any contractual or other business
relationship or expectancy between the Company or its affiliates and their
employees.
10. EQUITABLE REMEDIES. The parties acknowledge that irreparable
damage will result to the Company from any violation of Sections 7, 8 or 9 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
Sections 6, 7 and 8 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 Sections 6, 7 or 8, 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.
11. NOTICES. All notices, requests, demands or other communications
under this Agreement shall be in writing addressed as follows:
(a) If to the Company, to:
Entertainment Properties Trust
One Kansas City Place
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
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(b) If to Employee, to:
Xxxxx X. Brain
Entertainment Properties Trust
One Kansas City Place
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
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. OTHER PROVISIONS. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns. 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. In the event one or more of the
provisions 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 provisions 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.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
ENTERTAINMENT PROPERTIES TRUST
By ___________________________________
Name _________________________________
Title ________________________________
"EMPLOYEE"
_______________________________________
XXXXX X. BRAIN
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