EMPLOYMENT AGREEMENT
EXHIBIT 10.17
THIS EMPLOYMENT AGREEMENT
is entered into as of February 28, 2007, by ENTERTAINMENT PROPERTIES
TRUST, a Maryland real estate investment trust (the “Company”) and Xxxxxxx X. Xxxxxxx (“Employee”).
In consideration of the mutual covenants contained herein, the parties agree as follows:
“ANNUAL INCENTIVE PROGRAM” shall mean the annual incentive program of the Company, as amended
from time to time, or any successor incentive program adopted by the Board or the Compensation
Committee, pursuant to which annual Performance Bonuses and Incentive Bonuses may be awarded to
Employee. Pursuant to the Annual Incentive Program, the Compensation Committee may make
recommendations to the Board, and the Board may adopt, an annual bonus for the Employee which will
be based primarily on the Employee’s performance, as measured by the Board, for the most recently
completed fiscal year.
“BOARD” shall mean the Board of Trustees of the Company. Notwithstanding anything herein to
the contrary, the Board may authorize the Compensation Committee to take any action required to be
taken by the Board pursuant to this Agreement.
“CAUSE” shall mean and be limited to an affirmative determination by the Board that any of the
following has occurred: (a) Employee’s willful and continued failure or refusal to perform his
duties with the Company (other than as a result of his Disability or incapacity due to mental or
physical illness) which is not remedied in the reasonable good faith determination of the Board
within 30 days after Employee’s receipt of written notice from the Board specifying the nature of
such failure or refusal, or (b) the willful engagement by Employee in misconduct which is
materially and demonstrably injurious to the Company. For purposes of this Agreement, no act or
failure to act shall be considered “willful” unless done or omitted in bad faith and without
reasonable belief that the act or omission was in the best interests of the Company. A failure or
refusal to perform duties materially and adversely inconsistent with Employee’s position, as
contemplated in paragraph (a) of the definition of “Good Reason,” shall not be considered willful
or in bad faith.
“CHANGE IN CONTROL” shall mean the occurrence of any of the following events:
(a) Incumbent Trustees cease for any reason to constitute at least a majority of the Board.
(b) Any “person” (as defined in Section 3(a)(9) of the Exchange Act and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) or “group” (within the contemplation of Section 13(d)(3)
of the Exchange Act and Rule 13d-5 thereunder) is or
1
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) or controls the
voting power, directly or indirectly, of shares of the Company representing 25% or more of the
Company Voting Securities, other than (i) an acquisition of Company Voting Securities by an
underwriter pursuant to an offering of shares by the Company, (ii) a Non-Qualifying Transaction, or
(iii) an acquisition of Company Voting Securities directly from the Company which is approved by a
majority of the Incumbent Trustees.
(c) The shareholders of the Company approve a Business Combination, other than a
Non-Qualifying Transaction.
(d) The shareholders of the Company approve a plan of complete liquidation or dissolution of
the Company.
(e) The acquisition of direct or indirect Control of the Company by any “person” or “group.”
(f) Any transaction or series of transactions which results in the Company being “closely
held” within the meaning of the REIT provisions of the Code, after any applicable grace period, and
with respect to which the Board has either waived or failed to enforce the “Excess Share”
provisions of the Company’s Amended and Restated Declaration of Trust.
(g) For purposes of this definition:
(A) “Company Voting Securities” shall mean the outstanding shares of the Company eligible to
vote in the election of trustees of the Company.
(B) “Company 25% Shareholder” shall mean any “person” or “group” which beneficially owns or
has voting control of 25% or more of the Company Voting Securities.
(C) “Business Combination” shall mean a merger, consolidation, acquisition, sale of all or
substantially all of the Company’s assets or properties, statutory share exchange or similar
transaction involving the Company or any of its subsidiaries that requires the approval of the
Company’s shareholders, whether for the transaction itself or the issuance or exchange of
securities in the transaction.
(D) “Incumbent Trustees” shall mean (1) the trustees of the Company as of the date of this
Agreement or (2) any trustee elected subsequent to the date of this Agreement whose election or
nomination was approved by a vote of at least two-thirds of the Incumbent Trustees then on the
Board (either by specific vote or approval of a proxy statement of the Company in which such person
is named as a nominee for trustee).
(E) “Parent Corporation” shall mean the ultimate parent entity that directly or indirectly has
beneficial ownership or voting control of a majority of the outstanding voting securities eligible
to elect directors of a Surviving Corporation.
(F) “Surviving Corporation” shall mean the entity resulting from a Business Combination.
2
(G) “Non-Qualifying Transaction” shall mean a Business Combination in which all of the
following criteria are met: (1) more than 50% of the total voting power of the Surviving
Corporation or, if applicable, the Parent Corporation, is represented by Company Voting Securities
that were outstanding immediately prior to the Business Combination (or, if applicable, is
represented by shares into which the Company Voting Securities were converted pursuant to the
Business Combination and held in substantially the same proportion as the Company Voting Securities
were held immediately prior to the Business Combination), (2) no “person” or “group” (other than a
Company 25% Shareholder or any Employee Benefit Plan (or related trust) sponsored or maintained by
the Surviving Corporation or the Parent Corporation) would become the beneficial owner, directly or
indirectly, of 25% or more of the total voting power of the outstanding voting securities eligible
to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) and no Company 25% Shareholder would increase its percentage of such total voting
power as a result of the transaction, and (3) at least a majority of the members of the board of
directors or similar governing body of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of the Business Combination were
Incumbent Trustees at the time of the Board’s approval of the Business Combination.
(h) Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely
because any “person” or “group” acquires beneficial ownership or voting control of more than 25% of
the Company Voting Securities as a result of any acquisition of Company Voting Securities by the
Company, but if after that acquisition by the Company the “person” or “group” becomes the
beneficial owner or obtains voting control of any additional Company Voting Securities, a Change in
Control shall be deemed to occur unless otherwise exempted as set forth above.
“CODE” shall mean the Internal Revenue Code of 1986, as amended.
“COMPENSATION COMMITTEE” shall mean the compensation committee appointed by the Board.
“CONTROL” shall mean the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of the Company, whether through the ownership of Company
Voting Securities, by contract, or otherwise.
“DISABILITY” shall mean (a) the adjudication of incompetence of Employee or (b) the failure of
Employee to perform his duties with the Company on a full-time basis for a period of time until the
Company’s Long-Term Disability Plan commences payment of benefits as a result of incapacity due to
mental or physical illness which is determined to be permanent by a physician selected by the
Company or its insurers and acceptable to Employee or his legal representative, which acceptance
shall not be unreasonably withheld.
“EMPLOYEE BENEFIT PLANS” shall mean any and all 401(k) plans, profit sharing plans, retirement
plans, savings plans, investment plans, Health Plans, group life insurance, disability insurance,
salary continuation plans, accidental death and travel accident insurance plans, long-term care
plans, fringe benefits and all other benefit plans, programs and
3
policies of the Company adopted for peer management employees of the Company or agreed to by
Employee and the Company during the Employment Period.
“EMPLOYMENT PERIOD” shall mean the period from the date of this Agreement until the third
anniversary of the date hereof, as extended automatically by adding one additional one year period
on the third anniversary of the date hereof and on each anniversary thereafter.
“EXCESS PARACHUTE PAYMENT” shall have the meaning given by such term in Section 280G of the
Code.
“EXCHANGE ACT” shall mean the Securities Exchange Act of 1934, as amended.
“EXCISE TAX” shall mean any tax imposed by Section 4999 or 280G of the Code.
“GOOD REASON” shall mean any of the following which is not remedied in the reasonable good
faith determination of Employee within 30 days after the Company’s receipt of written notice
specifying the event claimed to constitute Good Reason:
(a) The assignment to Employee of duties materially and adversely inconsistent
with Employee’s position as described in Section 2 or other position to which
Employee may have been promoted prior to that time, or any material reduction in
Employee’s office, status, position, title(s) or responsibilities which is not
agreed to by Employee;
(b) Any material reduction in Employee’s base compensation or eligibility under
the Annual Incentive Program, eligibility for Long-Term Incentive Awards under the
Long-Term Incentive Plan, or eligibility under Employee Benefit Plans which is not
agreed to by Employee, or, after the occurrence of a Change in Control, a diminution
of the Employee’s target opportunity under the Annual Incentive Plan, Long-Term
Incentive Plan or any successor plan, or a failure to evaluate Employee’s
performance relative to the target opportunity based upon the same metrics as peer
management at the surviving or acquiring company;
(c) A material breach of this Agreement by the Company, its successors or
assigns, including any failure to pay Employee on a timely basis any amounts to
which he is entitled under this Agreement; or
(d) Any requirement that Employee be based at any office outside of a 35-mile
radius of the current offices of the Company.
“GROSS-UP PAYMENT” shall mean a payment to Employee in an amount equal to all Excise Tax
imposed on Employee as a result of any of the events described in Section 6(d),
4
plus an amount equal to all federal, state or local income or other tax imposed on Employee as
a result of any payment of such Excise Tax amount.
“HEALTH PLANS” shall mean any and all individual and family health and hospitalization
insurance and/or self-insurance plans, medical reimbursement plans, prescription drug plans, dental
plans and other health and/or wellness plans.
“INCENTIVE BONUS” shall mean any portion of bonus awarded to Employee under the Annual
Incentive Program in which the Employee elects to take restricted shares of the Company or other
equity based compensation.
“LONG-TERM INCENTIVE AWARDS” shall mean all grants of equity-based compensation awarded to
Employee under the Company’s Long-Term Incentive Plan, other than Incentive Bonuses, together with
amounts under the Long-Term Incentive Plan that Employee elects to contribute to the Section 79
insurance plan of the Company, or any successor plan.
‘LONG-TERM INCENTIVE PLAN” means the 1997 Share Equity Plan and any successor, renewal or
additional equity plan of the Company.
“NOTICE OF TERMINATION” shall mean a written instrument delivered by Employee or the Board, as
the case may be, which (a) gives notice of the termination of this Agreement and Employee’s
employment hereunder, (b) indicates the provision of this Agreement under which the termination is
made, (c) unless the termination is pursuant to Section 5(a), (d), (f) or (g), describes in
reasonable detail the facts and circumstances claimed to provide a basis for termination, and (d)
specifies the Termination Date (which shall be not more than 30 days after the date of the Notice).
The failure by Employee or the Company to describe in a Notice of Termination any fact or
circumstance which contributes to a showing of Disability, Good Reason or Cause (as applicable)
shall not waive any right to assert such fact or circumstance in enforcing Employee’s or the
Company’s rights hereunder.
“PERFORMANCE BONUS” shall mean any portion of the bonus awarded to Employee under the Annual
Incentive Program in which the Employee elects to take in the form of cash.
“RESIGNATION” shall mean Employee’s resignation from the Company other than pursuant to
Section 5(e) or (g). “Resign” shall have the correlative meaning.
“SEVERANCE MULTIPLE” shall mean the number three (3).
“TERMINATION DATE” shall mean: (a) if Employee is terminated pursuant to Section 5(b) or (c)
or terminates pursuant to Section 5(e) or (g), the date of receipt of the Notice of Termination or
any later date specified in the Notice, (b) if Employee is terminated by reason of death, the date
of his death, or (c) if Employee is terminated pursuant to Section 5(d) or Resigns, 30 days after
the date of receipt of the Notice of Termination.
“YEAR” shall mean a calendar year including, for purposes of Section 4, all of calendar year
2007.
5
(a) Employee shall perform, to the best of his ability, the duties commensurate with
Employee’s position as Chief Operating Officer, Vice President, Secretary and General Counsel, or
such other position as Employee may be promoted in the future, as the Company shall assign from
time to time.
(b) Employee shall devote his full time and attention to the business of the Company and shall
not engage in any other business activity for gain or profit, other than personal investments or
service on corporate, civic or charitable boards or committees, so long as such activities do not
significantly interfere with the performance of his responsibilities under this Agreement.
Employee accepts his employment and agrees to faithfully observe and enforce the policies and
decisions of the Company in effect from time to time, including but not limited to the Company’s
Code of Business Conduct and Ethics and Xxxxxxx Xxxxxxx and Regulation FD Compliance Policy.
6
(f) EXPENSE REIMBURSEMENTS. The Company shall reimburse Employee for all business travel and
other out-of-pocket expenses reasonably incurred by Employee in the performance of his services
under this Agreement. All reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement, in a format and manner
consistent with the Company’s expense reporting and reimbursement policies applicable to other peer
management employees of the Company.
7
8
participate prior to his death for a period of time after the Termination Date equal to 12
months times the Severance Multiple.
All other rights and obligations of the Company and Employee under this Agreement (other than
Sections 8, 9 and 10, which shall survive termination) shall cease as of the Termination Date.
(e) For purposes of this Section 6, the value on the award date of any Incentive Bonus or any
Long-Term Incentive Award shall be, in the case of equity compensation, the estimated fair value of
the award as of the grant date, without respect to vesting, determined by the Company in accordance
with FAS No. 123 (revised 2004), “Share-Based Payment,” issued by the Financial Accounting
Standards Board, or any replacement successor or amended accounting standard regarding the
valuation of equity-based awards.
9
receive at or subsequent to a Termination Date under any plan, policy, practice or program of,
or any contract or agreement with, the Company shall be payable in accordance with the same, except
as explicitly modified in this Agreement.
(a) The Company’s obligation to make the payments provided in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any unilateral right of set-off,
counterclaim, recoupment, defense or other claim, right or action which the Company may have
against Employee or others, but the foregoing shall not limit the right of the Company to seek such
relief in any proceeding. Any payments and benefits provided for in this Agreement shall be
contingent upon Employee executing a full release of any and all claims against the Company, the
Board and officers of the Company and any affiliates and representatives of the Company arising out
of Employee’s employment with the Company or this Agreement. In no event shall Employee be
obligated to seek other employment or take any other action to mitigate any amounts payable under
this Agreement. If Employee is the prevailing party in any action brought by the Company to
contest any liability or obligation hereunder or in any action by Employee to enforce the
provisions hereof, the Company shall reimburse Employee for the fees and expenses of his counsel
incurred in such action.
(b) If there is a dispute between the Board and Employee (i) if the Board terminates for
Cause, with respect to the existence of Cause (ii) if Employee terminates with Good Reason, with
respect to the existence of Good Reason, then, upon the entry of a final, nonappealable judgment by
a court of competent jurisdiction declaring that the Board’s termination was not for Cause or that
Employee’s determination of Good Reason was made in good faith, as the case may be, the Company
shall pay all amounts provided in the applicable provisions of Section 6, plus any damages to which
Employee is entitled by reason of the Company’s breach of this Agreement and shall reimburse
Employee for the fees and expenses of his counsel incurred in such proceeding.
(c) Any amount payable under this Section 8 shall bear interest at the federal rate provided
in Section 7872(f)(2)(A) of the Code until fully paid.
(a) Employee shall retain in confidence and shall not disclose to any party (other than
officers, trustees or representatives of the Company as required for the conduct of the Company’s
business), nor use for any purpose (other than in the performance of his duties hereunder) any
confidential or proprietary information of or with respect to the Company, its business, financial
condition or performance, existing or potential properties, existing or
10
potential transactions, negotiations, relationships, plans, strategies, projections, existing
or potential tenants or any other information of a confidential or proprietary nature, whether in
written, oral or electronic format and whether disclosed prior to or after the date of this
Agreement (“Confidential Information”). Notwithstanding the foregoing, Confidential Information
shall not include (i) information which is publicly disclosed or otherwise generally available
through no fault of Employee, or (ii) information required to be disclosed by Employee or the
Company under the federal securities laws and regulations or any subpoena or order of a court or
governmental agency. In no event shall an asserted violation of the provisions of this Section
10(a) constitute a basis for the Company’s unilateral deferral or withholding of any amounts
otherwise payable to Employee under this Agreement, without limitation of the right of the Company
to assert any right of set-off, counterclaim, recoupment, defense or other claim in any proceeding.
(b) During the Employment Period and for a period ending on the third anniversary of the
Termination Date, Employee shall not, directly or indirectly, unless for the Company or its
affiliates or otherwise with the express written consent of the Company:
(i) own or have any interest in, or act as an officer, director, partner,
member, manager, principal, employee, agent, representative, consultant, independent
contractor or other capacity of or for, or in any way assist, any Competitive
Enterprise within the Restricted Area, whether paid or unpaid; or
(ii) divert or attempt to divert clients, customers or accounts of the Company
or of its affiliates (whether or not the applicable parties have done business with
the Company or any of its affiliates once or more than once), regardless of their
location.
This provision shall not apply if, within one year following a Change in Control, the Company
terminates Employee’s employment with Company for any reason other than pursuant to Sections 5(b)
or 5(c). Employee agrees that because of the nationwide nature of Company’s business (directly or
through its affiliates), the “Restricted Area” shall include the entire United States, and that a
more limited geographic restriction is neither feasible nor appropriate to protect the interests of
Company. “Competitive Enterprise” means any business that is primarily engaged in the business of
developing, acquiring and financing real estate and related improvements associated with megaplex
theatre properties, excluding any business that is in the primary business of movie exhibition.
(c) Employee acknowledges that any breach of the covenants in Sections 10(a) and 10(b) would
cause irreparable injury to the Company which would not be fully compensable in damages.
Accordingly, the Company shall be entitled to injunctive or specific relief from a court of
competent jurisdiction against any breach or threatened breach by Employee, his agents or persons
acting through him, of the covenants in Sections 10(a) and 10(b) , without the necessity of posting
bond or proving lack of an adequate remedy at law, and without limitation of other remedies that
may be available to the Company at law or in equity.
11
(a) This Agreement is personal to Employee and shall not be assigned by him without the prior
written consent of the Board. The provisions of Sections 6 and 8 shall inure to the benefit of and
be binding on and enforceable by Employee’s heirs and legal representatives.
(b) This Agreement may be assigned by the Company to any successor to its business or assets
and shall inure to the benefit of its successors and assigns.
(c) This Agreement shall be binding upon and enforceable against any successor (whether
direct or indirect, by acquisition, merger, consolidation, Change in Control or otherwise) to the
Company or to all or substantially all of its assets, whether such transaction was approved by the
Incumbent Trustees or otherwise. The Company shall advise any successor to its business or assets
and the person or entity effecting any Change in Control of the provisions of this Agreement and
the survival of such provisions following the consummation of such transaction. As used in this
Agreement, “Company” shall mean Entertainment Properties Trust and any successor to its business,
assets or outstanding securities.
13. GOVERNING LAW. This Agreement shall be governed by Missouri law, without reference to
conflicts of laws rules.
15. ENTIRE AGREEMENT. This constitutes the entire agreement of the parties with regard to the
subject matter hereof and may not be modified or amended except by written instrument executed by
the Company and Employee. This Agreement supercedes and replaces the Employment Agreement, dated
as of January 13, 2000, by and between the Company and Employee, which Employment Agreement shall
have no further force and effect, provided, however, that nothing in this Agreement shall cause an
amendment or modification of any of the terms of any loans to Employee by the Company, which terms,
obligations and agreements shall continue in full force and effect.
| If to Employee: | Xxxxxxx X. Xxxxxxx | |||
12
| FAX: | ||||
| If to the Company: | Entertainment Properties Trust | |||
| 00 Xxxx Xxxxxxxx Xxxx, Xxxxx 000 | ||||
| Xxxxxx Xxxx, Xxxxxxxx 00000 | ||||
| Attention: Chief Executive Officer | ||||
| FAX: (000) 000-0000 | ||||
| and: | Entertainment Properties Trust | |||
| 00 Xxxx Xxxxxxxx Xxxx, Xxxxx 000 | ||||
| Xxxxxx Xxxx, Xxxxxxxx 00000 | ||||
| Attention: Chairman of the Compensation Committee | ||||
| FAX: (000) 000-0000 |
or to such other address or facsimile number as either party shall have furnished the other in
writing. Notices and communications shall be effective when actually received by the addressee.
[Remainder of page left intentionally blank]
13
| COMPANY ENTERTAINMENT PROPERTIES TRUST |
||||
| By: | /s/ Xxxxx X. Brain | |||
| Xxxxx X. Brain | ||||
| President and Chief Executive Officer | ||||
| EMPLOYEE |
||||
| /s/ Xxxxxxx X. Xxxxxxx | ||||
| Xxxxxxx X. Xxxxxxx | ||||
14