Exhibit 10.1
EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of May 14,
2009, by ENTERTAINMENT PROPERTIES TRUST, a Maryland real estate investment trust
(the “Company”) and Morgan G. Earnest II (“Employee”). In consideration of the
mutual covenants contained herein, the parties agree as follows:
     1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the following meanings.
          “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 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

 

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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.

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               (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

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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 Employee’s principal residence as of the date hereof (as set
forth in Section 16 hereof).

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          “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), 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.

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          “YEAR” shall mean a calendar year including, for purposes of
Section 4, all of calendar year 2009.
     2. DUTIES. The Company employs Employee as its Chief Investment Officer and
Vice President. During the Employment Period:
          (a) Employee shall perform, to the best of his ability, the duties
commensurate with Employee’s position as Chief Investment Officer and Vice
President, 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 (i) Employee’s service as a consultant to Capmark Financial
Group, Inc. and (ii) personal investments or service on corporate, civic or
charitable boards or committees, in the case of both clause (i) and (ii), 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 Insider
Trading and Regulation FD Compliance Policy.
     3. TERM. This Agreement and Employee’s employment shall remain in effect
during the Employment Period, unless sooner terminated in accordance with
Section  5.
     4. COMPENSATION.
          (a) BASE SALARY. Employee shall receive an annual base salary of
$360,000, payable in regular increments in accordance with the Company’s
standard payroll procedures (but not less frequently than monthly) less
applicable withholdings, and subject to such increases as awarded in the
discretion of the Compensation Committee from time to time.
          (b) BONUS. Employee shall be eligible for an annual Performance Bonus
and an annual Incentive Bonus in accordance with the Annual Incentive Program as
administered by the Compensation Committee. The Compensation Committee shall
establish the bonus computation methodology and performance criteria for each
Year and shall have sole authority to administer the Annual Incentive Program,
to establish performance goals, to certify to their achievement, to establish
under the Annual Incentive Program the amount of the Performance Bonus and
Incentive Bonus, the type of compensation comprising the Incentive Bonus and the
number of restricted shares or amount of other equity-based compensation
issuable as the Incentive Bonus.
          (c) LONG-TERM INCENTIVE AWARDS. Employee shall be eligible to
participate in Long-Term Incentive Awards from time to time at the discretion of
the Compensation Committee.

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          (d) EMPLOYEE BENEFIT PLANS. Employee shall be eligible to participate
in all Employee Benefit Plans made available to other peer management employees
of the Company or otherwise agreed to by Employee and the Compensation Committee
during the Employment Period.
          (e) VACATION. Employee shall be entitled to at least four weeks paid
vacation during each Year of service, or such greater amount as otherwise agreed
to by Employee and the Compensation Committee (prorated for any partial Year).
          (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.
          (g) ADJUSTMENTS TO COMPENSATION. Employee’s base salary and other cash
compensation shall be subject to withholding and other applicable taxes. If
Employee is employed by the Company for less than 12 months in any Year, unless
otherwise provided in Section 6 or in the applicable plan or arrangement, his
compensation and benefits shall be prorated in accordance with the number of
days in the Year during which he is employed.
     5. TERMINATION. This Agreement and Employee’s employment hereunder shall be
terminated upon the earliest of:
          (a) DEATH. Employee’s employment shall automatically terminate upon
his death.
          (b) DISABILITY. The Company will make efforts to reasonably
accommodate Employee as required by applicable federal and state laws. However,
in the event of Employee’s Disability, the Board may, after giving 30 days’
written notice to Employee, terminate Employee by giving Notice of Termination
if he is unable because of his Disability to resume his full-time duties within
such 30-day period.
          (c) CAUSE. The Board may terminate Employee’s employment for Cause by
giving Notice of Termination to Employee. Employee shall have the right to
appeal any termination for Cause to the Board by providing written notice to the
Chairman of the Board not later than five business days after the date of the
Notice of Termination. Employee and his counsel shall have the right to appear
before the Board at a meeting at which such appeal shall be considered. The
determination of the Board with regard to such appeal shall be final and
binding.
          (d) WITHOUT CAUSE. The Board may terminate Employee’s employment
without Cause by giving 30 days’ Notice of Termination to Employee.

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          (e) GOOD REASON. Employee may terminate his employment for Good Reason
by giving Notice of Termination to the Company.
          (f) RESIGNATION. Employee may Resign his employment by giving 30 days’
Notice of Termination to the Company.
          (g) RETIREMENT. Employee may retire at or after age 65.
     6. COMPENSATION ON TERMINATION. Upon termination of Employee’s employment
for any reason provided in Section 5, Employee (or his estate) shall be entitled
to all compensation earned and all benefits under Employee Benefit Plans and
expense reimbursements vested or accrued through the Termination Date. In
addition:
          (a) DEATH OR DISABILITY. If Employee’s employment hereunder is
terminated pursuant to Section 5(a) or Section 5(b), Employee (or Employee’s
estate in the case of termination pursuant to Section 5(a)) shall receive from
the Company in a lump sum payment due within 30 days after the Termination Date,
an amount equal to the product of (A) the sum of (i) Employee’s annual base
salary at the rate in effect immediately prior to the Termination Date, plus
(ii) the amount of the Performance Bonus plus the value on the award date of the
Incentive Bonus paid or payable to Employee for the most recently completed Year
prior to the Termination Date (annualized as applicable), plus (iii) the value
on the award date of the Long-Term Incentive Awards made to Employee during the
current Year or if none, during the prior Year (annualized as applicable), times
(B) the Severance Multiple. In addition (1) notwithstanding anything to the
contrary in any share option plan or agreement, any share options held by
Employee on the Termination Date shall become immediately exercisable and may be
exercised by Employee (or Employee’s estate or other authorized representative)
until the earlier of one year after the Termination Date or 10 years after the
grant date of the options, and (2) all unvested restricted shares held by
Employee on the Termination Date shall become fully vested as of such date.
          (b) BY THE COMPANY WITHOUT CAUSE; BY EMPLOYEE FOR GOOD REASON. If
Employee’s employment hereunder is terminated pursuant to Section 5(d) or
Employee terminates Employee’s employment hereunder pursuant to Section 5(e),
Employee shall receive from the Company (or its successor, if applicable), in a
lump-sum payment due within 30 days after the Termination Date, an amount equal
to the product of (A) the sum of (i) Employee’s annual base salary at the rate
in effect immediately prior to the Termination Date, plus (ii) the amount of the
Performance Bonus plus the value on the award date of the Incentive Bonus paid
or payable to Employee for the most recently completed Year prior to the
Termination Date (annualized as applicable), plus (iii) the value on the award
date of the Long-Term Incentive Awards made to Employee during the current Year
or if none, during the prior Year (annualized as applicable), times (B) the
Severance Multiple. In addition (1) notwithstanding anything to the contrary in
any share option plan or agreement, any share options held by Employee on the
Termination Date shall become immediately exercisable and may be exercised by
Employee until the earlier of 180 days after the Termination Date or 10 years
after the grant date of the options, and (2) all unvested restricted shares held
by Employee

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on the Termination Date shall become fully vested as of such date.
Notwithstanding the foregoing, if Employee’s employment hereunder is terminated
pursuant to Section 5(d) or Employee terminates Employee’s employment hereunder
pursuant to Section 5(e) after the second anniversary of the date hereof and
within 90 days after Employee has received notice of the Board’s requirement,
made upon the recommendation of the Chief Executive Officer of the Company, that
Employee be based at the then current offices of the Company, and (iii) in the
Board’s reasonable judgment, Employee has failed to comply with such requirement
within such 90-day period, then Employee shall receive (in lieu of the payments
set forth above) from the Company (or its successor, if applicable), in a
lump-sum payment due within 30 days after the Termination Date, an amount equal
to the product of (A) Employee’s annual base salary at the rate in effect
immediately prior to the Termination Date, times (B) 1.5. If Employee relocates
pursuant to the Board’s requirement, clause (d) of the definition of “Good
Reason” shall be revised to read in its entirety as follows: “Any requirement
that Employee be based at any office outside of a 35-mile radius of the current
offices of the Company.”
          (c) HEALTH PLANS. If Employee is terminated pursuant to Section 5(b)
or (d) or terminates pursuant to Section 5(e), Employee shall be entitled to
participate at the Company’s expense in all Health Plans in which Employee was
eligible to participate prior to the Termination Date for a period of time after
the Termination Date equal to 12 months times the Severance Multiple. Upon
Employee’s death, his immediate family shall be entitled to participate at the
Company’s expense in all Health Plans in which Employee was eligible to
participate prior to his death for a period of time after the Termination Date
equal to 12 months times the Severance Multiple.
          (d) GROSS-UP PAYMENT. If the Internal Revenue Service asserts that any
portion of any payment made to Employee pursuant to any provision of this
Agreement constitutes an Excess Parachute Payment and imposes an Excise Tax
thereon, then the Company agrees that it will indemnify and hold harmless
Employee in an amount equal to such Excise Tax. Such amount shall be paid to
Employee immediately pending a final judicial determination of, or settlement
determining, such liability for the Excise Tax otherwise. In addition, the
Company shall pay a Gross-Up Payment to Employee or his estate in the amount of
any Excise Tax incurred by Employee as a result of any severance compensation,
accelerated exercisability of options, accelerated vesting of restricted shares
and/or continuation of benefits under this Section 6, plus an amount equal to
any federal, state or local income tax imposed on Employee as the result of the
Company’s payment of any such Excise Tax amount. Such Gross-Up Payment shall be
payable to Employee at the time the respective applicable tax triggering such
Gross-Up Payment is due. For purposes of determining the amount of the Gross-Up
Payment, Employee will be deemed to (i) pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is made, and (ii) state and local income taxes at the highest
marginal rates of taxation in the state and locality of his residence in the
calendar year in which the Gross-Up Payment is made net, in the case of
clause (i), of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. The parties agree that
the payments required to be made under this Section 6 are such that the payments
Employee receives, or is entitled to receive, under this Section 6 shall not be
reduced by any Excise Tax or Gross-Up Payment with respect

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thereto and therefore the net amount retained by Employee, after reimbursement
for any Excise Tax, or any other federal, state or local income or other tax
that may be payable on receipt of such reimbursement for Excise Tax, that is
imposed as a result of any payment required to be made under this Section 6
shall be equal to the same amount as if no such Excise Tax or other tax had been
imposed.
     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.
     7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall limit
Employee’s continuing or future participation in any plan, program, policy or
practice provided by the Company and for which Employee may qualify, nor shall
anything herein limit or otherwise affect any rights Employee may have under any
other contract or agreement with the Company. Amounts which are vested benefits
or which Employee is otherwise entitled to 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.
     8. FULL SETTLEMENT; RESOLUTION OF DISPUTES.
          (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,

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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.
     9. INDEMNIFICATION. Nothing in this Agreement shall limit Employee’s
indemnification rights under the Company’s Declaration of Trust or Bylaws or any
Trustees’ and Officers’ insurance coverage. Employee shall not be liable to the
Company or its shareholders for any errors or omissions made in good faith and
in the absence of gross negligence or willful misconduct.
     10. COVENANTS OF THE EMPLOYEE.
          (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 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

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     (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. SUCCESSORS.
          (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.
          12. EXCESS PARACHUTE PAYMENT. If the Internal Revenue Service asserts
that any portion of any payment made to Employee pursuant to this Agreement
constitutes an “excess parachute payment” and imposes an excise tax thereon, the
Company will indemnify Employee in an amount equal to the excise tax. Such
amount shall be paid to Employee immediately upon a final judicial determination
of, or settlement determining, the liability for the excise tax.

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     13. GOVERNING LAW. This Agreement shall be governed by Missouri law,
without reference to conflicts of laws rules.
     14. HEADINGS. Section headings are for convenience of reference only and
shall have no effect on the interpretation of this Agreement.
     15. ENTIRE AGREEMENT. This Agreement 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.
Notwithstanding anything to the contrary herein, this Agreement shall not affect
or otherwise reduce the rights of Employee with respect to grants of stock,
stock options or restricted stock units made to Employee by the Company prior to
the date of this Agreement, the terms of which shall survive execution of this
Agreement.
     16. NOTICE. Any notice or other communication hereunder shall be in writing
and may be hand delivered or sent by registered or certified mail return receipt
requested, commercial courier or facsimile transmission:

             
 
  If to Employee:   Morgan G. Earnest II    
 
           
 
     
 
   
 
     
 
   
 
     
FAX:                                                                           
         
 
           
 
  If to the Company:   Entertainment Properties Trust    
 
      30 West Pershing Road, Suite 201    
 
      Kansas City, Missouri 64108    
 
      Attention: Chief Executive Officer    
 
      FAX: (816) 472-5794    
 
           
 
  and:   Entertainment Properties Trust    
 
      30 West Pershing Road, Suite 201    
 
      Kansas City, Missouri 64108    
 
      Attention: Chairman of the Compensation Committee    
 
      FAX: (816) 472-5794    

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.
     17. SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or unenforceability of any other
provision of this Agreement.

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     18. WAIVER. A party’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right such party may
have hereunder shall not be deemed a waiver of such provision or any other
provision of this Agreement, and no such waiver shall be effective unless by
written instrument signed by the party granting the waiver.
     19. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original and both of which, taken together, shall constitute a
single instrument.
     20. AMENDMENT. This Agreement may not be amended or otherwise modified
except pursuant to the express written agreement of each of the parties hereto.
     21. BOARD APPROVAL. This Agreement has been approved by the Board upon the
recommendation of the Compensation Committee. The officer signing this Agreement
on behalf of the Company is duly authorized to do so and to bind the Company to
the provisions hereof.
[Remainder of page left intentionally blank]

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
above date.

            COMPANY

ENTERTAINMENT PROPERTIES TRUST
      By:   /s/ David M. Brain         David M. Brain        President and Chief
Executive Officer        EMPLOYEE
             /s/ Morgan G. Earnest II              Morgan G. Earnest II         
 

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