Exhibit 10.4


 


EMPLOYMENT AGREEMENT


 


This Employment Agreement (the “Agreement”) is entered into as of
December 23, 2004, and is effective immediately following the Effective Time,
by and among MARQUEE HOLDINGS INC.,
a Delaware corporation (“Holdings”), AMC ENTERTAINMENT INC.,
a Delaware corporation (“AMCE” and, collectively with Holdings, the “Company”),
and PETER C. BROWN (“Employee”).  In consideration of the mutual promises and
covenants contained herein, the parties hereto agree as follows:


 


Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in Section 17.


 


1.             Position and
Duties.  During the Term (as
defined in Section 2) of his employment by the Company under this Agreement,
Employee shall devote his full time and attention to the business of the
Company as Chairman of the Board, Chief Executive Officer and President of each
of Holdings and AMCE, as directed by the Board of Directors of Holdings or
AMCE, as applicable.  Notwithstanding the
foregoing, Employee shall be permitted, to the extent such activities do not
substantially interfere with the performance by Employee of his duties and
responsibilities under this Agreement, (i) to manage Employee’s personal
financial and legal affairs, (ii) to serve on corporate, civic or charitable
boards or committees, and (iii) to serve in executive positions in affiliates
or entities in which the Company has an interest.


 


2.             Term.  The term of this Agreement shall commence as
of the Effective Date and shall terminate on the fifth anniversary thereof or
sooner as provided in Section 6 below (such period, as it may be extended, the “Term”).  On each anniversary of the Effective Date during
the Term, one year shall be added to the Term of Employee’s employment with the
Company under this Agreement, so that as of each such anniversary the Term of
Employee’s employment hereunder shall be five (5) years.


 


3.             Compensation.


 


(a)           Base Salary.  During the Term of his employment by the
Company under this Agreement, Employee shall receive an annual salary of
$728,300.00 (“Base Salary”) (less withholding for applicable taxes), payable in
accordance with the Company’s payroll procedures for its salaried employees,
subject to such increases as may be approved by the Compensation Committee of
Holdings’ Board of Directors (the “Compensation Committee”).


 


(b)           Bonus.  In addition to Base Salary, Employee shall be
eligible to receive an annual bonus (the “Bonus”) as determined from time to
time by the Compensation Committee based on the Company’s applicable incentive
compensation program, as such may exist from time to time.


 


(c)           Benefits.  During the Term of Employee’s employment by
the Company under this Agreement, Employee also shall be eligible for the
benefits offered by the Company from time to time to the Company’s other
executive officers (such as group insurance, pension plans, thrift plans, stock
purchase plans and the like).  Following
termination of employment,


 





















 


Employee’s rights to coverage and benefits under such plans and
programs shall be governed by the terms of such plans as in effect from time to
time, except to the extent expressly provided otherwise herein.  Nothing herein shall be construed so as to
prevent the Company from modifying or terminating any employee benefit plans or
programs it may adopt from time to time.


 


(d)           Automobile.  During the Term of Employee’s employment by
the Company under this Agreement, the Company shall provide Employee with a
Company owned or leased automobile or an equivalent automobile allowance.


 


4.             Expense
Reimbursements.  During the Term of Employee’s employment by
the Company under this Agreement, the Company shall reimburse Employee for
business travel and entertainment expenses reasonably incurred by Employee on
behalf of the Company in accordance with the Company’s procedures, as such may
exist from time to time.


 


5.             Termination. 
Employee’s employment by the Company under this Agreement shall be
terminated upon the earliest to occur of the following events and any
termination of Employee’s employment as provided herein shall constitute a
termination of his employment with each of Holdings and AMCE:


 


(a)           Resignation.  Employee’s resignation or other voluntary
departure.


 


(b)           Death.  The death of Employee.


 


(c)           Disability.  If, as a result of Employee’s incapacity due
to physical or mental illness, (i) Employee shall not have been regularly
performing his duties and obligations hereunder for a period of one hundred
twenty (120) consecutive days (a “Disability”), (ii) the Company has given
Employee the written Notice of Termination pursuant to Section 6(a) hereof, and
(iii) within thirty (30) days after the Company gives Employee such written
Notice of Termination (which may occur before or after the end of such 120 day
period), Employee shall not have returned to the performance of his duties and
obligations hereunder on a regular basis.


 


(d)           Cause.  Employee is terminated by Holdings’ Board of
Directors for Cause.  For purposes of
this Agreement, “Cause” is defined as (i) the willful and continued failure by
Employee to perform substantially his duties with the Company (other than any
such failure resulting from his incapacity due to physical or mental illness),
or (ii) the willful engaging by Employee in misconduct which is materially and
demonstrably injurious to the Company. 
For purposes of this Agreement, no act, or failure to act, on the part
of Employee shall be considered “willful” unless such act was committed, or
such failure to act occurred, in bad faith and without reasonable belief that
Employee’s act or failure to act was in the best interests of the Company.


 


(e)           Without
Cause.  The employment of
Employee by the Company under this Agreement may be terminated without Cause
with severance at any time by Holdings’ Board of Directors in its sole
discretion.


 


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(f)            Good Reason.  Employee terminates his employment by the
Company hereunder for Good Reason.  For
purposes of this Agreement, “Good Reason” shall mean (i) a failure by the
Company to comply with any material provisions of this Agreement which has not
been cured within thirty (30) days after written notice of such noncompliance
has been given to Holdings by Employee, (ii) any purported termination of
Employee which is not effected pursuant to a Notice of Termination, as defined
in Sections 6 and 12 below (and for purposes of this Agreement no such
purported termination shall be effective), (iii) the assignment to Employee of
any duties inconsistent in any material respect with Section 1 of this
Agreement, or any other actions by the Company that result in a material
diminution of Employee’s position, authority, duties or responsibilities, other
than an action that is not taken in bad faith and is remedied by the Company
promptly after receipt of notice thereof from Employee, (iv) any material
reduction in Employee’s Base Salary or benefits or eligibility under Bonus or
benefit plans which is not agreed to by Employee, or (v) any requirement that
Employee be based at any office outside of a 35 mile radius of the current
headquarters office of AMCE; provided, however, that the Merger
of Marquee Inc. with and into AMCE as of the Effective Date shall not
constitute or be deemed to constitute grounds for Employee’s resignation for
Good Reason under this Agreement. 
Employee must notify Holdings in writing within thirty (30) days of
becoming aware of the occurrence of any of (i) through (v) above in order to
receive the payments described in Section 7(c) below.


 


(g)           Change of
Control.  Employee terminates
his employment by the Company hereunder in the event of a Change of
Control.  Employee must not be the person
or part of a group (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act) which effected the Change of Control, and must notify the Company
in writing of such termination within sixty (60) days after the occurrence of a
Change of Control, in order to receive the payments described in Section 7(c)
below.


 


(h)           Retirement.  The voluntary retirement by Employee at or
after age 65.


 


6.             Termination
Procedure.


 


(a)           Notice of
Termination.  Any termination
of the Company’s employment of Employee, either by the Company or by Employee
(other than termination pursuant to Section 5(b) hereof), shall be communicated
by written Notice of Termination to the other party hereto in accordance with
Section 12.  For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall,
where applicable, set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee under the provisions so
indicated.


 


(b)           Date of
Termination.  “Date of
Termination” shall mean (i) if Employee’s employment by the Company is
terminated pursuant to Section 5(a) or 5(h) hereof, thirty (30) days after
Notice of Termination is given, (ii) if Employee’s employment by the Company is
terminated pursuant to Section 5(b) hereof, the date of death, (iii) if
Employee’s employment by the Company is terminated pursuant to Section 5(c)
hereof, thirty (30) days after Notice of Termination is given (provided that
Employee shall not have again become available for service to the Company on a
regular basis during such thirty (30) day period), (iv) if Employee’s


 


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employment by the Company is terminated pursuant to Section 5(d), the
date specified in the Notice of Termination, and (v) if Employee’s employment
by the Company is terminated for any other reason, the date on which a Notice
of Termination is given.


 


7.             Compensation
During Disability or Upon Termination of Employment.


 


(a)           During
Disability.  During any period
that Employee fails to perform his duties under this Agreement as a result of
incapacity due to physical or mental illness (a “disability period”), Employee
shall continue to receive his Base Salary at the rate then in effect for such
period until his employment by the Company is terminated pursuant to Section
5(c) hereof, provided that payments so made to Employee during the first 180
days of any such disability period shall be reduced by the sum of the amounts,
if any, paid to Employee at or prior to the time of any such payment under
disability benefit plans of the Company or under the Social Security disability
insurance program, and which amounts were not previously applied to reduce any
such payment.  Employee shall also
receive a pro rata portion of the Bonus described in Section 3(b) pursuant to
the Company’s applicable incentive compensation program (the amount of such pro
rated Bonus to be determined as though the target level for such Bonus was
attained (or if there is no target level, to be determined as though the target
level of 70% of the Base Salary at the rate then in effect was attained),
multiplied by a fraction, the numerator of which is the number of completed
months in the then current Bonus program year and the denominator of which is
12), as such may exist from time to time.


 


(b)           Termination
for Employee Resignation, Cause or Retirement.  If Employee’s employment by the Company is
terminated pursuant to Section 5(a) or (d), the Company shall pay Employee his
accrued but unpaid Base Salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given (the “Accrued Payments”), and
the Company shall have no further obligations to Employee under this
Agreement.  If Employee’s employment by
the Company is terminated pursuant to Section 5(h), (i) the Company shall pay
Employee the Accrued Payments, (ii) the Company shall pay Employee a pro rata
portion of the Bonus described in Section 3(b) pursuant to the Company’s
applicable incentive compensation program (the amount of such pro rated Bonus
to be determined as though the target level for such Bonus was attained (or if
there is no target level, to be determined as though the target level of 70% of
the Base Salary at the rate then in effect was attained), multiplied by a
fraction, the numerator of which is the number of completed months in the then
current Bonus program year and the denominator of which is 12), as such may
exist from time to time and (iii) Employee shall have the Put Right described
in Section 7(c)(ii) and Employee’s outstanding Employee Options shall be vested
as if the Date of Termination were the fifth anniversary of such date (i.e.,
Employee will be credited with an additional five years of service for purposes
of vesting in the Employee Options).  .


 


(c)           Termination
for Death, Disability, Without Cause or by Employee for Good Reason or Change
of Control.  If Employee’s
employment by the Company is terminated pursuant to Section 5(b), (c), (e), (f)
or (g), the Company shall pay to Employee or his personal representative the Accrued
Payments and the compensation payments described in Section 7(c)(i), Employee
shall have the Put Right in Section 7(c)(ii) and Employee’s outstanding Employee
Options shall be vested as if the Date of Termination were the fifth anniversary
of


 


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such date (i.e., Employee will be credited with an additional five
years of service for purposes of vesting in the Employee Options); provided,
however, that Employee also must have timely notified the Company as
provided in Sections 5(f) and (g), as applicable, in order to receive such
payments, such Employee Option vesting and have such Put Right.  All amounts payable under this Section 7(c)
shall be reduced by withholding for applicable taxes, if any.


 


(i)            A lump-sum cash
payment equal to the sum of (A) Employee’s Base Salary at the rate in effect on
the Date of Termination for the remainder of the Term, plus (B) the Bonus
described in Section 3(b) pursuant to the Company’s applicable incentive
compensation program (the amount of such Bonus to be determined as if the
target level for such Bonus was attained (or if there is no target level, to be
determined as though the target level of 70% of the Base Salary at the rate
then in effect was attained)), multiplied by the number of years remaining in
the Term (for purpose of (A) and (B) any partial year during the remainder of
the Term shall be treated as an entire year). 
All payments pursuant to this Section 7(c)(i) shall be paid on the Date
of Termination by wire transfer of immediately available funds in the
appropriate amount to an account designated by Employee or his estate, as the
case may be.


 


(ii)           Put Right.


 


(A)          Except
as otherwise provided herein, if Employee’s employment by the Company is
terminated pursuant to Section 5(b), (c), (e), (f), (g) or (h), then Employee
or his estate, as the case may be, shall have the right (the “Put Right”), for
six months following the Date of Termination, (A) to sell to Holdings, and Holdings
shall be required to purchase, on one occasion, all or any portion, as
specified by Employee or his estate, of the shares of Common Stock then held by
Employee or his estate, as the case may be, at the Put Price and (B) to require
Holdings to pay to Employee or his estate, as the case may be, an amount equal
to the Employee Option Excess Price with respect to the termination of all or
any portion, as specified by Employee, of the outstanding vested Employee Options
then held by Employee or his estate, as the case may be.


 


(B)           Employee
or his estate, as the case may be, shall send written notice to Holdings of his
or its intention to exercise the Put Right to sell shares of Common Stock
and/or to terminate Employee Options (the “Redemption Notice”).  The completion of the purchase shall take
place on the tenth day after the actual date of delivery of the Redemption
Notice against delivery of certificates or other instruments representing the
Common Stock so purchased and appropriate documents canceling the Employee Options
so terminated, appropriately endorsed or executed by Employee or his estate, or
his or its duly authorized representative. 
Subject to Section 7(c)(ii)(C), payment of the aggregate Put Price for
all Common Stock repurchased pursuant to a Redemption Notice shall be paid
within ten (10) days following the determination of Fair Market Value by wire
transfer of immediately available funds in the appropriate amount to an account
designated by Employee or his estate, as the case may be.  Payments with respect to Employee Options as
described above shall be paid in substantially equal installments on the first
business day of the month over the 180 day period following the determination
of Fair Market Value by wire transfer of immediately available funds in


 


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the appropriate amount to an account designated by Employee or his
estate, as the case may be.


 


(C)           Notwithstanding
anything to the contrary herein, if the Board of Directors of Holdings in good
faith determines that the repurchase by Holdings of Common Stock pursuant to a
Redemption Notice:


 


(I)            is
prohibited by applicable law restricting the purchase by a corporation of its
own shares; or


 


(II)           prior
to the first to occur of an Initial Public Offering or a Change of Control, would
violate or cause a default under any of Holdings’ or any of Holdings’
Subsidiaries’ material debt agreements, indentures and other agreements or
instruments evidencing material indebtedness of Holdings or any of its
Subsidiaries, as such agreements, indentures and instruments may be amended or
modified from time to time in accordance with their terms (collectively, “Financing
Documents”) (the events described in (I) and (II) above each constitute a “Repurchase Disability”),


 


then Holdings shall notify Employee in writing (a “Disability Notice”).  The Disability Notice shall specify the
nature of the Repurchase Disability.  Holdings
shall thereafter repurchase the Common Stock described in the Redemption Notice
as soon as reasonably practicable after all Repurchase Disabilities cease to
exist (or Holdings may elect, but shall have no obligation, to cause its
nominee to repurchase the Common Stock while any Repurchase Disabilities
continue to exist).


 


In the event Holdings or its nominee does not repurchase the Common Stock
due to a Repurchase Disability, (1) Holdings shall provide written notice
to Employee as soon as practicable after all Repurchase Disabilities cease to
exist (the “Reinstatement Notice”);
(2) the Fair Market Value shall be determined as of the date the Reinstatement
Notice is delivered to Employee, which Fair Market Value shall be used to
determine the Put Price and (3) the completion of the repurchase pursuant to
the Redemption Notice shall occur on a date specified by Holdings within 10
days following the determination of the Fair Market Value of the Common Stock; provided,
however, that the number of shares of Common Stock subject to repurchase
under this Section 7(c)(ii) shall be that number of shares of Common Stock held
by Employee or his estate, as the case may be, at the effective date of the
Redemption Notice in accordance with this Section 7(c)(ii).


 


(D)          Notwithstanding
the foregoing, to the extent that Holdings’ repurchase of Common Stock pursuant
to a Redemption Notice may be made in part without creating or causing a
Repurchase Disability, Holdings shall make such repurchases to the fullest
extent without creating or causing a Repurchase Disability.


 


(E)           Notwithstanding
anything to the contrary in the Management Stockholders Agreement, if the
Company shall exercise the Call Right pursuant to Section 2(c) of the Management
Stockholders Agreement, Employee shall have the Put


 


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Right specified herein as if he terminated his employment pursuant to
Section 5(g) of this Agreement as of the date of the Change of Control pursuant
to which such Call Right is exercised.


 


8.             Indemnification.


 


(a)           Holdings shall
indemnify Employee to the fullest extent permitted by Delaware law against all
costs, expenses, liabilities and losses (including, without limitation,
attorneys’ fees, judgments, fines, penalties, ERISA liabilities, excise taxes
and amounts paid in settlement) reasonably incurred by Employee in connection
with a Proceeding.  For the purposes of this Section, a “Proceeding” shall
mean any action, suit or proceeding, whether civil, criminal, administrative or
investigative, in which Employee is made, or is threatened to be made, a party,
or a witness by reason of the fact that he is or was an officer, director or
employee of Holdings or is or was serving as an officer, director, member,
employee, trustee or agent of any other entity at the request of Holdings.


 


(b)           Holdings shall advance
to Employee all reasonable and necessary costs and expenses incurred in
connection with a Proceeding within 20 days after receipt by Holdings of a
written request for such advance.  Such
request shall include an itemized list of the costs and expenses and an
undertaking by Employee to repay to Holdings the amount of such advance if
ultimately it shall be determined that he is not entitled to be indemnified
against such costs and expenses.


 


(c)           Employee shall not be
entitled to indemnification under this Section unless Employee meets the
standard of conduct specified under Delaware law.  Notwithstanding the foregoing, to the extent
permitted by law, neither Section 145(d) of the General Corporation Law of the
State of Delaware nor any similar provision shall apply to indemnification
under this Section, so that if Employee in fact meets the applicable standard
of conduct (as ultimately determined by a court of competent jurisdiction or as
ultimately determined by the arbitrator in arbitration pursuant to Section 16),
he shall be entitled to indemnification hereunder whether or not Holdings (whether
by the Board of Directors of Holdings, the shareholders, independent legal
counsel or other party) determines that such indemnification is proper or that
he has met such applicable standard of conduct.  Neither the failure of Holdings
to have made such a determination prior to the commencement by Employee of any
suit or arbitration proceeding seeking indemnification, nor a determination by Holdings
that Employee has not met such applicable standard of conduct, shall create a
presumption that Employee has not met the applicable standard of conduct.


 


(d)           Holdings shall be
permitted to settle any Proceeding or claim in any manner other than as would
impose liability on Employee for which he would not be entitled to
indemnification or insurance coverage hereunder.  Employee shall not settle any proceeding
without Holdings’ prior written consent, which consent will not be unreasonably
withheld.


 


(e)           Holdings shall maintain
an insurance policy or policies providing directors’ and officers’ liability
insurance.  Employee shall be covered by
such policy or policies, in accordance with its or their terms, to the maximum
extent of coverage available for any director or officer of Holdings.


 


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(f)            Employee shall give Holdings
prompt notice of any proceeding which may give rise to a claim for
indemnification.  Holdings shall have the
right, at its expense, to assume the defense of any such proceeding.


 


9.             Confidentiality. 
Employee acknowledges that he knows and in the future will know
information relating to the Company and its affiliated companies and their
respective operations that is confidential or a trade secret.  Such information includes information,
whether obtained in writing, in conversation or otherwise, concerning corporate
strategy, intent and plans, business operations, pricing, costs, budgets,
equipment, the status, scope and term of pending acquisitions, negotiations and
transactions, the terms of existing or proposed business arrangements,
contracts and obligations, and corporate and financial reports.  Such confidential or trade secret information
shall not, however, include information in the public domain unless Employee
has, without authority, made it public.


 


Employee shall (a) not disclose such information to anyone except in
confidence and as is necessary to the performance of his duties for the
Company, (b) keep such information confidential, (c) take appropriate
precautions to maintain the confidentiality of such information, and (d) not
use such information for personal benefit or the benefit of any competitor or
any other person.


 


Upon termination of his employment by the Company under this Agreement,
Employee shall return all materials in his possession or under his control that
were prepared by or relate to the Company or its affiliates, including, but not
limited to, materials containing confidential information, files, memorandums,
price lists, reports, budgets and handbooks.


 


Employee’s obligation under this Section 9 shall survive the termination
of Employee’s employment by the Company under this Agreement.


 


10.          Equitable Remedies.  The parties acknowledge that irreparable
damage will result to the Company from any violation of Section 9 above by
Employee.  The parties expressly agree
that, in addition to any and all remedies available to the Company for any such
violation, the Company shall have the remedy of restraining order and
injunction and any such equitable relief as may be declared or issued to
enforce the provisions of Section 9 above and Employee agrees not to claim in
any such equitable proceeding that a remedy at law is available to the
Company.  Notwithstanding anything
contained herein to the contrary and if, and only if, any provision of the type
contained in Section 9 above, as the case may be, is enforceable in the
jurisdiction in question, if any one or more of the provisions contained in
such section shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
construed by limiting and reducing it so as to be enforceable to the extent
compatible with the applicable law in such jurisdiction as it shall then
appear.


 


11.          Successors: Binding Agreement.


 


(a)           Company
Successors.  The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all the business of the
Company, by agreement in form and substance satisfactory to Employee, to
expressly


 


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assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.


 


(b)           Employee’s
Successors.  This Agreement
and all rights hereunder shall be binding upon, inure to the benefit of and be
enforceable by Employee’s personal or legal representatives and heirs.


 


12.          Notices.  All notices,
requests, demand or other communications under this Agreement shall be in
writing addressed as follows:


 


	
  If to
  Holdings:

  	
  Marquee
  Holdings Inc.

  
	
   

  	
  c/o J.P.
  Morgan Partners (BHCA), L.P.

  
	
   

  	
  1221 Avenue
  of the Americas

  
	
   

  	
  39th
  Floor

  
	
   

  	
  New York,
  New York 10020

  
	
   

  	
  Attn:

  	
  Michael R.
  Hannon

  
	
   

  	
   

  	
  Stephen P.
  Murray

  
	
   

  	
   

  
	
  with a copy
  to:

  	
  Latham &
  Watkins LLP

  
	
   

  	
  885 Third
  Avenue

  
	
   

  	
  Suite 1000

  
	
   

  	
  New York, NY
  10022

  
	
   

  	
  Attn:

  	
  Samuel A.
  Fishman

  
	
   

  	
   

  	
  David M.
  Schwartzbaum

  
	
   

  	
   

  
	
  and to:

  	
  Marquee
  Holdings Inc.

  
	
   

  	
  c/o Apollo
  Management V, L.P.

  
	
   

  	
  9 West 57th
  Street

  
	
   

  	
  43rd
  Floor

  
	
   

  	
  New York,
  New York 10019

  
	
   

  	
  Attn:

  	
  Marc Rowan

  
	
   

  	
   

  
	
  with a copy
  to:

  	
  Wachtell,
  Lipton, Rosen & Katz

  
	
   

  	
  51 West 52nd
  Street

  
	
   

  	
  New York,
  New York 10019

  
	
   

  	
  Attn:

  	
  Daniel A.
  Neff

  
	
   

  	
   

  	
  David C.
  Karp

  
	
   

  	
   

  
	
  If to AMCE:

  	
  AMC Entertainment Inc.

  
	
   

  	
  920 Main Street

  
	
   

  	
  Kansas City, MO 64105

  
	
   

  	
  Attn:

  	
  General Counsel

  
	
   

  	
   

  
	
  with copies
  to:

  	
  Holdings,
  Latham & Watkins LLP and Wachtell, Lipton, Rosen & Katz as set forth
  above.

  
				



 


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  If to Employee:

  	
  to him at the most recent residence address as
  maintained in the Company’s payroll records.

  



 


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.


 


13.          Total
Compensation.  The compensation to be paid to Employee under
this Agreement shall be in full payment for all services rendered by Employee
in any capacity to the Company or any affiliate of the Company.  All compensation and benefits provided
hereunder shall be subject to applicable income tax and other corresponding withholding
requirements.


 


14.          Additional
Potential Compensation.  Nothing in this Agreement shall prohibit the
Company from awarding additional compensation to Employee if it is determined
that such compensation is warranted based on Employee’s performance.


 


15.          Other
Provisions.  This Agreement
shall be governed by the laws of the State of Missouri.  This Agreement represents the entire
agreement of the parties hereto and shall not be amended except by a written
agreement signed by all the parties hereto. 
This Agreement supersedes any prior oral or written agreements or
understandings between the Company or any affiliate of the Company and
Employee.  In the event of any conflict
between the terms of this Agreement and the terms of the Management Stockholders
Agreement, the Option Plan, the Incentive Stock Option Agreement by and between
Holdings and Employee dated on or about the Effective Date, the Non-Qualified
Stock Option Agreement by and between Holdings and Employee dated on or about
the Effective Date or any agreement between the Company and Employee regarding
Employee Options, the terms of this Agreement shall control.  This Agreement shall not be assignable by one
party without the prior written consent of the other party, except by the
Company if it complies with Section 11 above. 
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.


 


16.          Arbitration.  Any legal dispute related to this Agreement
and/or any claim related to this Agreement, or breach thereof, shall, in lieu
of being submitted to a court of law, be submitted to arbitration, in
accordance with the applicable dispute resolution procedures of the American
Arbitration Association.  The award of
the arbitrators shall be final and binding upon the parties.


 


The parties hereto agree that (i) three arbitrators shall be selected
pursuant to the rules and procedures of the American Arbitration Association,
(ii) at least one arbitrator shall be a licensed attorney, (iii) the
arbitrators shall have the power to award injunctive relief or to direct
specific performance, (iv) each of the parties, unless otherwise provided by
applicable law and procedures, shall bear its own attorneys’ fees, costs and
expenses and an equal share of the arbitrators’ and administrative fees of
arbitration, and (v) the arbitrators shall award to the prevailing party a sum
equal to that party’s share of the arbitrators’ and administrative fees of
arbitration.


 


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Nothing in this Section shall be construed as providing Employee a
cause of action, remedy or procedure that Employee would not otherwise have
under this Agreement or the law. 
Employee understands that in signing this Agreement he is waiving any
right that he may have to a jury trial or a court trial of any legal dispute or
claim as set forth above.


 


17.          Definitions.  For purposes of this Agreement, the following
definitions are applicable:


 


“Affiliate”
shall mean, with respect to any specified Person:


 


(i)            any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; or


 


(ii)           any
other Person that owns, directly or indirectly, 10% or more of such Person’s
Capital Stock or any officer or director of any such Person or other Person or
with respect to any natural Person, any person having a relationship with such
Person by blood, marriage or adoption not more remote than first cousin.


 


For the
purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.


 


“Apollo” means
Apollo Management V, L.P., a Delaware limited partnership.


 


“Apollo Group”
means (i) Apollo; (ii) the Apollo Holders; and (iii) any Affiliate of Apollo
(including the Apollo Holders).


 


“Apollo
Holders” means Apollo Investment Fund V, L.P. (“AIF V”), Apollo Overseas
Partners V, L.P. (“AOP V”), Apollo Netherlands Partners V (A), L.P. (“Apollo
Netherlands A”), Apollo Netherlands Partners V (B), L.P. (“Apollo Netherlands B”),
and Apollo German Partners V GmbH & Co KG (“Apollo German Partners”) and
any other partnership or entity affiliated with and managed by Apollo or its
Affiliates to which AIF V, AOP V, Apollo Netherlands A, Apollo Netherlands B,
or Apollo German Partners assigns any of their respective interests in
Holdings.


 


“Apollo
Investors” means, collectively, AIF V, AOP V, Apollo Netherlands A, Apollo
Netherlands B and Apollo German Partners.


 


“Capital Stock”
of any Person shall mean any and all shares, interests, participations or other
equivalents (however designated) of such Person’s capital stock, including
preferred stock, any rights (other than debt securities convertible into
capital stock), warrants or options to acquire such capital stock, whether
outstanding as of the Effective Time or issued thereafter.


 


“Change of
Control” means the occurrence of, after the Effective Date, any of the
following events:


 


(i)            any
“person” or “group” as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act other than one or more Permitted Holders is or becomes the


 


11





















 


“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person or group shall be deemed to have “beneficial
ownership” of all shares that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, by way of merger, consolidation or
other business combination or purchase of 50% or more of the total voting power
of the Voting Stock of Holdings or of AMCE (for purposes of calculating the
total voting power of the Voting Stock held by a group solely in the context of
a merger, consolidation or other business combination with a Person engaged in
a line of business similar to that of Holdings or of AMCE and its Subsidiaries
on August 18, 2004, the voting power beneficially owned by the Permitted
Holders or by Permitted Co-Investors, to the extent such voting power of the
Voting Stock was acquired by such Permitted Co-Investors on or before January
31, 2005 in transactions that satisfy the definition of Permitted Co-Investor,
shall be excluded in an amount equal to the lesser of the total voting power of
the Voting Stock beneficially owned by such Permitted Co-Investors on (x)
January 31, 2005 or (y) the date of such merger, consolidation or other
business combination);


 


(ii)           the
adoption of a plan relating to the liquidation or dissolution of Holdings or
AMCE;


 


(iii)          the
sale, lease, transfer or other conveyance, in one or a series of related
transactions, of all or substantially all of the assets of Holdings or of AMCE
and its Subsidiaries, taken as a whole, to any Person other than one or more
Permitted Holders; or


 


(iv)          a
change of control under the indentures relating to the 91/2% Senior Subordinated Notes
due 2011 (the “2011 Notes”), the 97/8% Senior Subordinated Notes due 2012 or
the 8% Senior Subordinated Notes due 2014 issued by AMCE (other than a change
of control under the indenture relating to the 2011 Notes resulting from the
Transactions);


 


provided, however,
that for the avoidance of doubt, the parties hereto agree that the closing of
the Merger of Marquee Inc. with and into AMCE as of the Effective Date shall
not constitute and shall not be deemed to cause or result in a Change of
Control hereunder.


 


“Common Stock”
means common stock of Holdings, par value $0.01 per share.


 


“Convertible
Securities” means any evidence of indebtedness, shares of stock or other
securities (other than Options or Warrants) which are directly or indirectly
convertible into or exchangeable or exercisable for shares of Stock.


 


“Effective
Date” means the later to occur of (i) the date of the closing of the merger of
Marquee Inc. with and into AMCE pursuant to the Agreement and Plan of Merger by
and among Holdings, Marquee Inc. and AMCE, dated as of July 22, 2004 and (ii)
the date on which occurs the Effective Time.


 


12





















 


“Effective
Time” means the date and time of the filing (or if another date and time is
specified in such filing, such specified date or time) of a certificate of
merger relating to the Merger with the Secretary of the State of Delaware
pursuant to Section 1.2 of the Merger Agreement.


 


“Employee
Option” means an option to purchase shares of Common Stock issued under the
Option Plan or other equity award plan of Holdings.


 


“Employee
Option Excess Price” with respect to each share of Stock that may be acquired
by exercise of an Employee Option means the excess, if any, of (i) the Put
Price over (ii) the price that must be paid under the applicable Employee
Option to purchase such share.


 


“Equivalent
Shares” means, at any date of determination, (a) as to any outstanding shares
of Stock, such number of shares of Stock, (b) as to any outstanding
Options, Warrants or Convertible Securities, the maximum number of shares of
Stock for which or into which such Options, Warrants or Convertible Securities
may at the time be exercised, converted or exchanged (or which will become
exercisable, convertible or exchangeable on or prior to, or by reason of, the
transaction or circumstances in connection with which the number of Equivalent
Shares is to be determined) and (c) in respect of any Subsidiary of the Company,
(i) as to any outstanding shares of stock of any Subsidiary of the Company,
such number of shares of stock or (ii) as to any outstanding options, warrants
or convertible securities, the maximum number of shares of stock of any
Subsidiary of the Company for which or into which such options, warrants or
convertible securities may at the time be exercised, converted or exchanged (or
which will become exercisable, convertible or exchangeable on or prior to, or
by reason of, the transaction or circumstances in connection with which the
number of Equivalent Shares is to be determined).


 


“Exchange Act”
means the Securities Exchange Act of 1934, as amended.


 


“Fair Market
Value” of a share of Common Stock as of a given date shall be:


 


(i)            the
closing price of a share of Common Stock on the principal exchange on which
such shares are then trading, if any (or as reported on any composite index
which includes such principal exchange), on the most recent trading day prior
to such determination date; or


 


(ii)           if
Common Stock is not traded on an exchange, the mean between the closing
representative bid and asked prices for a share of Common Stock on the most
recent trading day prior to such determination date as reported by Nasdaq or,
if Nasdaq is not then in existence, by its successor quotation system; or


 


(iii) if Common Stock is not publicly traded
on an exchange and not quoted on Nasdaq or a successor quotation system, the
fair market value of a share of Common Stock as determined in good faith by the
Board of Directors of Holdings or the committee appointed to administer the
Option Plan;


 


provided,
however, that if Fair Market Value is determined pursuant to subsection
(iii) above and Employee disagrees with such determination, the determination
of the Fair Market Value shall be made by an independent third party valuation
expert selected by Holdings (and reasonably


 


13





















 


acceptable to
Employee).  Such third party valuation
expert shall make a determination of Fair Market Value within 90 days after
selection pursuant to the preceding sentence. 
The determination of Fair Market Value by such third party expert shall
take account of all relevant facts, including, as appropriate, lack of
marketability and minority position.  The
reasonable fees and expenses of such third party expert shall be borne equally
by Holdings and Employee.


 


“Initial
Investor Shares” means that number of Shares held by an Investor immediately
following the Effective Time, as the same may be adjusted for stock splits,
stock dividends, recapitalizations or similar events.


 


“Initial
Public Offering” shall mean the first issuance by Holdings of any class of
common equity securities that is required to be registered (other than on a
Form S-8) under Section 12 of the Exchange Act.


 


“Investor” or “Investors”
means each of the JPMP Investors, the Apollo Investors and the other entities
listed on Schedule 1 attached hereto and, upon the unanimous approval of each
of the JPMP Investors and the Apollo Investors, any other subsequent holder of Shares
who agrees to be bound by the terms of the Investor Stockholders Agreement.


 


“Investor
Stockholders Agreement” means that certain Stockholders Agreement by and among Holdings,
the JPMP Investors, the Apollo Investors and certain other stockholder parties
thereto dated as of October 29, 2004, as amended.


 


“J.P. Morgan
Partners Group” means (i) J.P. Morgan Partners, LLC and (ii) any Affiliates of
J.P. Morgan Partners, LLC.


 


“JPMP Investors” means, collectively, J.P. Morgan Partners
(BHCA), L.P. (“JPMP BHCA”), J.P. Morgan Global Investors (Cayman), L.P., JP.
Morgan Partners Global Investors (Cayman) II, L.P., and any other affiliated
entities designated by JPMP BHCA to Holdings in writing prior to the Effective
Time.


 


“Management
Stockholders Agreement” means that certain Management Stockholders Agreement by
and among Holdings, the Principal Investors and certain management stockholder
parties.


 


“Merger” means
the merger of Marquee Inc. with and into AMCE pursuant to the Merger Agreement.


 


“Merger
Agreement” means the Agreement and Plan of Merger by and among Holdings,
Marquee Inc. and AMCE, dated as of July 22, 2004.


 


“Option Plan”
means the 2004 Stock Option Plan of Marquee Holdings Inc., as amended.


 


“Options”
means any options to subscribe for, purchase or otherwise directly acquire
Stock, other than any such option held by Holdings or any right to purchase
shares pursuant to the Investor Stockholders Agreement.


 


14





















 


“Permitted
Co-Investor” means an Investor (other than the Principal Investors) as of the
Effective Time and any one or more institutional investors and their respective
Affiliates to which any Permitted Holder transfers in the aggregate up to, but
no more than, 35% of (a) its equity commitments to the Transactions or (b) its
equity securities of Holdings or AMCE, in each case on or before January 31,
2005 (all transfers to any Affiliates of such institutional investor shall be
included in such percentage calculation).


 


“Permitted
Holder” means:


 


(i)            any
member of the Apollo Group;


 


(ii)           any
member of the J.P. Morgan Partners Group; and


 


(iii)          any
Subsidiary, any employee stock purchase plan, stock option plan or other stock
incentive plan or program, retirement plan or automatic reinvestment plan or
any substantially similar plan of AMCE or Holdings or any Subsidiary of
Holdings or any Person holding securities of AMCE or Holdings for or pursuant
to the terms of any such employee benefit plan; provided that if any lender or
other Person shall foreclose on or otherwise realize upon or exercise any
remedy with respect to any security interest in or lien on any securities of
AMCE or Holdings held by any Person listed in this clause (iii), then such
securities shall no longer be deemed to be held by a Permitted Holder.


 


“Permitted Transfer” means:  (i) a Transfer approved by each Principal
Investor so long as there are any Principal Investors, (ii) a Transfer to an Affiliate
of such Investor; provided such transferee remains an Affiliate of such
transferor following the Transfer; (iii) following an Initial Public
Offering, a Transfer by an Investor made as part of a distribution by an
Investor to its respective general or limited partners or members in accordance
with such Investor’s fund documents, as the case may be; (iv) a Transfer made
by a JPMP Investor pursuant to and in accordance with the Regulatory
Sideletter; or (v) a Transfer made pursuant to the registration rights as set
forth in Section 7 of the Investor Stockholders Agreement; provided
that such transferee, in the case of clauses (i), (ii), (iii) and (iv) above
shall agree in writing with the parties to the Investor Stockholders Agreement
to be bound by, and to comply with, all applicable provisions of and to be deemed
to be an Investor for purposes of the Investor Stockholders Agreement.


 


“Permitted
Transferee” means any Person who acquires Shares pursuant to clauses (i), (ii)
and (iii) of the definition of “Permitted Transfer”.


 


“Person” means
any individual, corporation, partnership, limited liability company, joint
venture, association, joint stock company, trust, estate, unincorporated
organization or government or any agency or political subdivision thereof.


 


“Principal
Investors” means (i) the JPMP Investors, so long as the JPMP Investors,
together with their Permitted Transferees, collectively own Shares representing
at least 33% of the Initial Investor Shares owned by the JPMP Investors; provided,
that the JPMP Investors shall not be deemed to be a Principal Investor at any
time that they do not, together with their Permitted Transferees, collectively
own Shares representing at least 33% of the Initial Investor Shares owned by
the JPMP Investors, and (ii) the Apollo Investors, so long as the Apollo


 


15





















 


Investors,
together with their Permitted Transferees, collectively own Shares representing
at least 33% of the Initial Investor Shares owned by the Apollo Investors; provided,
that the Apollo Investors shall not be deemed to be a Principal Investor at any
time that they do not, together with their Permitted Transferees, collectively
own Shares representing at least 33% of the Initial Investor Shares owned by
the Apollo Investors (in each case, as may be adjusted for stock splits, stock
dividends, recapitalizations or similar events).  For the avoidance of doubt, so long as there
are two Principal Investors, references in this Agreement to “Principal
Investors” shall mean both Principal Investors, and if at any time there is
only one Principal Investor, references in this Agreement to “the Principal
Investors” or “each Principal Investor” shall mean that sole Principal Investor
then remaining.


 


“Put Price”
per share of Stock shall mean the Fair Market Value as of the later of the date
of the Redemption Notice and the date the Reinstatement Notice is delivered to
Employee.


 


“Regulatory
Sideletter” means that certain letter agreement between Holdings and the JPMP
Investors, a copy of which is attached to the Investor Stockholders Agreement
as Exhibit B.


 


“Shares” means
(a) all shares of Stock, whenever issued, including all shares of Stock issued
upon the exercise, conversion or exchange of any Options, Warrants or
Convertible Securities and (b) all Options, Warrants and Convertible Securities
(treating such Options, Warrants and Convertible Securities as a number of
Shares equal to the number of Equivalent Shares represented by such Options,
Warrants and Convertible Securities for all purposes of this Agreement except as
otherwise specifically set forth herein).


 


“Stock” means Common
Stock, together with any other classes or series of equity securities of Holdings.


 


“Subsidiary”
of a Person means: (i) any corporation of which more than 50% of the
outstanding shares of Capital Stock having ordinary voting power for the
election of directors is owned directly or indirectly by such Person; and (ii)
any partnership, limited liability company, association, joint venture or other
entity in which such Person, directly or indirectly, has a more than 50% equity
interest.


 


“Transactions”
means the transactions set forth in the Agreement and Plan of Merger by and
among Holdings, Marquee Inc. and AMCE, dated as of July 22, 2004 and the
transactions related thereto.


 


“Transfer”
means a transfer, sale, assignment, pledge, hypothecation or other disposition
or exchange, including any Transfer of a voting or economic interest in
securities or other property; and “Transferring” or “Transferred” have
correlative meanings.


 


“Voting Stock”
of a Person means all classes of Capital Stock or other interests (including
partnership interests) of such Person then outstanding and normally entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof.


 


16





















 


“Warrants”
means any warrants to subscribe for, purchase or otherwise directly acquire
Stock or Convertible Securities.


 


[signature page follows]


 


17





















 


THIS AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.


 


 


IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.


 


	
   

  	
  MARQUEE HOLDINGS INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephan Oppenheimer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President, Secretary and Assistant

  	
   

  
	
   

  	
   

  	
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Aaron J. Stone

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President, Assistant Secretary and

  	
   

  
	
   

  	
   

  	
  Assistant Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMC ENTERTAINMENT INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Kevin M. Connor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President, General Counsel and

  	
   

  
	
   

  	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Peter C. Brown

  	
   

  
	
   

  	
  PETER C. BROWN, EMPLOYEE

  
											



 





















 


SCHEDULE 1


 


SCHEDULE OF INVESTORS


 


 


	
  NAME

  
	
  JPMP
  INVESTORS

  
	
  J.P. MORGAN PARTNERS
  (BHCA), L.P.

  
	
  J.P. MORGAN PARTNERS GLOBAL
  INVESTORS, L.P.

  
	
  J.P. MORGAN PARTNERS GLOBAL
  INVESTORS (CAYMAN), L.P.

  
	
  J.P. MORGAN PARTNERS GLOBAL
  INVESTORS (CAYMAN) II, L.P.

  
	
  J.P. MORGAN PARTNERS GLOBAL
  INVESTORS (SELLDOWN), L.P.

  
	
  AMCE
  (GINGER), L.P.

  
	
  AMCE
  (LUKE), L.P.

  
	
  AMCE
  (SCARLETT), L.P.

  
	
   

  
	
  APOLLO
  INVESTORS

  
	
  APOLLO INVESTMENT FUND V,
  L.P.

  
	
  APOLLO OVERSEAS PARTNERS V,
  L.P.

  
	
  APOLLO NETHERLANDS PARTNERS
  V(A), L.P.

  
	
  APOLLO NETHERLANDS PARTNERS
  V(B), L.P.

  
	
  APOLLO GERMAN PARTNERS V
  GMBH & CO KG

  
	
   

  
	
  OTHER
  INVESTORS

  
	
  WESTON PRESIDIO CAPITAL IV,
  L.P.

  
	
  WPC ENTREPRENEUR FUND II,
  L.P.

  
	
  SSB CAPITAL PARTNERS
  (MASTER FUND) I, L.P.

  
	
  CAISSE DE DEPOT ET
  PLACEMENT DU QUEBEC

  
	
  CO-INVESTMENT PARTNERS,
  L.P.

  
	
  CSFB STRATEGIC PARTNERS
  HOLDINGS II, L.P.

  
	
  CSFB STRATEGIC PARTNERS
  PARALLEL HOLDINGS II, L.P.

  
	
  CSFB CREDIT OPPORTUNITIES
  FUND (EMPLOYEE), L.P.

  
	
  CSFB CREDIT OPPORTUNITIES
  FUND (HELIOS), L.P.

  
	
  CREDIT SUISSE
  ANLAGESTIFTUNG

  
	
  PEARL HOLDINGS LIMITED

  
	
  PARTNERS GROUP PRIVATE
  EQUITY PERFORMANCE HOLDING LIMITED

  
	
  VEGA INVEST (GUERNSEY)
  LIMITED

  
	
  ALPINVEST PARTNERS CS
  INVESTMENTS 2003 C.V.

  
	
  ALPINVEST PARTNERS LATER
  STAGE CO-INVESTMENTS CUSTODIAN II B.V.

  
	
  ALPINVEST PARTNERS LATER
  STAGE CO-INVESTMENTS CUSTODIAN IIA B.V.

  
	
  SCREEN INVESTORS 2004, LLC