EX-10.1






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




 









 




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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